TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Tuesday, April 25, 2017

Pittsburgh Tax Review Issues Call For Papers

Pittsburgh Tax Review (2017)With some room still remaining in its coming fall issue, the peer-reviewed Pittsburgh Tax Review invites the submission of articles and essays for publication in the journal’s Fall 2017 issue. Submissions can be sent directly to Anthony Infanti, preferably prior to June 1, 2017.

Continue reading

April 25, 2017 in Scholarship, Tax | Permalink | Comments (0)

Monday, April 24, 2017

Hemel Presents The Federalist Safeguards of Progressive Taxation Today At Pepperdine

HemelDaniel Hemel (Chicago) presents The Federalist Safeguards of Progressive Taxation, 93 NYU L. Rev. ___ (2017), at Pepperdine today as part of our Tax Policy Workshop Series funded in part by a generous gift from Scott Racine:

This essay considers the distributional consequences of the Supreme Court’s federalism jurisprudence over the past quarter century, focusing specifically on the anticommandeering, anti-coercion, and state sovereign immunity doctrines. The first of these doctrines prevents Congress from compelling the states to administer federal programs; the second prevents Congress from achieving the same result through offers that for practical purposes the states cannot refuse; the third prohibits Congress from abrogating state sovereign immunity outside a limited class of cases. These doctrines vest the states with valuable entitlements and allow the states to sell those entitlements back to Congress for a price. In this respect, the doctrines have an intergovernmental distributional effect, shifting wealth from the federal government to the states.

Continue reading

April 24, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Trump Signs Executive Order Rolling Back Obama Tax Regulations

Trump SigningExecutive Order, Identifying and Reducing Tax Regulatory Burdens (Aug. 21, 2017):

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:

Section 1.  Policy.  The Federal tax system should be simple, fair, efficient, and pro-growth.  The purposes of tax regulations should be to bring clarity to the already complex Internal Revenue Code (title 26, United States Code) and to provide useful guidance to taxpayers.  Contrary to these purposes, numerous tax regulations issued over the last several years have effectively increased tax burdens, impeded economic growth, and saddled American businesses with onerous fines, complicated forms, and frustration.  Immediate action is necessary to reduce the burden existing tax regulations impose on American taxpayers and thereby to provide tax relief and useful, simplified tax guidance.

Sec. 2.  Addressing Tax Regulatory Burdens.  (a)  In furtherance of the policy described in section 1 of this order, the Secretary of the Treasury (Secretary) shall immediately review all significant tax regulations issued by the Department of the Treasury on or after January 1, 2016, and, in consultation with the Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, identify in an interim report to the President all such regulations that:

Continue reading

April 24, 2017 in Tax | Permalink | Comments (1)

Trump Promises To Unveil 'Massive' Tax Cut On Wednesday, Leaving Treasury Department Officials 'Speechless'

Trump

New York Times, Trump Vows to Unveil Tax-Cut Plan Next Week, Surprising Staff:

President Trump promised on Friday that he would unveil a “massive” tax cut for Americans next week, vowing a “big announcement on Wednesday,” but he revealed no details about what is certain to be an enormously complicated effort to overhaul the nation’s tax code.

Mr. Trump offered his tax tease in an interview and again during remarks at the Treasury Department on Friday afternoon as he raced to stack up legislative accomplishments before his 100th day in office at the end of next week.

His announcement surprised Capitol Hill and left Mr. Trump’s own Treasury officials speechless as he arrived at the Treasury offices to sign directives to roll back Obama-era tax rules and financial regulations. Earlier in the day, when reporters asked Steven Mnuchin, the Treasury secretary, how far away a tax overhaul proposal was, he said he could not give an answer. “Tax reform is way too complicated,” he said.

Continue reading

April 24, 2017 in Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, April 23, 2017

Today Is Tax Freedom Day — Earlier In MS, TN & SD, Later In CT, NJ & NY

Tax Foundation logoTax Foundation, Tax Freedom Day 2017 is April 23rd:

  • This year, Tax Freedom Day falls on April 23rd, 113 days into the year.
  • Tax Freedom Day is a significant date for taxpayers and lawmakers because it represents how long Americans as a whole have to work in order to pay the nation’s tax burden.
  • Americans will pay $3.5 trillion in federal taxes and $1.6 trillion in state and local taxes, for a total bill of more than $5.1 trillion, or 31 percent of the nation’s income.
  • Americans will collectively spend more on taxes in 2017 than they will on food, clothing, and housing combined.
  • If you include annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur 14 days later, on May 7.

Tax Freedom Day

Center on Budget and Policy Priorities, Tax Foundation Figures Do Not Represent Typical Households’ Tax Burdens: Figures May Mislead Policymakers, Journalists, and the Public:

Continue reading

April 23, 2017 in Tax, Think Tank Reports | Permalink | Comments (0)

The Top 5 Tax Paper Downloads

SSRN LogoThere is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper:

  1. [355 Downloads]  Background and Current Status of FATCA, by William Byrnes (Texas A&M) & Robert J. Munro (Texas A&M)
  2. [346 Downloads]  House Plan's Bad Math: Over-Estimates of Revenue from a Border Adjustment, by David Kamin (NYU) & Brad Setser (Council on Foreign Relations)
  3. [328 Downloads]  Destination-Based Cash Flow Taxation, by Alan Auerbach (UC-Berkeley), Michael P. Devereux (Oxford), Michael Keen (IMF) & John Vella (Oxford)
  4. [216 Downloads]  The Offshore Tax Enforcement Dragnet, by Shu-Yi Oei (Tulane)
  5. [200 Downloads]  The First McGee Annual Report on the Best and Worst States for Business, by Robert W. McGee (Fayetteville State University)

April 23, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 1445:  'True The Vote v. IRS' Lawyer: 'The Deep State Is Still Operating'

IRS Logo 2PJ Media, 'True the Vote v. IRS' Lawyer: 'The Deep State Is Still Operating':

A prominent constitutional attorney is sounding the alarm over Obama administration-style behavior by attorneys in President Trump's new administration. Jim Bopp, Jr., the attorney for the plaintiff in the landmark Citizens United suit, told PJ Media that he has seen no change in the attitude of government attorneys since Trump's inauguration:

The Deep State is still operating, no question. ...

