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Friday, October 17, 2014

The IRS Scandal, Day 526

IRS Logo 2Statesman Journal:  Wehby Attempts to Tie Sen. Jeff Merkley to IRS Scandal:

Republican Senate candidate Monica Wehby released a web video Thursday with the goal of tying Sen. Jeff Merkley to the scandal surrounding the Internal Revenue Service targeting tax-exempt groups for their political leanings.

The 35-second video entitled "Corrupt" explains that Merkley was one of several Democratic Senators who wrote a letter to the IRS in 2012 requesting the agency "immediately change the administrative framework for enforcement of the tax code as it applies to groups designated as 'social welfare' organizations." ... The ad lays that targeting of conservative groups at Merkley's feet and asks whether voters can trust him.

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October 17, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, October 16, 2014

Virginia Tax Review Publishes New Issue

Virginia Tax Review (2014)The Virginia Tax Review has published Vol. 33, No. 4 (Spring 2014):

October 16, 2014 in Scholarship, Tax | Permalink | Comments (0)

Cauble: Relying on the IRS

Emily Cauble (DePaul), Relying on the IRS:

The IRS issues different types of guidance to taxpayers, and the extent to which taxpayers can rely on IRS guidance depends on the form in which it was offered. For instance, taxpayers generally cannot rely on oral advice provided over the phone but can rely on more formal types of advice. The current state of the law harms unsophisticated taxpayers who disproportionately obtain informal advice -- the least reliable type of IRS guidance.

Existing literature lacks a thorough discussion of why, as a policy matter, we allow taxpayers to rely on some forms of IRS guidance more than others. This Article fills that gap by suggesting and critically evaluating potential justifications for this practice.

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October 16, 2014 in Scholarship, Tax | Permalink | Comments (0)

A Case for Simpler Gain Bifurcation for Real Estate Developers

Florida Tax ReviewBradley T. Borden (Brooklyn), Nathan Brown (Proskauer Rose, Boca Raton) & John Wagner II (Williams Parker Harrison Dietz & Getzen, Sarasota), A Case for Simpler Gain Bifurcation for Real Estate Developers, 15 Fla Tax Rev. 279 (2014):

This Article examines the judicially-sanctioned bifurcation of real estate developers’ gain. The Article recognizes that even though some commentators oppose granting favorable tax treatment to capital gains, the law most likely will not change. With that in mind, the Article examines the all-or-nothing approach of characterizing gain from the sale of real estate as either capital gain or ordinary income. The Article rejects the all-or-nothing approach of characterizing income under the current statutory system. Instead, it embraces gain bifurcation in the second-best setting that taxes capital gains and ordinary income differently. Illustrating the policy justification for gain bifurcation and judicially-sanctioned bifurcation structures, the Article recommends that lawmakers should more fully embrace gain bifurcation for real estate developers by creating a simple statutory election for bifurcating gain that would enhance equity, accuracy, and transparency of gain bifurcation. Although the Article limits its analysis to real estate developers, the idea of gain bifurcation, once improved in this area, could be a catalyst for exploring bifurcation in other areas.

October 16, 2014 in Scholarship, Tax | Permalink | Comments (0)

Dharmapala: Base Erosion and Profit Shifting -- A Simple Conceptual Framework

Dhammika Dharmapala (Chicago), Base Erosion and Profit Shifting: A Simple Conceptual Framework:

BEPSThe issue of tax-motivated income shifting within multinational firms – or “base erosion and profit shifting” (BEPS) – has attracted increasing global attention and has become the subject of an ongoing OECD initiative. This paper provides a simple conceptual framework that helps to clarify aspects of governments’ responses to the BEPS phenomenon and the potential role of the OECD initiative. An important implication of this framework is that multilateral cooperation of the type envisaged in the BEPS initiative has the potential to reduce the deadweight costs of MNCs’ tax planning and compliance activities, thereby enhancing global welfare. 

October 16, 2014 in Scholarship, Tax | Permalink | Comments (0)

Penalizing Tax Petitions: Why the Erroneous Refund Penalty in § 6676 Violates Taxpayers’ First Amendment Rights

Derek T. Ho & Christopher Klimmek (both of Kellogg, Huber, Hansen, Todd, Evans & Figel, Washington, D.C.), Penalizing Tax Petitions: Why the Erroneous Refund Penalty in Code § 6676 Violates Taxpayers’ First Amendment Rights, 68 Tax Law. ___ (2015):

In 2007, Congress enacted the so-called “erroneous refund penalty,” which imposes a 20% penalty on any taxpayer who submits a claim for tax refund that the IRS deems “inaccurate,” even if the taxpayer’s position is legally non-frivolous and asserted in good faith. In part because the IRS has rarely imposed the penalty since its enactment, the statute has thus far not been analyzed extensively by legal scholars or policymakers. However, the penalty continues to impose a significant chilling effect on tax refund claims, and the Treasury Department has now signaled the possibility of more aggressive application in the future. This article argues that the erroneous refund penalty is unconstitutional under the Petition Clause of the First Amendment. Penalizing taxpayers financially for asking their government to return money they believe is legally theirs strikes at the heart of the Petition Clause’s protections. Indeed, protecting citizens’ right to complain about abusive taxation by the national Government was one of the Framers’ core motivations for enacting the First Amendment. The article draws on the history of the First Amendment, the Supreme Court’s Petition Clause jurisprudence, and recent lower court decisions in exposing the constitutional infirmity of the penalty. The article also explains that the erroneous refund penalty is unjustified as a matter of tax policy, because it fails to promote voluntary compliance, is irrationally harsh and unfair to taxpayers, and is not necessary to solve the narrow, targeted problems that Congress intended to address in enacting the statute. Finally, the article suggests ways in which the penalty could be amended, if it is not repealed altogether, to avoid infringing on taxpayers’ First Amendment rights and ensure that refund claims are treated fairly.

