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Friday, October 24, 2014

Hoffer, Lederman & Walker Debate Tax Court Exceptionalism Today at Kentucky

HLWStephanie Hoffer (Ohio State), Leandra Lederman (Indiana), and Christopher Walker (Ohio State) debate Tax Court exceptionalism at Kentucky today as part of its Faculty Workshop Series (blogged here):

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October 24, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Talley Presents Corporate Inversions and the Unbundling of Regulatory Competition Today at Virginia

Talley 2Eric Talley (UC-Berkeley) presents Corporate Inversions and the Unbundling of Regulatory Competition at Virginia today as part of its Faculty Workshop Series:

A sizable number of US public companies have recently executed “tax inversions” – acquisitions that move a corporation’s residency abroad while maintaining its listing in domestic securities markets. When appropriately structured, inversions replace American with foreign tax treatment of extraterritorial earnings, often at far lower effective rates. Regulators and politicians have reacted with alarm to the “inversionitis” pandemic, with many championing radical tax reforms. This paper questions the prudence of such extreme reactions, both on practical and on conceptual grounds. Practically, I argue that inversions are simply not a viable strategy for many firms, and thus the ongoing wave may abate naturally (or with only modest tax reforms). Conceptually, I assess the inversion trend through the lens of regulatory competition theory, in which jurisdictions compete not only in tax policy, but also along other dimensions, such as the quality of their corporate law and governance rules. I argue that just as US companies have a strong aversion to high tax rates, they have a strong affinity for strong corporate governance rules, a traditional strength of American corporate law. This affinity has historically given the US enough market power to keep taxes high without chasing off incorporations, because US law specifically bundles tax residency and state corporate law into a conjoined regulatory package. To the extent this market power remains durable, radical tax overhauls would be unhelpful (and even counterproductive). A more blameworthy culprit for inversionitis, I argue, can be found in an unlikely source: Securities Law. Over the last fifteen years, financial regulators have progressively suffused US securities regulations with mandates relating to internal corporate governance matters – traditionally the domain of state law. Those federal mandates, in turn, have displaced and/or preempted state law as a primary source of governance regulation for US-traded issuers. And, because US securities law applies to all listed issuers (regardless of tax residence), this displacement has gradually “unbundled” domestic tax law from corporate governance, eroding the US’s market power in regulatory competition. The most effective elixir for this erosion, then, may also lie in securities regulation. I propose two alternative reform paths: either (a) domestic exchanges should charge listed foreign issuers for their consumption of federal corporate governance policies; or (b) federal law should cede corporate governance back to the states by rolling back many of the governance mandates promulgated over the last fifteen years.

October 24, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Weekly Tax Roundup

October 24, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Roundup

October 24, 2014 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Hickman Reviews Blank's Collateral Compliance

JotwellKristin Hickman (Minnesota), Evaluating the Efficacy of Nonmonetary Penalties (Jotwell) (reviewing Joshua D Blank (NYU), Collateral Compliance, 162 U. Pa. L. Rev. 719 (2014)):

Monetary penalties for noncompliance are a routine feature of the tax laws. The tax literature includes extensive debate over different ways of structuring those penalties to improve tax compliance and eliminate the tax gap. In Collateral Compliance, Josh Blank shifts his gaze beyond that debate to examine what he labels “collateral tax sanctions”—nonmonetary penalties that federal and state governments impose, in addition to the monetary ones, for failing to comply with the tax laws. ...

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October 24, 2014 in Scholarship, Tax | Permalink | Comments (0)

Cauble: Redefining Qualifying Income for Publicly Traded Partnerships

Tax Analysys Logo (2013)Emily Cauble (DePaul), Redefining Qualifying Income for Publicly Traded Partnerships, 145 Tax Notes 107 (Oct. 6, 2014):

In general, business entities are subject to the section 11 corporate tax if they are publicly traded. Corporate tax is justified under the rationale that entities will pay tax in exchange for access to an established market because liquidity has value. It allows owners of large enterprises to easily exit by selling their shares. Publicly traded partnerships can avoid being subject to corporate tax under current law if they earn primarily qualifying income. The best rationale for this exemption from corporate tax is that the partners could have access to the income of the publicly traded partnership by buying the assets of the partnership directly. Congress should redefine qualifying income to make the definition better fit that rationale by classifying income as qualifying only if it is earned by holding publicly traded stock or other publicly traded assets.

October 24, 2014 in Scholarship, Tax | Permalink | Comments (0)

American University Symposium Today on The Taxation of the Digital Economy

AmericanAmerican University, Kogod School of Business, hosts a symposium today on The Taxation of the Digital Economy. Robert Stack, Assistant Deputy Secretary for International Tax at the U.S. Treasury Department, will deliver the keynote address.

Panel 1: Cross-Border Taxation Considerations for the Digital Economy
The digital economy often involves the massive use of personal data and multi-sided business models. This can often lead to difficulties in quantifying costs and benefits generated by free products and user created intangibles including the determination of where value creation occurs. Defining a permanent establishment in the context of the digital economy has been difficult since companies often do not require a physical presence in a jurisdiction in order to conduct business. This panel will discuss the tax issues faced by the broader digital economy, proposals currently under consideration by the OECD, and planning considerations in light of the OECD report.  

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October 24, 2014 in Conferences, Tax | Permalink | Comments (1)

The IRS Scandal, Day 533

IRS Logo 2USA Today:  Tea Party Loses Court Battle Over Targeting to IRS:

A federal court dismissed two lawsuits against the Internal Revenue Service Thursday, ruling that the tax agency is no longer targeting conservative tax-exempt groups for greater scrutiny.

True the Vote v. IRS Ruling

Linchpins of Liberty v. IRS

"Unless an actual, ongoing controversy exists in this case, this court is without power to decide it," U.S. District Court Judge Reggie Walton ruled, dismissing one lawsuit brought by True the Vote, a conservative vote-monitoring organization.

True the Vote, an offshoot of the Tea Party-affiliated King Street Patriots, had its application as a social welfare group help up because the IRS suspected it was engaging in direct political election campaigning, which is forbidden under section 501(c)(4) of the tax code. IRS agents found that its web site contained "Democratic attacks and Republican/conservative response," according to confidential IRS documents obtained by USA TODAY. 

Walton said the IRS has assured the public that they're no longer screening applications for tax exemptions based on its political leanings, a practice that led to the dismissal of several top IRS officials when it was disclosed by Treasury inspectors last year.

"Thus, the allegedly unconstitutional governmental conduct, which had delayed the processing of the plaintiffs' tax-exempt applications and spawned this litigation, is no longer impacting the plaintiffs," Walton said in a second opinion dismissing a lawsuit brought by Linchpins of Liberty and 40 other groups in 22 states. ...