I see no evidence the attitude of the IRS has changed. We have a new attorney general, and the Department of Justice is providing the lawyers to defend the IRS in this case. We've seen no change.

Bopp is currently involved with two similarly high-profile suits against the federal government and he says the Trump administration's defense attorneys are presenting arguments indistinguishable from those he faced during Obama's tenure.

In True the Vote v. IRS, election integrity watchdog True the Vote sued the federal government in 2013 over its targeting of pro-liberty non-profit groups for extra scrutiny. This case has wide implications for all non-profits that claimed their tax status was denied or delayed by Lois Lerner and a rogue IRS. ...

It boggles the mind that the IRS in a Trump administration would still be defending the actions of Lois Lerner and the notorious branch in Cincinnati. They had burdened groups with "Tea Party," "Liberty," "Constitution," and other related words in their title with mountains of extra paperwork to affirm their non-profit tax status. Yet, according to Bopp, that is indeed the case. ...

Bopp's observations come amid a renewed push by House Republicans to reopen the case against Lerner for possible prosecution. On April 9, House Ways and Means Committee Chairman Kevin Brady and Tax Policy Subcommittee Chairman Peter Roskam sent a letter to Attorney General Jeff Sessions requesting he reopen the probe.

Continue reading

April 23, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, April 22, 2017

This Week's Ten Most Popular TaxProf Blog Posts

Harvard Seeks To Hire A Clinical Tax Prof

Harvard Law School (2016)Job Announcement:  Clinical Fellow, Harvard Law Sc hool Federal Tax Clinic:

Duties & Responsibilities:  The Legal Services Center of Harvard Law School (LSC) seeks to hire a Clinical Fellow in the Federal Tax Clinic [launched in Fall 2015]. The Clinic — through which Harvard Law students receive hands-on lawyering opportunities — provides direct legal representation in tax controversies to low-income taxpayers.

Continue reading

April 22, 2017 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

The IRS Scandal, Day 1444:  Judicial Watch Sues IRS Over Email Preservation

IRS Logo 2Press Release, Judicial Watch Sues IRS Over Email Preservation:

Judicial Watch today announced that it filed a Freedom of Information Act (FOIA) lawsuit against the Internal Revenue Service (IRS) to obtain records relating to the agency’s “preservation and/or retention” of the email records of officials who have left the agency since January 2010. (Judicial Watch v. Internal Revenue Service (No.1:17-cv-00596)). The suit was filed as part of Judicial Watch’s continuing efforts to gain information about the IRS’ targeting of conservative groups and citizens during the Obama administration.

Judicial Watch filed the complaint after the IRS failed to respond to a November 15, 2016, FOIA request seeking:

  • All records concerning the preservation and/or retention of email records generated by IRS officials and employees upon their departure from the IRS; and
  • All records related to any changes, updates, or modifications to IRS policies and procedures for the retention of email records generated by IRS officials and employees.

The timeframe for the request is for records from January 1, 2010, to the present.

“Judicial Watch doesn’t trust the IRS, especially given its dishonesty about Lois Lerner’s emails,” said Judicial Watch President Tom Fitton. “The IRS was used by Obama and his allies to suppress his political opposition in a way that helped guarantee his re-election. Now we need to make certain that the IRS is not continuing to try to cover its tracks by destroying records.”

Judicial Watch’s litigation forced the IRS first to say that emails belonging to Lois Lerner, former director of the Exempt Organizations Unit of the IRS, were supposedly missing and later declare to the court that the emails were on IRS back-up systems.  Lerner was one of the top officials responsible for the IRS’ targeting of President Obama’s political opponents.

Continue reading

April 22, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, April 21, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Daniel Hemel (Chicago) reviews a new article by Richard Schmalbeck (Duke), Jay Soled (Rutgers), and Kathleen DeLaney Thomas (North Carolina), Advocating A Carryover Tax Basis Regime, 93 Notre Dame L. Rev. (forthcoming 2017).

HemelCandidate Donald Trump’s campaign platform contained a cryptic line regarding the tax treatment of assets transferred at death: “The Trump Plan will repeal the death tax, but capital gains held until death and valued over $10 million will be subject to tax to exempt small businesses and family farms.” Some read that to mean Trump would treat death as a realization event; others interpreted it to mean that Trump would allow inheritors to defer capital gains tax until they sold the inherited asset, but with carryover rather than stepped-up basis. No one was quite sure how the $10 million exemption would work. Would it apply to the first $10 million in transferred assets or the first $10 million in capital gains? (Unless the decedent’s basis is zero, those two things aren’t the same.)

