TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Tuesday, July 19, 2016

South Carolina Seeks To Hire A Tax Prof

South Carolina Logo (2016)The University of South Carolina School of Law invites applications for tenured, tenure-track, or visiting faculty positions to begin fall semester 2017:

The School of Law is interested in candidates who are qualified to teach in the areas of taxation and clinical legal education, but will also be considering candidates in a variety of other areas of need. The School of Law is also interested in candidates who can contribute to the diversity of our law school community.

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July 19, 2016 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

Death Of Tax Court Judge Howard Dawson

Tax Court Logo 2Tax Court Press Release, The Honorable Howard A. Dawson, Jr., 1922-2016:

The Tax Court wishes to acknowledge the passing of Judge Howard A. Dawson, Jr., on July 15, 2016. Judge Dawson was the longest-serving judge in the history of the Tax Court, having been appointed in 1962 by President John F. Kennedy and remaining in service as a Senior Judge at the time of his death. ...

Judge Dawson was appointed by President Kennedy as Judge, Tax Court of the United States, on August 21, 1962, for a term ending June 1, 1970. He was reappointed on June 2, 1970, for a term ending June 1, 1985. He retired from active service on June 2, 1985, and served on recall as a Senior Judge from 1990 until his death.

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July 19, 2016 in Tax | Permalink | Comments (0)

Grewal:  Why Lenity Has No Place In The Income Tax

Andy Grewal (Iowa), Why Lenity Has No Place in the Income Tax Laws, 80 Mo. L. Rev. ___ (2016):

A controversy has emerged over how to interpret statutes under which the government can undertake either civil or criminal action against a person. Should courts interpret these statutes like any other civil statutes, and defer to agencies to resolve ambiguities? Or should courts treat these statutes like pure criminal provisions, and use the rule of lenity to resolve ambiguities in a defendant-friendly fashion?

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July 19, 2016 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1167

IRS Logo 2The Hill, GOP Platform Calls for Impeachment of IRS Chief:

The Republican Party platform adopted Monday calls for Internal Revenue Service (IRS) Commissioner John Koskinen to be impeached and removed from office.

The commissioner "has lied to Congress, hidden evidence, and stonewalled investigations,” the platform states without explicitly using Koskinen's name. “He should be impeached by the House of Representatives and convicted by the Senate.”

The GOP platform calls the IRS “toxic” and says the agency “has become an ideological attack dog for the worst elements of today’s Democratic Party.”

Republicans are calling for the repeal of the “Johnson Amendment,” which bars nonprofits from endorsing political candidates.

“Places of worship for the first time in our history have reason to fear the loss of tax-exempt status merely for espousing and practicing traditional religious beliefs that have been held across the world for thousands of years, and for almost four centuries in America,” the platform states. “We value the right of America’s religious leaders to preach, and Americans to speak freely, according to their faith.”

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July 19, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, July 18, 2016

Tax Prof Schadenfreude

What could be better for a law student than being on the same flight as your tax professor the day after your exam? Being on the same return flight:

Plane

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July 18, 2016 in Book Club, Legal Education, Tax | Permalink | Comments (0)

Tax Lawyers Say Proposed Debt/Equity Regulations Exceed Treasury Department's Statutory Authority

Debt v EquityBloomberg, Treasury Corporate-Debt Rules Exceed Authority, Tax Lawyers Say, by Lynnley Browning & Saleha Mohsin:

The U.S. Treasury Department exceeded its authority by proposing wide-ranging regulations intended to curb corporations’ ability to shift their American earnings overseas, tax lawyers told agency officials during a hearing.

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July 18, 2016 in Tax | Permalink | Comments (0)

Johnson:  House Votes To Dump Chevron And Auer

JohnsonTaxProf Blog op-ed:  House Votes to Dump Chevron and Auer, by Steve R. Johnson (Dunbar Family Professor of Law, Florida State):

On July 12, 2016, the U.S. House of Representatives passed H.R. 4768, the Separation of Powers Restoration Act (SOPRA).  The vote was 240 to 171, mostly along party lines.  If enacted, SOPRA would amend 5 U.S.C. sec. 706, a judicial review section of the Administrative Procedure Act (the APA).  The goal, according to the Judiciary Committee’s report, would be “to overturn the so-called Chevron and Auer doctrines of judicial deference to agency interpretations of statutory and regulatory provisions.”  H. Rep. 114-622, at 2  (June 14, 2016); see Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) (deference to reasonable agency interpretations of ambiguous statutes); Auer v. Robbins, 519 U.S. 452 (1997)(deference to reasonable agency interpretations of the agency’s own ambiguous regulations).

