TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Sunday, May 27, 2018

The Top Five New Tax Papers

SSRN Logo (2018)There 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 and #5:

  1. [984 Downloads]  Evaluating the New US Pass-Through Rules, by Dan Shaviro (NYU)
  2. [248 Downloads]  The 2017 Tax Cuts: How Polarized Politics Produced Precarious Policy, by Michael Graetz (Columbia)
  3. [194 Downloads]  Higher Education Savings and Planning: Tax and Nontax Considerations, by Philip Manns (Liberty) & Timothy Todd (Liberty)
  4. [183 Downloads]  IRC Section 678 and the Beneficiary Deemed Owner Trust (BDOT), by Edwin Morrow
  5. [151 Downloads]  The New U.S. Tax Preference for 'Foreign-Derived Intangible Income', by Chris Sanchirico (Pennsylvania)

May 27, 2018 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, May 26, 2018

This Week's Ten Most Popular TaxProf Blog Posts

Borden: Like-Kind Exchanges After The 2017 Tax Act

Bradley T. Borden (Brooklyn), Code Sec. 1031 after the 2017 Tax Act, 21 J. Passthrough Ent. 17 (2018):

The Tax Cuts and Jobs Act of 2017 changed Code Sec. 1031 and other provisions that may affect Code Sec. 1031. This Article examines those changes. Code Sec. 1031 now applies only to real property, so taxpayers must consider whether exchange properties are real property and like kind. Code Sec. 1031 does not have an established definition of real property, so its scope will be uncertain until further guidance emerges. Until then, taxpayers may look to definitions of real property in other provisions of the Code. The Article presents a table comparing the various other definitions of real property, showing that tax law does not have a unified definition of real property.

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May 26, 2018 in Scholarship, Tax | Permalink | Comments (0)

Friday, May 25, 2018

Weekly SSRN Tax Article Review And Roundup: Mazur Reviews Ring's Silos And First Movers In The Sharing Economy

This week, Orly Mazur (SMU) reviews a new work by Diane M. Ring (Boston College), Silos and First Movers in the Sharing Economy Debates.

Mazur (2017-2)Should the workers who make up the sharing economy be classified as employees or independent contractors? This question, which has significant legal ramifications for gig economy workers, has been extensively debated by policymakers, academics, litigators, legislators, business operators, and regulators, among many others. In her new work, Diane Ring brings a new perspective to the debate. She convincingly argues that the worker classification debates are often incomplete due to silos among legal experts. In the sharing economy, the detrimental effects of these legal silos are compounded by first-mover actions, which together create the risk that the outcomes of the worker classification debates have unintended and undesirable collateral effects. 

As Ring explains, when answering the question of how sharing economy workers should be classified, legal experts often focus on the implications of each classification arising from their area of the law or “legal silo,” without a full understanding of the effects of that outcome in other legal contexts. But resolution of this worker classification issue in one legal context is likely to affect a worker’s legal implications in another context. 

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May 25, 2018 in Orly Mazur, Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

Hemel: Two Cheers For IRS Guidance On The New State & Local Tax Cap

Following up on yesterday's post, IRS Warns Taxpayers That Regs Will Prevent States From Circumventing $10k S&L Tax Cap With 'Charitable' Contributions:  Daniel Hemel (Chicago), Two Cheers for IRS Guidance on the New SALT Cap:

Yesterday’s notice by the Treasury Department and the IRS that they plan to propose regulations related to the state and local tax (SALT) and charitable contribution deductions has generated lots of news coverage. ...

Let’s start with what the notice did say. First, it revealed — and this is new news — that Treasury and the IRS “intend to propose regulations addressing the federal income tax treatment of certain payments made by taxpayers for which taxpayers receive a credit against their state and local taxes.” That’s apparently a reference to laws already enacted in New JerseyNew York, and Oregon that allow taxpayers to claim a state tax credit for charitable contributions to certain state-affiliated funds, as well as several similar proposals pending in other state legislatures. Interestingly, Treasury and the IRS signaled no intention to issue regulations addressing New York’s new “Employer Compensation Expense Program,” which allows employees to claim a state tax credit if their employer opts into a new payroll tax regime. Even those who are skeptical of the charitable credit arrangement acknowledge that the payroll tax shift “almost certainly” will pass muster under federal tax law, and nothing in yesterday’s notice suggests otherwise.

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May 25, 2018 in IRS News, Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

WSJ: Small Businesses Rethink Client Meals & Entertaining After Losing Tax Break

WSJWall Street Journal, Season Tickets? Steak Dinners? Small Firms Rethink Client Events After Losing Tax Break:

A wholesale distributor plans to replace some expense-account lunches with open houses for customers. A marketing firm has stopped reimbursing employees’ commuting expenses and is giving them raises instead. A tax-audit defense firm is giving up its season tickets to Sacramento Kings basketball games.

These are some of the ways small-business owners are responding to changes in the tax law that reduce or eliminate some popular deductions for meals, entertainment and transportation, though many of the fine points are unclear.

For instance, the changes eliminate the deduction for sports tickets, concerts and other client entertainment, and set new limits on deductions for certain employee meals. Among the uncertainties is whether companies will still be able to claim a 50% deduction for business meals with customers or business associates, or whether those expenses will be considered entertainment, which is no longer deductible. “That’s the one that has got everyone jumping up and down,” said Marianna Dyson, of counsel to Covington & Burling.