In a footnote, the judge did leave open the possibility that two groups -- Patriots Educating Concerned Americans Now of Redding, Calif. and the suburban Cincinnati Liberty Township Tea Party -- could still sue because the IRS failed to rule on their tax exemption application within 270 days. The judge gave the IRS 14 days to argue why that element of the lawsuit cannot go forward.

Because he dismissed the lawsuits on procedural grounds, Walton did not rule on the merits of the case. He wrote in a footnote: "The court's opinion should not be interpreted as an assessment of the propriety of the alleged conduct by the defendants."

True the Vote:  Press Release:

"The Court today correctly acknowledged that the IRS targeted True the Vote because of its perceived political beliefs," True the Vote President Catherine Engelbrecht said. “Such conduct is reprehensible and should never be acceptable in a free society. Despite this critical finding, we are stunned and disappointed in the court’s ruling which nevertheless dismisses our case. We will be evaluating our legal options and will announce our intent in that regard soon.”

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October 24, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Thursday, October 23, 2014

Hickman Presents Treasury's Retroactivity Today at UC-Irvine

Hickman 2014 2Kristin Hickman (Minnesota) presents Treasury's Retroactivity at UC-Irvine today as part of its Faculty Workshop Series:

In Bowen v. Georgetown University Hospital, the Supreme Court described retroactivity as "not favored in the law" and generally rejected allowing federal administrative agencies to adopt regulations "altering the past legal consequences of past actions."  Unlike most regulatory agencies, Treasury and the IRS are expressly authorized by Congress to adopt regulations with precisely such primary retroactive effect.  Specifically, IRC § 7805(b) grants Treasury and the IRS the power to backdate tax regulations under a variety of circumstances.  Preliminary analysis shows that Treasury and the IRS utilize this authority regularly with little judicial oversight for abuse of discretion.  Using empirical data, this article will explore more fully Treasury and IRS utilization of the authority to adopt retroactively effective regulations interpreting the Internal Revenue Code.

October 23, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Whistleblowers: IRS Officials Behind ‘Fraudulent’ Multi-Billion Dollar Corporate Tax Giveaways

IRS Whistleblower (2014)Raw Story:  Whistleblowers: IRS Officials Behind ‘Fraudulent’ Multi-Billion Dollar Corporate Tax Giveaways:

A 10-year veteran IRS attorney has demanded a Congressional audit of the IRS to investigate the agency’s alleged role in allowing American corporations to illegally avoid paying billions of dollars in taxes at the same time the agency is cracking down on individuals and small businesses.

In a letter to Treasury Secretary Jacob Lew, IRS commissioner John A. Koskinen, and IRS chief counsel William Wilkins, Jane J. Kim, an attorney in the IRS Office of the Chief Counsel in New York, accused IRS executives of “deliberately” facilitating multi-billion dollar tax giveaways. The letter, dated October 19, will add further pressure on the agency, which is under fire for allegedly targeting conservative and Tea Party groups.

Kim, who has previously blown the whistle on “gross waste of government resources” in the IRS New York field offices [Senior IRS Lawyer Charges Chief Counsel's New York Office With Waste and Abuse], wrote in her new letter that senior IRS officials have “intentionally undermined the authority of the IRS Whistleblower Office” to avoid taking action “in cases involving billions in corporate taxes due.” The IRS also refuses to enforce laws for “large corporate taxpayers,” resulting in giveaways of further billions, despite applying the same laws with “draconian strictness to small business, the self-employed, and wage-earning individuals.”  ...

Following coverage of her earlier allegations by Pulitzer Prize winning tax journalist David Cay Johnston, Kim was approached by a private sector lawyer representing corporate whistleblowers to the IRS, who told her that numerous legitimate investigations into corporate tax fraud were being shut down. Her letter sent on Sunday to the US Treasury and IRS described three such cases. ...

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October 23, 2014 in IRS News, Tax | Permalink | Comments (4)

Osofsky: Tax Law Nonenforcement

Leigh Osofsky (Miami), Tax Law Nonenforcement:

The Obama Administration has engaged in what some have characterized as an “unprecedented use of executive power” not to enforce certain laws, including immigration laws, federal marijuana laws, and even parts of the Obama Administration’s own Patient Protection and Affordable Care Act. In response to this nonenforcement, commentators have begun asking what would have happened if a President Romney, or a future Republican President, decided not to enforce the tax laws. Could a President decide not to enforce the estate tax, the income tax with respect to millionaires, or the income tax for anyone who has already paid a specified percentage of income in taxes? In answering this question, constitutional scholars have suggested that the President cannot declare categorical, or complete, prospective nonenforcement of some aspect of the law. Recent tax literature examining IRS pronouncements that it will not enforce particular aspects of the tax law has also determined that categorical tax law nonenforcement is troublesome from the perspective of the rule of law.

What has been missing in the existing discussion, especially in the preoccupation with flashy, and relatively infrequent, presidential nonenforcement of the tax law, is a broad based examination of what tax law nonenforcement looks like at the agency level and an accompanying examination of categorical nonenforcement through the lens of the legitimacy of the administrative state.

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October 23, 2014 in Scholarship, Tax | Permalink | Comments (0)

Mann: Subchapter S: Vive Le Difference!

Roberta F. Mann (Oregon), Subchapter S: Vive Le Difference!, 18 Chapman L. Rev. 65 (2014):

Is Subchapter S obsolete, or does it still serve a rational purpose in the economy? This Article will examine that issue, focusing on the comparison between S corporations and LLCs. The Article begins with a history of Subchapter S and the “check-the-box” regulations. Next, the Article will compare the arguments for and against repealing Subchapter S. Statistics appear to show that the number of S corporation returns is still increasing. Why are S corporations still being used, and do those reasons justify its continued existence? Perhaps the answer is political: politicians love small businesses and S corporation stands for “small business.” Ultimately, the answer to these questions may depend on whether politicians’ favorable view of small business is justified.

October 23, 2014 in Scholarship, Tax | Permalink | Comments (1)

U.S. News Annual Peer Assessment of Law School Tax Programs

U.S. NewsI received in the mail my ballot for the 2016 U.S. News Tax Rankings (2015 U.S. News tax rankings). As in prior years, the survey is intended "to identify the law schools having the top programs in tax law."  The survey is sent "to a selection  of faculty members involved in and who are knowledgeable about the area of tax law. Law schools supplied names of these faculty members to U.S. News in summer 2014."  Recipients are asked "to [i]dentify up to fifteen (15) schools that have the highest-quality tax law courses or programs. In making your choices consider all elements that contribute to a program's excellence, for example, the depth and breadth of the program, faculty research and publication record, etc."