1.  Significance

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July 18, 2016 in Scholarship, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1166

IRS Logo 2The Daily Signal, House Conservatives Explain Latest IRS Chief Impeachment Push: ‘Leadership Has Been Too Timid to Go After Corruption’:

The House Freedom Caucus has launched a pressure play against Republican leadership in an effort to force a vote on impeaching John Koskinen, commissioner of the Internal Revenue Service.

Before Congress skipped town Thursday for a seven-week recess, Reps. Tim Huelskamp, R-Kan., and John Fleming, R-La., filed a parliamentary measure known as a privileged resolution on behalf of the Freedom Caucus.

The effort hinges on maximizing public pressure on lawmakers during their summer recess, Huelskamp told The Daily Signal. Conservatives hope that populist opposition to the IRS in congressional districts will translate into support for impeachment on Capitol Hill.

But when Congress returns Sept. 6., lawmakers have two legislative days to vote on either impeaching Koskinen or tabling the measure.

And by going straight to the floor, the Freedom Caucus has bypassed the regular committee process, bucked GOP leadership, and widened an expanding chasm within Republican ranks.

Establishment aides describe the effort as a publicity stunt while their conservative contemporaries say it is part of a greater effort to overcome leadership’s opposition to impeachment. ...

Koskinen’s lawyer, in a statement to Bloomberg News, described the Freedom Caucus case as an “unfortunately repeated conspiracy theory that was long ago discredited.”

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July 18, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, July 17, 2016

IRS Rejects 501(c)(3) Status For DNC Convention As Too Partisan, Causing Donors To Pull Out Due To Lost Deductions; DNC Devises Workaround To Funnel Contributions Through Philadelphia Convention Bureau

DNCFollowing up on my previous posts (here and here):  Philadelphia Inquirer:  Turned Down by the IRS, Philly's DNC Host Committee Goes for Plan B:

The IRS has turned down the long-running effort by the Democratic convention's Philadelphia host committee to win a tax exemption.

Word of the decision, a setback for efforts to raise the last of the $60 million needed to help pay for the July 25 to 28 convention, came Friday from its adviser, David L. Cohen.

When the decision came - and why - is less clear. Cohen would say only that the IRS "recently" turned down the application for tax-exempt status under section 501(c)3 of the tax code, which the committee had sought for more than a year.

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July 17, 2016 in Political News, Tax | Permalink | Comments (6)

NY Times Op-Ed:  The Carried Interest Non-Loophole

NY Times Dealbook (2013)New York Times Deal Book: The Carried Interest Loophole? What Loophole?, by Steven B. Klinsky (Founder & CEO, New Mountain Capital):

Many politicians want to close the carried interest tax loophole for private equity managers. The only problem is, no such loophole exists. ...

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July 17, 2016 in Tax | Permalink | Comments (2)

The Top 5 Tax Paper Downloads

The IRS Scandal, Day 1165

IRS Logo 2Washington Examiner, How Conservatives Hope to Win the IRS Impeachment Vote:

Conservative lawmakers behind the resolution to impeach IRS Commissioner John Koskinen have a not-so-secret weapon that they hope will lead to a successful impeachment vote in September: public outrage.

Reps. Tim Huelskamp, R-Kan., and John Fleming, R-La., made a motion on Thursday to call up their impeachment resolution on a privileged basis, essentially forcing the House to vote on it. That motion won't be considered until the House returns in September from conventions and the summer recess.

Some already see the intervening seven weeks as a cooling off period that gets Republican leaders off the hook, since they don't want to hold the vote.

But Huelskamp and Fleming say the time back home might subject lawmakers to several weeks of pressure from constituents who are demanding an impeachment vote to finally hold somebody in Washington — anybody — accountable. ...

GOP leaders don't agree, and would rather focus on a more moderate agenda that gives voters a reason to keep Republicans in charge of the House and Senate. House Speaker Paul Ryan, R-Wis., on Thursday tried to calm things down by saying the GOP would have a "family" discussion about impeachment once members return. ...

But while leaders hope things calm down, supporters of impeachment are hoping voters let lawmakers know they're mad as hell. That would put more pressure on the House to not only hold the vote, but to vote in favor of impeachment.

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July 17, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Saturday, July 16, 2016

This Week's Ten Most Popular TaxProf Blog Posts

WSJ:  Europe’s Tax Punishers

BrexitWall Street Journal editorial, Europe’s Tax Punishers:

What most frightens European leaders about Brexit? Perhaps it is that Britain might make a success of its departure from the European Union. Witness the furious backlash against proposals to improve Britain’s attractiveness to foreign investors.