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May 25, 2018 in Tax | Permalink | Comments (0)

Thursday, May 24, 2018

Ring: Silos And First Movers In The Sharing Economy Debates

Diane M. Ring (Boston College), Silos and First Movers in the Sharing Economy Debates:

Over the past few years, a significant global debate has developed over the classification of workers in the sharing economy either as independent contractors or as employees. While Uber and Lyft have dominated the spotlight lately, the worker classification debates extend beyond ridesharing companies and affect workers across a variety of sectors. Classification of a worker as an employee, rather than an independent contractor, can carry a range of implications for worker treatment and protections under labor law, anti-discrimination law, tort law, and tax law, depending on the legal jurisdiction. The debates, at least in the United States, have been incomplete due to the failure of policy makers and advocates to consider the scope and interconnectedness of the worker classification issues across the full sweep of legal arenas. There is time, however, to remedy the incompleteness of these policy conversations before worker classification decisions ossify and path dependence takes hold.

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May 24, 2018 in Scholarship, Tax | Permalink | Comments (0)

Death Of Larry Jegen

JegenIU McKinney Mourns the Passing of Professor Lawrence A. Jegen III:

Professor Lawrence A. Jegen, III, passed away on May 17, 2018, at his home in Indianapolis. He was 83 years old. He taught at the Indiana University Robert H. McKinney School of Law for 56 years before his retirement in 2018. He joined the faculty in 1962 as an Assistant Professor, was promoted to an Associate Professor two years later, and became a full professor in 1966.

“It is hard to understate the impact that Professor Jegen made on the lives of others during his remarkable 56-year career at our law school," said IU McKinney Dean Andrew R. Klein. "Using the word ‘legend’ might sound like hyperbole, but today it does not. The outpouring of affection that I have heard from generations of McKinney Law alumni is overwhelming. This is a sad day for our law school family, but also a moment to remember the incredible difference that a teacher can make. We will miss Professor Jegen, but never forget him.”

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May 24, 2018 in Legal Education, Obituaries, Tax | Permalink | Comments (0)

Gamage: Charitable Contributions In Lieu Of State & Local Tax Deductions

David Gamage (Indiana), Charitable Contributions in Lieu of SALT Deductions, 87 State Tax Notes 973 (Mar. 12, 2018):

State governments are considering new charitable tax credits designed to circumvent the 2017 federal tax overhaul’s cap on state and local tax deductions. Will these plans work?

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May 24, 2018 in Scholarship, Tax | Permalink | Comments (3)

Colleges May Dodge New Endowment Tax

Bloomberg, Facing First Tax on Endowments, Colleges May Be Set to Dodge It:

Private colleges facing a new endowment tax may “behave strategically” to avoid paying it, according to a study published Thursday by a senior researcher at the Federal Reserve Bank of Cleveland [College Endowments].

Schools may increase enrollment — or give the appearance of doing so by changing the way they measure it — to reduce their endowment-per-student ratio to miss the tax threshold set by Congress, wrote economist Peter Hinrichs. Those colleges with low enrollment may reduce it in order to stay below 500 students to avoid the tax.

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May 24, 2018 in Tax | Permalink | Comments (1)

IRS Warns Taxpayers That Regs Will Prevent States From Circumventing $10k S&L Tax Cap With 'Charitable' Contributions

Bloomberg:  IRS Warns Taxpayers About Tactics to Avoid Property Deduction Caps, by Lynnley Browning:

The Internal Revenue Service warned taxpayers to proceed with caution after states including New York and New Jersey approved workarounds involving charitable organizations to circumvent new federal limits on deductions for state and local taxes.

“Taxpayers should be mindful that federal law controls the proper characterization of payments for federal income tax purposes,” the agency said in a press release Wednesday [IR-2018-122], the first time it’s weighed in on the matter. The Treasury Department and IRS intend to propose regulations addressing measures that would allow homeowners to declare property taxes as charitable deductions, which are still unlimited, according to the IRS [Notice 2018-54, 2018-24 IRB ___ (June 11, 2018)].

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May 24, 2018 in IRS News, Tax | Permalink | Comments (9)

Wednesday, May 23, 2018

Morrow: Government As Investor — The Case For Immediate Expensing

Rebecca Morrow (Wake Forest), Government as Investor: The Case for Immediate Expensing, 106 Ky. L. Rev. 1 (2017) (reviewed here):

For more than sixty years, tax scholars have recognized conditions under which the government ceases to be a mere taxing entity—imposing a rate of tax on a business’s profits—and through the operation of tax law becomes more like an investment partner—contributing its fair share of capital to new investments and proportionately sharing in losses as well as gains. These conditions, which are satisfied by immediate expensing policies, are now common.

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May 23, 2018 in Scholarship, Tax | Permalink | Comments (1)

Stock Market Responses To The Trump Election And The 2017 Corporate Tax Reform

Alexander F. Wagner (University of Zurich), Richard J. Zeckhauser (Harvard) & Alexandre Ziegler (University of Zurich), Unequal Rewards to Firms: Stock Market Responses to the Trump Election and the 2017 Corporate Tax Reform:

Massive dollars shuttled back and forth among firms on the twisted path to and passage of the 2017 tax reform. Prices of individual stocks responded to the difference between initial and revised expectations. From the bill’s initiation in the House to final passage, high-tax firms gained significantly, given the dramatic cut from 35% to 21% in the corporate tax rate. Internationally-oriented firms suffered notably, since investors assessed that the surprisingly high repatriation tax outweighed the benefits from territorial taxation. Daily price movements show that the aggregate market responded positively to lower expected taxes.

May 23, 2018 in Scholarship, Tax | Permalink | Comments (0)

TIGTA: One-Third Of IRS Employees Who Participated In Public Transportation Subsidy Program Received Excessive Benefits

TIGTAThe Treasury Inspector General for Tax Administration yesterday released Review of the Internal Revenue Service’s Public Transportation Subsidy Program (2018-10-033):

The IRS’s Public Transportation Subsidy Program (PTSP) was created to encourage employees to use public transportation when commuting to and from work in order to improve air quality, reduce traffic congestion, and conserve energy by reducing the number of single occupancy vehicles on the road.  In Calendar Year 2016, more than 18,000 IRS employees received more than $17.5 million in public transportation benefits.  Controls in place over the program are important to ensure proper stewardship of taxpayer dollars.

