TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Thursday, January 19, 2017

The IRS Scandal, Day 1351:  Two Federal Judges Order Five Officials To Preserve Emails Sought In FOIA Lawsuits; Judicial Watch Fears Another Lois Lerner Situation As Obama Administration Leaves Power

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Politico, Judge Orders 4 Homeland Security Officials to Preserve Private-Account Emails:

A federal judge has ordered four current or former top officials at the Department of Homeland Security, including Secretary Jeh Johnson, to preserve emails in their private accounts that may be responsive to a Freedom of Information Act lawsuit.

U.S. District Court Judge Randolph Moss issued the order Wednesday morning to Johnson, former Deputy Secretary Alejandro Mayorkas, former chief of staff Christian Marrone, and former General Counsel Stevan Bunnell, telling them to copy relevant messages to thumb drives.

Moss said the Justice Department indicated that all four men agreed to preserve any responsive messages that might be in their private accounts, but he still granted the preservation order sought by the conservative group Judicial Watch, which said it feared the government might lose easy access to the records as Obama appointees ship out.

“Given the Department’s representation, the Court has no reason to doubt that the four individuals have agreed to comply fully with their obligations to preserve any potentially responsive emails and that they have every intention of doing so,” wrote Moss, an appointee of President Barack Obama.

“Nonetheless, out of the abundance of caution, the Court will order an additional preservation step to minimize the risk of any inadvertent loss of potentially responsive emails. Specifically, the Court will order the individuals to copy any emails from the relevant time period in any private email accounts that might contain responsive materials onto portable thumb drives, to be kept in the individuals’ personal possessions,” the judge added. “Copying the emails to a physical drive will minimize the risk that any responsive email might be inadvertently deleted.” ...

In a separate Judicial Watch case before another judge, the Justice Department indicated Wednesday that one of its top officials has no record of an email he apparently sent to a top Clinton campaign official in May 2015 previewing an upcoming congressional hearing and an expected DOJ filing in a court case related to Clinton’s emails.

Assistant Attorney General for Legislative Affairs Peter Kadzik sent the message with the subject line “Heads Up” to Clinton campaign chairman John Podesta. Clinton campaign aides said the communication was routine, but Donald Trump’s campaign has alleged it showed improper collusion between Justice and the Clinton camp. The contact is one focus of a Justice inspector general investigation announced last week.

The message from Kadzik to Podesta was one of tens of thousands of messages that were hacked from Podesta’s account and posted online by WikiLeaks during the campaign in an effort U.S. intelligence agencies have concluded was part of a Russian government-led drive to influence the U.S. presidential election and bolster Trump’s chances. ...

U.S. District Court Judge Emmet Sullivan issued a preservation order Wednesday at Judicial Watch’s request and instructed the government to report by this morning on its efforts to comply.

Before It's News, Federal Judge Orders DHS Officials to Not Destroy Email:

Even though the judge says the doesn’t doubt their intent, of course he does. He’d have to have been utterly brain dead to not see what is going on from Lois Lerner to Hillary Clinton and beyond. Even as this was happening, another federal judge was discovering that the word of an Obama official that they’d complied with the law wasn’t worth a whole lot.

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January 19, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, January 18, 2017

Rostain Presents Lessons From The Tax Shelter Wars At University Of British Columbia

RostainTanina Rostain (Georgetown) delivered the J. Donald Mawhinney Lectureship in Professional Ethics at the University of British Columbia Allard School of Law on Lessons from the Tax Shelter Wars: Tax Advice, Organizational Wrongdoing, and Enforcement Challenges:

The turn of the 21st Century saw the development of an enormous tax shelter industry in the United States. Aided by prestigious law firms, tax professionals at major accounting firms — including KPMG, Ernst & Young, and PricewaterhouseCoopers — created a widespread market in abusive shelters, which allowed corporate and individual taxpayers to eliminate billions of dollars in taxes owed. As tax shelter activity proliferated, government authorities were faced with increasingly complex regulatory challenges and were ultimately forced to resort to criminal prosecutions to stem the tide of tax shelter activity.

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

Call For Proposals: Association For Mid-Career Tax Law Professors

The Association for Mid-Career Tax Law Professors (“AMT”) has issued a Call for Proposals:

MCThe AMT organizing committee — Jennifer Bird-Pollan (Kentucky), Miranda Fleischer (San Diego), Will Foster (Arkansas), Brian Galle (Georgetown), and Susie Morse (Texas) — welcomes proposals for our annual conference.

AMT is a recurring conference intended to bring together relatively recently-tenured professors of tax law for frank and free-wheeling scholarly discussion. Our third annual meeting will be held on Monday and Tuesday, May 22 and 23, 2017, on the campus of the University of Arkansas School of Law in Fayetteville, Arkansas. We’ll begin early on Monday and adjourn by noon on Tuesday.

2015 Conference at Ohio State (Day 1, Day 2)
2016 Conference at UC-Davis (Day 1, Day 2)

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

Just 8 Men Own The Same Wealth As Half The World

Oxfam

OxFam, An Economy for the 99%: It’s Time to Build a Human Economy That Benefits Everyone, Not Just the Privileged Few:

New estimates show that just eight men [Jeff Bezos, Michael Bloomberg, Warren Buffett, Larry Ellison, Amancio Ortega Gaona, Bill Gates, Carlos Slim Helú, Mark Zuckerberg] own the same wealth as the poorest half of the world. As growth benefits the richest, the rest of society – especially the poorest – suffers. The very design of our economies and the principles of our economics have taken us to this extreme, unsustainable and unjust point.

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January 18, 2017 in Tax, Think Tank Reports | Permalink | Comments (0)

Tax Policy Center:  Are Entrepreneurs Overtaxed?

Tax Polcy Center Logo (2017)Tax Policy Center, Are Entrepreneurs Overtaxed?:

Entrepreneurs play a critical role in developing new products, inventing new production techniques, creating jobs, and strengthening our economy. As lawmakers focus on tax reform, it is timely to ask whether America’s tax system treats entrepreneurs appropriately and whether reforms could improve economic performance.

Policy discussions often emphasize how taxes affect incentives to work, save, invest, innovate, and launch new ventures. Because successful entrepreneurs sometimes amass substantial wealth, discussions also consider how the tax burden is shared across people of different means. These considerations are important, but incomplete. Policymakers should also consider the special characteristics of income from entrepreneurial activity.