As Donald Tobin (Dean, Maryland) has noted, it is more than strange that NYU has finished ahead of Florida and Georgetown each year that U.S. News has conducted the survey.  Because the survey ranks the schools by how often they appear on the respondents' "Top 15" lists, this means that some folks list NYU, but not Florida and Georgetown, among the Top 15 tax programs.

In filling out your survey, you may want to consult our forthcoming book, Pursuing a Tax LLM Degree, which compiles information about 13 highly ranked tax LLM programs: (1) NYU; (2) Florida; (3) Georgetown; (4) Northwestern; (5) Miami; (6) Boston University; (7) San Diego; (8) Loyola-L.A./LMU; (9) SMU; (10) Denver; (11) University of Washington; (12) Villanova; and (13) Chapman. The topics on which information is reported in the book include:

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October 23, 2014 in Law School Rankings, Legal Education, Tax | Permalink | Comments (1)

Economists: 90% Top Tax Rate Would Decrease Inequality, Raise Revenue & Increase Everyone’s Well-Being

90%Huffington Post:  Economists Say We Should Tax The Rich At 90 Percent, by Ben Walsh:

America has been doing income taxes wrong for more than 50 years.

All Americans, including the rich, would be better off if top tax rates went back to Eisenhower-era levels when the top federal income tax rate was 91 percent, according to a new working paper by Fabian Kindermann from the University of Bonn and Dirk Krueger from the University of Pennsylvania [High Marginal Tax Rates on the Top 1%? Lessons From a Life Cycle Model With Idiosyncratic Income Risk].

The top tax rate that makes all citizens, including the highest 1 percent of earners, the best off is “somewhere between 85 and 90 percent,” Krueger told The Huffington Post. 

Chart 22

Kindermann and Krueger say that a top marginal tax rate in the range of 90 percent would decrease both income and wealth inequality, bring in more money for the government and increase everyone’s well-being -- even those subject to the new, much higher income tax rate. ...

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October 23, 2014 in Tax | Permalink | Comments (12)

Cockfield: BEPS and Global Digital Taxation

Tax Analysys Logo (2013)Arthur J. Cockfield (Queen's University Faculty of Law), BEPS and Global Digital Taxation, 75 Tax Notes Int'l 933 (Sept. 15, 2014):

In 2013, the Organization for Economic Cooperation and Development (OECD) launched its base erosion and profit shifting (BEPS) project to inhibit aggressive international tax planning. Action 1 of the BEPS project requires the OECD to identify the main challenges that the digital economy poses for the application of current international tax rules and develop reforms to address these challenges. The article reviews related academic perspectives, and discusses how the digital world facilitates aggressive tax planning. It concludes that any new tax rules should apply broadly and neutrally to substantively similar economic activities from either the digital or traditional commercial world. In addition, the OECD should more carefully examine how Internet technologies can help enforce national tax laws to constrain aggressive planning.

October 23, 2014 in Scholarship, Tax | Permalink | Comments (0)

TIGTA: IRS Fails to Follow TEFRA Procedures in 63% of Partnership Audits

TIGTA The Treasury Inspector General for Tax Administration yesterday released Improvements Are Needed to Ensure That Procedures Are Followed During Partnership Audits Subject to the Tax Equity and Fiscal Responsibility Act of 1982 (2014-30-082):

This audit was initiated to determine whether audits of partnerships subject to the TEFRA are initiated in accordance with applicable statutory and administrative procedures. ... TIGTA reviewed a statistically valid sample of 35 partnership audits subject to the TEFRA that were closed during Fiscal Year 2012 and identified 22 audits that were not conducted in accordance with one or more applicable TEFRA procedures. Specifically, TIGTA found that: (1) minimum tests were not always documented to determine whether TEFRA procedures should have been used to examine the partnership return; (2) necessary checks were not always documented to ensure that the Tax Matters Partner was qualified to represent the partnership; (3) some Forms 2848, Power of Attorney and Declaration of Representative, did not contain the required information that allows disclosure of tax return information; and (4) some Letters 1787, Notice of Beginning of Administrative Proceeding, were not issued timely. When the sample results are projected to the population of 2,698 TEFRA audits closed during Fiscal Year 2012, TIGTA estimates that approximately 1,696 TEFRA audits were not conducted in accordance with one or more applicable TEFRA procedures.

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October 23, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 532

IRS Logo 2Independent Journal Review:  Former Newsweek Editor Gives 4 Solid Reasons Why Women No Longer Feel Safe Under President Obama:

Appearing on MSNBC’s Morning Joe, former Newsweek editor Tina Brown said women no longer feel safe under Obama’s leadership. She gave four areas in which she feels this is the case: ...

#4 – “What they feel unsafe about is the government response to different crises and I think that they’re beginning to feel a bit that Obama’s like that guy in the corner office who’s too cool for school: calls a meeting, says this has to change, doesn’t put anything in place to make sure it does change, then it goes wrong and he’s blaming everybody.”

Yes, he has been blaming others when things have gone wrong. In particular, he’s been blaming the women around him. Hillary Clinton, Susan Rice, Cheryl Campbell, Lois Lerner, and Kathleen Sebelius all come to mind as women who have taken the fall for Obama.

WND:  Tina Brown Scorches Obama on Live TV:

One of the top feminists in America blasted Barack Obama’s handling of numerous crises Monday, claiming the president is actually making women feel unsafe. During an appearance on MSNBC’s “Morning Joe” program, Tina Brown, the founder and former editor of the Daily Beast and Newsweek as well as current head of Tina Brown Live Media, explained support for Democrats among women in recent polls has been plummeting because Obama is making women feel “unsafe.” ...

She continued, “More recently women felt unsafe when Lois Lerner wielded the IRS like a mighty weapon and targeted thousands of innocent civilians who were deemed ‘enemies’ of the Obama administration. No one has been held accountable and because of evidence that was ‘mysteriously’ destroyed, no one probably ever will. Women have seen innocent people punished and/or killed while criminals have been lauded.