WHY TIGTA DID THE AUDIT
The overall objective of this audit was to determine whether the IRS has effective controls in place to prevent, detect, and deter employee misuse of the PTSP.

WHAT TIGTA FOUND
Controls over the application process provided assurance that applications were complete and limited PTSP usage to only those who were approved for the program.  In addition, controls over PTSP benefits effectively limited participants to receiving benefits that were less than or equal to the statutory maximum of $255 per month.  Lastly, vendor blocks established by the Department of Transportation effectively prevented purchases from being made at non-transportation-related vendors.

However, the PTSP remained vulnerable to misuse by participants.  Based on the results of a statistical sample of program participants, TIGTA estimates that 6,449 participants used almost $1.6 million more in transportation benefits than necessary for commuting to work or used benefits while in a nonpay status, on leave, or while teleworking.  The IRS does not have effective controls in place to prevent employees from receiving PTSP benefits that are greater than the participant’s actual commuting cost.

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May 23, 2018 in Gov't Reports, IRS News, Tax | Permalink | Comments (1)

8th & 9th Ninth Annual Employee Benefits & Social Insurance Conferences

The dates and locations of the next two annual Employee Benefits & Social Insurance Conferences are:
Academic Year 2018–2019
Friday, March 29, 2019
University of Illinois College of Law
Organized by Sean Anderson (smander@illinois.edu; 217-244-8256)

Academic Year 2019–2020

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May 23, 2018 in Colloquia, Conferences, Tax | Permalink | Comments (0)

Tuesday, May 22, 2018

NY Times: American Companies, Flush With Cash From GOP Tax Cut, Set Record For Stock Buybacks

New York Times, Cash-Rich Companies Set Record for Buybacks:

American companies, flush with cash from the $1.5 trillion tax cut, bought back a record quantity of their own shares during the first three months of the year.

NYT

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May 22, 2018 in Tax | Permalink | Comments (0)

Field: A Taxonomy For Tax Loopholes

Heather M. Field (UC-Hastings), A Taxonomy for Tax Loopholes, 55 Hous. L. Rev. 545 (2018) (reviewed here):

Democrats, Republicans, media commentators and even academics denounce “tax loopholes.” Speakers may think that they are talking about the same things, but this article demonstrates that people have widely divergent views about what tax loopholes are. Thus, people criticizing loopholes often talk past each other and engage in the tax equivalent of schoolyard name-calling. The response to this problem is not, however, to try to define the concept of “tax loopholes” with precision. Such an endeavor is pointless. Instead, this article provides a taxonomy for translating the rhetoric of “tax loopholes” into meaningful tax policy discourse. This taxonomy posits that any reference to a “tax loophole” should be understood in two dimensions — the tax policy objection and the target of the criticism. Using numerous examples from the popular/political discourse and the academic literature, this article catalogs alternatives on each dimension. Categorizing any purported “tax loophole” using this taxonomy provides a more productive framing of whatever critique is implied by any use of the “loophole” label, thereby enabling the elevation of the quality of the conversation about the individual tax preference. This taxonomy may be particularly useful now, as our political leaders embark on efforts to reform the tax law, because the taxonomy can help us better understand and advance the debate that will certainly surround those reform efforts.

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May 22, 2018 in Scholarship, Tax | Permalink | Comments (1)

The Tax Home Of Athletes Under I.R.C. § 162 And The Pay-For-Play Model

Kathryn Kisska-Schulze (Clemson), Analyzing the Applicability of IRC § 162 on the Pay-For-Play Model, 16 Va. Sports & Ent. L. J. 2 (2017):

Identifying the federal tax home of professional athletes has been a minimally examined area in academic scholarly works, but an important analysis for IRC § 162 business expense deduction purposes. However, due to the inconsistency among circuits in defining the term home from an IRC § 162 perspective, and because the U.S. Supreme Court has decidedly not clarified the definition of the term home for business expense deduction purposes, applying the conflicting interpretations could eventually pose an interesting federal tax issue for paid student-athletes.

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May 22, 2018 in Scholarship, Tax | Permalink | Comments (0)

SSRN Tax Professor Rankings

SSRN Logo (2018)SSRN has updated its monthly rankings of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  This ranking includes downloads from two 30- and 35-page papers by 12 tax professors on the new tax legislation that garnered a lot of media attention (including the New York Times and Washington Post) and generated a massive amount of downloads (the papers are the most downloaded papers over the past 12 months across all of SSRN and the most downloaded tax papers of all-time by over 200%).  See Brian Leiter (Chicago), 11 Tax Profs Blow Up The SSRN Download Rankings. (For some reason, Mitchell Kane (NYU) — the twelfth academic co-author of the two papers — is not included in the SSRN download rankings (although the downloads are included on his individual author page)).  Here is the new list (through May 1, 2018) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

 

 

All-Time

 

Recent

1

Reuven Avi-Yonah (Mich.)

164,218

Reuven Avi-Yonah (Mich.)