October 16, 2014 in Scholarship, Tax | Permalink | Comments (0)

Afield: A Market for Tax Compliance

W. Edward Afield III (Ave Maria), A Market for Tax Compliance, 62 Clev. St. L. Rev. 315 (2014):

It is becoming increasingly clear that, due to political realities and budgetary constraints, the IRS is going to have to attempt to enforce the tax laws by doing more with less. Current enforcement efforts have yielded a tax gap (i.e., the difference between the amount of taxes that should be paid and the amount that are collected) of roughly $450 billion annually. Faced with this task, one of the steps that the IRS has recently taken is to try to improve the quality in services performed by paid tax preparers, a group that historically has been subject to little IRS regulation or monitoring but that continues to play an increasingly important role in the tax system.

Although the IRS’s recent efforts to better regulate paid preparers is a good step in improving the quality of tax services, its current structure as a mandatory regulatory regime causes it to miss a number of compliance oriented advantages that could be achieved through a voluntary system of tax preparer regulation in which tax preparers could choose to seek certifications indicating whether they had a positive track record of compliance.

This paper explores in detail for the first time in the literature how preparer regulation could achieve significantly more compliance gains if it were structured as a voluntary system designed to create a market that rewards tax compliance.

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October 16, 2014 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 525

Wednesday, October 15, 2014

Borden Presents REIT Stuff at Florida

BordenBradley T. Borden (Brooklyn) presented REIT Stuff at Florida as part of its Graduate Tax Program Colloquium Series:

Real estate investment trusts (REITs) have made headlines recently because they provide favorable tax treatment to corporations that primarily own real estate, which contrasts with the typical double-tax that generally applies to corporations. The media appears to be particularly concerned that existing corporations are spinning off their real estate holdings into REITs, eroding the corporate tax base. It is also concerned that the IRS has extended REIT classification to entities that hold property, such as telecommunications equipment, billboards, mortgages, oil and gas pipeline systems, timber, casinos, and data centers, which do not fit within the traditional definition of real estate. Such extension broadens the scope of favorable REIT tax treatment to property that was not held in real estate trusts when Congress enacted the REIT regime. Despite all of this attention, the effect of REIT spinoffs and the formation of REITs with non-traditional real estate assets may not have a very significant effect on federal tax revenues. This Article will closely examine the revenue effect of REIT spinoffs and the extension of REIT treatment to non-traditional real estate assets. Early work in this are suggests that the revenue effect appears to be nominal, and it is a result of dual, overlapping tax policies—favorable tax treatment of real estate and tax-exempt status for retirement plans. The analysis will set the stage for discussing potential action in this area by recounting the history of REITs and the important events that have directed the course of REIT legislation to its current status. The early analysis appears to suggest that lawmakers should either reconsider the preference for real estate and pensions or consider relaxing the law to provide more efficient ways for corporations to bifurcate real-estate income from operating income and more easily obtain the benefits available under current law.

October 15, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The Need for a Patent Box Tax Regime to Encourage Domestic Manufacturing

Bernard Knight (Partner, McDermott, Will & Emery, Washington, D.C.) & Goud Maragani (Senior Counsel, USPTO), It Is Time for the United States to Implement a Patent Box Tax Regime to Encourage Domestic Manufacturing, 19 Stan. J.L. Bus. & Fin. 39 (2013):

In order to curb the outsourcing of industries and jobs, the United States must provide better incentives to encourage manufacturers to operate domestically. The United States is at a strategic disadvantage vis-à-vis many other industrialized nations that attract industry and jobs by taxing income from intellectual property sourced in those countries at a lower tax rate. This Article suggests that the United States should consider a patent box regime and outlines the benefits that such a regime should produce in terms of additional domestic manufacturing and job creation. The Article begins by discussing scholarly work that explores the link between domestic manufacturing and research and development, and explains why domestic manufacturing is critical to innovation. In turn, innovation leads to more productivity, higher paying jobs and lower unemployment. The next Section summarizes the significant features of the existing patent box tax regimes in certain European Union nations and China. Taking into account the positive attributes and deficiencies of the existing patent box regimes, the Article concludes by suggesting features that should be considered for inclusion in a U.S. patent box regime.

October 15, 2014 in Scholarship, Tax | Permalink | Comments (0)

Deadline Today: Call for Tax Papers and Panels for 2015 Law & Society Annual Meeting

SeattleToday is the deadline for Neil Buchanan's call for tax papers and panels for next year's annual meeting of the Law & Society Association in Seattle (May 28-31, 2015):

For the eleventh consecutive year, I will organize sessions for the the Law, Society, and Taxation group (Collaborative Research Network 31).

Although there is an official call for papers, please remember that you are not bound by the official theme of the conference.  I will give full consideration to proposals in any area of tax law, tax policy, distributive justice, interdisciplinary approaches to tax issues, and so on.

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October 15, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

SSRN Tax Professor Rankings

SSRN LogoSSRN has updated its monthly rankings of 944 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through October 1, 2014) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

 

 

All-Time

 

Recent

1

Reuven Avi-Yonah (Mich.)

40,434

Reuven Avi-Yonah (Mich.)