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October 23, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, October 22, 2014

Faulhaber: Charitable Giving, Tax Expenditures, and Direct Spending in the US and EU

Lilian Faulhaber (Boston University), Charitable Giving, Tax Expenditures, and the Fiscal Future of the European Union, 39 Yale J. Int'l L. 87 (2014):

This Article compares the ways in which the United States and the European Union limit the ability of state-level entities to subsidize their own residents, whether through direct subsidies or through tax expenditures. It uses four recent charitable giving cases decided by the European Court of Justice (ECJ) to illustrate the ECJ’s evolving tax expenditure jurisprudence and argues that, while this jurisprudence may suggest a new and promising model for fiscal federalism, it may also have negative social policy implications. It also points out that the court analyzes direct spending and tax expenditures under different rubrics despite their economic equivalence and does not provide a clear rule for distinguishing between the two, adding to the confusion of Member States and taxpayers. The Article then surveys the Supreme Court’s Dormant Commerce Clause jurisprudence, under which the Court analyzes discriminatory state spending provisions. The Article concludes that although both the Supreme Court and the ECJ prioritize formalism over economic equivalence, the Supreme Court’s approach to tax expenditures is more defensible than that of the ECJ due to the different federal structures of the two jurisdictions.

October 22, 2014 in Scholarship, Tax | Permalink | Comments (0)

Mann: The Tax Policy Implications of Economists/Policymakers Miscommunication

Roberta F. Mann (Oregon), Economists are from Mercury, Policymakers are from Saturn: The Tax Policy Implications of Communication Failure, 5 Wm. & Mary Pol'y Rev. 1 (2013):

SaturnPolicymaking lawyers and economists are different types of people who come together in the policymaking realm. Sometimes policymakers rely on economic analysis to make decisions. Sometimes policymakers use economic analysis to support decisions already made. In particular, economic analysis has played a large role in the formation of tax and budgetary policy. However, there is a problem. Not only do economists and lawyers communicate differently, they think, perceive, react and respond differently. They almost seem to be from different planets, speaking different languages. While both lawyers and economists use “stories” to persuade, economic analysis cloaks the story in a complex mathematical model, opaque to those without training in economic theory. The results of economic modeling can obscure the decisions that policymakers and the public need to make — about the direction of the tax system, the nation, and the economy. This article examines the roles economists and lawyers play in the development and implementation of the income tax system. 

October 22, 2014 in Scholarship, Tax | Permalink | Comments (0)

ABA Tax Section Publishes Fall 2014 Issue of News Quarterly

ABA News QuarterlyThe ABA Tax Section has published 34 News Quarterly No. 1 (Fall 2014):

October 22, 2014 in ABA Tax Section, Tax | Permalink | Comments (0)

Osofsky: Concentrated Enforcement

Florida Tax ReviewLeigh Osofsky (Miami), Concentrated Enforcement, 16 Fla. Tax Rev. 325 (2014):

When enforcement resources are limited, how should the scarce enforcement resources be allocated to increase compliance with the law? The answer to this question can determine to what extent the law on the books translates to the law in practice. A dominant school of thought in the tax literature suggests that they should be allocated based on a “worst-first” method, whereby the individuals likely to be most noncompliant are targeted. However, while “worst-first” methods can encourage all individuals to increase compliance so as not to be deemed the “worst,” they can also provide cover to engage in noncompliance that is perceived moderate for the relevant population. This dynamic can become most problematic in highly noncompliant populations. In such populations, existing, high levels of noncompliance, and underlying, structural causes of the high noncompliance can serve as coordinating mechanisms, providing mutual assurance of low compliance. Moreover, “worst-first” theories do not provide a comprehensive explanation for the group and project-based enforcement practices that are found in a number of actual enforcement settings. In response to these deficits, I draw on work from across different disciplines to develop a new theory for the allocation of scarce tax enforcement resources. I suggest that, under certain conditions, deterrence can be enhanced by allocating scarce enforcement resources among a low-compliance population of taxpayers through a process I call concentrated enforcement. After setting forth the theoretical case for concentrated enforcement, I examine how it might apply in the cash business tax sector, a highly noncompliant sector that presents particular challenges for “worst-first” methods. I conclude that concentrated enforcement may increase compliance, meriting its application and empirical evaluation.

October 22, 2014 in Scholarship, Tax | Permalink | Comments (0)

Death of Mark Kuller

KullerWashington Post, Mark Kuller, Former Tax Lawyer Who Opened Acclaimed Restaurants in D.C., Dies at 61:

Mark Kuller, a former tax lawyer who transformed his prodigious appetite for good food and drink into a diverse collection of critically acclaimed restaurants in Washington, died Oct. 16 at his home in Bethesda, Md. He was 61.

The cause was pancreatic cancer, said his daughter, Candace Kuller.

The son of a bookie who took bets for the Mafia, Mr. Kuller went on to become, according to the New York Times, “a major player in corporate tax shelters.” As part of his job studying tax codes and entertaining clients, he developed a serious interest in restaurants that eventually spurred his desire to change careers. ...

If Mr. Kuller had carved a new career path for himself in his 50s, he had also created a new life at home. In 2010, he married Kristin Connor, who was more than 20 years his junior, and started talking about being a father again. (Mr. Kuller had divorced his first wife, the former Janet Goldberg, in 2003, according to a Washingtonian profile; he had two children from that marriage, Max and Candace, who both work at their father’s restaurants.)

But last year, just days after Mr. Kuller learned Connor was pregnant, he received tragic news: He was diagnosed with stage-four pancreatic cancer, a condition with a short life expectancy.

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October 22, 2014 in Obituaries, Tax | Permalink | Comments (1)

Willis & Tanzler: ObamaCare Violates the Origination Clause

Steven J. Willis (Florida) & Hans G. Tanzler IV (Florida), ObamaCare Fails the Origination Clause: Why Sissel and Hotze Should Be Reversed:

ObamaCare 2The Affordable Care Act violates the Constitution's Origination Clause: Article One, Section 7. What began as House Bill 3590 was not a "bill for Raising Revenue" because it solely covered non-taxes: spending items such as credits and recapture exclusions. Further, the Senate amendment adding I.R.C. section 5000A - the tax for lacking health insurance - was not germane to the House Bill; however, the amendment was indeed a "bill for Raising revenue" that must originate in the House.

The D.C. Circuit - in Sissel - and the District Court - in Hotze - each used a mistaken "primary purpose" test to overcome an Origination Clause challenge. Both Courts mistakenly focused on the "primary purpose" of the Affordable Care Act, rather than the purpose of the isolated section 5000A tax. As the Supreme Court in Rainey (1914) and Flint (1911) demonstrated, an Origination Clause challenge must examine the individual provision of the Act on its own merits as to germaneness and revenue raising, rather than as compared to the Act as a whole.

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October 22, 2014 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 531

IRS Logo 2Barrow Journal:  Losing Faith as Dysfunction Clouds Our Institutions:

We Americans seem to have lost faith in our major institutions. All around us we see dysfunction dominating the news. To wit: ...