95,567

2

Dan Shaviro (NYU)

103,908

Daniel Hemel (Chicago)

90,782

3

David Gamage (Indiana)

98,839

David Gamage (Indiana)

87,310

4

Lily Batchelder (NYU)

98,670

Dan Shaviro (NYU)

86,743

5

Daniel Hemel (Chicago)

94,258

Darien Shanske (UC-Davis)

86,617

6

Darien Shanske (UC-Davis)

92,956

Manoj Viswanathan (Hastings)

85,829

7

Cliff Fleming (BYU)

90,608

Lily Batchelder (NYU)

85,540

8

David Kamin (NYU)

86,943

Cliff Fleming (BYU)

85,254

9

Rebecca Kysar (Brooklyn)

86,612

Ari Glogower (Ohio State)

84,752

10

Manoj Viswanathan (Hastings)

85,918

David Kamin (NYU)

84,654

11

Ari Glogower (Ohio State)

84,964

Rebecca Kysar (Brooklyn)

84,391

12

Michael Simkovic (USC)

39,750

Gladriel Shobe (BYU)

23,047

13

Paul Caron (Pepperdine)

34,389

Richard Ainsworth (BU)

3,575

14

D. Dharmapala (Chicago)

34,267

D. Dharmapala (Chicago)

3,533

15

Louis Kaplow (Harvard)

29,739

Michael Simkovic (USC)

3,504

16

Ed Kleinbard (USC)

24,689

Omri Marian (UC-Irvine)

2,587

17

Vic Fleischer (San Diego)

24,606

Hugh Ault (Boston College)

2,487

18

Richard Ainsworth (BU)

24,259

Kyle Rozema (Chicago)

2,314

19

Jim Hines (Michigan)

23,743

Sam Donaldson (Georgia St.)   

2,244

20

Gladriel Shobe (NYU)

23,591

Stephen Shay (Harvard)

2,178

21

Richard Kaplan (Illinois)

22,827

Jacob Goldin (Stanford)

2,158

22

Ted Seto (Loyola-L.A.)

22,725

Ed Kleinbard (USC)

2,153

23

Katie Pratt (Loyola-L.A.)

21,201

Ruth Mason (Virginia)    

2,113

24

David Weisbach (Chicago)

20,267

Kirk Stark (UCLA)

1,829

25

Robert Sitkoff (Harvard)

20,267

Steven Bank (UCLA)

1,730

Note that this ranking includes full-time tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.

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May 22, 2018 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

NY Times:  More Fabric, More Money? Retailer Accused Of Charging ‘Fat Tax’

New York Times, More Fabric, More Money? British Retailer Is Accused of Charging ‘Fat Tax’:

Size is a sensitive subject in the clothing business. So when one of Britain’s most popular and affordable clothing giants was found to charge more for plus-size clothing, it was accused of imposing a “fat tax” on women.

The pricing by the store, New Look, revived a debate over whether the use of more fabric for the same outfit should logically cost more.

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May 22, 2018 in Tax | Permalink | Comments (1)

Monday, May 21, 2018

IRS Seeks Grant Applications For Funding Low Income Taxpayer Clinics

LITC

The IRS has announced (IR-2018-121) that it is accepting grant applications through June 27 for Low Income Taxpayer Clinics for the 2019 grant cycle (Jan. 1 - Dec. 31, 2019):

The LITC program is a federal grant program administered by the Office of the Taxpayer Advocate at the IRS, led by the National Taxpayer Advocate, Nina E. Olson. Under the program, the IRS awards matching grants of up to $100,000 per year to qualifying organizations to develop, expand or maintain an LITC. An LITC must provide services for free or for no more than a nominal fee.

For calendar year 2018, the IRS awarded just over $11.8 million in matching grants to 134 organizations across the country for the development, expansion or continuation of LITCs. A listing of the 2018 LITC grant recipients is available on IRS.gov.

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May 21, 2018 in IRS News, Tax | Permalink | Comments (0)

Manns & Todd: Section 529 Plans Are Not The Ideal College Savings Vehicle For Most Families

F. Philip Manns (Liberty) & Timothy M. Todd (Liberty), Higher Education Savings and Planning: Tax and Nontax Considerations, 5 Texas A&M L. Rev. 343 (2018):

Funding higher education is among the critical financial decisions made by individuals and families. There are myriad options. Yet, the conventional wisdom — namely using Section 529 Plans — may not be the optimal vehicle to effectuate this goal. Therefore, this Article discusses various strategies to plan, save, and pay for higher education. It compares various savings methods including gifts, UTMA accounts, Section 529 Plans, trusts, and other vehicles. The analysis explores both tax and non-tax considerations, including the effect of different strategies on financial aid, transaction costs, investor control, income taxes, gift and estate taxes, flexibility, and creditor protection.

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May 21, 2018 in Scholarship, Tax | Permalink | Comments (0)

Lesson From The Tax Court: The Role Of State Law In Federal Taxation

Tax Court (2017)The United States Legal system is as hard to learn as the English language. One of the more difficult aspects of the system is the existence and interplay of 51 sovereignties. The Tax Code is not immune from that difficulty. Even though federal tax is governed in the first instance by federal law, state law can still be quite important to the resolution of a federal tax controversy, whether the dispute is about the amount of tax owed or the collection of an undisputed amount. The recent case of Vincent C. Hamilton and Stephanie Hamilton v. Commissioner, T.C. Memo. 2018-62 (May 8, 2018) teaches a lesson about the role of state law in determining a federal tax liability.

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May 21, 2018 in Bryan Camp, New Cases, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, May 20, 2018

University of Luxembourg Hosts Conference On New Tax Challenges: US And EU Perspectives

LuxThe University of Luxembourg hosted a conference on Friday on New Tax Challenges: US and EU Perspectives:

US Tax Reform and its Impact on the EU
Stephen Shay (Harvard)
Edoardo Traversa (Louvain)

Tax Leaks and Transparency
Diane Ring (Boston College), Leak-Driven Law, 65 UCLA L. Rev. __ (2018) (with Shu-Yi Oei (Boston College))
Katerina Pantazatou (Luxembourg)

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May 20, 2018 in Conferences, Scholarship, Tax | Permalink | Comments (0)

The Top Five New Tax Papers

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 #4 and #5:

  1. [957 Downloads]  Evaluating the New US Pass-Through Rules, by Dan Shaviro (NYU)
  2. [415 Downloads]  Taxation of Investments in Bitcoins and Other Virtual Currencies: International Trends and the Brazilian Approach, by Flavio Rubinstein (Fundação Getúlio Vargas) & Gustavo Gonçalves Vettori (University of São Paulo)
  3. [237 Downloads]  The 2017 Tax Cuts: How Polarized Politics Produced Precarious Policy, by Michael Graetz (Columbia)
  4. [156 Downloads]  IRC Section 678 and the Beneficiary Deemed Owner Trust (BDOT), by Edwin Morrow
  5. [151 Downloads]  How to Drive an RV Through a Loophole: The Ethics and Legality of LLC Formation for Sales Tax Avoidance, by Chase Edwards (Louisiana-Lafayette), Justin Ward (Jones Walker, Baton Rouge) & Casey Carder (Arkansas-Little Rock )

May 20, 2018 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, May 19, 2018

This Week's Ten Most Popular TaxProf Blog Posts

Shavuot: A Holiday For The Rule Of Law

ShavuotWall Street Journal op-ed:  Shavuot: A Holiday for the Rule of Law, by Joe Lieberman (Former U.S. Senator (D-CT)):

[Lawyers] play a crucial role in maintaining the rule of law, which creates order. A good legal system makes the difference between a civilized society and a chaotic one, and it all began when God gave the Ten Commandments to Moses on Mount Sinai.

For Jews, now is the perfect time of year—between Passover and the much less observed holiday of Shavuot—to contemplate the role of law in our lives.

In the Bible, the exodus from Egypt is not an insulated experience. It is part of a larger cycle that goes from slavery in Egypt, to freedom in the desert, to the Ten Commandments. Every year, religiously observant Jews count the 49 days from Passover to Shavuot, which begins this Saturday evening. The former holiday emphasizes liberty, the latter law. These values balance each other, which is why it’s unfortunate that so few people who observe Passover continue to Shavuot. ...

How do the children of Israel serve God? By accepting and obeying a code of law, the Ten Commandments. Freedom is not enough. Liberty without law leads to chaos, immorality and violence. Law without liberty is what the Israelites endured under Pharaoh’s tyrannical rule.

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May 19, 2018 in Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1834: Why Are We Still Arguing Over The Facts?

IRS Logo 2Forbes:  Why Are We Still Arguing Over The Facts Of The IRS Scandal?, by David Herzig (Valparaiso):

There has been a politically charged debate in academic circles for a while now about events that happened in 2013 regarding IRS investigations into groups purportedly because of the use of the term "Tea Party" in their name.

Paul L. Caron on the TaxProf Blog has been running a mostly continuous post (up to around day 1830) about "The IRS Scandal." The blog series is controversial in academic circles because it frames the issue of alleged IRS targeting of a typology of groups as a definite scandal.  As Professor Philip Hackney wrote, "This so-called scandal over what conservatives saw as the persecution of right-leaning nonprofits erupted at a meeting of Washington tax lawyers in May of 2013."  To be sure, it would be true if there was a direct use of the IRS to harm opposition groups.  For example, it was a clear scandal when Nixon used the IRS to target his political enemies. Yet, as we saw over the weekend, the facts associated with this particular allegation are not so certain and open to debate even after many Congressional, internal IRS, and other investigations.

This weekend an interesting feud between Bradley A. Smith (and others) and David Cay Johnston (and others) percolated over the facts associated with Professor Smith's Wall Street Journal Op-ed. In a series of posts on the TaxProf Blog, Mr. Johnston, Professor Smith, and others, continued to debate and litigate the underlying facts related to the IRS investigations.

Professor Smith and others are of the belief that there was a clear scandal and targeting of right leaning groups.  Mr. Johnston, is of the belief that the issue is less opaque.  After all, the IRS did not just use right leaning terms to identify groups for targeting.  What is clear from the series of posts is that even armed with a series of documents, either side in the debate can find clarity in their position and fault in the opposition.

How one interprets the facts, seems to be based on the lens of one's glasses. But, missing in a dispute over the facts, is what they mean. Rather that continue the downward spiral of arguing over the facts of what happened, here I want to offer a more productive use of the spot-light. We should be focused on two important points.

May 19, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Friday, May 18, 2018

Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews Cauble's Superficial Proxies For Simplicity In Tax Law

This week, Mirit Eyal-Cohen (Alabama) reviews a new article by Emily Cauble (DePaul), Superficial Proxies for Simplicity in Tax Law:

Mirit-Cohen (2018)In her article, Cauble reminds us that tax laws are always a popular target for political rhetoric. She aims in this Article to derail the public discourse about the concept of tax simplification by highlighting the dangers of focusing solely on numeric metrics relating to volume in order to describe complexity. We often hear unsophisticated, superficial proxies of tax complexity such as word counts, page counts, number of regulations, and other metrics. For example, there is much commentary that points to the length of IRS publications or tax forms instructions as evidence of the intricate nature of tax law. According to Cauble, these often leave the public susceptible to policies under the appearance of simplification while their real purpose is much more than that. They enable politicians to advance provisions under the guise of achieving simplicity – a prospect with broad appeal - when the true effect of the proposal is something that would be much less popular. She exemplifies with the latest tax legislation that while the rhetoric around the proposal to remove some tax brackets may have portrayed it as a simplification move, in her opinion its real goal was to reduce progressivity. 

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May 18, 2018 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (2)

Tax Policy In The Trump Administration

Ring: The Stages Of International Tax Reform

Diane Ring (Boston College), The Stages of International Tax Reform:

Since December 2017, tax conferences in the United States have focused substantially on the H.R. 1 tax reform legislation. No surprise there — the 2017 changes are among the most significant in the past thirty years. But over the past five months, through attending numerous tax conferences featuring international tax practitioners, I’ve observed some interesting developments in the nature of the discussions and debates at these conferences. These changes are pretty revealing about the process of absorbing the true impact of the new tax law, particularly in international tax. This weekend’s ABA May Tax Section Meeting in Washington, D.C. highlighted some of these trends.