6677

2

Paul Caron (Pepperdine)

26,751

Ed Kleinbard (USC)

5005

3

Louis Kaplow (Harvard)

23,022

Richard Ainsworth (BU)

2688

4

D. Dharmapala (Chicago)

20,615

D. Dharmapala (Chicago) 

2630

5

Vic Fleischer (San Diego)

20,156

Paul Caron (Pepperdine)

2624

6

James Hines (Michigan)

19,969

Robert Sitkoff (Harvard)

2051

7

Ted Seto (Loyola-L.A.)

19,266

Omri Marian (Florida)

1986

8

Richard Kaplan (Illinois)

19.122

Richard Kaplan (Illinois)

1901

9

Ed Kleinbard (USC)

16,472

Katie Pratt (Loyola-L.A.)

1824

10

Katie Pratt (Loyola-L.A.)

16,334

Bridget Crawford (Pace)

1626

11

Dennis Ventry (UC-Davis)

15,417

Jen Kowal (Loyola-L.A.)

1583

12

Carter Bishop (Suffolk)

15,230

Brad Borden (Brooklyn.)

1578

13

Jen Kowal (Loyola-L.A.)

14,568

David Gamage (UCBerkeley)

1509

14

David Weisbach (Chicago)

14,483

Jeff Kwall (Loyola-Chicago)

1502

15

Chris Sanchirico (Penn)

14,317

Louis Kaplow (Harvard)

1457

16

Richard Ainsworth (BU)

14,260

James Hines (Michigan)

1421

17

Robert Sitkoff (Harvard)

14,168

Francine Lipman (UNLV)

1390

18

Francine Lipman (UNLV)

14,009

Dan Shaviro (NYU)

1376

19

Brad Borden (Brooklyn)

13.974

Dick Harvey (Villanova)

1343

20

David Walker (Boston Univ.)

13,965

Vic Fleischer (San Diego)

1308

21

Bridget Crawford (Pace)

13,955

Ted Seto (Loyola-L.A.)

1292

22

Herwig Schlunk (Vanderbilt)

12,527

Carter Bishop (Suffolk)

1252

23

Dan Shaviro (NYU)

12,171

David Weisbach (Chicago)

1176

24

Ed McCaffery (USC)

11,771

Gregg Polsky (North Carolina)

1156

25

Wendy Gerzog (Baltimore)

11,759

Chris Sanchirico (Penn)

1151

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

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October 15, 2014 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

Ireland Pulls Curtain on 'Double Irish' Tax Break

Rich States, Poor States

RSPS_7th_EditionArthur B. Laffer, Stephen Moore & Jonathan Williams, Rich States, Poor States (7th ed. 2014):

In this seventh edition of Rich States, Poor States, Arthur B. Laffer, Stephen Moore, and Jonathan Williams highlight specific policy choices throughout the 50 states that have led some states to economic prosperity and others to lackluster growth. The authors provide the 2014 ALEC-Laffer State Economic Competitiveness Index, based on the economic policies of the states. Through the empirical evidence and analysis contained in this edition of Rich States, Poor States, the policies for economic growth are clear.

In chapter one, the authors provide updates on important policy developments that occurred throughout 2013 and the first half of 2014 in an in-depth, state-of-the-states analysis. ... Chapter two chronicles the movement of both people and income throughout the states. ... In chapter three, the authors provide a detailed explanation of not just which policies are conducive to economic growth and which ones are not, but also why this is the case. ... Finally, chapter four is this year’s comprehensive ALEC-Laffer State Economic Competitiveness Index.

Table 2

  Table 1

October 15, 2014 in Tax | Permalink | Comments (3)

The IRS Scandal, Day 524

IRS Logo 2Forbes:  President Obama, Audit Threats, And Rogue IRS Employees, by Robert W. Wood:

The fallout from the IRS targeting flap isn’t over. The key lost emails could be the result of bona fide, unanticipated, and irreversible computer crashes. Yet some still see finger-prints of a cover-up. It provides fodder for the online equivalent of jawing around the water-cooler. Either way, conservative groups are outraged.

More broadly, there is a general malaise about the IRS and our tax system. It is not enough for the IRS to do a good job of enforcing the tax laws in a fair and non-discriminatory way. As important, the IRS needs to be perceived as fair. If profiling is a dirty word, it should be equally dirty when the IRS does it. Truly, audit targeting is scary. ...

Don’t forget President Obama’s audit quip in 2009 in a commencement speech. The President joked about Arizona State University’s decision not to award him an honorary degree:

“I really thought this was much ado about nothing, but I do think we all learned an important lesson. I learned never again to pick another team over the Sun Devils in my NCAA brackets. . . . President [Michael] Crowe and the Board of Regents will soon learn all about being audited by the IRS.”

It was an innocent remark, but some pundits didn’t see any humor. Comedians joke about such things, not Presidents, especially not with the history this charged issue has had. It would only be a few years before the ‘rogue employees’ excuse could be used about IRS targeting. In the meantime, a clever remark can go a long way.

‘Gee, I thought you wanted me to ice that guy,’ a mafia button man might say. With plausible deniability, the don might get off scot free. Presumably, though, we can’t see what Ms. Lerner told her exempt organization subordinates in Cincinnati. If there were truly rogue employees, might they have misunderstood their mission and gotten overzealous?

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October 15, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, October 14, 2014

Fleischer Presents Curb Your Enthusiasm for Pigouvian Taxes Today at Columbia

Fleischer Vic (2013)Victor Fleischer (San Diego) presents Curb Your Enthusiasm for Pigouvian Taxes at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex RaskolnikovDavid Schizer, and Wojciech Kopczuk:

Pigouvian (or "corrective") taxes have been proposed or enacted on dozens of products and activities that may be harmful in excess: carbon, gasoline, fat, sugar, guns, cigarettes, alcohol, traffic, zoning, executive pay, and financial transactions, among others. Academics of all political stripes are mystified by the public’s inability to see the merits of using Pigouvian taxes more frequently to address serious social harms.