The IRS openly, and without apology, targeted a small number of conservative groups for special scrutiny in what can only be seen as a political move designed to silence those organizations. When called in before Congress to testify, the IRS’ chief administrator smirked and dithered, basically flicking his middle finger to Congress. His agency is above the law, he seemed to be saying. The IRS has become the stereotypical ruthless tax collector. Adding a political agenda to that only makes that powerful agency more suspect. Unfortunately, nobody seems interested in reeling in the IRS and making sure it doesn’t become a gunslinger for either political party.

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October 22, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, October 21, 2014

Blank Presents Reconsidering Corporate Tax Privacy Today at UNLV

BlankJoshua D. Blank (NYU) presents Reconsidering Corporate Tax Privacy, 11 N.Y.U. J. L. & Bus. ___ (2014), at UNLV today as part of its Faculty Enrichmant Series:

For over a century, politicians, government officials and scholars in the United States have debated whether corporate tax returns, which are currently subject to broad tax privacy protections, should be publicly accessible. The ongoing global discussion of base erosion and profit shifting by multinational corporations has generated calls for greater tax transparency. Throughout this debate, participants have focused exclusively on the potential reactions of a corporation’s managers, shareholders and consumers to a corporation’s disclosure of its own tax return information. There is, however, another perspective: how would the ability of a corporation’s stakeholders and agents to observe other corporations’ tax return information affect the corporation’s compliance with the tax law?

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October 21, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Top Scorer on Florida Bar Exam Is IRS Agent

Florida International University Law School Press Release, FIU Law Student Earns Top Score on Florida Bar Exam:

MartiniFIU alumnus Alexander Martini has earned the highest score among more than 2,800 lawyers who took the Florida Bar Examination in July. ...

“I am absolutely honored and excited,” said Martini, 28, who studied law in the evening while he worked full-time as an Internal Revenue Service agent.

Martini, who was valedictorian of the evening class, was a member of the FIU Law Review, competed in the American Bar Association Section of Taxation Law Student Tax Challenge, took and passed his final Certified Public Accountant exam, [and] completed a master’s degree in taxation. ...

Martini is married to Melissa Aponte Martini, who is a recent graduate of Nova Southeastern University Law School’s evening program, and also took and passed the bar exam in July.

October 21, 2014 in IRS News, Tax | Permalink | Comments (2)

Marian: A Conceptual Framework for the Regulation of Cryptocurrencies

Omri Y. Marian (Florida), A Conceptual Framework for the Regulation of Cryptocurrencies, 81 U. Chi. L. Rev. Dialogue ___ (2015):

BitcoinThis Essay proposes a conceptual framework for the regulation of transactions involving cryptocurrencies. Cryptocurrencies offer tremendous opportunities for innovation and development, but at the same time are uniquely suited to facilitate illicit behavior. The suggested regulatory framework is intended to support (or, at the least, not impair) cryptocurrencies’ innovative potential. At the same time, the aim is to disrupt cryptocurrencies’ utility for criminal activities. To achieve such purposes, this Essay suggests a regulatory framework that imposes costs on the characteristics of cryptocurrencies that make them particularly useful for criminal behavior (in particular, anonymity), but does not impose costs on characteristics that are at the core of the generative potential (in particular, the decentralization of value-transfer processes). Using a basic utility model of criminal behavior as a benchmark, the Essay explains how regulatory instruments can be so designed. One such regulatory instrument is proposed as an example – an elective anonymity tax on cryptocurrency transactions in which at least one party is not anonymous.

October 21, 2014 in Scholarship, Tax | Permalink | Comments (0)

NY Times: Ireland Still Addicted to Tax Breaks

DOuble IrishNew York Times editorial, Ireland, Still Addicted to Tax Breaks:

The Irish government decided last week to get rid of a tax loophole that has helped big multinational companies like Apple and Google avoid paying billions in taxes to any government at all. But hold the champagne: Ireland could well replace one problematic tax policy with another, leaving aggressive tax avoidance pretty much intact. 

On Oct. 14, Ireland’s finance minister, Michael Noonan, said the country would get rid of the “double Irish” — a provision that allows companies doing business in the country to avoid taxes by making royalty payments to an affiliated firm that is registered in Ireland but has its tax home in another country, often a tax haven like Bermuda that has no corporate income taxes. The provision will disappear for new companies in January, but businesses already using it can continue to do so until 2020.

Still, Ireland, which for years used policies like the double Irish to attract

multinational businesses, appears uninterested in true reform. It will create a new provision known as the Knowledge Development Box that will allow technology, pharmaceutical and other companies that make money from patented products and services to pay a discounted tax rate. Officials haven’t said much about what kinds of profits will qualify for the lower rate or what it will be. Experts expect it to be lower than the already low standard corporate tax rate of 12.5 percent. Ireland is not alone in trying to lure tech companies with very low tax rates. ...

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October 21, 2014 in Tax | Permalink | Comments (0)

Osofsky: Unwinding the Ceiling Rule

Leigh Osofsky (Miami), Unwinding the Ceiling Rule, 33 Va. Tax Rev. 63 (2014):

As is widely known, the so-called “ceiling rule,” which applies under the traditional method for section 704(c) allocations, can create the wrong tax result. Specifically, the ceiling rule can result in misallocations of income, gain, loss, and deduction to both a partner contributing property and to the noncontributing partners. Notwithstanding these predictable misallocations, the Treasury Department still permits application of the ceiling rule under section 704(c). This Article challenges longstanding assumptions regarding the operation of the ceiling rule in the context of section 704(c). Historically, Congress and partnership tax experts assumed that the ceiling rule is perfectly unwound on liquidation or sale of a partnership interest. This assumption still operates to some extent today. The assumption glosses over a significantly more complicated reality. This Article closely examines the history of section 704(c) and the interaction between the ceiling rule and the rules regarding sales and liquidations of partnership interests. Doing so reveals that when and to what extent the perfect unwinding assumption holds depends (perhaps to a surprising degree) on (1) a variety of relatively arbitrary facts regarding the assets held by the partnership on liquidation or sale, and (2) the unintended interactions of inordinately complicated partnership tax rules. In reaching this conclusion, this Article displays that the ceiling rule, which has always been part of the section 704(c) regime, is even worse than it is commonly thought to be.

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October 21, 2014 in Scholarship, Tax | Permalink | Comments (0)

Johnson: Repatriation Tax -- Are We Churchill or Chamberlain?