Departing Chancellor George Osborne last week suggested slashing Britain’s corporate-tax rate, to below 15% from the current 20%. The U.K. already was the bane of high-taxing continentals, especially after Mr. Osborne introduced phased cuts to bring the corporate rate down to 17% by 2020. But his latest idea, which would bring Britain’s rate into the same league as Hong Kong and Singapore, and nearly down to Ireland’s 12.5%, has set off a new wave of neuralgia across the Channel. ...

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July 16, 2016 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 1164

IRS Logo 2American College of Tax Counsel, Letter to Paul Ryan, Kevin Brady, Nancy Pelosi & Sander Levin (July 13, 2016):

On behalf of the Officers and the Board of Regents of the American College of Tax Counsel, I write to express our significant concerns with the resolutions being considered with respect to the possible impeachment and censure of Internal Revenue Service Commissioner John Koskinen. It is our view that such actions are not commensurate with the alleged conduct and will damage the agency at a time when it needs strong leadership. We do not see any benefit to the agency or our system of laws that could arise from moving forward with these actions.

The Officers and Regents of the College are senior, experienced tax lawyers with decades of experience in dealing with the Internal Revenue Service. Many of our colleagues have devoted years of their professional careers to working at the agency, in service of our country. We have watched the agency struggle with significant decreases in funding that have caused staffing and morale issues. In our practices we have seen the negative impact this has had on our clients, the taxpayers. We often disagree with actions taken by the Internal Revenue Service, and at times we think that things should be done differently. Overall, however, we think that the agency serves the American people in a manner consistent with its vital mission, especially in view of the complexity of the tax law, the additional responsibilities that it has been given over the past few years, and the severe financial constraints under which it operates.

We see the benefits of the steady hand that Commissioner Koskinen, an experienced, dedicated and respected public servant, provides. Ifhe were to be replaced now, the agency would have its fifth Commissioner in four years. This is an enonnous organization - it employs over 78,000 people and processes nearly 150 million individual income tax returns filed each year. To be an effective leader, the Commissioner needs to take time to build up the knowledge base, as Commissioner Koskinen has done, and it takes time to build up trust in the employees. We think that the agency and the country will be well served if he is willing and allowed to continue on the path that he has set.

We would respectfully request that Congress reject impeachment and censure, and instead apply its time and attentions to improving both the tax law and the administration of our tax system.

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July 16, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, July 15, 2016

Weekly Tax Roundup

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

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July 15, 2016 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Tax Policy Center Seeks To Hire A New Director

Tax Polcy Center Logo (2017)The Urban Institute seeks a Center Director/Robert C. Pozen Director for the Urban-Brookings Tax Policy Center:

The preferred candidate will be an entrepreneurial leader in the field of taxation and public finance who offers a compelling vision for the Tax Policy Center’s future. 

Background on TPC
Founded in 2002 as a joint venture of the Urban Institute and the Brookings Institution, the Urban-Brookings Tax Policy Center is the preeminent nongovernmental tax policy organization in the United States. We have built a record of clear, evidence-based, and objective analysis of tax policy.

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July 15, 2016 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 1163

IRS Logo 2Washington Post, House Conservatives Try to Force Vote to Impeach IRS Chief:

A group of House conservatives is making a last-ditch effort to force a floor vote to impeach Internal Revenue Service Commissioner John Koskinen because of their continuing frustrations over how the agency has treated small-government groups.

House Freedom Caucus members John Fleming (R-La.) and Tim Huelskamp (R-Kan.) on Thursday employed a rarely used procedural maneuver that allows any member to have an issue considered by the full House.

The move means that any action would probably happen shortly after lawmakers return in September following a seven-week recess.

“Congress has held countless congressional hearings on the impeachable offenses of Koskinen — but there have been zero consequences for his behavior,” Huelskamp said in a news release. “It is time for him to be impeached and removed.”

The lawmaker said a vote is “necessary to bring national attention to this disgrace and to impeach and remove at least one Obama Administration official.” ...

House Speaker Paul D. Ryan (R-Wis.) has resisted holding a vote to impeach Koskinen, but the move by Fleming and Huelskamp will force him to deal with the issue in September. ...

The IRS said Thursday that history is on Koskinen’s side. “Commissioner Koskinen believes that a traditional, fair impeachment process that follows historical precedent would demonstrate that neither impeachment nor censure is warranted,” the agency said in a statement. “If this proceeds, he deserves an opportunity to refute the allegations and fully respond to these charges before a House vote on the allegations. The Commissioner has made it clear that he testified truthfully and that the facts clearly do not support the claims.”