To help us sort through these alternatives, Richard Schmalbeck, Jay Soled, and Kathleen DeLaney Thomas have produced an excellent article arguing for a carryover basis regime and against any exemption. Soled, Thomas, and James Alm of Tulane have published two shorter pieces in Tax Notes advocating a carryover basis regime limited to marketable securities. (See Soled, Alm & Thomas, A New Carryover Tax Basis Regime for Marketable Securities, 154 Tax Notes 835 (Feb. 13, 2017); Soled, Alm & Thomas, Trump and a Populist Agenda?, 154 Tax Notes 1131 (Feb. 27, 2017).) Soled, Thomas, and Alm also have condensed their argument into an op-ed for The Hill, distilling a complicated issue of tax law into clear language comprehensible to nonlawyers.

Continue reading

April 21, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (1)

Weekly Tax Roundup

Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog):

Monday, April 17, 2017

Diane Ring, Panama Papers: The One-Year Anniversary (Surly Subgroup). "At its core, the leak revealed the true ownership of over 200,000 offshore entities, thereby raising a host of tax and political questions regarding many of the entities’ owners."

Jack Townsend, Court Denies Motion to Dismiss Counts Against Tax Shelter Lawyer. “I will cut and paste Judge Rakoff’s discussion about § 7212(a) which I think offers good review for tax crimes lawyers.”

Continue reading

April 21, 2017 in IRS News, Tax, Weekly Tax Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

NY Times:  The IRS Enlists Debt Collectors To Recover Overdue Taxes, 'Placing A Bull’s-Eye On The Backs Of Low-Income Taxpayers' And 'Putting Out Barrels Of Honey For Scammers'

IRS Logo 2Following up on Tuesday's post, The IRS's Use Of Private Debt Collectors Will Not End Well (Again):  New York Times, I.R.S. Enlists Debt Collectors to Recover Overdue Taxes:

The Internal Revenue Service is about to start using four private debt-collection companies to chase down overdue payments from hundreds of thousands of people who owe money to the federal government, a job it has handled in house for years.

Unlike I.R.S. agents, who are not usually allowed to call delinquent taxpayers by telephone, the outside debt-collection agencies will have free rein to do so. Consumer watchdogs are fearful that some of the nation’s most vulnerable taxpayers will be harassed and that criminals will take advantage of the system by phoning people and impersonating I.R.S. collectors.

Continue reading

April 21, 2017 in IRS News, Tax | Permalink | Comments (0)

Thursday, April 20, 2017

The Taxing Power After Sebelius

Bret N. Bogenschneider (University of Surrey), The Taxing Power After Sebelius, 51 Wake Forest L. Rev. 941 (2016):

In National Federation of Independent Business v. Sebelius, the individual mandate of the Affordable Care Act was upheld under Congress’s taxing power rather than pursuant to the Commerce Clause. Although politically expedient, the salutary effect of the decision came at the expense of an undefined expansion of the taxing power. The Congressional Research Service concluded that, after Sebelius, the limits of the Congressional taxing power are unknown. Accordingly, the Congressional staff attorneys listed prior cases that ostensibly limit the taxing power and then predicted that future cases will be needed to define the limits going forward.

Continue reading

April 20, 2017 in Scholarship, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1442:  Editorial Calls For Firing IRS Commissioner Koskinen

IRS Logo 2Washington Examiner, Fire IRS chief John Koskinen:

President Trump needs a win. The public would benefit from reassurance about the institutions of government. Luckily, both can be achieved with a single action. Trump should dismiss IRS Commissioner John Koskinen.

By telling the taxman he's fired, the president would re-energize his young administration. More importantly, he would also significantly reform the most loathed agency in Washington. Tax Day provides a perfect chance for this sort of principled populism. ...

So long as Koskinen stays in his job, taxpayers have no such assurance. He was brought in by President Obama to clean up the IRS in 2013, but has succeeded only in making the agency more corrupt. A political crook and a liar, Koskinen has no place working in the Trump administration. ...

But Koskinen set himself above the rules. Trump vows to drain the swamp, and the IRS boss is an especially capable and devious swamp monster. House Republicans have tried shaming, censuring, and even threatening to impeach him. But each time, he's found a way to survive.

The failure of past lawmakers provides Trump a perfect opportunity. As the head of an administrative agency, Koskinen serves at the pleasure of the president. A word from Trump would send him packing and bring closure to the controversy.

A principled power move, firing Koskinen would also provide the White House with a needed influx of political capital. What's more, it would signal the beginning of a new era of good government during the Trump era.

Continue reading

April 20, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, April 19, 2017

Steve Ballmer Launches USAFacts To Track Government Spending And Taxing

USAFactsWashington Post, Tax Transparency in the Age of Trump:

Steve Ballmer, former CEO of Microsoft and current owner of the Los Angeles Clippers, is doing a significant public service. According to an article in the New York Times, Ballmer has funded a project to compile where every cent of government money is raised and spent at the federal, state and local levels. By clicking on USAFacts.org, anyone will be able to discover how much is raised in corporate versus sales or income taxes; how much money goes to their school district and what percentage is spent on teacher versus administrative salaries; how much the government spends on treating some specific categories of disease, such as depression; how much goes to diplomatic services versus the military. And so on. One hopes that Ballmer’s old friends at Xbox could turn all this data into an entertaining and instructive video game called “Taxes Versus Spending.”

Ballmer hopes that public debate will be strengthened by the availability of a common set of accurate data, perhaps echoing Daniel Patrick Moynihan’s saying that one is “entitled to his own opinion, but not his own facts.”