This enthusiasm for Pigouvian taxes should be tempered. A Pigouvian tax is easy to design — as a uniform excise tax — if one assumes that each individual causes the same amount of harm with each incremental increase in activity on the margin. This assumption of uniform marginal social cost pairs well with the limited information and enforcement capacity of tax institutions. But when marginal social cost varies significantly, a Pigouvian tax will not lead to an optimal allocation of economic resources. Focusing on carbon emissions, where the assumption of uniform marginal social cost happens to be reasonable, obscures this common design flaw.

Broadly speaking, Pigouvian taxes should be employed only when (1) the harm is (or is properly analogized to) global pollution, and where the harm does not vary based on the source, or (2) the variation in marginal social cost is easily observed and categorized, as with traffic congestion charges.

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October 14, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Fleischer: Charitable Giving and Utilitarianism

Miranda Perry Fleischer (San Diego), Charitable Giving and Utilitarianism: Problems and Priorities, 89 Ind. L.J. 1484 (2014):

Charitable giving is redistributive at heart. It is thus surprising that scholarship on the charitable tax subsidies focuses on the efficient and pluralistic production of public goods while largely ignoring distributive justice concerns. Existing scholarship and current law leave crucial questions unanswered: How should we prioritize among charities? Should subsidized groups be required to help the poor? Are criticisms that charities do too little to help the poor valid? This Article is part of a series that examines how each common theory of distributive justice would answer these questions.

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October 14, 2014 in Scholarship, Tax | Permalink | Comments (0)

Law Faculty Rankings Should Focus More on Non-Academic Influence

Patrick Arthur Woods, Stop Counting (Or At Least Count Better):

For American legal scholarship to fulfill its purpose, it must have an impact on the development of the actual law as it is enacted and interpreted in the United States. However, legal scholarship broadly — and law review articles in particular — has become less influential on judges and members of the practicing bar over time. This short essay argues that the decline is partly attributable to the open reliance on metrics that primarily represent influence within the legal academy when measuring the value of a scholar’s work. In particular, I argue that a focus on metrics with only a tenuous connection to non-academic usage of a new scholar’s work, such as download counts, law journal citation count-based rankings methodologies, and article placement, incentivizes new legal writers to write for other academics rather than for judges, attorneys in practice, or policy-makers.

October 14, 2014 in Law School Rankings, Scholarship, Tax | Permalink | Comments (3)

Epstein: We Need a Real Flat Tax, Not Kleinbard's Version

Hoover Institution:  We Need a Real Flat Tax, by Richard A. Epstein (NYU):

I was heartened recently to see Edward Kleinbard’s op-ed in the New York Times, with its alluring title, “Don’t Soak the Rich.” But as I read the piece by Kleinbard, a law school professor at the University of Southern California, it became clear that his proposed solution was a classic bait-and-switch operation. Kleinbard’s so-called flat tax soaks the rich by a different route. He proposes a tax hike on everyone evenly and then suggests that the government spend most of the extra revenues on the poor, either by direct grants or public expenditures from which they derive the lion’s share of the benefit.

The flat tax deserves a better send-off. Historically, the tax was championed by such notables as Aristotle, Locke, and Hayek as a device to reduce the government’s role in the lives of its citizens. Even a limited government must do many things—provide national defense, preserve internal order, and supply the infrastructure on which a well-organized private sector markets run. Accomplishing these daunting tasks requires public revenues. The challenge for the defender of limited government is to find that set of taxes that minimizes the distortions of a market economy while generating revenue to accomplish government’s necessary and proper goals. ...

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October 14, 2014 in Tax | Permalink | Comments (1)

Call for Papers: University of North Carolina Tax Symposium

North Carolina Tax SymposiumThe University of North Carolina Kenan-Flagler School of Business has issued a call for papers for its Eighteenth Annual Tax Symposium to be held April 10-11, 2015. The symposium "is designed to bring together leading tax scholars from economics, accounting, finance, law, political science, and related fields." The deadline for the call for papers is January 1, 2015:

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October 14, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Thimmesch: The Tax Hangover -- Trailing Nexus

Tax Analysys Logo (2013)Adam B. Thimmesch (Nebraska), Evaluating the Tax Hangover: Trailing Nexus, 74 State Tax Notes 83 (Oct. 13, 2014):

In this article, which is adapted from a longer law review article [The Tax Hangover: Trailing Nexus, 33 Va. Tax Rev. 497 (2014)], Thimmesch examines the concept of trailing nexus. He argues that the concept is consistent with the physical presence standard and proposes an economic latency approach, which he asserts is consistent with both constitutional principles and economic reality.

October 14, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

Boston College Seeks to Hire a Tax Clinician

BC LogoBoston College Law School seeks to hire a full-time tax clinician:

Boston College Law School seeks a full-time faculty member interested in establishing and teaching in a transactional clinic that emphasizes entrepreneurship, technology, and the innovation economy.

JOB DESCRIPTION: The successful applicant will be expected to expand the offerings of one of our existing clinics or develop a new program, which may include hybrid arrangements with outside institutions such as incubators, corporations or law firms, and may include simulation as a method of instruction. The focus of teaching should be business formation, business transactions, taxation, or intellectual property. The successful applicant will play a major role in determining the clinic's specific emphasis and operation.

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October 14, 2014 in Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 523

IRS Logo 2Town Hall:  The White House Dogs, by Erick Erickson:

There are two dogs living in the White House other than the Obamas' pet dog. The first of the two dogs is the one that eats all the homework. It has been let loose across government agencies.