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May 18, 2018 in ABA Tax Section, Conferences, News, Shuyi Oei, Tax | Permalink | Comments (0)

Oei & Ring: Tax Issues In The Sharing Economy

SharingShu-Yi Oei (Boston College) & Diane Ring (Boston College), Tax Issues in the Sharing Economy: Implications for Workers, in The Cambridge Handbook of the Law of the Sharing Economy (Nestor Davidson (Fordham), John Infranca (Suffolk) & Michèle Finck (Oxford), eds. Cambridge University Press 2018):

A growing number of individuals now perform work in the sector known as the “sharing economy,” and their participation raises important tax and regulatory questions. In this chapter, we survey some of the key tax issues confronting individuals operating in the sharing economy in the United States. Many of the tax implications that arise in sharing economy work stem from the threshold decision by many platforms to classify such individuals as independent contractors rather than employees. Therefore, we first discuss how the threshold classification decision affects the substantive and compliance-related tax issues faced by individuals operating in the sharing economy.

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May 18, 2018 in Scholarship, Tax | Permalink | Comments (0)

Call For Papers: NTA 111th Annual Conference On Taxation

National Tax Association (2016)The National Tax Association has issued a Call for Papers for its 111th Annual Conference on Taxation to be held Nov. 15-17, 2018 in New Orleans:

The 111th Annual Conference on Taxation will cover a broad range of topics including, but not limited to, taxation and tax policies; expenditure policies; government budgeting; intergovernmental fiscal relations; and subnational, national, and international public finance. The conference will focus, as always, on policy-relevant research bearing on taxation and government spending.

You are invited to submit the following: individual papers to be integrated into sessions, proposals for complete sessions of papers, and proposals for panel discussions. The submission deadline is June 1, 2018.  Decisions concerning the inclusion of papers and sessions will be announced in July 2018.  All presenters, including members of panel discussions, must then register and pay a conference registration fee.

You are also invited to volunteer to be a discussant or a session chair.  Decisions concerning discussants and session chairs will be made at a later date.  All discussants and session chairs must then register and pay a conference registration fee.

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May 18, 2018 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Thursday, May 17, 2018

Shaviro Presents Gilded Age Literature And Inequality Today At Stanford

ShaviroDaniel N. Shaviro (NYU) presents Gilded Age Literature and Inequality today at Stanford:

We are an intensely social species, and often a rivalrous one, prone to measuring ourselves in terms of others, and often directly against others.  Accordingly, relative position matters to our sense of wellbeing, although excluded from standard economic models that look only at the utility derived from own consumption of commodities plus leisure.  For example, people can have deep-seated psychological responses to inequality and social hierarchy, creating the potential for extreme wealth differences to invoked feelings of superiority and inferiority, or dominance and subordination, that may powerfully affect how we relate to each other.

The tools that one needs to understand how and why this matters include the sociological and the qualitative.  In my book-in-progress, Dangerous Grandiosity: Literary Perspectives on High-End Inequality Through the First Gilded Age, I use the particular tool of in-depth studies of particular classic works of literature (from Jane Austen’s Pride and Prejudice  through Theodore Dreiser’s The Financier and The Titan) that offer suggestive insights regarding the felt experiences around high-end inequality at different times and from different perspectives. A successor volume will carry this account through the twentieth century and up to the present.

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May 17, 2018 in Book Club, Colloquia, Scholarship, Tax | Permalink | Comments (1)

Hayashi Reviews Shobe's Tax Receivable Agreements In IPOs

Jotwell (Tax) (2016)Andrew Hayashi (Virginia), Understanding Tax Provisions in M&A Agreements (JOTWELL) (reviewing Gladriel Shobe (BYU), Private Benefits in Public Offerings: Tax Receivable Agreements in IPOs, 71 Vand. L. Rev. ___ (2017)):

In Private Benefits in Public Offerings, Prof. Shobe describes the emergence and evolution of a fascinating term in initial public offerings: tax receivable agreements (TRAs). These agreements reserve for the pre-IPO owners of the business the economic value of certain tax attributes that are either created in the course of the IPO or which were created over a course of years before the IPO. TRAs are contracts between the post-IPO corporation and the pre-IPO owners, pursuant to which the corporation makes distributions to those pre-IPO owners as tax assets are used. In one variation, pre-IPO owners receive the economic benefit of basis step ups that arise in certain “turbocharged” IPOs, and in other variations the pre-IPO owners receive the economic benefit of net operating losses and historical basis in the corporation’s assets.

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May 17, 2018 in Scholarship, Tax | Permalink | Comments (0)

How To Improve Pennsylvania's Tax System

Pavel A. Yakovlev (Mercatus Center, George Mason), How to Improve Pennsylvania's Tax System:

Pennsylvania ranks near the top in tax burden and near the bottom in business friendliness in the nation. While much good can be said about the state’s at personal income tax rate and relatively low sales tax rate, Pennsylvania’s business taxes are in serious need of reform. The state government took a step in the right direction by phasing out its archaic capital stock and foreign franchise tax, but Pennsylvania’s economy is still being held back by its high corporate income and unemployment insurance taxes. Pennsylvania’s 9.99 percent corporate income tax rate, the second highest in the nation, puts the state at a significant competitive disadvantage while generating less than 7 percent of total tax revenue. A combination of business tax cuts and tax base broadening could make Pennsylvania’s economy grow faster without jeopardizing its public finances.

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May 17, 2018 in Scholarship, Tax | Permalink | Comments (1)

Tax Presentations At Today's Mid-Atlantic Junior Faculty Forum

Richmond (2018)Tax presentations at today's Mid-Atlantic Junior Faculty Forum at Richmond:

  • Hayes Holderness (Richmond), Wither Transactional Nexus?
  • Danny Schaffa (Richmond), Can a Consumption Tax Undo Deficit Spending?