New York Times Deal Book: Steve Ballmer Serves Up a Fascinating Data Trove, by Aaron Ross Sorkin:

Continue reading

April 19, 2017 in Tax | Permalink | Comments (0)

The IRS Will Issue Tax Refunds This Year In Forever Stamps Rather Than Cash

Forever 2The Onion, IRS Announces Refunds Will Come In Form Of Forever Stamps This Year:

Stating that the policy change represented the kind of reform taxpayers have long demanded, the IRS announced Tuesday that all refunds for the 2016 fiscal year will be disbursed in the form of Forever stamps. “Persons anticipating a refund will receive a ream of Forever stamps equal to the expected amount within six to eight weeks of filing their taxes,” said IRS commissioner John Koskinen, explaining that someone with a $500 tax refund, for example, will receive an envelope containing 1,020 stamps, or roughly 51 booklets of the 49-cent postage.

Continue reading

April 19, 2017 in IRS News, Tax | Permalink | Comments (5)

NYU Tax Law Review Publishes New Issue

NYU Law (2016)The Tax Law Review has published a new issue (Vol. 69, No. 4 (Summer 2016)):

Continue reading

April 19, 2017 in Scholarship, Tax | Permalink | Comments (0)

Tuesday, April 18, 2017

Galle Presents Design And Implementation Of A Charitable Regulation Regime Today At Georgetown

Galle (2016)Brian Galle (Georgetown) presents Design and Implementation of a Charitable Regulation Regime at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

Charitable organizations are often billed as private alternatives to the governmental provision of public goods (Weisbrod 1975). Yet in developed countries many aspects of charities are subject to government dictate, or at least oversight. Government rules may circumscribe, or at least incentivize, the organizational structure of the firm, the rights and obligations of its stakeholders, what activities it will engage in or not, how much it will spend or save, even to whom it will communicate and the content of those communications. In a federated system such as the United States, a single multi-state firm might be answerable to literally dozens of separate regulators.

Continue reading

April 18, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

WSJ:  How $100 Of Your Taxes Are Spent

Wall Street Journal, How $100 of Your Taxes Are Spent:

With April 18 nearly here, U.S. taxpayers are likely asking themselves: Where exactly are my tax dollars going?

To answer the question, here is a “Taxpayer Receipt” showing how each $100 of taxes was spent, both for 2016 and five years earlier. It was prepared by the Committee for a Responsible Federal Budget, a nonpartisan nonprofit group in Washington that monitors federal spending. The group’s three chairmen are Republican Mitch Daniels, Democrat Leon Panetta and independent Tim Penny.

Looking at the list of expenditures, it is clear why some say the U.S. is a giant insurance company with an army. Half of all spending goes for Social Security benefits and health programs such as Medicare and Medicaid, while another 20% is for defense and military benefits.

WSJ

Continue reading

April 18, 2017 in Tax | Permalink | Comments (5)

Sen. Flake Releases Report on 'Outlandish Tax Rackets'

Flake

Sen. Jeff Flake (R-AZ), Tax Rackets: Outlandish Loopholes to Lower Tax Liabilities (press release):

As Tax Day approaches and Congress considers long-overdue tax reforms, the report is intended to highlight loopholes that create fake markets for unnecessary or unwanted goods and services; encourage more borrowing, spending, and taxing by local governments; and shift the tax burden to the middle class. ...

Continue reading

April 18, 2017 in Congressional News, Tax | Permalink | Comments (1)

Columbia Symposium:  The House GOP Better Way To Tax Reform

Better WaySymposium, The Better Way Plan, 8 Colum. J. Tax L. 113-308 (2017):

Continue reading

April 18, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Chodorow:  The IRS's Use Of Private Debt Collectors Will Not End Well (Again)

Slate (2017)Slate:  The IRS Is Using Private Debt Collectors Again. And It May Not End Well, by Adam Chodorow (Arizona State):

Last year, Congress authorized the Internal Revenue Service to use private debt collectors to go after unpaid tax liabilities — and this month, if you are one of the unfortunate, you may have already had the pleasure first-hand. The U.S. Treasury hopes to assign up to 1,000 delinquent accounts a month to each of four different companies, which will be able to keep 25 percent of the tax bills they collect.

We’ve been here before — twice, in fact — and the government actually lost money. It is not at all clear why this time should be different. And even if the program does save the government money, as its proponents promise, turning over delinquent tax accounts to private debt collectors raises a host of issues that should give us pause. ...

Continue reading

April 18, 2017 in IRS News, Tax | Permalink | Comments (3)

Monday, April 17, 2017

Perry Fleischer Presents The Libertarian Case For A Universal Basic Income Today At NYU

Fleischer (Miranda)Miranda Perry Fleischer (San Diego) presents Atlas Nods: The Libertarian Case for a Universal Basic Income (with Daniel Hemel (Chicago)) at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Rosanne Altshuler: :

Proposals for a universal basic income are generating interest across the globe, with pilot experiments underway or in the works in Finland, Kenya, the Netherlands, and the city of Oakland, California. Surprisingly, many of the most outspoken supporters of a universal basic income have been self-described libertarians — even though libertarians are generally considered to be antagonistic toward redistribution and a universal basic income is, at its core, a program of income redistribution. What explains such strong libertarian support for a policy that seems so contrary to libertarian ideals?