Tax Analysys Logo (2013)Calvin H. Johnson (Texas), Repatriation Tax: Are We Churchill or Chamberlain?, 144 Tax Notes 1459 (Sept. 22, 2014):

Under current law, earnings of a foreign subsidiary are not subject to tax until they are repatriated. At repatriation, the U.S. parent pays 35% corporate tax, less foreign tax credits. A tax on repatriation has no effect on repatriations, by mathematical law, if the tax remains. If the United States reduces or forgives the tax in the foreseeable future, U.S. corporations will delay repatriation to take advantage of the reduction. This project proposes an increase in tax on repatriation after a short window during which the 35% tax, less foreign tax credits, will remain. The increase will induce corporations to repatriate their foreign earnings within the window to take advantage of the relatively generous 35% rate.

October 21, 2014 in Scholarship, Tax | Permalink | Comments (1)

The IRS Scandal, Day 530

IRS Logo 2Wall Street Journal editorial:  Defining Dismissal Down: The VA Gives Officials an Opening to Retire Before They’re Fired:

The common theme in the many failures of President Obama’s second term is government incompetence, and a corollary is lack of accountability. Both themes came together in the news late last week that the Veterans Affairs department can’t even successfully fire officials it wants to dismiss.

President Obama and Congress agreed this summer on a bill that made it easier for the VA to fire incompetent officials in return for $16 billion in additional spending to address long patient waiting lines caused by the agency’s incompetence. That looked like another case of government rewarding government failure, and now we learn that two officials targeted for dismissal as part of the VA investigation are retiring instead.

The law gave new secretary Robert McDonald the ability to fire immediately, but the VA says it gave the targeted employees a five-day period to respond so the dismissals would hold up in court. Two of the targets took the opening to retire, including Susan Taylor, the VA’s deputy chief procurement officer in Washington who was the subject of an inspector general report alleging years of misconduct for personal gain. Ms. Taylor declined to comment to a Journal query.

The VA retirees follow the example set by Lois Lerner, who retired from the IRS before she could be dismissed for her role in targeting conservative groups seeking tax-exempt status. They will all presumably suffer no reduction in federal retirement benefits.

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October 21, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, October 20, 2014

Sanchirico Presents International Tax and Ownership Nationality Today at Northwestern

SanchiricoChris Sanchirico (Pennsylvania) presents As American as Apple, Inc.: International Tax and Ownership Nationality, 68 Tax L. Rev. ___ (2014), at Northwestern today as part of its Law and Economics Workshop Series organized by Bernard Black:

The ownership nationality of large US multinational companies plays an implicit but important role in the current debate over how such companies should be taxed. This paper identifies that role and investigates what is actually known about where these companies’ shareholders reside.

October 20, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Heath Presents Taxation as Collective Consumption Today at McGill

HeathJoseph Heath (Toronto) presents Taxation as Collective Consumption? at McGill today as part of its Spiegel Sohmer Tax Policy Colloquium Series hosted by Allison Christians and Daniel Weinstock:

Individuals express a surprisingly pervasive error that I refer to as the “government as consumer” fallacy. The picture underlying this fallacy is relatively straightforward. Government services, such as health care, education, national defense, and so on, “cost” us as a society. We are able to pay for them only because of all the wealth that we generate in the private sector, which we transfer to the government in the form of taxes. A government that taxes the economy too heavily stands accused of “killing the goose that lays the golden eggs” by disrupting the mechanism that generates the wealth that it itself relies upon in order to provides its services.

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October 20, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Dharmapala Presents Interest Deductions in a Multijurisdictional World Today at Loyola-L.A.

DharmapalaDhammika Dharmapala (Chicago) presents ​Interest Deductions in a Multijurisdictional World at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

The tax treatment of interest expenses in a multijurisdictional setting raises numerous complexities. This paper catalogs these difficulties and highlights the particular problems associated with efforts to achieve ownership neutrality among multinational corporations (MNCs) when debt financing is available. We argue that the differential deductibility of debt entailed by various current tax law provisions leads in general to potential distortions in the patterns of asset ownership across MNCs, and that various proposed solutions have significant limitations. We suggest several alternative regimes to address both the ownership distortions that we highlight, as well as other well-established problems of income-shifting through debt. These alternative regimes are extensions to a multinational setting of two general approaches to the neutral treatment of interest expenses - the CBIT (comprehensive business income tax) and ACC (allowance for corporate capital). These regimes – a worldwide debt cap (WDC) and a net financing deduction (NFD) – provide solutions to income-shifting and ownership distortions. However, they have the potential disadvantage of restricting other policy parameters.

Alexander Wu (UCLA) is the commentator.

October 20, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

TIGTA: IRS Is Not Complying With Homeland Security Laws on Information Security Management and Employee ID Cards

TIGTA The Treasury Inspector General for Tax Administration today released:

Federal Information Security Management Act Report for Fiscal Year 2014 (2014-20-090):

The Federal Information Security Management Act of 2002 (FISMA) was enacted to strengthen the security of information and systems within Federal Government agencies. The IRS collects and maintains a significant amount of personal and financial information on each taxpayer. As custodians of taxpayer information, the IRS has an obligation to protect the confidentiality of this sensitive information against unauthorized access or loss.

As part of the FISMA legislation, the Offices of Inspectors General are required to perform an annual independent evaluation of each Federal agency’s information security programs and practices. This report presents the results of TIGTA’s FISMA evaluation of the IRS for Fiscal Year 2014.

Based on this year’s FISMA evaluation, five of the 11 security program areas met the performance metrics specified by the Department of Homeland Security’s Fiscal Year 2014 Inspector General Federal Information Security Management Act Reporting Metrics. ... Four security program areas were not fully effective due to one or more program attributes that were not met. ... Two security program areas did not meet the level of performance specified due to the majority of the attributes not being met.

Progress Has Been Made; However, Significant Work Re mains to Achieve Full Implementation of Homeland Security Presidential Directive 1 (2014-20-069):

Issued in August 2004, the Homeland Security Presidential Directive 12 (HSPD-12), Policy for a Common Identification Standard for Federal Employees and Contractors, requires Federal agencies to issue identity credentials that meet the HSPD-12 standard and use them for gaining physical access to Federally controlled facilities and logical access to Federally controlled information systems.  Without full implementation of HSPD-12 compliant authentication, IRS facilities, networks, and information systems are at an increased risk of unauthorized access.

This audit was initiated to determine the IRS’s progress in implementing HSPD-12 requirements for accessing IRS facilities and information systems.  The U.S. Department of the Treasury has set a goal for its bureaus to achieve 100-percent HSPD-12 compliance by Fiscal Year 2015.  In Fiscal Year 2012, the Administration identified HSPD-12 as a Cross-Agency Priority initiative needed to improve the security of Federal data.