The Internal Revenue Service had an encounter with the dog. Lois Lerner, in charge of the division accused of harassing conservative groups, suddenly had her hard drive crash. All her emails were gone. Then six other employees mysteriously had their emails vanish. All seven were relevant to the congressional probe of the IRS.

The emails appear not to be on any servers. They do not seem to have been backed up, or the back ups were destroyed too. The emails have simply vanished. It is just awfully convenient that they were emails involved in a congressional probe.

Once the dog finished eating emails at the IRS, it moved over to the Environmental Protection Agency. The Competitive Enterprise Institute filed a request for certain emails and text messages from or to EPA administrator Gina McCarthy. According to the Washington Times last Wednesday, the EPA now says thousands of text messages related to Ms. McCarthy have simply disappeared. Her emails too are gone. The Competitive Enterprise Institute and the EPA are involved in a lawsuit, making the disappearance of the emails even more serious.

Now it is not just congressional Republicans looking at disappearing data. A federal judge is involved, too. Congressional Republicans can be dismissed far more easily than a federal judge in a black robe with a gavel.

It seems the IRS and EPA are not the only government agencies visited by this hungry dog. The Securities and Exchange Commission has lost hundreds of computers with information on them that could be used for insider trading purposes. ...

That leads us to the other dog living in the Obama White House. In "Silver Blaze," a short story about Sherlock Holmes by Sir Arthur Conan Doyle, a prized racehorse went missing the night before a major race. Holmes, investigating the disappearance and the related death of the horse's trainer, refers "to the curious incident of the dog in the nighttime." The curious incident was that the dog did not bark. The dog at the stables made no sound as the thief stole the horse because the dog knew the thief.

The Obama administration has not barked in these cases. Internal Revenue Service emails from employees under investigation by Congress have been deleted. The Obama administration's best guess is that there was just an unfortunate coincidence of timing with an obligatory reference to "partisan witch hunts." The same holds for the EPA and now the SEC.

The Obama administration has expressed little concern, mostly taking the opportunity to blame Republicans. Government data has been deleted, and no one in the White House seems concerned. The dog is not barking. ...

The matters on which the White House dogs are willing to bark and be quiet should direct the attention of an objective press. The silence on the IRS and EPA is very telling.

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October 14, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, October 13, 2014

Sanchirico Presents International Tax and Ownership Nationality Today at Florida

SanchiricoChris Sanchirico (Pennsylvania) presents As American as Apple, Inc.: International Tax and Ownership Nationality, 68 Tax L. Rev. ___ (2014), at Florida today as part of its Graduate Tax Program Colloquium Series:

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

October 13, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Mayer Presents Taxing Politics Today at Loyola-L.A.

MayerLloyd Hitoshi Mayer (Notre Dame) presents Taxing Politics at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

This draft Article addresses two key questions relating to the interaction between federal tax law and political activity. First, is it advisable as a policy matter for Congress to use the tax law to regulate the flows of money in politics in furtherance of non-tax goals such as combatting corruption, promoting equality, and encouraging democratic participation? I answer this first question generally no, in significant part because the tax law and the IRS are poorly suited for this role and suffer significant collateral damage when their poor fit becomes evident, as the ongoing controversy over the IRS’ handling of exemption applications filed by Tea Party and other conservative groups reveals. Second, does tax law in its current form treat political activity properly based on longstanding tax policies relating to what constitutes income, what expenses should be deductible, what constitutes a taxable gift, and what characteristics organizations should have in order to qualify for tax exemption? I answer this second question generally yes, but identify several areas where the tax law needs to be changed to achieve greater consistency with such policies, including with respect to reducing the amount of political activity that is deemed permissible for most types of tax-exempt organizations.

Ellen Aprill (Loyola-L.A.) and Justin Levitt (Loyola-L.A.) are the commentators.

October 13, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Does the USA Really Soak the Rich?

Next New Deal (Blog of the Roosevelt Institute), Does the USA Really Soak the Rich?:

There's a new argument about taxes: the United States is already far too progressive with taxation, it says, and if we want to build a better, eglitarian future we can't do it through a "soak the rich" agenda. It's the argument of this recent New York Times editorial by Edward D. Kleinbard, and a longer piece by political scientists Cathie Jo Martin and Alexander Hertel-Fernandez at Vox. I'm going to focus on the Vox piece because it is clearer on what they are arguing.

There, the researchers note that the countries “that have made the biggest strides in reducing economic inequality do not fund their governments through soak-the-rich, steeply progressive taxes.” They put up this graphic, based on OECD data, to make this point:

You can quickly see that the concept of "progressivity" is doing all the work here, and I believe the way they are going to use that word will be problematic. What does it mean for Sweden to be one of the least progressive tax state, and the United States the most? ... 

When average people usually talk about soaking the rich, they are talking about the marginal tax rates the highest income earners pay. But as we can see, in Sweden the rich pay a much higher marginal tax rate [56% v. 39%]. ... 

[Jo Martin and Hertel-Fernandez] are measuring how much of tax revenue comes from the top decile ...  and calling that the progressivity of taxation. ...  The fact that the United States gets so much more of its tax revenue from the rich when compared to Sweden means we have a much more progressive tax policy, one of the most progressive in the world. Congratulations?

The problem is, of course, that we get so much of our tax revenue from the rich because we have one of the highest rates of inequality across peer nations. How unequal a country is will be just as much of a driver of the progressivity of taxation as the actual tax polices. In order to understand how absurd this is, even flat taxes on a very unequal income distribution will mean that taxes are “progressive” as more income will come from the top of the income distribution, just because that’s where all the money is. Yet how would that be progressive taxation?