This Article seeks to answer that question. We first show that a basic safety net is not only consistent with, but likely required by, several strands of libertarianism. We then explain why libertarians committed to limited redistribution and limited government might support a system of unconditional cash transfers paid periodically. Delivering benefits in cash, rather than in-kind, furthers autonomy by recognizing that all citizens —  even poor ones — are the best judges of their needs. Decoupling such transfers from a work requirement acknowledges that the state lacks the ability to distinguish between work-capable and work-incapable individuals. Providing payments periodically, rather than through a once-in-a-lifetime lump sum grant, ensures that all individuals can receive a minimum level of support over lifespans of variable lengths, while also allowing individuals to adjust payment flows through financial market transactions.

Continue reading

April 17, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (2)

Thomas Brennan Named Stanley Surrey Professor of Law At Harvard Law School

Harvard Law School, Focus and Perspective in Taxation: Tom Brennan receives the Stanley S. Surrey Professorship of Law:

In a lecture marking his appointment as the Stanley S. Surrey Professor of Law at Harvard Law School, Tom Brennan ’01 delivered a talk titled “Focus and Perspective in Taxation.”

Continue reading

April 17, 2017 in Legal Education, Scholarship, Tax | Permalink | Comments (0)

Camp:  Are We Ready For A Federal Ready Return System?

Camp (2017)TaxProf Blog op-ed:  Are We Ready for a Federal Ready Return System? Or Who Ya Gonna Call?, by Bryan T. Camp (Texas Tech):

This is the time of year where thoughtful people raise what seems like a very basic question: why does preparing taxes have to be so complicated? For example, in a recent New York Times op-ed [Filing Taxes in Japan Is a Breeze. Why Not Here?], Mr. T.R. Reid opines that our government should be able to what governments in other countries do: pre-populate tax forms. Mr. Reid says that in these other countries (Japan and the Netherlands are the two he cites),

[t]he taxpayer just has to check the numbers. If the agency got something wrong, there’s a mechanism for appeal. Our own Internal Revenue Service could do the same for tens of millions of taxpayers. For most families, the I.R.S. already knows all the numbers — wages, dividends and interest received, capital gains, mortgage interest paid, taxes withheld — that we are required to enter on Form 1040.

Continue reading

April 17, 2017 in IRS News, Tax | Permalink | Comments (2)

TaxProf Blog Weekend Roundup

Sunday, April 16, 2017

This Week's Ten Most Popular TaxProf Blog Posts

The Top 5 Tax Paper Downloads

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with new papers debuting on the list at #3, #4, and #5:

  1. [327 Downloads]  House Plan's Bad Math: Over-Estimates of Revenue from a Border Adjustment, by David Kamin (NYU) & Brad Setser (Council on Foreign Relations)
  2. [307 Downloads]  Destination-Based Cash Flow Taxation, by Alan Auerbach (UC-Berkeley), Michael P. Devereux (Oxford), Michael Keen (IMF) & John Vella (Oxford)
  3. [299 Downloads]  Background and Current Status of FATCA, by William Byrnes (Texas A&M) & Robert J. Munro (Texas A&M)
  4. [203 Downloads]  The Offshore Tax Enforcement Dragnet, by Shu-Yi Oei (Tulane)
  5. [195 Downloads]  The First McGee Annual Report on the Best and Worst States for Business, by Robert W. McGee (Fayetteville State University)

April 16, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 1438:  Sessions Is Noncommittal On GOP Request To Reopen DOJ Probe Of Lois Lerner

IRS Logo 2WND, Sessions 'Will Evaluate' Request to Probe IRS Boss: GOP Lawmakers Charge Lois Lerner Criminally Targeted Tea Party:

Attorney General Jeff Sessions was noncommittal when asked in an interview whether he would fulfill a request by Republican lawmakers to review evidence that former IRS official Lois Lerner engaged in criminal misconduct by targeting tea-party and conservative groups for their political beliefs.

“Are you inclined to open an investigation of Lois Lerner and the IRS?” asked Boston talk-radio host Howie Carr Thursday.

Sessions hesitated.

“Well, I would, I’m, uh, interested in that letter,” he said.

“We’re going to respond to it, and I think it would be appropriate to review certain cases, and we’ll evaluate this one for possible review,” the attorney general said.

Continue reading

April 16, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, April 15, 2017

Tax Policy In The Trump Administration

The IRS Scandal, Day 1437: Lois Lerner Fears For Her Life, Asks Federal Court To Seal Her Upcoming Deposition Testimony

IRS Logo 2Washington Times, Lois Lerner Demands Secrecy, Blames Death Threats Over IRS Tea Party Targeting:

Former IRS senior executive Lois G. Lerner told a federal court this week that she faces the possibility of death threats if her role in the tax agency’s tea party-targeting becomes public, and asked a judge to forever seal her upcoming deposition in a class-action lawsuit brought by hundreds of groups that were targeted.

Mr. Lerner and Holly Paz, another figure from the IRS tea party targeting, told the judge they’ve already faced “harassment and death threats” before, and said they fear another media firestorm if their version of events from the tea party targeting were to become public.

The two women said they are willing to testify, but said they could be putting “their lives in serious jeopardy.”

“Mss. Lerner and Paz have demonstrated that the public dissemination of their deposition testimony would expose them and their families to harassment and a credible risk of violence and physical harm,” they said in documents submitted by their lawyer to Judge Michael R. Barrett. ...

The class action lawsuit involves 428 groups who were snared by the IRS targeting procedures. That case, which is being heard in a federal court in Ohio, is in the discovery phase, and Ms. Lerner and Ms. Paz are supposed to give testimony. ...

Meanwhile, in Washington, D.C., two cases brought by tea party groups are proceeding. A judge on Wednesday granted limited discovery in those cases, ordering the IRS to detail its past and current approval processes for tax-exempt organizations. Judge Reggie B. Walton also said the groups could depose Tamera L. Ripperda, a former IRS employee who ran the Cincinnati office that processed the applications. The groups also can depose the unnamed IRS employee who currently holds that same post.