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July 15, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, July 14, 2016

Journal of Tax Administration Hosts Workshop Today On U.S. And U.K. Trends In Tax Exceptionalism And Tax Litigation

JOTAThe Journal of Tax Administration hosts a workshop today on Trends in Tax Exceptionalism and Tax Litigation (program):

In the United States, the Supreme Court's 2011 decision in the Mayo Foundation case has fundamentally changed tax litigation and tax administration. Previously, tax administration functioned with a mindset of "tax exceptionalism" from the administrative statutory requirements, legal doctrines, and norms that applied to other federal government agencies. The legal veracity of tax exceptionalism had not been tested; it was an unchallenged assumption, but one that persisted for some decades. In Mayo Foundation, the Supreme Court expressly rejected tax exceptionalism from general administrative law requirements, doctrines, and norms absent "good reason" — which is generally thought to mean unless the Internal Revenue Code provides an express exception.

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July 14, 2016 in Colloquia, Conferences, Scholarship, Tax | Permalink | Comments (0)

Advocacy Group Launches AuditIRS.com

AuditTax Revolution Institute, National Tax Watchdog Launches AuditIRS.com: First Independent Audit of the Internal Revenue Service:

The Tax Revolution Institute (TRI) — a Washington-based nonprofit group that promotes “justice and integrity in the tax system” — is taking a whole new approach to shedding light on the Internal Revenue Service: Today, it is announcing the launch of the first-ever independent audit of the IRS.

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July 14, 2016 in IRS News, Tax | Permalink | Comments (2)

Cockfield:  Big Data And Tax Haven Secrecy

Florida Tax Review  (2015)Arthur J. Cockfield (Queen's University), Big Data and Tax Haven Secrecy, 18 Fla. Tax Rev. 483 (2016):

While there is now a significant literature in law, politics, economics, and other disciplines that examines tax havens, there is little information on what tax haven intermediaries — so-called offshore service providers — actually do to facilitate offshore evasion, international money laundering and the financing of global terrorism. To provide insight into this secret world of tax havens, this Article relies on the author’s study of big data derived from the financial data leak obtained by the International Consortium for Investigative Journalists (ICIJ).

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July 14, 2016 in Scholarship, Tax | Permalink | Comments (0)

UC-Berkeley, Oxford & Tax Policy Center Host Program Today On Corporate Tax For The 21st Century

UCBThe Oxford University Centre for Business Taxation, Robert D. Burch Center for Tax Policy and Public Finance at UC-Berkeley and Tax Policy Center are hosting a program today on Corporate Tax for the 21st Century:

Welcome and Introduction: Michael Devereux (Oxford)

Panel:  The Need for Reform and Current Policy Proposals

  • Alan Auerbach (UC-Berkeley) (moderator)
  • Michael Devereux (Oxford)
  • Michael Graetz (Columbia)
  • Justus S. Hotchkiss (Yale)
  • Mark Mazur (Assistant Secretary for Tax Policy, U.S. Treasury Department)
  • John Vella (Oxford)

Session:  Residual Profit Allocation Proposal

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July 14, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Netanya Hosts Roundtable Today On Taxation And Tax Policy

American Action Forum:  Tax Inversion Rhetoric—Debunked By Dogs

July 14, 2016 in Tax | Permalink | Comments (1)

The IRS Scandal, Day 1162

IRS Logo 2Politico, Freedom Caucus Goes All-In On IRS Impeachment:

The House Freedom Caucus on Wednesday set in motion a plan to force a vote to impeach IRS Commissioner John Koskinen, bucking House GOP leaders who oppose the idea and worry it will lower the bar for such extreme actions in the future.

The group of right-wing rebels led by Reps. Jim Jordan (R-Ohio) and Mark Meadows (R-N.C.) on Tuesday had warned Paul Ryan they would file a privileged resolution — effectively bypassing leadership — if the House speaker did not agree to initiate impeachment proceedings in the Judiciary Committee.

Reps. John Fleming (R-La.) and Tim Huelskamp (R-Kansas) filed the measure calling for Koskinen's ouster. Due to the procedure they used to introduce the resolution, it is not "privileged" and is therefore referred to the Judiciary Committee, which does not have to act on the controversial measure.

However, Fleming and Huelskamp are expected to refile a similar measure on Thursday using a slightly different procedure, according to Republican leadership sources. This second resolution would be "privileged," meaning whoever files it can force a floor vote on the measure, although with the House ready to adjourn for a seven-week recess, that would like not take place until September.

Huelksamp said there "will be some action on it tomorrow," but declined to say exactly what he, Fleming and the Freedom Caucus are planning.

Some senior Republicans believe the move to impeach Koskinen — which will fail if the Senate doesn't go along — is a cunning political ploy by the Freedom Caucus. It puts Speaker Paul Ryan (R-Wis.) in a box; he and other top Republicans can oppose the motion and be portrayed by conservative critics as protecting Koskinen, or they can support it despite concerns that it is not an appropriate action by the House.