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October 13, 2014 in Tax | Permalink | Comments (0)

Why Do Lawyers Blog?

Legal Productivity, Why Do You Blog? 23 Lawyers Weigh In:

Blogging means different things to different people but I’m less interested in narrowly defining blogging, than examining why lawyers blog. So I went to the source and asked: “Why do you blog?” Twenty-three lawyers responded, some of whom have been at it for a very long time.

Several have their own practice or are part of a larger firm. Many still maintain their blog, while some write for other blogs. Topics range from their area of legal expertise to other interests like technology and practice management. But these blogging lawyers all have one thing in common: they write with passion and purpose. Business development doesn’t drive their writing. These lawyers blog because they love to write and share their knowledge, experience, and passions.

October 13, 2014 in Legal Education, Tax | Permalink | Comments (0)

Christians: It's Time to Fix FBAR

Tax Analysys Logo (2013)Allison Christians (McGill), Paperwork and Punishment: It's Time to Fix FBAR, 76 Tax Notes Int'l 147 (Oct. 13, 2014):

Allison Christians argues that the U.S. Foreign Bank Account Report regime is excessive and offers suggestions to narrow its scope and ease compliance burdens.

October 13, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

Congress, GAO Target ‘Supersize’ IRAs

Super Size MeFollowing up on my previous posts:

Wall Street Journal Tax Report:  Washington Scrutiny of ‘Supersize’ IRAs, by Laura Saunders:

Washington is taking a hard look at tax-sheltered retirement accounts, especially “supersize” ones worth millions of dollars. Savers should consider what it could mean for them.

The U.S. Government Accountability Office, an arm of Congress, recently released a report on individual retirement accounts, requested by Senate Finance Committee Chairman Ron Wyden (D., Ore.). Its publication coincided with Senate hearings on retirement savings held last month.

The GAO study addressed questions many people asked after disclosures that former presidential candidate Mitt Romney had a traditional IRA worth as much as $101 million and technology entrepreneur Max Levchin put more than 13.3 million shares of Yelp YELP -5.11% stock in a Roth IRA before the firm went public in 2012.

How many supersize IRAs are there? The GAO estimates more than 300 individuals or families have IRAs with balances greater than $25 million, while more than 9,000 have IRAs worth more than $5 million. The GAO wasn’t able to distinguish between regular and Roth IRAs, given the data. ...

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October 13, 2014 in Congressional News, Gov't Reports, Tax | Permalink | Comments (0)

The IRS Scandal, Day 522

IRS Logo 2New York Observer:  Sex, Lies, and . . . White House Counsel; Ruemmler Blunders Into Secret Service Mess, by Sidney Powell:

Enter Kathryn Ruemmler, former White House Counsel, repeatedly discussed on the “short list” for Attorney General. ...

As we reported previously, not only was Ms. Ruemmler in the middle of the IRS email scandal, the Benghazi cover-up, and the most vigorous “protector” of a president while increasing government secrecy and violating the rights of others, the Post places her squarely in the middle of the cover-up of the Cartagena sex scandal for which the Secret Service and the military took the sole blame for having several prostitutes spend the night before the President arrived. ...

According to Mr. Obama, those involved in the “Hookergate” scandal were just “a couple of knuckleheads” in the Secret Service. Wait, that sounds familiar. Oh yes, the IRS targeting of conservative political groups was just “a couple of boneheads” in the Cincinnati office of the IRS, and there wasn’t a “smidgeon of corruption” in Mr. Obama’s IRS.

Anyone still buying that must have been comatose for the last several months, during which we learned of the ever increasing number of computer crashes, and that the IRS deliberately destroyed Lois Lerner’s blackberry—a fact the IRS tried to hide from federal judge Emmet G. Sullivan. These developments may have a role to play in Mr. Holder’s departure—the real reasons for which I believe are yet to surface.

Our entire government is imploding in deceit and dishonesty. The United States has become the laughingstock of the world, and the vacuum in leadership of this country is sucking the very air we breathe. Nero fiddled while Rome burned. Mr. Obama golfs while ISIS beheads. Meanwhile, Kathryn Ruemmler’s on his short list for Attorney General.

There are reasons for his “trust” in her that are obvious to him, but she “ain’t no friend of mine.”

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October 13, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, October 12, 2014

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 on SSRN, with a new paper debuting on the list at #5.  The #1 paper is now #19 in all-time downloads among 10,386 tax papers:

  1. [3288 Downloads]  'Competitiveness' Has Nothing to Do with it, by Edward D. Kleinbard (USC)
  2. [336 Downloads]  2013 Developments in Connecticut Estate and Probate Law, by Jeffrey A. Cooper (Quinnipiac) & John R. Ivimey (Reid and Riege, Hartford)
  3. [219 Downloads]  The OECD'S Flawed and Dated Approach to Computer Servers Creating Permanent Establishments, by Monica Gianni (Florida)
  4. [131 Downloads]  Rights Without Remedies, by Matthew L. M. Fletcher (Michigan State)
  5. [126 Downloads]  Home-Country Effects of Corporate Inversions, by Omri Y. Marian (Florida)

October 12, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 521

IRS Logo 2Forbes:  Lois Lerner And The Terrible, Horrible, No Good, Very Bad Day, by Robert W. Wood:

Lois Lerner–the former IRS official at the heart of Tea Party targeting–is retired from the IRS. Despite being held in contempt of Congress for refusing to testify, she hasn’t been prosecuted. Yet after her long silence, her exclusive interview with Politico was anything but reticent and reserved. In it, Ms. Lerner said she did nothing wrong and considers herself  the victim.