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May 17, 2018 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Top GOP Donors Close Wallets Over Tax Law

CNN, Top GOP Donors Close Wallets Over Tax Law:

As national Republicans scramble their resources for a high-stakes midterm election year, some of the party's biggest and most reliable donors have quietly withheld their support for Senate and House Republican groups out of frustration with the new tax law, CNN has learned.

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May 17, 2018 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (2)

GOP Tax Cut Not Why Economy Is Booming: Economists Are Rolling Their Eyes At Candidates’ Claims

Politico, GOP Tax Cut Not Why Economy Is Booming: Economists Are Rolling Their Eyes at Candidates’ Claims:

Republicans facing a tough midterm election season are pointing to the strong economy as proof their new tax law is working its magic.

But as campaign ads tout swelling payrolls and lawmakers spotlight companies handing out employee bonuses, there’s little evidence the tax cuts are already having an impact across the economy, which was already humming even before the law was enacted.

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May 17, 2018 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (0)

Wednesday, May 16, 2018

Hemel: Justice Alito, State Tax Hero?

Daniel Hemel (Chicago), Justice Alito, State Tax Hero?:

I had been waiting with bated breath for the Supreme Court’s decision in Murphy v. NCAA, formerly Christie v. NCAA. (Sorry, Chris Christie: You won’t have your name attached to the winning side of a landmark constitutional case — your successor will.) Anyhow, it came down yesterday — and it’s way more interesting than I anticipated. In a nutshell: Not only did the Supreme Court strike down the federal law at issue, which had stopped states, counties, and cities from legalizing sports gambling within their borders, but it also appears to have invalidated a broad swath of congressional limitations on state tax authority. (Oh, and it also saved sanctuary cities.) ...

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May 16, 2018 in New Cases, Tax | Permalink | Comments (2)

Tax Consequences Of The $130,000 Payment To Stormy Daniels

StormyForbes:  Stormy Daniels, Michael Cohen, Giuliani, Trump & Taxes, by Robert W. Wood:

At first it appeared that Michael Cohen had paid off Stormy Daniels with his own money, and without President Trump's knowledge. Then, Rudy Giuliani said President Trump had reimbursed him. Then, there was some reshuffling about who knew what when. There were some awkward questions about whether President Trump knew of the deal at the time, or only learned of it later. The timing and mechanics of the reimbursement seem a little confused. From a tax viewpoint—which surely isn't the most important part of this story--many of these details may not matter. Even so, the tax issues are an interesting side show. Just about every kind of payment has tax consequences, to both the recipient and to the one who paid the money.

There's no question that Stormy Daniels would have to pay tax on the $130,000 payment. Settlement money is almost always taxable to the recipient, unless it is for personal physical injuries or physical sickness. That is one of the rules about taxes on legal settlements. But on the payer side of the equation, it isn't so clear whether someone paying her could deduct the payment, leaving aside the question of who effectively paid the money. Michael Cohen may have expected reimbursement at the time or only learned of the reimbursement later. Someone else was ultimately paying the bill.

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May 16, 2018 in Celebrity Tax Lore, Tax | Permalink | Comments (4)

Colinvaux: State Tax Benefits And The Federal Charitable Deduction

Roger Colinvaux (Catholic), Failed Charity: Taking State Tax Benefits into Account for Purposes of the Charitable Deduction,  66 Buff. L. Rev. ___ (2018):

The Tax Cuts and Jobs Act (TCJA) substantially limited the ability of individuals to deduct state and local taxes (SALT) on their federal income tax returns. Some states are advancing schemes (CILOTs) to allow taxpayers a state tax credit for contributions to a 501(c)(3) organization controlled by the state. The issue is whether CILOTs are deductible as charitable contributions on federal returns. Under a general rule of prior law — the full deduction rule — state tax benefits were ignored for purposes of the charitable deduction. If the full deduction rule is applied to CILOTs, then the SALT limitation can successfully be avoided. This article explains that after the TCJA, state tax benefits are more valuable and it no longer makes sense to ignore them for purposes of determining whether a taxpayer has made a charitable contribution.

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May 16, 2018 in Scholarship, Tax | Permalink | Comments (0)

The Elephant Curve Of Global Inequality And Growth

Facundo Alvaredo, Lucas Chancel, Thomas Piketty, Emmanuel Saez & Gabriel Zucman (Paris School of Economics), The Elephant Curve of Global Inequality and Growth:

We present new evidence on global inequality and growth since 1980 using the World and Wealth Income Database. We plot the curve of cumulated growth from 1980 to 2016 by percentile of the global distribution of income per adult. This curve has an elephant shape due to high growth rates at the median (fast growth in China and India), modest growth rates above the median, and explosive growth rates at the top. We project the evolution of global inequality between now and 2050 combining projected macro growth rates and within country inequality evolution based on past trends.

Figure 2

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May 16, 2018 in Scholarship, Tax | Permalink | Comments (1)

The IRS Scandal, Day 1831: Johnston Says Wyland Ignores Inconvenient Facts In The IRS 'Scandal'

IRS Logo 2TaxProf Blog op-ed:  Michael Wyland Ignores Inconvenient Facts In The IRS 'Scandal', by David Cay Johnston

I’m glad that Michael Wyland weighed in, though he begins with diversionary nonsense by asserting that I forgot that others would critique my critique. Then Wyland falsely asserts that I “persist in denying a scandal ever happened” when I explicitly state there was a scandal and, as a Tax Notes columnist back then, was the first person to call on Lois Lerner to resign.

Wyland also faults me for not addressing C3 application scrutiny. Professor Bradley Smith didn’t write about C3s, only C4s.

Let’s stick to the issue — did the Obama Administration target conservatives, exclusively or nearly so, in reviewing gratuitous C4 applications, blocking their engagement in the 2012 elections? Or is this scandal’s nature quite different?