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

The IRS Scandal, Day 1350:  Even Trump Adviser Buys Myth Of 'Scandal-Free Administration,' Despite IRS, Five Other Scandals

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Wall Street Journal: Obama’s ‘Scandal-Free Administration’ Is a Myth, by John Fund (National Review) & Hans Von Spakovsky (Heritage Foundation):

You often hear that the Obama administration, whatever its other failings, has been “scandal-free.” Valerie Jarrett, the president’s closest adviser, has said he “prides himself on the fact that his administration hasn’t had a scandal and he hasn’t done something to embarrass himself.”

Even Trump adviser Peter Thiel seems to agree. When the New York Times’s Maureen Dowd observed during an interview that Mr. Obama’s administration was “without any ethical shadiness,” Mr. Thiel accepted the premise, saying: “But there’s a point where no corruption can be a bad thing. It can mean that things are too boring.”

In reality, Mr. Obama has presided over some of the worst scandals of any president in recent decades. Here’s a partial list: ...

IRS abuses. Mr. Obama’s Internal Revenue Service did something Richard Nixon only dreamed of doing: It successfully targeted political opponents. The Justice Department then refused to enforce Congress’s contempt citation against the IRS’s Lois Lerner, who refused to answer questions about her agency’s misconduct. ...

All of these scandals were accompanied by a lack of transparency so severe that 47 of Mr. Obama’s 73 inspectors general signed an open letter in 2014 decrying the administration’s stonewalling of their investigations. ...

The president’s journalistic allies are happily echoing the “scandal-free” myth. Time’s Joe Klein claims Mr. Obama has had “absolutely no hint of scandal” in his presidency. The media’s failure to cover the Obama administration critically has been a scandal in itself—but at least the president can’t be blamed for that one.

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January 18, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Tuesday, January 17, 2017

Grewal:  Can Trump Deduct Donations Of Emoluments To The U.S. Treasury?

Trump (President Elect)Andy Grewal (Iowa), Trump’s Donations of Emoluments to the U.S. Treasury—Tax Deductible?, Yale J. on Reg.: Notice & Comment (Jan. 13, 2017):

On Wednesday, President-Elect Donald Trump, through his legal advisors, presented his plan to address potential conflicts of interests created by his continued ownership in the Trump Organization. As part of his plan, the President (referred to this way for ease of exposition) has promised to transfer profits derived some foreign government transactions to the United States Treasury, even though he probably correctly denies that the foreign Emoluments Clause applies to those profits. The first question that comes to mind about the President’s plan relates, of course, to its U.S. federal income tax consequences.

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January 17, 2017 in Tax | Permalink | Comments (2)

The IRS Scandal, Day 1349:  Peggy Noonan On The Obama Presidency And The IRS Scandal

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Wall Street Journal op-ed: The Trump Cabinet’s Good Opening Week, by Peggy Noonan:

Mr. Obama’s has not been a successful presidency. In foreign affairs his two terms, added to George W. Bush’s two terms, produced 16 years of unsuccess—an entire generation. Richard Haass, head of the Council on Foreign Relations, put it gently in conversation this week: Mr. Bush tried to do too much, which was unrealistic; Mr. Obama attempted too little, its own, perhaps more consequential unrealism.

In domestic matters he put all his chips on health care and bullied it through without a single Republican vote, leaving his party fully owning it and the other with no investment in saving it. His relationship with Congress started out at impasse, proceeded to fraught and ended in estrangement. He saw this all as the other side’s fault. In his dealings with the Hill he was often imperious, sometimes a snot. He allowed executive agencies such as the IRS to ruin their public reputations and stonewall scandal after scandal. His most famous words as president came not in formal addresses but extemporaneous misjudgments—“red line,” ISIS as the “jayvee team”—plus an attempt to mislead: “If you like your plan, you can keep your plan.”

He left his party weaker, in terms of public offices held, than at any point since the 1920s.

He spent an unprecedented amount of time campaigning against, and assailing in the bitterest terms, his successor. Donald Trump was “uniquely unqualified,” “temperamentally unfit.” America chose him anyway. They were choosing Mr. Obama’s exact opposite, just as in choosing Sen. Obama in 2008 they went with the opposite of Mr. Bush. When they want the opposite of what you are, they are not registering approval.

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

TaxProf Blog Holiday Weekend Roundup

Monday, January 16, 2017

Sturgeon:  Martin Luther King Jr. And The Three Dimensions Of A Complete Life

MLKStarting to Look Up:  Be the Best of Whatever You Are, by Al Sturgeon (Dean of Graduate Programs, Pepperdine):

Fifty years ago, and just one year before his assassination, Dr. Martin Luther King, Jr. preached a sermon at the New Covenant Baptist Church in Chicago titled, The Three Dimensions of a Complete Life.  Dr. King’s 3D sermon emphasized the height dimension of life (God) along with the length (self) and breadth dimensions (others).  Some of his thoughts about breadth made the entire sermon known as “the street sweeper speech.”  Today, on the holiday that remembers Dr. King, I ask you to remember this:

When I was in Montgomery, I went to a shoe shop quite often, known as the Gordon Shoe Shop. And there was a fellow in there that used to shine my shoes, and it was just an experience to witness this fellow shining my shoes. He would get that rag, you know, and he could bring music out of it. And I said to myself, “This fellow has a Ph.D. in shoe shining.” What I’m saying to you this morning, my friends, even if it falls your lot to be a street sweeper, go on out and sweep streets like Michelangelo painted pictures; sweep streets like Handel and Beethoven composed music; sweep streets like Shakespeare wrote poetry; sweep streets so well that all the host of heaven and earth will have to pause and say, “Here lived a great street sweeper who swept his job well.”

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January 16, 2017 in Legal Education, Tax | Permalink | Comments (0)

IRS Whistleblower Awards Jump 322%

The IRS Scandal, Day 1348: How The Trump Administration Can Stop IRS Abuse Of Political Groups

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Weekly Standard, How the Trump Administration Can Stop IRS Abuse of Political Groups:

For more than six years, the Internal Revenue Service has been trying to fend off accusations that its process for granting tax-exempt status discriminated against applicants expressing political views at odds with those of the Obama administration. This discrimination against political viewpoints the Democrats disapprove of is a clear, even astonishing, violation of the First Amendment. For that reason, the IRS has lost many more of these battles than it has won. It’s lost battles not only in court against the victimized non-profits; it’s even lost against the Treasury Department’s own inspector general, which conducted a detailed study and concluded that many of the most serious accusations of discrimination were true.

In its court battles the IRS has been represented by the Justice Department, whose job it is to represent federal agencies when they are sued. No one will be shocked to learn that under the Obama administration, and Attorneys General Eric Holder and Loretta Lynch, DOJ lawyers have used every tool at their disposal to defeat the IRS’s accusers even when those accusers are agreeing with Treasury’s inspector general. That means that, according to the Obama administration’s own inspector general report, those victimized non-profits are right in claiming that they were discriminated against because of their political views.