Ms. Lerner bristled at any suggestion she had anything to do with destroying emails, switching to texts, letting her own liberal views influence her treatment of Tea Party a_holes, crazies. etc. Yet in a curious turn of events, journalist and Crapitalism author Jason Mattera showed up in her nice Bethesda neighborhood to pepper her with questions. They included such zingers as “Do you feel bad about turning the government into a weapon to crush political dissent?”

This time, Ms. Lerner wasn’t flanked by lawyers and facing softball questions at Politico. And who can blame her for not wanting to answer these questions. So she scurried to a neighbor’s house and started knocking on the door, begging to be admitted. Ms. Lerner’s day got worse when her neighbors seemed to, well, ‘Take the Fifth’ about letting her in. She  stood there on the porch, while Jason Mattera probes with barbs like, ‘it doesn’t feel good to be targeted does it?’

AlexanderOK, this may not be journalism’s finest hour, nor does it necessarily mean much that Ms. Lerner didn’t want to answer these questions. It may not even mean much that the neighbor has probably had enough, and didn’t want to be involved. That’s so no matter how much the neighbor may like Ms. Lerner, or her dogs for that matter.

I’m not saying that anyone wants to be hounded (excuse the pun), either. But being hounded and asked questions of this sort cannot be entirely unexpected and may not even be unfair, especially after Ms. Lerner’s exclusive interview with Politico. It all sounds a little like Alexander and the Terrible, Horrible, No Good, Very Bad Day, based on the book by Judith Viorst. Just like Lois Lerner’s day, from the moment Alexander wakes up, everything goes wrong. ...

Want even more terrible, horrible, no good items? How about those rogue employees in Cincinnati doing things they shouldn’t. I’ll bet all those missing emails would prove once and for all that those confused rogue Cincinnatians did all the targeting non-biased and careful review with no help from the boss. Too bad the hard drive is gone destroyed buried not available despite best efforts. Maybe Alexander had something. Maybe moving to Australia wouldn’t be such a bad idea after all?

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October 12, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, October 11, 2014

Ryan: Valuation Lessons From Estate of Adell

Tax Analysys Logo (2013)Kerry A. Ryan (St. Louis), Valuation Lessons From Estate of Adell, 144 Tax Notes 1455 (Sept. 22, 2014):

In Estate of Adell [T.C. Memo. 2014-155], the Tax Court determined that the correct value of a decedent’s interest in a closely held corporation was the figure reported on the original estate tax return. The court rejected alternative values as either using the incorrect valuation method or failing to account for the significant value of a key employee’s personal goodwill. 

October 11, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

The IRS Scandal, Day 520

IRS Logo 2Forbes: Is IRS A Smidgen Corrupt? Ask Lois Lerner, NetJets, Buffett & 150 Million Taxpayers, by Robert W. Wood:

[A]ny dealings with the IRS today may be more unsettling than in the past because many have less confidence today that the system is fair and impartial. It is hard to overstate how important this is. Some of it comes back to the last 18 month who’s-on-first routine on display from the IRS.

Lois Lerner wouldn’t talk to Congress, although she is collecting a nice pension. Despite being held in contempt of Congress for refusing to testify, she hasn’t been prosecuted. Maybe her refusal is constitutionally protected, maybe not. Yet after her long silence, in an exclusive interview with Politico, Ms. Lerner said she did nothing wrong and she considers herself the victim.

She bristled at any suggestion she had anything to do with destroying emails, switching to texts to avoid being traced, letting her own liberal views influence her treatment of tea party a_holes, etc. It isn’t only Ms. Lerner who comes off as above the law. IRS Commissioner Koskinen did his share of testifying about the email mess. Sadly, he somehow managed to seem arrogant, uninformed, and perhaps even a tad dismissive that his organization had any explaining to do.

The IRS and its thousands of dedicated employees deserve far better. Yet given the IRS’s current image problem, might some taxpayers feel justified in cheating on their taxes? I hope not, but I’ll bet some might think of this. Some of the public may not be able to get past the apparent stonewalling. Some of the public may wonder if they would get a pass from the IRS if their hard drive ate their tax records.

Some taxpayers may go beyond fudging their taxes and take their distrust to the courts. It already happened with True the Vote’s lawsuit against the IRS. But you can’t win without evidence. See Judge sides with IRS in search for Lerner emails. More suits could be impacted too. As noted in The Lois Lerner App, NetJets has asserted that the IRS “wiped clean a number of computer hard drives containing e-mails and other electronic documents that the government was required to produce.” ...

Will some taxpayers cheat after seeing this kind of behavior? I hope not, but some might justify it to themselves. When thousands of emails go missing from the key time period? And, when no one said anything about the emails being missing until one year into a federal investigation? Might some taxpayers cheat after seeing this kind of behavior? ...

Whatever one’s political views, politics are not supposed to matter to the IRS. Taxes and tax administration can’t be even remotely based on politics. We all need to believe that, and more generally, in the fairness of the system. One’s tolerance for coincidence should not have to be work overtime to be convinced.

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October 11, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, October 10, 2014

Brooklyn Hosts 2014 Scholar’s Roundtable Today

Brooklyn Logo 1Brooklyn hosts the 2014 Scholar’s Roundtable today with this tax panel:

October 10, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Weekly Tax Roundup

October 10, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

October 10, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Kleinbard: Don't Soak the Rich

New York Times op-ed:  Don’t Soak the Rich, by Edward D. Kleinbard (USC):

In response to the growing income disparity between the wealthy and the merely well off — not to mention the middle class and working class — an increasing number of economists and politicians have called for higher tax rates on top incomes. That would collect more revenues, and make our tax system more progressive, by collecting a disproportionate share of those new revenues from the highest income taxpayers, a fact that appeals to many people’s sense of fairness.