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July 14, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, July 13, 2016

Clinton Aims Party’s ‘Wall Street’ Tax At Flash Boys, Not Banks

Hillary Logo (2016)Bloomberg: Clinton Aims Party’s ‘Wall Street’ Tax at Flash Boys, Not Banks, by Lynnley Browning:

The Democratic Party’s proposed 2016 platform supports “a financial transaction tax on Wall Street” -- but presumptive nominee Hillary Clinton is focused on a narrower approach that isn’t likely to target big banks.

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July 13, 2016 in Tax | Permalink | Comments (1)

Chodorow & Hackney:  Post-Graduate Legal Training — The Case For Tax-Exempt Programs

ASUAdam Chodorow (Arizona State) & Philip Hackney (LSU), Post-Graduate Legal Training: The Case for Tax-Exempt Programs, 65 J. Legal Educ. 463 (2016):

The challenging job market for recent law school graduates has highlighted a fact well known to those familiar with legal education: A significant gap exists between what students learn in law school and what they need to be practice-ready lawyers. Legal employers historically assumed the task of providing real-world training, but they have become much less willing to do so. At the same time, a large numbers of Americans — and not just those living at or below the poverty line — are simply unable to afford lawyers. In this Article, we argue that post-graduate legal training, similar to post-graduate medical training, is a good way to address these market failures and reduce the gap in both skills and legal services.

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July 13, 2016 in Legal Education, Scholarship, Tax | Permalink | Comments (1)

CBO:  In 30 Years, U.S. Will Have Highest Debt-To-GDP Ratio In Our History—141%

Congressional Budget Office, The 2016 Long-Term Budget Outlook:

If current laws remained generally unchanged, the United States would face steadily increasing federal budget deficits and debt over the next 30 years—reaching the highest level of debt relative to GDP ever experienced in this country. 

Figure 1-1

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July 13, 2016 in Congressional News, Tax | Permalink | Comments (7)

NY Times:  Ireland, Home To U.S. ‘Inversions,’ Sees Huge (26%) Growth In GDP

IrelandNew York Times, Ireland, Home to U.S. ‘Inversions,’ Sees Huge Growth in G.D.P.:

In the United States, politicians, lawmakers and officials have derided “inversion deals,” which allow an American company to move its headquarters overseas to cut its tax bills. In Ireland, they are celebrating them.

The Irish government on Tuesday revised the country’s economic growth rate in 2015 to 26.3 percent from a preliminary estimate of 7.8 percent. While Ireland’s economy has been on the upswing since the country repaid its bailout, it wasn’t that the Celtic Tiger suddenly came roaring back in an unexpected way. Rather, it was the magic of those inversion deals and other sleights of finance.

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July 13, 2016 in Tax | Permalink | Comments (1)

The IRS Scandal, Day 1161

IRS Logo 2Politico, Freedom Caucus Threatens End Run Around Ryan on IRS Impeachment:

House conservatives are threatening to force a vote to impeach IRS Commissioner John Koskinen, bucking Republican leaders who don't believe his actions warrant such severe consequences.

Leaders of the House Freedom Caucus presented Speaker Paul Ryan (R-Wis.) with a choice on Tuesday: Move our impeachment resolution forward in committee on your own accord, or we will likely force the matter by filing a "privileged resolution." In other words, an end run around leadership to the House floor.

They want a commitment from Ryan by the end of the week on a timetable to advance the impeachment measure. ...

Ryan responded by asking the caucus to hold off on forcing any sudden action, according to a person familiar with a meeting with Ryan Tuesday at which caucus leaders brought up the matter. Republican lawmakers deserve a chance to discuss the matter in conference, Ryan said, adding that any further action on Koskinen should be a “team decision."

Conservatives used the same procedure a year ago to launch a pressure campaign that ultimately drove then-Speaker John Boehner from office. ...

Should Ryan and the Judiciary Committee fail to advance the impeachment resolution, the Freedom Caucus will likely file the privileged resolution. A floor vote, however, is unlikely to come before members break for summer recess this week. The House will return in September.

Even Republicans who don't like the idea and don't support it have said privately they will have to vote for impeachment for fear of how it will play back home should they vote the other way.

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July 13, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, July 12, 2016

Obama Administration Goes To Bat For Apple In EU Tax Dispute

ObamaAppleBloomberg, U.S. Treasury Chief Lew Set for Apple Tax Showdown With EU:

U.S. Treasury Secretary Jacob J. Lew is set to meet with European Union antitrust chief Margrethe Vestager this week as she prepares to deliver a final verdict on a probe into Apple Inc.’s tax affairs in Ireland.