That litigation strategy needs to change.

Upon President Trump’s inauguration, the Justice Department will get a new boss: Jeff Sessions, President Trump’s nominee for Attorney General. The moment he takes office, General Sessions should direct the Justice Department lawyers—all of whom report to him—to change their litigation stance to reflect an important adage about how government lawyers should do business: “the government wins when justice is done.”

It’s time to see that justice is done in these cases.

Up until now, the government’s strategy has been to make the IRS cases take as long as possible and to resist every demand for discovery—the process by which litigants can request that their adversaries produce documents, or provide testimony, revealing what was really going on inside the IRS.

I represent the plaintiff in one of these cases—Z STREET v. Koskinen—which challenges the IRS’s six year delay in processing the application for tax-exempt status by an organization whose views on the Middle East were at odds with President Obama’s. In discovery, we’ve asked for information about how the IRS went about deciding what to do with (and to) our organization. But the IRS has produced virtually nothing that sheds light on its decision-making process. Other organizations in court against the IRS have been given the same treatment by the Justice Department’s litigation teams.

All of the members of those government lawyer teams report to the U.S. Attorney General. That means that when the new sheriff arrives in town he can give new orders on how these cases ought to be handled.

Attorney General Sessions should direct these lawyers to stop resisting discovery, and to stop trying to prevent the litigants—and the public—from finding out what the IRS was really doing to all of these organizations for all these years. This is not a matter of political payback, like the question whether Hillary Clinton ought to be prosecuted for what many think are her misdeeds, at the State Department and with the Clinton Foundation. It’s just a matter of letting the truth be told. Z STREET, like many of the plaintiffs in the other cases against the IRS, is not seeking money damages. We just want to know the truth about what the IRS was doing to us, and why, and at whose direction.

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January 16, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Sunday, January 15, 2017

The Top 5 Tax Paper Downloads

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

  1. [603 Downloads]  Problems with Destination-Based Corporate Taxes and the Ryan Blueprint, by Reuven S. Avi-Yonah (Michigan; moving to UC-Irvine) & Kimberly A. Clausing (Reed College)
  2. [334 Downloads]  IRS Issues Final and Temporary Debt-Equity Regulations Under Section 385, by David S. Miller (Proskauer, New York) & Janicelynn Asamoto Park (Proskauer, New York)
  3. [316 Downloads]  A Guide to the GOP Tax Plan — The Way to a Better Way, by David A. Weisbach (Chicago)
  4. [166 Downloads]  The Right Tax at the Right Time, by Edward Kleinbard (USC)
  5. [149 Downloads]  Protecting Trump's $916 Million of NOLs, by Steve Rosenthal (Tax Policy Center)

January 15, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Tax Policy In The Trump Administration

The IRS Scandal, Day 1347:  IRS Chief Counsel William Wilkins Resigns, Effective Jan. 20; GOP Questioned His Role In Tea Party Targeting

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Accounting Today, IRS Names Acting Chief Counsel Following William Wilkins’ Departure:

The Internal Revenue Service has chosen William M. Paul to step into the role of acting chief counsel after William Wilkins stepped down this week. ...

Wilkins has been the IRS’s chief counsel since 2009. Like many Obama administration officials, he is leaving just ahead of the incoming Trump administration. He is one of only two political appointees at the IRS.

Wilkins drew some controversy in the midst of the Tea Party targeting scandal in 2013 when it was revealed that he had met with President Obama only two days before the IRS provided new guidance to its Exempt Organizations unit on how to handle applications for tax-exempt status from political groups. Wilkins testified before Congress that he didn’t recall many of the details of his interactions with Treasury Department officials during the period when the new guidance was being drawn up, provoking outraged reactions from Republican leaders of the House Oversight Committee blasting him for his cautious testimony. ...

IRS Commissioner John Koskinen [said] ... "I also want to thank Bill Wilkins for nearly eight years of dedicated service here as Chief Counsel at the IRS. As many in the wider tax community recognize, Bill has done an exceptional job leading the legal division of the IRS during a challenging period.”

Prior TaxProf Blog coverage:

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

Saturday, January 14, 2017

This Week's Ten Most Popular TaxProf Blog Posts

IRS Chief Counsel William Wilkins Resigns, William Paul Named Acting Chief Counsel, Effective Jan. 20

WPNational Law Review, IRS Chief Counsel William J. Wilkins Resigns Effective January 20, 2017:

William J. Wilkins has tendered his resignation as Chief Counsel effective as of noon on January 20, 2017. Mr. Wilkins was nominated by President Obama to replace Donald L. Korb, who resigned from the position in late 2008. Mr. Wilkins was confirmed by the Senate to serve as Chief Counsel in July 2009.

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January 14, 2017 in IRS News, Tax | Permalink | Comments (2)

Mnuchin Used Dynasty Trust Estate Tax Loophole Obama Has Tried To Close

DynastyBloomberg: Mnuchin May Have Used Tax Loophole Obama Attacked, by Zachary Mider:

Steven Mnuchin, Donald Trump’s nominee to lead the U.S. Treasury Department, may be taking advantage of a loophole that allows the nation’s richest families to shield their wealth from estate taxes for generations into the future.

Mnuchin placed assets worth at least $32.9 million into the Steven Mnuchin Dynasty Trust I, according to a disclosure to federal ethics officials made public Wednesday, as well as securities filings by a company where he used to work. The assets include corporate stock and interests in a Willem de Kooning painting and a three-engine corporate jet.

Dynasty trusts are designed to foil the estate tax, which in its current form takes a 40 percent bite of a person’s fortune at death. Because the first $5.5 million of wealth is exempt from the tax, and there are ample opportunities to avoid it, in 2013 only one in 555 estates paid anything at all. 

Structured properly, dynasty trusts comply with the law and are common among the wealthiest Americans, tax professionals say. ...

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January 14, 2017 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 1346:  The Trump Dossier, The Left, And Tea Party Targeting

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Wall Street Journal: Dumpster Diving for Dossiers, by Kimberley A. Strassel:

Washington and the press corps are feuding over the Trump “dossier,” screaming about what counts as “fake news.” The pity is that this has turned into a story about media ethics. The far better subject is the origin of the dossier itself.

“Fake news” doesn’t come from nowhere. It’s created by people with an agenda. This dossier—which alleges that Donald Trump has deep backing from Russia—is a turbocharged example of the smear strategy that the left has been ramping up for a decade. Team Trump needs to put the scandal in that context so that it can get to governing and better defuse the next such attack.