The majority of the IRS workforce (85%) has been issued HSPD-12 compliant Personal Identity Verification (PIV) cards.  However, full implementation of PIV card electronic authentication for accessing IRS facilities is not scheduled until at least Fiscal Year 2018, and only if funding is available.  In addition, significant challenges remain in the area of implementing PIV card electronic authentication for accessing IRS networks and information systems.  These challenges include many legacy systems and technologies in use at the IRS that are incompatible with PIV cards, and limited HSPD-12 staffing and funding for resolving these conflicts.

October 20, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (1)

Frye: Crowdfunding as a Solution to the Inefficiency of the Charitable Deduction

Brian L. Frye (Kentucky), Solving Charity Failures, 93 Or. L. Rev. 155 (2014):

Kickstarter Logo“Crowdfunding” is a way of using the Internet to raise money by asking the public to contribute to a project. This Article argues that crowdfunding has succeeded, at least in part, because it makes charitable giving more efficient by solving certain “charity failures,” or inefficiencies created by the inability of the charitable contribution deduction to subsidize the charitable giving from low-income donors. The economic subsidy theory of the charitable contribution deduction explains that the deduction is justified because it solves market failures and government failures in charitable goods. According to this theory, free riding causes market failures in charitable goods, and majoritarianism causes government failures in charitable goods. The charitable contribution deduction solves these market and government failures by indirectly subsidizing charitable contributions, thereby compensating for free riding and avoiding majoritarianism. Crowdfunding is successful because it provides a technological solution to some of those charity failures. While the charitable contribution deduction causes charity failures because the deduction cannot subsidize contributions from low-income donors, crowdfunding can subsidize those contributions by offering rewards instead. As a result, crowdfunding should solve at least some of the charity failures caused by the deduction through providing an incentive for low-income donors to contribute. The remarkable success of crowdfunding suggests that the inefficiency associated with charity failures is quite large.

October 20, 2014 in Scholarship, Tax | Permalink | Comments (0)

Gupta: Will eBay's Spinoff of PayPal Result in an Inversion?

Tax Analysys Logo (2013)Ajay Gupta (Tax Analysts), Will PayPal's Spinoff End in an Inversion -- or Two?, 76 Tax Notes Int'l 188 (Oct. 20, 2014):

Ajay Gupta discusses how Treasury's anti-inversion guidance [Notice 2014-52] could affect PayPal's announced spinoff from parent company eBay.

October 20, 2014 in Tax, Tax Analysts | Permalink | Comments (0)

Washington & Lee Seeks to Hire Tax Clinic Visitor for Fall 2015

W&L Logo (2014)The Washington and Lee University School of Law invites applications for a Visiting Professor and Interim Director of its Tax Clinic for the Fall 2015 semester:

The visitor would supervise and manage the school’s Low-Income Taxpayer Clinic.  Applicants must be an active member of a state bar or the District of Columbia bar.  The position would begin on July 1, 2015 and end on December 31, 2015.  For additional details or to apply, contact Associate Dean Samuel Calhoun. Applications are due by December 1, 2014.

October 20, 2014 in Tax, Tax Prof Jobs | Permalink | Comments (0)

The IRS Scandal, Day 529

IRS Logo 2Forbes:  UnFair: Exposing The IRS -- Does Not Make Strong Case Or Decent Documentary, by Peter C. Reilly:

[H]ere is my report on UnFair: Exposing the IRS.  I am reacting to both the film and the companion book, which pretty much cover the same ground in the same order. The bottom line is that Craig Bergman's argument does not make a lot of sense.

He discusses IRS abuses in the last several years and proposes that we repeal the income tax, abolish the IRS and enact the Fair Tax. A lmost all the abuses he discusses concern the qualification of organizations for exempt status. It turns out that the same issues exist under the Fair Tax.

The filmmaker I brought along did not think that it was much of a documentary. His biggest issue was that he was expecting an expose` and instead experienced a reiteration of a political and cultural platform. If this review is any indication, he is not alone in his judgement. ...

It is not an exaggeration to say that the film is seeking to make the case that the IRS is a criminal organization . The tip off is the clip of 1930s gangsters with guns. A significant portion of time is spent on Teapartygate. We get brief clips from news programs hearing from George Will, Governor Mike Huckabee, Congressman John Linder, and Bill O’Reilly among others. Craig Bergman, the narrator, then tells us that he put together a crew of talented filmakers to travel across America to talk one-on-one with those affected by the abuses. Craig starts at the Tea Party “Audit The IRS” rally, has an extensive treatment of Lois Lerner including her campaign against the Christian Coalition while working for the Federal Election Commission and moves on to an interview with Jim Jess of the Georgia Tea Party. There is a lot of network footage, most of it from Fox News. There is r eally nothing new in this part if you have been following the scandal. The treatment is entirely one sided. ...

Jonathan Schwartz did not think that UnFair cut it as a documentary. He did not even think that it was very effective propaganda.  It was more of a rally the troops type of piece that would only work on those who were already convinced of the viewpoints expressed.

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October 20, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

TaxProf Blog Weekend Roundup

Sunday, October 19, 2014

L.A. Times: Ed Kleinbard's We Are Better Than This Is 'Moral and Farsighted'

Los Angeles Times:  On Fiscal Policy, USC Professor's Viewpoint is Moral and Farsighted, by Michael Hiltzik:

We Are Better Than This (2014)The left sees me as a Wall Street Journal Satanist, and the right as a stealth Marxian bent on destroying free enterprise," Edward D. Kleinbard was saying.

The USC law professor was referring to the reactions elicited by his recent op-ed in the New York Times, in which he asserted that the solution to economic inequality in the U.S. was not to make the tax system more progressive — it's already "the most progressive in the developed world," he wrote — but to make it bigger.

As he explained when we met last week at USC's Gould School of Law, where he has taught tax law since 2009, that would render the entire fiscal system more progressive, because it would fund more spending. Government spending is always progressive, benefiting middle- and lower-income people more than the wealthy. So: If you want to reduce inequality, expanding government is more effective than merely increasing the relative burden on the rich.

One can see why left and right alike felt that their shibboleths were being skewered.

But Kleinbard's viewpoint is both moral and farsighted. It's also an important theme of his newly published book, We Are Better Than This: How Government Should Spend Our Money.

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October 19, 2014 in Book Club, Scholarship, Tax | Permalink | Comments (1)

Linda Beale to Return to Tax Blogging Following the Death of Her Husband

Beale (2014)Tax Prof Linda Beale (Wayne State) has announced that she is returning to blogging after an eight month hiatus following the death of her husband:

To make a long and difficult story short--my husband died in January, and I have gone through an intense personal struggle to cope with life without my soulmate.  The hard winter and too-short summer added their own tribulations, in the form of electrical outages, some basement water, and all those unexpected expenses that go along with weather-related problems, all of which must now be handled by me.