Continue reading

April 15, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (11)

Friday, April 14, 2017

Weekly Tax Highlight And Roundup

This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) discusses a recent Tax Court decision denying limited partner status to law firm partners.

KristanLaw firm partners find the limits of “limited.”

In the beginning, there were general partnerships and limited partnerships.

But the lawyers came down and said, “Come, let us go down and confuse their language so they will not understand each other.” Thus LLCs, LLP, LLLPs, PLCs, PLLCs, and so forth were loosed upon the firmament.

But the IRS self-employment tax regulations, in their wisdom, ignored this, and continued to speak only of general partnerships and limited partnerships. And thus a Mississippi law firm ended up in Tax Court.

In the simple world of the old regulations, general partners in a service firm pay self employment tax on all of their K-1 income, and limited partners don’t. The Mississippi law firm practiced as a “PLLC,” short for “professional limited liability company.” Under the tax law, it was treated as a partnership. The “limited liability” thing makes it sound like a limited partnership. On the advice of their tax preparer, they treated their “guaranteed payments” — what non-partners call wages and bonuses — as self-employment income, and their residual income on their K-1s as income not subject to self-employment tax. According the Tax Court opinion, “the guaranteed payments were commensurate with local legal salaries as determined by a survey of legal salaries in the area.”

Continue reading

April 14, 2017 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Article Review And Roundup

This week, David Gamage (Indiana) reviews a recent article by David P. Hariton (Sullivan & Cromwell), Planning for Border Adjustments: A Practical Analysis, Tax Notes, February 20, 2017.

Gamage (2017)The House Republicans’ proposal for a destination-based cash-flow tax (DBCFT) continues to inspire fascinating discussions among tax policy experts.  Important advances in our knowledge about how destination-based taxes can work, or fail to work, are occurring in real time through these discussions.  This will be my third blog entry praising a recent piece of scholarship as one of the best analyses of the DBCFT to date (see here and here for my previous entries).  Nevertheless, I hope I retain credibility in declaring Hariton’s new article to be essential reading for anyone hoping to understand how the DBCFT, or any other similar proposal reliant on federal-level border adjustments, might work in practice.

Continue reading

April 14, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Aprill:  Section 501(C)(3) Organizations, Single Member LLCs, And Fiduciary Duties

Ellen P. Aprill (Loyola-L.A.), Section 501(C)(3) Organizations, Single Member Limited Liability Companies, and Fiduciary Duties, 52 ABA Real Prop., Prob. & Tr. J. ___ (2017):

Tax-exempt organizations, including section 501(c)(3) organizations and their philanthrocapitalists, use single member limited liability companies (SMLLCs) for a variety of purposes. Exempt section 501(c)(3) nonprofit organizations (which, for convenience, I will refer to as charities) that have a number of facilities, be they schools, hospitals, or real estate investments, may form a separate SMLLC for each of them, primarily to protect other assets from liability. Charities may wish to place activities with a high risk of tort liability, such as an overnight summer camp, in its own SMLCC. SMLLCs may be used to isolate unrelated business activities from related activities. They may be used to isolate risky investments from more conservative ones. Philanthrocapitalists may structure donations through SMLLCs. They may use them to control aspects of the tax exempt entity’s activities, as according to press reports, the Koch Brothers may do with some of their noncharitable tax-exempt entities.

Continue reading

April 14, 2017 in Scholarship, Tax | Permalink | Comments (0)

NYU Hosts 8th Annual Tax Movie/TV Night

Thursday, April 13, 2017

Hanna Presents The Theory And Reality Of Business Tax Reform Today At Georgetown

HannaChristopher Hanna (SMU; Senior Policy Advisor for Tax Reform, Senate Finance Committee) presents The Theory and Reality of Business Tax Reform at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

The last several years has seen a lot of discussion among policymakers as to reforming the tax code. On the individual side, there is very little agreement on what form tax reform should take. For example, some policymakers would like to eliminate a number of exclusions, deductions and credits thereby broadening the income tax base and coupling that with a reduction in the individual statutory tax rates. Others would like to shift the current tax system to a consumption-based tax system through, for example, enactment of a value-added tax or an exemption of capital income from the tax base. Some policymakers would simply like to retain the current individual income tax system, particularly after the enactment of a higher individual statutory tax rate as part of the fiscal cliff deal in early 2013.

Continue reading

April 13, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Gamage & Ross Present At Final Indiana Tax Policy Workshop Of The Semester

Indiana (2016)Two Indiana-Bloomington faculty are presenting papers today at the final Indiana Tax Policy Workshop of the semester:

David Gamage, Tax Cannibalization and State Government Tax Incentive Programs, 82 State Tax Notes 197 (Oct. 17, 2016) (with Darien Shanske (UC-Davis)):

States and localities offer businesses an enormous amount of tax incentives to locate within their jurisdictions despite: 1) the mass of evidence that suggests that these incentives are not particularly effective and, 2) substantial doubts about their constitutionality.

In this essay, we develop a new critical perspective on state tax incentives. We argue that offering these incentives permits states to offer lower taxes to more mobile businesses while keeping their overall corporate tax rates high. This is arguably not the best choice for the states, but it is definitely not the best choice for the federal government. Because the states share the corporate income tax base with the federal government, higher overall state corporate income tax rates results in more cannibalization of federal corporate income tax revenue.