The more that progressives have failed to win political arguments, the more they have turned to underhanded tactics to shut down their political opponents. (For a complete account of these abuses, see my book, “The Intimidation Game.”) Liberals co-opted the IRS to crack down on Tea Party groups. They used state prosecutors to launch phony investigations. They coordinated liberal shock troops to threaten corporations. And they—important for today’s hysteria—routinely employed outside dirt diggers to engage in character assassination.

This editorial page ran a series in 2012 about one such attack, on Frank VanderSloot. In 2011 the Idaho businessman gave $1 million to a super PAC supporting Mitt Romney. The following spring, the Obama re-election campaign publicly smeared Mr. VanderSloot (and seven other Romney donors) as “wealthy individuals with less-than-reputable records.”

This national shaming, by the president no less, painted a giant target on Mr. VanderSloot’s back. The liberal media slandered him daily on TV and in print. The federal bureaucracy went after him: He was ultimately audited by the IRS and the Labor Department.

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January 14, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, January 13, 2017

Weekly Tax Highlight And Roundup

This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) describes a recent Tax Court case in which the judge rejected a taxpayer's attempt to be treated as a real estate professional for passive loss purposes because of his unsubstantiated assertions that he spent 750 hours per year working on real estate activities.

KristanIn Tax Court, the seventh “allegedly” proves fatal

Allegedly. That’s a bad word to see when a Tax Court judge is describing your arguments. It turned out badly for a Massachusetts couple in Tax Court.

Like other taxpayers we’ve seen, the couple was trying to convince the court that they had spent enough time on their rental properties to qualify as “real estate professionals.” If they did, they could deduct their rental losses despite the passive loss rules. Unfortunately, it’s a tough hurdle to clear.

Real estate professionals avoid the “per-se passive” rule that makes their rental losses automatically passive and deductible only to the extent of “passive” income. Instead they get to determine whether they are passive using the hours-spent standards that apply to other business activities. To be a real estate pro, you have to pass two tests:

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January 13, 2017 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Article Review And Roundup

This week, Ari Glogower (Ohio State) reviews a new article by Omri Marian (UC-Irvine), The Other Eighty Percent: Private Investment Funds, International Tax Avoidance, and Tax-Exempt Investors, BYU L. Rev (forthcoming 2016).

Glogower (2016)Omri Marian’s new work highlights the role of private investment funds (“PIFs”) in international tax planning and avoidance by PIF-controlled multinational enterprises (“MNEs”).  Marian argues that PIFs active in cross-border investments can take advantage of tax planning opportunities unavailable to purely domestic funds, and provides evidence that PIF-controlled MNEs are more likely to engage in aggressive planning.  Consequently, income earned by PIFs can more readily escape taxation entirely, in both the source jurisdiction where investments are made, and in the residence jurisdiction of investors and managers.   

This groundbreaking work lies at the intersection of two literatures, on cross-border tax planning by MNEs, and on the taxation of PIFs, and fills critical gaps in both.  The MNE literature, Marian notes, generally focuses on tax planning by corporate MNEs, particularly in industries with mobile IP such as technology and pharmaceuticals, but not on the role of investor and PIFs in MNE tax planning.  Marian’s work also calls for (and makes significant strides towards) a broader account of the full scope PIF tax planning activities, beyond traditional areas of concern such as manager compensation and carried interest. 

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January 13, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

PwC Hires GE's 600-Person Global Tax Team

GEPWCWall Street Journal, GE Tax Trade: Sending Hundreds of Accountants to PwC:

PricewaterhouseCoopers and General Electric Co. have agreed to move GE’s in-house global tax team over to PwC as the accounting firm adds global expertise and the industrial conglomerate continues slimming down.

PWC will absorb more than 600 employees under the agreement announced Thursday. GE’s tax employees in 42 countries will move to PwC, where they will provide tax planning, advice, compliance and other tax services to both GE and other PwC tax clients.

PwC will also take over GE’s tax technologies as part of the five-year renewable agreement.

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January 13, 2017 in Tax | Permalink | Comments (1)

Alex Brill, David Schizer Interviewed By Trump Transition Team For Assistant Secretary Of The Treasury For Tax Policy

BSBloomberg is reporting that Alex Brill (Research Fellow, American Enterprise Institute) and David M. Schizer (Dean Emeritus and Harvey R. Miller Professor of Law and Economics, Columbia Law School) have been interviewed by the Trump transition team for the position of Assistant Secretary of the Treasury for Tax Policy.

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January 13, 2017 in Tax | Permalink | Comments (3)

Batchelder:  Fixing The Estate Tax

Democracy Logo (2018)Democracy: A Journal of Ideas: Fixing the Estate Tax, by Lily Batchelder (NYU):

Liberals and conservatives have long disagreed about how much economic inequality is fair. But one thing they generally share is a vision of America as a land of opportunity—a nation where, at least compared to other countries, one’s financial success should depend relatively little on the circumstances of one’s birth. To be sure, we have had, and continue to have, great failings in this regard, with slavery and disenfranchisement just two conspicuous examples. But as President Obama has said, “What makes us Americans is our shared commitment to an ideal—that all of us are created equal, and all of us have the chance to make of our lives what we will.”

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

The IRS Scandal, Day 1345:  Donald Trump, The Intelligence Community, And Lois Lerner

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Communities Digital News, Chuck Schumer and the CIA Like Their Targets Shaken, Not Stirred:

Between 2010 and 2012, roughly 426 conservative organizations were targeted for extra scrutiny by the IRS. A 298-page report by the Office of Inspector General says the IRS targeted organizations for harassment with names that included the words “tea,” “liberty,” “patriot” or “constitution” in their titles.

Subsequent congressional hearings revealed the IRS colluded with the Justice Department, the Federal Election Commission and leading Democratic members of Congress on which tea party groups to target. One of those congressional members is today’s Democratic Senate Minority Leader, Chuck Schumer.

In 2012, Schumer joined several of his Democratic colleagues in drafting a letter urging the IRS to investigate tea party organizations “focused on federal election activities” and applying for 501(c)(4) tax-exempt status.

When Democrats lost control of the U.S. Senate in 2014, Schumer expressed his fear to members of the Center for American Progress that tea party groups could out fundraise Democratic-friendly organizations, thus purchasing more commercial time for political ads.

“It is clear that we will not pass anything legislatively [to curtail tea party influence] as long as the House of Representatives is in Republican control, but there are many things that can be done administratively by the IRS and other government agencies—we must redouble those efforts immediately,” Schumer said.

When Lois Lerner, who headed the tax-exempt division of the IRS, was subpoenaed to appear before congress to explain her agency’s targeting, she exercised her Fifth Amendment right against self-incrimination. She eventually resigned, with the Obama Justice Department exonerating her of any criminal wrongdoing.