Taxes are the core of our democracy and the very reason (along with the power to regulate commerce) that we live in the Second American Republic under our Constitution. I hope more people weigh in because our democracy will benefit from a full airing of the tax law enforcement issue at hand. My purpose is to show verifiable facts that reveal as false the meme that Rep. Daryl Issa, Smith and now Wyland perpetuate.

False memes damage our democracy. Facts matter.

Demolishing a key aspect of this meme is easy — the blocking part. No one needs IRS approval to open shop as a C4. Only after-the-fact filings are required. That means no one was blocked or could have been. When Smith and others state otherwise they are ill-informed or deceitful. Smith should know the law given his occupation.

There is, also, a larger issue about politics and money and what role Congress should define for the IRS, our federal tax police.

Those issues will be addressed in my next book, tentatively titled The Prosperity Tax, which proposes an entirely new and simplified tax system aligned with the 21st Century economy. My plan would shrink the IRS, use a privatized but licensed system to make cheating extremely difficult (and very painful), level the tax playing field and encourage much more savings and investment more wisely deployed. And is wipes away all the tax code filigree.

For now, let’s stick to the issue at hand.

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May 16, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, May 15, 2018

NY Times: Seattle Scales Back 'Amazon Tax,' But Tensions Linger With Bezos

Amazon logoNew York Times, Seattle Scales Back Tax in Face of Amazon’s Revolt, but Tensions Linger:

After intense lobbying by local businesses and a bold threat by Amazon to curtail development in its hometown, the Seattle City Council on Monday approved a smaller and more limited tax on big companies than originally envisioned.

The new tax — dubbed the “Amazon Tax” by locals — will fund affordable housing and homeless services in a city whose economic boom, driven in no small part by Amazon, has priced many residents out of the area and forced some onto the streets. ...

The council had originally considered an annual “head” tax of $500 per full-time employee for Amazon and other large employers, but the amended measure that passed reduced that figure to $275. Instead of the $75 million a year the tax was originally expected to raise, it will bring in less than $50 million. The council also included a sunset provision that would require the tax to be reauthorized in five years.

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May 15, 2018 in Tax | Permalink | Comments (0)

For Your Own Good: Taxes, Paternalism, And Fiscal Discrimination

For Your Own GoodFor Your Own Good: Taxes, Paternalism, and Fiscal Discrimination in the Twenty-First Century (Adam J. Hoffer (Wisconsin) & Todd Nesbit (Ball State), eds., 2018):

An Introduction to Selective Taxation, p. 1
Adam J. Hoffer (Wisconsin) & Todd Nesbit (Ball State)

Part I: Public Finance and Public Choice: Establishing the Foundation
Ch. 1: Selective Consumption Taxes in Historical Perspective, p. 19
William F. Shughart II (Utah State)
Ch. 2: Welfare Effects of Selective Taxation: Economic Efficiency as a Normative Principle, p. 41
Justin M. Ross (Indiana)
Ch. 3: The Theory and Practice of Selective Consumption Taxation, p. 59
Adam J. Hoffer (Wisconsin) & William F. Shughart II (Utah State)
Ch. 4: The Language of Taxation: Ideology Masquerading as Science, p. 77
Richard E. Wagner (George Mason)

Part II: The Political Economy of Public Budgeting

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May 15, 2018 in Scholarship, Tax, Think Tank Reports | Permalink | Comments (0)

Skadden Tax Litigator Michael Scudder Confirmed To 7th Circuit, Succeeding Judge Posner

ScudderNational Law Journal, Skadden's Michael Scudder Confirmed to 7th Circuit, Succeeding Posner:

Michael Scudder, a litigation partner at Skadden, Arps, Slate, Meagher & Flom in Chicago, was confirmed Monday for a seat on the U.S. Court of Appeals for the Seventh Circuit.

Scudder, whose practice focused on tax-related matters, accounting and white-collar disputes, was the Trump administration’s nominee to replace Richard Posner, who retired. Scudder’s nomination sailed through the Senate Judiciary Committee in March. The vote Monday evening was 90-0.

Scudder had been a Skadden partner since 2009, earning $3.06 million in partnership income in 2017 and $2.55 million in 2016, according to a financial disclosure released as part of the confirmation process.

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May 15, 2018 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 1830: Johnston Says Smith Mischaracterizes The Record And Gets The Facts Of The IRS 'Scandal' Wrong

IRS Logo 2TaxProf Blog op-ed:  Smith Mischaracterizes The Record And Gets The Facts Of The IRS 'Scandal' Wrong, by David Cay Johnston

I’m glad that Professor Smith has responded, though he begins with a false assertion that “most” of my essay “consists of ad hominin attacks.” Noting Smith’s “failure to know the facts” is not ad hominem. And contrary to his assertion, I never questioned his intelligence or anyone else’s. But points for using a rhetorical device to divert attention from the issues.

My essay was rich with specific facts and circumstances which Smith fails to refute. Sadly, Smith presents as facts things he considers so obvious that they need no attribution (See Sunrise, from the East) but which under scrutiny turn out to be bogus.

Anyone who checks Smith’s sources will see that Smith mischaracterizes the record and, in some cases, gets the facts totally wrong.

Worse, Smith asserts that he knows things for which there is not a scintilla of evidence. His reiterated argument that the IRS did Obama’s bidding is nothing but conjecture, directly contradicted by the testimony of the IRS manager who volunteered that he is a conservative Republican. Smith relies on TIGTA, but its audits do not support him, they contradict him.

Smith refers to documents without quoting them. That may explain a reason Smith does not even come close to getting his facts straight, although that does not excuse his errors and falsehoods. When one has been shown the facts and repeats a falsehood it becomes a much more serious matter, a lie.  (See my pieces, for example, AG Eric Holder lying here, here and here.)

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May 15, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)