Justin Ross, The Impact of State Taxes on Pass-Through Businesses: Evidence from the 2012 Kansas Income Tax Reform (with Jason DeBacker (Middle Tennessee State), Bradley Heim (Indiana) & Shanthi Ramnath (U.S. Treasury Department, Office of Tax Analysis)):

Continue reading

April 13, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

NY Times:  Democrats See Opening In Tax Reform Fight — Trump’s Own Deductions

New York Times, Democrats See Opening in Tax Overhaul Fight: Trump’s Own Deductions:

When Donald J. Trump was crafting his campaign tax plan last year, one of his top economic advisers proposed an idea that would have made it harder for real estate moguls to use mountains of debt to make deals. Mr. Trump, who made his fortune as a property developer and earned the nickname “the king of debt,” scoffed at the suggestion.

“He hated that idea,” said Stephen Moore, the Heritage Foundation economist who counseled Mr. Trump during the campaign.

The proposal to scale back interest deductions for companies did not make the cut.

As President Trump focuses his attention on overhauling America’s tax code, he has considered turning to the other side of the aisle to reach a bipartisan deal. But an obstacle has already surfaced, dimming the chances that a “grand bargain” will be achieved: Democrats are sounding the alarm that reshaping the tax code presents Mr. Trump’s biggest conflict of interest yet.

Continue reading

April 13, 2017 in Tax | Permalink | Comments (0)

Tax March: How A Law Professor Sparked A Global Event To Demand Trump's Returns

TaubThe Guardian, Tax March: How a Law Professor Sparked a Global Event to Demand Trump's Returns:

Inspired by the Women’s March in January, law professor Jennifer Taub ‘impulsively’ called for action. Now people from New York to Tokyo are preparing to take to the streets.

Donald Trump’s adviser Kellyanne Conway accidentally inspired a law professor and a comedian to convince thousands of people to take to the streets this Saturday to demand that the president release his tax returns.

The day after attending January’s Women’s March in Boston, Jennifer Taub was proudly looking at photos and coverage online when a video of Conway popped up. Conway, Trump’s former campaign manager, declared that Trump was “not going to release his tax returns” and that voters didn’t care.

Continue reading

April 13, 2017 in Legal Education, Tax | Permalink | Comments (7)

The IRS Scandal, Day 1435: House GOP Tax Writers Ask Attorney General To Reopen Criminal Investigation Of Lois Lerner

IRS Logo 2Letter from Kevin Brady (Chair, Ways & Means Committee) & Peter Roskam (Chair, Subcommittee on Tax Policy) to Attorney General Sessions (Apr. 12, 2017):

On April 9, 2014, the House Committee on Ways and Means voted to send a letter to the Department of Justice referring former IRS Exempt Organizations Division Director Lois G. Lerner for criminal prosecution.  As indicated in the attached letter, the Committee’s nearly three-year investigation uncovered evidence of willful misconduct on the part of Ms. Lerner.  Despite this fact, and for what many believe were purely partisan reasons, the prior Administration refused to review Ms. Lerner’s misconduct.  For the reasons described below, I respectfully request the Department of Justice to take a fresh look at the evidence presented in the attached referral in order to restore taxpayers’ trust in the IRS.

In particular, the Committee found that Ms. Lerner used her position to improperly influence IRS action against conservative organizations, denying these groups due process and equal protection rights under the law.  The Committee also found she impeded official investigations by providing misleading statements in response to questions from the Treasury Inspector General for Tax Administration.  Finally, Lerner risked exposing, and may actually have disclosed, confidential taxpayer information, in apparent violation of Internal Revenue Code section 6103 by using her personal email to conduct official business. 

As you know, your predecessor brought no charges against Ms. Lerner or any other IRS employees involved in the improper targeting of organizations applying for tax-exempt status. 

Disturbingly, in February 2014, while the investigation by the Department of Justice (DOJ) was ongoing, President Obama stated there was “not a smidgeon of corruption” at the IRS, preempting a fair investigation in which he had political equities.  It is clear that when the DOJ announced in October 2015 that it would not bring charges against Lois Lerner, the agency was following President Obama’s signal on how he wanted the investigation to be handled. 

Taxpayers deserve to know that the DOJ’s previous evaluation was not tainted by politics.  Again, I respectfully request that the Department of Justice to take a fresh look at the evidence presented in the attached referral in order to assure the American people that DOJ’s prior investigation was handled fairly and to restore taxpayers’ trust in the IRS.

Continue reading

April 13, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Wednesday, April 12, 2017

NY Times:  Can Trump And Congress Solve The Rubik’s Cube Of Tax Reform?

Rubik's Cube 2New York Times:  Can Trump and Congress Solve the Rubik’s Cube of Tax Reform?, by Neil Irwin:

As Congress and the Trump administration turn their sights on overhauling the tax code, it’s a good time to think about the great three-dimensional brain twister of the 1980s, the Rubik’s Cube.

That’s partly because the first and last time there was a comprehensive rewrite of the tax code, it was 1986. But there is more than that.

What makes trying to solve a Rubik’s Cube so exasperating is that every rotation you make to align the colors on one side messes up something on one of the other sides. Nothing moves in isolation; everything affects everything else, and rarely for the better.

Continue reading

April 12, 2017 in Tax | Permalink | Comments (0)

Dirty Secrets: How Tax Havens Destroy the Economy

Dirty SecretsRichard Murphy (City University, London), Dirty Secrets: How Tax Havens Destroy the Economy (2017):

The Panama Papers were a reminder of how the superrich are allowed to hide their wealth from the rest of us. Dirty Secrets uncovers the extent of the corruption behind this crisis and shows what needs to be done in the face of this unregulated spread of rampant greed.