Lerner is retired and drawing a comfortable federal pension.

History, they say, is prelude. ...

MSNBC host Rachel Maddow described Trump’s skepticism of America’s spy agencies as “taking shots,” “antagonism” and “taunting of the intelligence community.”

Schumer, her guest, peered over his bifocal readers and spoke in hushed tones, “[If] you take on the intelligence community, they have six ways from Sunday to come back at you. So, even for a practical, supposedly hard-nosed businessman, he’s being really dumb to do this.”

Tuesday, Buzzfeed released a leaked, 35-page dossier supposedly compiled by British intelligence officer Christopher Steele—and in the possession of U.S. intelligence agencies—containing unsubstantiated claims Russian intelligence possess compromising information on Trump for purposes of blackmail and, incredibly, claiming Trump is in essence a Russian spy. ...

Move over IRS. The shadowy U.S. intelligence community, with its state-of-the-art domestic and global spying operations, missile-bearing drones and license to kill, is morphing into a political targeting apparatus beyond Lois Lerner’s wildest dreams.

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January 13, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, January 12, 2017

Morse Presents Entrepreneurship Incentives For Resource-Constrained Firms Today At Duke

Morse (2017)Susan Morse (Texas) presents Entrepreneurship Incentives for Resource-Constrained Firms at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

How should entrepreneurship and innovation policy account for the fact that different firms have different access to capital? The firms that can more easily claim tax and other legal incentives targeted at encouraging innovation are often large established firms with ready access to capital. But there is no reason to think that large, established firms are best suited to the pursuit of entrepreneurial goals. To the contrary, new firms, such as resource-constrained startups, may have an advantage when it comes to pursuing entrepreneurship and innovation.

The typical resource-constrained firm considered in this chapter is a new, loss-making firm. Legal incentives, including tax incentives, for entrepreneurial action often offer a deal that is unappealing to such a firm. This is because such incentives often require an up-front investment in exchange for a delayed, uncertain payoff.  A firm must expend resources to respond to the law. But the legal incentives often do not offer any definite benefit, let alone any immediate benefit, in exchange for the up-front expenditure. ...

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January 12, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Sugin:  Invisible Taxpayers

Linda Sugin (Fordham), Invisible Taxpayers, 69 Tax L. Rev. 617 (2017):

The paradigm tax dispute involves a taxpayer on one side and the government on the other. In that traditional dyad, only the taxpayer matters, even though the interrelatedness of taxpayers across the fiscal system means that the outcome of any one dispute often affects the interests of many other taxpayers. Yet everyone else is invisible to the legal system, without enforceable rights in the administrative or judicial structure. This article focuses attention on such invisible taxpayers and what justice for them would require. It proposes a theory of tax injury that is determined by “legal shares” and argues that conventional standing doctrine can accommodate broader taxpayer access if courts acknowledge the financial interrelatedness of taxpayers. Invisibility deprives taxpayers of both economic fairness (a traditional tax policy norm) and democratic fairness (a norm requiring tax institutions to treat people with equal respect and concern). This article explains how the Supreme Court has turned tax expenditures into invisible laws. It evaluates tax expenditures as tax law, challenging the standard scholarly approach that assumes tax expenditures should be not only economically, but also legally, equivalent to direct spending programs.

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January 12, 2017 in Scholarship, Tax | Permalink | Comments (0)

Hasen:  A Partnership Mark-To-Market Tax Election

David Hasen (Colorado), A Partnership Mark-to-Market Tax Election:

The rules of subchapter K of the Internal Revenue Code impose substantial compliance burdens on partnerships and substantial administrative burdens on the government. These burdens could make the option to have periodic deemed realizations of gains and losses on partnership assets attractive to many partnerships. Although deemed realizations would impose valuation costs and a slightly higher expected tax liability for partners than they bear under current law, for many partnerships, the tradeoff likely would prove worthwhile, especially if partners could continue to take advantage of the long-term capital gain preference for gains that would be taxed at preferential rates in the absence of deemed realizations.

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January 12, 2017 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1344:  Democrats Remind Jeff Sessions AG Enforces 'Every Law,' Yet Were Silent When DOJ Declined To Prosecute Lois Lerner

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Western Journalism Review, Democrats Remind Jeff Sessions AG Enforces 'Every Law,' They Were Silent These 7 Times Under Obama:

Sen. Dianne Feinstein (D-CA) reminded Sessions and America that the Attorney General must enforce every law, regardless of the nation's top law enforcement official's views on those laws. ...

While it's absolutely imperative that Sessions uphold the rule of law if he's confirmed, that charge is a little hypocritical as President Obama's Attorney Generals ignored laws that went against the Obama Administration's agenda.

Here are seven times Obama's Attorney Generals side-stepped the law. ...

3. DOJ Concluded IRS Scrutiny Of Tea Party Groups Wasn't Politically Motivated, Despite Evidence To The Contrary

On October 23, 2015, the Department of Justice announced that it would not bring charges against Lois Lerner, the former Internal Revenue Service (IRS) official who was at the center of the conservative targeting controversy.

The IRS admitted to inappropriately targeting groups with the words “patriot” or “tea party” in their names for increased scrutiny of their tax-exempt applications.

Lerner, who oversaw the tax-exempt section of the IRS, denied that the targeting was politically motivated and DOJ announced that it concluded the IRS's actions were not politically motivated. In a letter to Congress, Assistant Attorney General Peter Kadzik said:

We found no evidence that any IRS official acted based on political, discriminatory, corrupt, or other inappropriate motives that would support a criminal prosecution.”

Republicans blasted the IRS when it was discovered that 24,000 of Lerner's emails were lost and could not be recovered.

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January 12, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (10)

Wednesday, January 11, 2017

Tillerson Seeks To Defer Tax On Gains From Sale Of Exxon Stock To Comply With Ethics Rules, Using Aggressive Interpretation Of I.R.C. § 83

TillersonBloomberg: Tillerson’s Exxon-Ethics Plan Has a $72 Million Tax Advantage, by Lynnley Browning:

The exit package Exxon Mobil Corp. has agreed to pay Rex Tillerson if he’s confirmed as secretary of state is structured to preserve roughly $180 million in deferred compensation for him — and might let him avoid an immediate federal income tax bill of as much as $72 million, according to tax specialists who have reviewed the plan.

The arrangement was designed to sever Tillerson’s ties to the global oil company he led since 2006 and allow him to comply with federal ethics law. Under the plan, Exxon would make a cash payment into an independent trust managed by Northern Trust Corp. for Tillerson. In exchange, Tillerson, 64, would give up his rights to more than 2 million restricted shares and restricted stock units that haven’t vested yet.