The showdown comes days after Vestager’s team came up with two possible scenarios on how much tax Apple owes in Ireland, according to two people familiar with the case, who asked not to be identified because the matter is private. Lew has contacted Vestager urging her to avoid ordering any collection of back taxes from Apple, according to one of the people.

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July 12, 2016 in Tax | Permalink | Comments (1)

IRS:  Birth Of Baby Is 'Unforeseen Circumstance' Justifying Pro Rata § 121 Exclusion Of Gain On Sale Of Home Owned Less Than 2 Years

NewbornThe § 121 exclusion of up to $250,000 ($500,000 for married couples) of gain on the gain on the  sale of a home requires that the home be used as the taxpayer's principal residence for at least two of the previous five years.  Section 121(c) allows a pro rata exclusion if the taxpayer's failure to meet the two year requirement is caused by "change of employment, health conditions, or such other unforeseen circumstances as may be specified by the Secretary."  Reg. § 1.121-3(e)(2) lists several unforeseen circumstances safe harbors, including:

  • involuntary conversion of the home
  • natural or man-made disasters or acts of war or terrorism resulting in a casualty to the home
  • death
  • unemployment
  • change in employment status that results in inability to pay housing costs and living expenses
  • divorce
  • multiple births resulting from the same pregnancy.  

In Priv. Ltr. Rul. 2016-28-002 (Apr. 11, 2016), the Service ruled that the birth of a second child constituted an unforeseen circumstance when the taxpayers purchased their two-bedroom condo.

July 12, 2016 in IRS News, Tax | Permalink | Comments (2)

Israel To Deduct 'Martyr's Stipends' From Tax Payments To Palestinian Authority

FlagsReuters, Israel to Cut Palestinian Tax Transfers Over 'Terrorist Payouts':

Israel will reduce monthly transfers of tax collected on behalf of the Palestinians in what aides to Prime Minister Benjamin Netanyahu described as a response to the killing of two Israelis in Palestinian attacks in the occupied West Bank this week.

The amount deducted from about $130 million sent to the Palestinian Authority (PA) each month will be equal to stipends it pays militants in Israeli prisons and the families of jailed or slain militants, Netanyahu's office said on Friday.

The move, which follows the killings of an Israeli man and girl in the West Bank this week, will be a blow to the already weak finances of the Western-backed Palestinian Authority (PA). ...

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July 12, 2016 in Tax | Permalink | Comments (0)

Morse & Deutsch:  Tax Anti-Avoidance Law In Australia And The U.S.

AUSSusan C. Morse  (Texas) & Robert Deutsch (Australia Administrative Appeals Tribunal), Tax Anti-Avoidance Law in Australia and the United States, 49 Int'l Law. 111 (2015):

In both Australia and the U.S., the tax anti-avoidance law has evolved to include two common doctrinal components. One component requires evidence of taxpayers’ tax avoidance purpose. The other component protects transactions clearly contemplated by the tax statute against charges of tax avoidance. The two bodies of law usually get to the same answer. Transactions involving loss generators, income assignment, and foreign tax credit generators illustrate this similarity.

But the two bodies of law sometimes arrive at different answers. This is because important but subtle doctrinal differences also exist. Australian law conceives of a tax avoidance transaction as a contrived, tax-motivated Plan B departure from the counterfactual of a more normal, Plan A course of action. Australia’s Part IVA has been applied to invalidate a planning step that is part of a larger, business-motivated merger transaction. In contrast, tax planning steps that are part of business-motivated merger and acquisition transactions generally are not vulnerable under U.S. law.

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July 12, 2016 in Scholarship, Tax | Permalink | Comments (0)

Shaviro:  Ten Observations Concerning International Tax Policy

Daniel Shaviro (NYU), Ten Observations Concerning International Tax Policy:

This is a slightly revised version of a lunch talk that the author gave at the National Tax Association’s 46th Annual Spring Symposium on May 12.

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July 12, 2016 in Scholarship, Tax | Permalink | Comments (0)

Tax Exam Dreams

DreamsAlan J. Oxford (Duncan), Inception: The Exam Dream is Real, 120 Penn St. L. Rev. Penn Statim 1 (2015):

Dream 1. I had a dream about the tax exam .... The test was the hardest test in the world.

I felt like I didn't know any of the material, and you were sitting in the room watching everyone with a look of disappointmen .... I later turned my exam into you and you marked all of them wrong, wrote F, circled it, and handed it back. I started to cry and repeatedly asked you not to fail me. I had a family and a life and I worked so hard and I really tried. My failure was only exacerbated by the fact there were only 4 students, please don't leave me behind. You were thinking about what I had to say and before you answered, I woke up.