Tax havens, we are often told, are part of the global architecture of capitalism, providing a freedom from regulation necessary to make markets work. In this book, leading authority Richard Murphy uncovers the truth behind this lie. The fact of the matter is that this increasingly popular practice threatens the foundations of democracy, sowing mistrust and creating a regime based upon opacity.

As Murphy shows, how we manage our economy is a political decision, and one that can be changed. Dirty Secrets proposes ways to regulate tax havens and what the world might look like without them.

Continue reading

April 12, 2017 in Book Club, Scholarship, Tax | Permalink | Comments (1)

Kleinbard:  What ‘Tax Reform' Really Means

The Hill op-ed:  What ‘Tax Reform' Really Means, by Edward Kleinbard (USC):

Like April flowers, talk of tax reform is blooming everywhere. The difficulty, though, is that when politicians these days say "tax reform," what they're really suggesting, and what people hear, is "tax cuts."

That's a big problem, because the truth is that the U.S. is already following a path of collecting inadequate tax revenues to fund the government we have, much less the one we need — and cutting out small programs like Meals on Wheels won't change that.

Continue reading

April 12, 2017 in Tax | Permalink | Comments (3)

Hemel:  The Quick And Easy Way To See Trump’s Tax Returns

Trump Tax ReturnsWashington Post op-ed: There’s a Quick and Easy Way to See Trump’s Tax Returns, by Daniel Hemel (Chicago):

State lawmakers across the country are pursuing creative methods to force President Trump to release his federal income tax returns before he can run for reelection in 2020. Unfortunately for citizens interested in greater presidential transparency, those efforts are likely to fail.

There is, however, a much easier way for state lawmakers to force the disclosure of Trump’s tax information: publishing the state tax returns already in their possession, which would reveal much of the same information appearing in his federal documents. ...

Continue reading

April 12, 2017 in Tax | Permalink | Comments (4)

The IRS Scandal, Day 1434:  How To Prevent The Next IRS Targeting Scandal

IRS Logo 2Tax Revolution Institute, How to Prevent the Next IRS Targeting Scandal:

We now know beyond a doubt that the Internal Revenue Service targeted and denied the nonprofit status of hundreds of organizations — mostly Tea Party and constitutionalist groups, but also those across the spectrum like Coffee Party USA — just in time for the 2012 presidential election. What we don’t know is whether anyone will be punished for this grand-scale corruption. ...

The 695-page release (PDF) of documents on April 4 — acquired thanks to a Freedom of Information Act request from Judicial Watch — is the final nail in the coffin, if there were any doubters still around. The fact that these documents remained under wraps during congressional hearings is itself worthy of condemnation.

Judicial Watch President Tom Fitton says there is no wonder why the IRS was reluctant to release these files: “The new smoking-gun documents contain admissions by the Obama IRS that it inappropriately targeted conservative groups.” Further, even when coming under scrutiny, “the abuse continued — as the Obama IRS tried to force conservative applicants to give up their First Amendment rights in order to finally get their applications granted.” ...

Not only will going after a few visible individuals not root out the bad faith, “American taxpayers are at risk for similar treatment in the future” — as noted by the Cause of Action Institute, another DC-based watchdog. CAI asserts that the targeting of politically relevant nonprofits with Special Case Reports (PDF) was and remains standard procedure. Their case rests on the little-known nonprofit red flags from Part Seven of the Internal Revenue Manual for IRS employees, which include whether the group might “generate significant publicity or controversy.” ... [W]e have to change incentives for the IRS and find solutions that go beyond the normal partisan brinkmanship. ...

What is politically plausible remains to be seen, be that a reworking of IRS procedures by the Congress or a more fundamental tax reform that places revenue collection in the hands of state governments. Perhaps the former can be an intermediate step before the latter.

Continue reading

April 12, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Tuesday, April 11, 2017

Shaviro Presents The Relationship Between 'Legally Defensible' Tax Planning And Social Justice Today At Northwestern

Shaviro (2015)Daniel Shaviro (NYU) presents Interrogating the Relationship between 'Legally Defensible' Tax Planning and Social Justice at Northwestern today as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

This article, prepared for presentation on September 23, 2016 at a conference at NYU Law School, organized by the Center for Human Rights and Global Justice and entitled Human Rights and Tax in an Unequal World, mainly takes the form of a dialogue between two fictional individuals. The conclusions that the discussants reach (insofar as they are able to agree) can be summarized as follows:

Large-scale tax avoidance by wealthy individuals and large companies that is legally defensible under relevant national tax laws can nonetheless have major adverse effects on social justice and/or public morale. However, its legal defensibility complicates analyzing its ethical implications, as compared to the more straightforward case of committing tax fraud. Legal defensibility also complicates the analysis of the extent to which human rights advocates should focus on such desiderata as “good corporate tax behavior” and the ethics of tax professionals.

Continue reading

April 11, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Trump And A Populist Tax Agenda

Jay A. Soled (Rutgers), James Alm (Tulane) & Kathleen DeLaney Thomas (North Carolina), Trump and a Populist Tax Agenda?, 154 Tax Notes 1131 (2017):

In this article, the authors argue that President Trump should urge Congress to institute a carryover tax basis rule for marketable securities applicable upon death.

April 11, 2017 in Scholarship, Tax | Permalink | Comments (0)