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January 11, 2017 in Political News, Tax | Permalink | Comments (0)

Nguyen & Maine:  Branding Taxation

Xuan-Thao Nguyen (Indiana-Indianapolis) & Jeffrey A. Maine (Maine), Branding Taxation, 50 Ga. L. Rev. 399 (2016):

Brand advertising and enforcement represent a significant investment by most firms. Yet, surprisingly, little scholarship is devoted to the ideal tax regime that should govern investments in both brand building and brand enforcement. Current tax rules governing branding evolved in the absence of an appropriate legal framework. The result is a regime with incoherent tax distinctions that lack theoretical justification, suggesting that legislative or administrative changes are warranted. This Article concludes that the current tax treatment of ordinary brand advertising (expensing) serves legitimate goals--expensing stimulates economic growth, furthers administrative efficiency, and creates an even playing field between businesses that advertise their own brands and businesses that choose instead to license from others the right to use well-known trademarks.

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

National Taxpayer Advocate Delivers Annual Report To Congress

NTAIR-2017-02 (Jan. 10, 2017), National Taxpayer Advocate Delivers Annual Report to Congress; Urges IRS Reform and Tax Reform:

National Taxpayer Advocate Nina E. Olson today released her 2016 annual report to Congress, recommending that the IRS revamp its “Future State” plan to adopt a taxpayer-centric focus and urging Congress to emphasize simplification when it considers tax reform later this year.

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January 11, 2017 in IRS News, Tax | Permalink | Comments (1)

The IRS Scandal, Day 1343:  IRS Let Lois Lerner Off The Hook By Paying $12 Million For Email Backup System It Did Not Use

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Daily Caller, ‘Wastebook’ Reveals IRS Wrong-Doing, IT Errors During Lerner Scandal:

Even as the Internal Revenue Service (IRS) was struggling to explain to Congress why it could not produce copies of former IRS official Lois Lerner’s emails, the agency was paying $12 million for an email backup system that it could not and did not use.

The agency’s inability helped Lerner get off the hook for using the IRS to target conservative and Tea Party nonprofit applicants during the 2010 and 2012 campaigns.

Soon after the Lerner scandal, IRS officials bought the system designed to prevent the loss of emails, but then didn’t bother to turn it on. They also broke federal procurement rules in how they bought the system.

The fiasco was highlighted by Sen. Jeff Flake, an Arizona Republican, in the latest edition of his Wastebook, released Tuesday.

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January 11, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, January 10, 2017

NY Times:  Elizabeth Warren, Media Mischaracterize I.R.C. § 1043 As Tax Boondoggle For Trump Appointees

NY Times Dealbook (2013)Following up on my previous posts (links below):  New York Times DealBook: Critics Say Trump Appointees Can Dodge a Huge Tax Bill. That’s Not the Case, by Aaron Ross Sorkin:

“Not only is Donald Trump giving a gang of billionaires control of our government, he’s offering them a special tax break just for signing up.”

That was Senator Elizabeth Warren, Democrat of Massachusetts, last week criticizing what has been called a “loophole” in the tax code that allows government appointees to defer paying taxes on stock sales. These appointees — who currently include some of the wealthiest people in the country — are typically required to sell all of their stock in individual companies to comply with conflict-of-interest rules, and this tax-deferring aspect of a 1989 law is meant to help offset that requirement. (President-elect Donald J. Trump is not covered by the same rules. But that’s another column.)

You’re going to be hearing a lot about this “loophole” over the next couple of weeks, if you haven’t already, as Mr. Trump’s nominees — many of them billionaires with huge holdings that they will most likely have to sell — get grilled in hearings and their financial disclosure forms become public.

If you just read the headlines, you might be convinced that Mr. Trump’s nominees were about to receive the windfall of the century, a gift that would allow them to eliminate capital gains taxes on much of their wealth. ...

But that’s not how the tax rule works. The rule has been repeatedly misconstrued and misexplained, including by me.

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January 10, 2017 in Tax | Permalink | Comments (3)

White:  Cost Sharing Agreements And The Arm's Length Standard

Florida Tax Review  (2015)Sienna Carly White (Jones Day, Cleveland), Cost Sharing Agreements & The Arm's Length Standard: A Matter of Statutory Interpretation?, 19 Fla. Tax Rev. 191 (2016):

The arm’s length standard has been the touchstone of international transfer pricing and Internal Revenue Code Section 482 for the better part of a century, but its relevance is under scrutiny. A growing consensus among the international community suggests the arm’s length standard is no longer adequate to accurately and fairly tax the multinational enterprises that make up the modern global economy. In this paper, I examine the implications of the Xilinx saga and conclude that both the Ninth Circuit and the IRS were incorrect: the arm’s length standard should function as a legal principle, with explicit exceptions, rather than as a legal rule.

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January 10, 2017 in Scholarship, Tax | Permalink | Comments (0)

Brooks:  Quasi-Public Spending

John R. Brooks (Georgetown), Quasi-Public Spending, 104 Geo. L.J. 1057 (2016):

The United States has increasingly designed certain public spending programs not as traditional tax-financed programs, but rather as mixtures of private expenditures, subsidies, and limited taxes. Thus part of what could have gone to the government as a tax is instead used to purchase the good or service directly, with only incremental taxes and subsidies to manage distributional goals. This Article terms this “quasi-public spending,” and argues that it is descriptive of our evolving approaches to both health care and higher education.

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January 10, 2017 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1342:  New Chair of House Oversight Committee Pledges To Increase IRS Accountability

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The Hill, Oversight Panel Will Focus on IRS, Medicare, New Chairman Says:

Rep. Vern Buchanan (R-Fla.), the new chairman of the House Ways and Means Committee's oversight panel, said the subcommittee's priorities in the 115th Congress will include combating fraud in Medicare and Social Security, increasing IRS accountability, and protecting people from identity theft.

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January 10, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, January 9, 2017

Law Prof Objects To Vilification Of Nancy Shurtz, But Concedes 'Her Social Skills May Need Work': Tax Faculty 'Tend To Be A Bit 'Different''

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David Barnhizer (Cleveland State), The Vilification of Nancy [Shurtz]:

I don’t know Oregon law professor Nancy Shurtz. But I do know that no American law professor at this point in time would knowingly or intentionally use racist language or dress up in “blackface” as a demonstration of personal racial bias against Americans of African ancestry. I believe her when she says what she was doing was intended as the opposite of racial disparagement and that it represented her intention to bring out to colleagues at a social gathering the continuing discrimination and denial of opportunity that blacks in America still disproportionately suffer. Professor Shurtz’s attempted message about the continuing effects of racial discrimination obviously fell flat.