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July 12, 2016 in Legal Education, Tax | Permalink | Comments (1)

The IRS Scandal, Day 1160

IRS Logo 2Politico Morning Tax, News on the Koskinen Front:

After lying dormant for a while, there’s been some news on the effort by some House Republicans to impeach or censure or strip the salary of IRS Commissioner John Koskinen. Relatively minor news, but news all the same. First, our Katy O’Donnell reports that a bipartisan group of eight former IRS chiefs took strong exception to the impeachment effort. “We believe these actions are both disproportionate and counterproductive. They would do serious, long-term damage to our revenue system,” they wrote in a letter to House leadership and the top Republican and Democrat on the House Ways and Means Committee. And while Ways and Means members haven’t been out front in the anti-Koskinen effort, Brady endorsed the no-salary effort. After a panel discussion on tax reform organized by the Taxpayers Protection Alliance, Brady said he takes, "every chance I get to make the case that this IRS ought to behave differently," Tax Analystsreported. Sources on the Hill have been less than enlightening about where things stand on the matter. But it’s a fair guess that some of Koskinen’s fiercest critics see bigger fish to fry — like investigating the investigation of Hillary Clinton’s email practices.

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July 12, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Monday, July 11, 2016

Columbia Law Review Tributes To Marvin Chirelstein

ChirelsteinIn Memoriam: Marvin A. Chirelstein, 116 Colum. L. Rev. 287-323 (2016):

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July 11, 2016 in Legal Education, Obituaries, Tax | Permalink | Comments (1)

Widow Of Indiana Pacers Owner Plays Hardball With IRS, Goes On Offense In Defending Against Subpoenas In $21 Million Gift Tax Case

PacersIndianapolis Business Journal, Pacers’ Legal Tenacity on Display in IRS Fight:

The legal fallout stemming from Melvin Simon’s decision to unload his half of the Indiana Pacers to his brother Herb just a few months before his September 2009 death is getting crazier by the day.

Mel’s widow, Bren Simon, got the public spectacle rolling in March 2015 when she sued the IRS in an effort to overturn the agency’s determination that the terms of the deal were so tilted in Herb’s favor that Mel essentially gave him an $83 million gift.

That conclusion left Bren with a $21 million gift-tax bill, which she paid under protest but hopes to get refunded by winning the suit.

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July 11, 2016 in Celebrity Tax Lore, New Cases, Tax | Permalink | Comments (0)

Happy 100th Birthday, Mortimer Caplin

MortimerUVAToday, Mortimer Caplin: 100 Years Young, and Still Serving:

His name is well-known to every graduate of the University of Virginia’s School of Law, and his penchant for bow ties is almost as famous. Over the course of a career in law, education and government service, Mortimer Caplin has seemingly lived several lifetimes, each distinguished by remarkable and influential achievements, from his time as an actor and boxer when he was a UVA undergraduate, to his service in the U.S. Navy on D-Day, to his work as IRS commissioner during the administration of President John F. Kennedy, and beyond.

On July 11, Caplin will celebrate his 100th birthday, providing an excellent occasion to look back over the accomplishments of, in the words of former Law School Dean Robert Scott, “an exemplar of a professional life well-lived.” In honor of this milestone, we spoke with Caplin and some of his peers and colleagues about highlights of his life and career. ...

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July 11, 2016 in Tax | Permalink | Comments (1)

NY Times:  What Trump And The GOP Agree On: Tax Cuts For The Rich

New York Times: What Trump and the G.O.P. Can Agree On: Tax Cuts for the Rich, by Patricia Cohen:

In some important ways, the House Republicans’ new plan to overhaul the tax code has more in common with proposals from the candidates who lost their party’s presidential nomination than those from Donald J. Trump, the one poised to win it. ...

[T]he blueprint, shepherded by Paul D. Ryan of Wisconsin, the House speaker, embraces a transformational shift promoted by both Mr. Cruz and Mr. Rubio, but not Mr. Trump: a move away from taxing income to a system that basically taxes consumption.

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July 11, 2016 in Tax | Permalink | Comments (2)

2017 Vault Law Firm Tax Rankings:  Skadden Is #1 For 7th Year In A Row

VaultVault has released its annual ranking of the Top 100 Law Firms, based on prestige as voted on by associates (methodology here). The Top Tax Practices (press release) are:

Rank

Firm

Home City

% Vote

1

Skadden

New York

47.99%

2

Davis Polk

New York

21.86%

3

Cleary Gottlieb

New York

21.11%

4

Baker & McKenzie

Chicago

20.35%

5

Cravath

New York

19.60%

6

McDermott Will & Emery

Chicago

17.34%

7

Wachtell

New York

15.33%

8

Sullivan & Cromwell

New York

13.57%

9

Caplin & Drysdale

D.C.