I plan to resume regular postings now.

October 19, 2014 in Tax | Permalink | Comments (1)

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 on SSRN, with new papers debuting on the list at #2 and #5:

  1. [338 Downloads]  2013 Developments in Connecticut Estate and Probate Law, by Jeffrey A. Cooper (Quinnipiac) & John R. Ivimey (Reid and Riege, Hartford)
  2. [236 Downloads]  Trying Times 2014: Important Lessons to Be Learned from Recent Federal Tax Cases, by Nancy A. McLaughlin (Utah) & Steven J. Small ( Law Office of Stephen J. Small, Newton, MA)
  3. [139 Downloads]  Rights Without Remedies, by Matthew L. M. Fletcher (Michigan State)
  4. [138 Downloads]  Home-Country Effects of Corporate Inversions, by Omri Y. Marian (Florida)
  5. [136 Downloads]  'Show Me the Money!' -- Analyzing the Potential State Tax Implications of Paying Student-Athletes, by Kathryn Kisska-Schulze (North Carolina A&T) & Adam Epstein (Central Michigan)

October 19, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 528

IRS Logo 2The Hollywood Reporter:  'Unfair: Exposing the IRS': Film Review:

Delivering an attack against the Internal Revenue Service is like shooting fish in a barrel. You'd be hard-pressed to find anyone, whatever their political affiliation, who has anything good to say about this much-reviled government agency. So it seems a bit of a waste that Judd Saul's documentary Unfair: Exposing the IRS, shown as a one-night event in some 680 screens around the country, should have resorted to such relentless overkill.

Before your angry online comments come pouring in accusing this reviewer of being a godless, unpatriotic communist, please be advised that this is a film review, not a political tract. Any criticisms to follow are meant to address the film on cinematic terms, and in that regard it falls woefully short of being convincing to anyone who isn't already fully aligned with its impassioned message. Devoid of thoughtful analysis or divergent opinions, it's little more than agitprop … which is not to say that many of the films emanating from the other side of the political spectrum are any better. ...

Beginning with the usual barrage of inflammatory news clips, it naturally spotlights the recent uproar over the IRS' alleged targeted persecution of Tea Party organizations — President Obama is repeatedly seen denouncing it as a "phony scandal" — and the subsequent embarrassing spectacle of its leaders haplessly testifying before Congress that they had somehow managed to lose over two years' worth of relevant emails. Couple that with evidence of the agency's wild overspending, such as video clips of their bizarre comic sketches performed at lavish getaways, and it's certainly hard not to get one's dander up. ...

Featuring commentary by such usual suspects as Mike Huckabee, Ted Cruz, Glenn Beck, Michele Bachmann and, of course, Grover Norquist, Unfair: Exposing the IRS is not so much an expose as predictable preaching to the choir.

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October 19, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, October 18, 2014

Red States Are More Generous Than Blue States

2012Chronicle of Philanthropy, How America Gives:

Using the IRS data, The Chronicle was able to track gifts to charity at the state, county, metropolitan-area, and ZIP code levels. The data were for gifts to charity among taxpayers who itemize deductions on their tax forms. It captured $180-billion that was given to charity in 2012, or about 80 percent of the total amount given to charity as tabulated by "Giving USA."

In How States Compare and How They Voted in the 2012 Election, the Chronicle of Philanthropy ranked the states by giving as a percentage of adjusted gross income.  The 17 states that gave the most to charity all voted for Mitt Romney in 2012, while 15 of the 17 states that gave the least to charity voted for President Obama:


Red

Blue

October 18, 2014 in Tax | Permalink | Comments (34)

How to Audit the President

Bloomberg, How to Audit the President, by Richard Rubin:

Obama 2013

The presidency is laden with perks: the jet, the mansion, the personal chef. 

But there's some nastiness, too, awaiting the winner of the 2016 election, namely: mandatory audits from the Internal Revenue Service. The tax returns of the commander-in-chief and the vice president get automatic annual scrutiny from the IRS. Compare that to the 1 in 49 audit rate for everyone else in the $200,000 to $500,000 income bracket. 

What got us poking around on this question was a set of documents released from Bill Clinton's presidential library last week, showing White House lawyers preparing for his second consecutive audit amid questions about the Whitewater real estate deal in Arkansas. The audit requirement is so obscure that one former, very senior IRS official didn't even recall it when we started asking questions.

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October 18, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

AbbVie Can Deduct $1.64 Billion Termination Fee From Inversion Cancellation

ShireWall Street Journal, Dept. of Irony: AbbVie Can Take Tax Write-Off for Fees:

Breaking up hurts, but a tax write-off can help ease the sting.

The $1.64 billion termination fee AbbVie would owe Shire for nixing their takeover deal is tax-deductible, experts say. Other transaction expenses, including fees paid to its advisers that are likely to reach into the millions, may also be deductible.

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October 18, 2014 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 527

IRS Logo 2American Center for Law and Justice: Finally: IRS Approves Two More Tea Party Groups:

It’s taken years, but IRS approvals are still slowly—very slowly—rolling in.

The ACLJ first sounded the alarm against the Obama Administration’s unlawful targeting of grassroots conservative groups in the spring of 2012. It was not until the following year, in May of 2013, when Lois Lerner admitted that the IRS had in fact singled out and targeted hundreds of tea party and conservative groups. Shortly afterwards, the ACLJ filed suit against the IRS on behalf of 41 groups in 22 states.

Some of those groups are still being targeted and delayed, even today.

Yet we’re still winning victories, even while the case is ongoing.

Today, two more conservative groups received approval of their tax-exempt applications. Laurens County Tea Party of Laurens, South Carolina and Allen Area Patriots from Frisco, TX, both seeking 501(c)(4) status, were just approved.

Laurens County Tea Party and Allen Area Patriots both applied for tax-exemption in July of 2010. It took the IRS more than four years to review their applications and approve these groups.

Of our 41 clients, 28 have now been approved, and seven groups are still awaiting approval. One of these seven groups, Albuquerque Tea Party is less than two months away from “celebrating” five years since they originally applied for tax-exemption. To date, they have still not been approved.

While the mainstream media gave the Administration the benefit of the doubt and ignored, if not completely dismissed the targeting as nothing more sour grapes from angry conservatives, vindication of these groups has come time and time again as the public learns more information from Congressional investigators of how wide scale this scandal really was.

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October 18, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, October 17, 2014

Weekly Tax Roundup

October 17, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Roundup

October 17, 2014 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)