Perhaps, unlike most law professors, Shurtz’s social skills need work. After all, she teaches tax and we know that many tax faculty members tend to be a bit “different”. One thing I have no difficulty concluding, however, is that while her execution wasn’t the smartest thing to do, her intentions were good (and perhaps even noble). I also have no doubt that given the attacks on her professional and personal character by some extremely vocal and hyper-sensitive law students, by the “usual suspects” who feed on accusations of racial bias, and by “trusted colleagues” at the law school and in the University of Oregon’s administration bleating about “sensitivity”, “inclusiveness”, “offensiveness” and the like that Nancy Shurtz has been dehumanized and objectified to such a degree that she must feel she is traveling the “road to Hell” regardless of her intentions.

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January 9, 2017 in Legal Education, Tax | Permalink | Comments (0)

The Intersection Of EU State Aid And U.S. Tax Deferral

Florida Tax Review  (2015)Romero Tavares, Bret Bogenschneider & Marta Pankiv (Vienna University), The Intersection of EU State Aid and U.S. Tax Deferral: A Spectacle of Fireworks, Smoke, and Mirrors, 19 Fla. Tax Rev. 121 (2016):

The Advance Pricing Agreements or transfer pricing rulings granted to U.S. multinationals by Ireland, the Netherlands, and Luxembourg were principally designed to achieve U.S. tax deferral and not EU tax avoidance. Adverse BEPS effects within the European Union would be immaterial in comparison to the deferral of U.S. tax on residual IP related profits, and would have occurred primarily in countries other than those charged with the granting of unlawful State aid. The Irish, Dutch, and Luxembourgish treasuries have not foregone tax revenues in favor of the U.S. multinationals they allegedly aided, which is a requirement for a finding of prohibited State aid.

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January 9, 2017 in Scholarship, Tax | Permalink | Comments (0)

The Most Downloaded Tax Professors Of 2016

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1

Reuven Avi-Yonah (Michigan)

10,604

2

Lily Batchelder (NYU)

6851

3

Michael Simkovic (Seton Hall)

5016

4

D. Dharmapala (Chicago)

4069

5

Ed Kleinbard (USC)

2585

6

Richard Ainsworth (BU)

2539

7

Paul Caron (Pepperdine)

2464

8

Dan Shaviro (NYU)

2372

9

William Byrnes (Texas A&M)

2234

10

Robert Sitkoff (Harvard)

2205

11

Louis Kaplow (Harvard)

2155

12

Omri Marian (UC-Irvine)

1854

13

David Weisbach (Chicago)

1823

14

Jeff Kwall (Loyola-Chicago)

1808

15

Steven Bank (UCLA)

1775

16

Yariv Brauner (Florida)

1636

17

Brad Borden (Brooklyn)

1626

18

Brian Galle (Georgetown)

1517

19

Christopher Hoyt (UMKC)

1507

20

Vic Fleischer (San Diego)

1490

21

Bridget Crawford (Pace)

1484

22

Richard Kaplan (Illinois)

1471

23

Michael Graetz (Columbia)

1469

24

Francine Lipman (UNLV)

1450

25

Jordan Barry (San Diego)

1442

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January 9, 2017 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

The IRS Scandal, Day 1341:  Another View Of The Republicans' Reactivation Of The Holman Rule And Lois Lerner

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The Moderate Voice: Preventing the Upcoming Barbarian Apocalypse, by Hart Williams:

House Republicans this week reinstated an arcane procedural rule that enables lawmakers to reach deep into the budget and slash the pay of an individual federal worker — down to a $1 — a move that threatens to upend the 130-year-old civil service. The Holman Rule, named after an Indiana congressman who devised it in 1876, empowers any member of Congress to offer an amendment to an appropriations bill that targets a specific government employee or program. ...

[W]hat does this mean? Well it means that any congressman or senator (almost exclusively GOP) can, in essence, terminate/eliminate almost any civil service employee who incites their wrath. ...

This is a de facto prescription to overturn ALL regulatory enforcement that the “Free Market” pirates of the House GOP deem “bad for business.” And, for a year, the Republicans in Congress can PURGE the Civil Service of all those “obstructionist” employees who insist on doing their jobs as prescribed by law. Think of what they did to Lois Lerner of the IRS, for example, who only attempted to enforce the charitable regulations of the IRS code. In a little-noted move thereafter, the GOP congress essentially gutted all 501(c)4 provisions, making it perfectly legal to launder dark money with zero accountability for political purposes — a complete overturning of the original intent of Congress in CREATING the section 501 provisions prohibiting charitable activities from being partisan POLITICAL activities, or, in essence, allowing the rich to engage in politics on your dime, Mr. and Mrs. US Taxpayer.

The implications of this “rule” are staggering when you apply the “if this goes on” test to it. And recall that you don’t really need to go after ALL civil service employees to create a chilling effect. Just make a few examples of “uppity” civil servants.

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January 9, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (13)

TaxProf Blog Weekend Roundup

Sunday, January 8, 2017

This Week's Ten Most Popular TaxProf Blog Posts

The Top 5 Tax Paper Downloads

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

  1. [489 Downloads]  Problems with Destination-Based Corporate Taxes and the Ryan Blueprint, by Reuven S. Avi-Yonah (Michigan; moving to UC-Irvine) & Kimberly A. Clausing (Reed College)
  2. [322 Downloads]  IRS Issues Final and Temporary Debt-Equity Regulations Under Section 385, by David S. Miller (Proskauer, New York) & Janicelynn Asamoto Park (Proskauer, New York)
  3. [195 Downloads]  Is Something Rotten in the Grand Duchy of Luxembourg?, by Omri Marian (UC-Irvine)
  4. [136 Downloads]  Protecting Trump's $916 Million of NOLs, by Steve Rosenthal (Tax Policy Center)
  5. [135 Downloads]  The Right Tax at the Right Time, by Edward Kleinbard (USC)

January 8, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 1340:  Tax Professors Discuss The Future Of Tax Administration And Enforcement After 'What The Media Often Refer To As The 'IRS Targeting Scandal''

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Association of American Law Schools Annual Meeting Discussion Group, The Future of Tax Administration and Enforcement (Jan. 7, 2016):

AALS Discussion Groups provide an in-depth discussion of a topic by a small group of invited discussants selected in advance by the Annual Meeting Program Committee. In addition to the invited discussants, additional discussants were selected through a Call for Participation. There will be limited seating for audience members to observe the discussion groups on a first-come, firstserved basis.

Enforcement and effective administration of tax laws pose challenges for every country, developed and developing. Moreover, how the tax law is administered determines the substantive effects of the laws on the books.