11.06%

10

Kirkland & Ellis

Chicago

  9.05%

10

Simpson Thacher

New York

  9.05%

12

Latham & Watkins

New York

  8.79%

13

Weil Gotshal

New York.

  7.04%

14

Mayer Brown

Chicago

  5.28%

15

Miller & Chevalier

D.C.

  4.77%

15

Sutherland

Atlanta

  4.77%

17

Morgan Lewis

Philadelphia

  3.77%

18

Debevoise

New York

  3.52%

18

Sidley Austin

Chicago

  3.52%

20

Fenwick & West

Palo Alto

  3.27%

For the seventh year in a row, Skadden is #1. From the press release:  "Wachtell dropped three spots to No. 7, allowing Baker & McKenzie (No. 4), Cravath (No. 5), and McDermott (No. 6) to each move up a spot. Sutherland Asbill and Brennan (tied at No. 15), Morgan Lewis (No. 17), Debevoise (tied at No. 18), and Fenwick & West (No. 20) all joined the ranking after being unranked last year."

The city rankings are:

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July 11, 2016 in Law Firm Tax Rankings, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1159

IRS Logo 2Heartland Institute, House Lawmakers Censure IRS Commissioner Koskinen:

A U.S. House committee overseeing the administration of justice in federal courts and agencies voted to censure a high-ranking Internal Revenue Service (IRS) official for his role in covering up abuses of power at the federal revenue-collection agency.

Beginning in 2010, employees of IRS’ Exempt Organizations division, under the supervision of division Director Lois Lerner, violated IRS policies by singling out organizations for special examination based on a group’s name or policy positions, with the aim of slowing or preventing the ability of conservative organizations to receive tax-exempt donations in the run-up to the 2012 elections.

Lawmakers on the U.S. House Oversight and Government Reform Committee say John Koskinen, the current IRS commissioner, participated in covering up Lerner’s actions by destroying public records and stonewalling government investigations.

With the committee having approved the censure in June, the House will vote on the measure. If the censure is approved, Koskinen will be stripped of his taxpayer-funded pension and other government perks.

U.S. Rep. Jim Jordan (R-OH), a member of the House Oversight Committee, told Budget & Tax NewsKoskinen’s actions and statements meet the legal standard necessary for censure.

“We think the standard is dereliction of duty, gross negligence, and breach of public trust,” Jordan said. “Obviously, Mr. Koskinen has done just that. When it’s something of this magnitude, where documents are under two subpoenas and there have been three document preservation orders in place, and under his watch 422 backup tapes were destroyed containing potentially 24,000 e-mails, … that’s a breach of public trust and gross negligence.” ...

Dan Mitchell, a senior fellow with the Cato Institute, says the IRS has also refused to enforce Obamacare provisions.

“In terms of the bigger question of what the IRS has done wrong, it goes way beyond the attempted suppression of Tea Party groups,” Mitchell said. “It deals with everything from the fact that they arbitrarily and unilaterally ignore certain Obamacare law provisions simply because the White House decided that they wanted to change the rules, notwithstanding that the law theoretically means what the law says.”

Mitchell says IRS has effectively become a “weaponized” arm of the government.

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July 11, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, July 10, 2016

Winners Of The 2016 Tax Analysts Student Writing Competition

Tax Analysys Logo (2013)2016 Tax Analysts Student Writing Competition:

Tax Notes:

  • S. Bruce Hiran (Houston)
  • Katrina Vitale (Villanova)
  • Luke Wagner (San Diego)

State Tax Notes:

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July 10, 2016 in Legal Education, Scholarship, Tax | Permalink | Comments (0)

The Top 5 Tax Paper Downloads

The (Im)Possibility Of Christian Legal Education

Trinity WesternVictor M. Muniz-Fraticelli (McGill), The (Im)Possibility of Christian Education:

Opponents of the Trinity Western University Law School do not seek to prohibit traditionalist religious law schools outright, nor do they seek to exclude individual candidates who hold traditionalist beliefs from becoming lawyers. Their effort, rather, is to give these schools the option to compromise on their religious identity, or to have students lose access to the most direct routes into the legal profession. This choice inhibits the establishment of traditionalist religious law schools by increasing the cost of maintaining a distinct institutional religious identity. When the alternative is to hold fast to religion but retreat from the task of producing lawyers, or play religion down and enter the legal market without any difference from secular institutions, the result is always the elimination of distinctly religious institutions from the educational landscape. This paper proposes an alternative that allows for the possibility of institutional diversity.

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July 10, 2016 in Scholarship, Tax | Permalink | Comments (1)