In the United States, the agency responsible for helping taxpayers voluntarily comply with federal tax laws and for coercing the recalcitrant into complying—the Internal Revenue Service (IRS)—is not only underfunded, its image was badly damaged by what the media often refer to as the “IRS targeting scandal.” The IRS is thus in crisis. Over the last couple of years, it has reduced service to taxpayers, reduced enforcement efforts, experienced hacks of its confidential taxpayer information, and sent out billions of dollars in fraudulent refunds claimed by identity thieves. Other tax collection agencies, both in U.S. and abroad, also struggle with resource and cybersecurity issues.

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January 8, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, January 7, 2017

Today's AALS Annual Meeting Highlight

AALS (2018)Today's highlight at the 2017 AALS Annual Meeting in San Francisco:

AALS Discussion Group, The Future of Tax Administration and Enforcement:

Enforcement and effective administration of tax laws pose challenges for every country, developed and developing. Moreover, how the tax law is administered determines the substantive effects of the laws on the books.

In the United States, the agency responsible for helping taxpayers voluntarily comply with federal tax laws and for coercing the recalcitrant into complying—the Internal Revenue Service (IRS)—is not only underfunded, its image was badly damaged by what the media often refer to as the “IRS targeting scandal.” The IRS is thus in crisis. Over the last couple of years, it has reduced service to taxpayers, reduced enforcement efforts, experienced hacks of its confidential taxpayer information, and sent out billions of dollars in fraudulent refunds claimed by identity thieves. Other tax collection agencies, both in U.S. and abroad, also struggle with resource and cybersecurity issues.

Discussion Group Participants:

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January 7, 2017 in Conferences, IRS News, Tax | Permalink | Comments (0)

Penis-Proud Former Energy CEO With Ties To Platinum Partners Pleads Guilty To Tax Fraud

PlatinumDealbreaker, Penis-Proud Former Energy CEO With Ties To Platinum Partners Pleads Guilty To Tax Fraud:

Remember Gary Mole?

Well, the the wacky Aussie with a proclivity for pulling his pecker out at the dinner table and a very intriguing link to Platinum Partners seems to have found himself in another pickle.

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January 7, 2017 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 1339:  House GOP Reactivates 'Holman Rule,' Would Have Permitted Reducing Lois Lerner's Pay To $1

IRS Logo 2Washington Post, House Republicans Revive Obscure Rule That Allows Them to Slash the Pay of Individual Federal Workers to $1:

House Republicans this week reinstated an arcane procedural rule that enables lawmakers to reach deep into the budget and slash the pay of an individual federal worker — down to $1 — a move that threatens to upend the 130-year-old civil service.

The Holman Rule, named after an Indiana congressman who devised it in 1876, empowers any member of Congress to propose amending an appropriations bill to single out a government employee or cut a specific program.

The use of the rule would not be simple; a majority of the House and the Senate would still have to approve any such amendment. At the same time, opponents and supporters agree that the work of 2.1 million civil servants, designed to be insulated from politics, is now vulnerable to the whims of elected officials. ...

Democrats and federal employee unions say the provision, which one called the “Armageddon Rule,” could prove alarming to the federal workforce because it comes in combination with President-elect Donald Trump’s criticism of the Washington bureaucracy, his call for a freeze on government hiring and his nomination of Cabinet secretaries who in some cases seem to be at odds with the mission of the agencies they would lead.

Weekly Standard, House GOP Revives Rule Allowing Them To Slash Salaries of Corrupt Federal Workers:

[T]here can be no question that federal workers have far too many civil service protections. After the IRS held a press conference admitting that they had improperly targeted conservative groups, Lois Lerner, the IRS official deemed most responsible, didn't face any meaningful consequences. Instead it was revealed that she recently received $129,000 in bonuses and retired with an annual pension that could possibly exceed $100,000.

Even after Lerner left, John Koskinen, the new interim head of the IRS, ignored congressional subpoenas as the IRS destroyed evidence relating to the investigation of Lerner and engaged in egregious stonewalling. It's pretty clear that the IRS was in no way fearful of suffering any consequences for persecuting thousands of ordinary Americans and flouting Congress.

Western Journalism, GOP House Revives 140-Year-Old Rule That Has Swamp-Dwelling Bureaucrats Sweating Bullets:

The rule would let lawmakers target civil servants who abuse their posts but still have union protections. The rule could, for instance, have been used on former Internal Revenue Service official Lois Lerner, locus of the IRS’ intimidation scandal.

While Lerner faced minimal consequences for her wide-ranging role in the scandal — she refused to reveal much of anything to congressional investigators — The Weekly Standard pointed out that she received $129,000 in bonuses and a yearly pension that could top $100,000.

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January 7, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (12)

Friday, January 6, 2017

Weekly Tax Highlight And Roundup

This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) uses a recent IRS ruling to discuss how the accumulated earnings tax on C corporations may take on increased importance in a reformed tax code emerging from the Trump Administration and the 115th Congress. 

KristanLiving fossil tax bites cashless C corporation

The accumulated earnings tax on C corporations is one of the more obscure items in the tax law. Designed to force corporations to distribute earnings as taxable dividends, it rarely comes up even in tax nerd get-togethers. A few years ago some populist politicians talked of strengthening it to force corporations to pay more dividends as a perverse form of economic stimulus, but interest soon faded.

The new administration may make C corporations much more attractive and more popular. If so, this living fossil may again rise from obscurity to bite taxpayers and their advisors. That makes a legal memorandum recently released by the IRS timely.

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January 6, 2017 in IRS News, Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Article Review And Roundup

This week, Erin Scharff (ASU) reviews a new paper by Jeffrey L. Hoopes (UNC), Leslie A. Robinson (Dartmouth), and Joel B. Slemrod (Michigan), Public Tax-Return Disclosure.

Scharff (2017)Calls for corporations to pay their fair share of taxes assume that corporations aren’t ponying up the way they should. But when it comes to individual companies, it can be hard to know what they are paying at all.

As a step toward reforming the system, reformers have called for increasing the public disclosure of corporate tax-return information. Jeffrey Hoopes, Leslie Robinson, and Joel Slemrod suggest reformers hope disclosure will achieve two goals. First, making this information public might limit tax evasion. Second, such disclosures might also provide information useful to investors.

As a result of reforms enacted in 2013, the Australian Tax Office (ATO) began releasing tax-return data (total income, taxable income, and tax payable) for about two thousand of Australia’s largest firms, as defined by income in 2015. The initial disclosures were all released on two specific dates. For large multinational corporations and Austrialian-owned public corporations, the ATO released tax information on December 17, 2015.

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January 6, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)