But even taking into account regressive state and local taxes, the American tax system already is the most progressive in the developed world. And the scars left by the 2013 fight over the “fiscal cliff” tax deal imply that trying to raise top marginal income tax rates to the levels suggested by some academics would be, well, a wholly academic exercise.

That does not mean, however, that we are bereft of instruments to tackle income inequality. In fact, achieving equality through the tax structure is the wrong way to think about the issue. Reformers have blundered by confusing what seems fair — more progressive taxation — with what is actually important, and lacking: a progressive fiscal system. As other developed countries have figured out, reducing inequality is not about where the money comes from, but where the money goes, and how much of it is spent.

A fiscal system encompasses both the tax and the spending sides of government. What we should care about is whether those two functions, taken as a whole, enhance the lives of average citizens. To that end, the right focus is not how progressively we finance government spending (i.e., tax ourselves), but rather the net effect of both sides of the equation — government taxing and government spending. Does the combination of the two advance or retard Americans’ prospects for a decent standard of living and equality of opportunity?

It turns out that progressive fiscal outcomes do not require particularly progressive tax systems — just big ones, to support substantial government investment and insurance programs. That’s because government spending invariably is very progressive: Lower-income Americans get disproportionately more value from government spending, relative to their incomes, than do the affluent, because they rely much more on public schools, social services and health care. ...

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October 10, 2014 in Tax | Permalink | Comments (1)

Boston College and Tax Analysts Host Conference Today on Reforming Entity Taxation

BCTABoston College and Tax Analysts host a conference today on Reforming Entity Taxation at Boston College:

Keynote Speaker:  Lee Sheppard (Tax Analysts)

Panel #1: Reforming Entity Taxation: Corporations

  • Papers: Mirit Eyal-Cohen (Alabama), Deborah Schenk (NYU), Dan Shaviro (NYU)
  • Moderator:  Jeremy Scott (Tax Analysts)
  • Commentator:  Brian Galle (Boston College)

Panel #2:  Reforming Entity Taxation: Partnerships

  • Papers:  Karen Burke (Florida), Andrea Monroe (Temple), Gregg Polsky (UNC)
  • Moderator:  Amy Elliot (Tax Analysts)
  • Commentator:  James Repetti (Boston College)

Panel #3: Reforming Entity Taxation: International

  • Papers:  Allison Christians (McGill), Robert Peroni (Texas), Martin Sullivan (Tax Analysts)
  • Moderator:  Sam Young (Tax Analysts)
  • Commentator:  Diane Ring (Boston College)

October 10, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 519

IRS Logo 2New York Sun:  Department of Injustice, by Conrad Black:

This brings us to the excruciating and horrifying saga of the Internal Revenue Service. It is clear, despite an administration effort to muddy the waters and strangle the congressional investigation, that the president and his party’s leaders in Congress launched a Herculean effort to bully the IRS to silence conservative organizations critical of the administration, and that the IRS, led by the head of the tax-exempt-organizations section, Lois Lerner, did its best to comply with this request. The extent of the collusion has been made difficult to fix with precision because Ms. Lerner’s hard drive disappeared and she has declined to answer congressional questions, exercising her right to avoid self-incrimination.

No one believes that her e-mails vanished accidentally, but let us note the contrast between the complacency with which the Democratic national media have assimilated this news with the hysteria that followed the revelation that Rose Mary Woods, Richard Nixon’s assistant, had lost only 18 minutes of a Watergate tape. Because of synchronized IRS non-cooperation and the likely destruction of evidence, it is hard to be sure of the extent of the contact between Democratic eminences and the national tax collector, but the existence of many meetings and e-mail exchanges has been established. (Senator Schumer had publicly urged the IRS to crack down on the “extraordinary influence” of the Tea Party and other Republican groups.) Ms. Lerner eventually took leave from her position and was accused of contempt of Congress. It is hard not to be contemptuous of the Congress, but that does not excuse refusal to answer amid the heavy suspicion of destruction of evidence.

President Obama installed John Koskinen, a “turn-around” expert from Fannie Mae, to clean up the IRS. But he has construed his role to be the obstruction of the congressional investigation, in appearances that were sanctimonious filibusters to explain the IRS’s conduct by standing on what he fancies to be his dignity and fuming with righteousness when the committee members suggested that he is not cooperating (which, of course, he isn’t). The administration’s own investigation has been a slapstick farce, largely led by Ms. Lerner’s chief associate in persecuting Republican political organizations, Jack Smith, now head of the public-integrity unit of the Justice Department. The administration is determined to kill the whole investigation, and there is little doubt that a thorough airing of the matter would show the conduct of much of the senior levels of the administration to be, to say the least, discreditable.

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October 10, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, October 9, 2014

Call for Tax Papers: Michigan Young Scholars’ Conference

The organizers of the 2015 Michigan Law School Young Scholars' Conference are seeking submissions for a tax panel:

MichiganThe University of Michigan Law School is pleased to invite submissions for its 2015 Young Scholars’ Conference to be held on March 27-28, 2015, at the University of Michigan Law School.

The conference is designated to provide aspiring doctoral students and recent graduates with a forum to present and discuss their work among academic peers from different nationalities and legal disciplines. The conference aims to promote fruitful research collaboration between its participants, and to encourage their integration in a community of legal scholars. ...

We welcome applications from current doctoral students, both in law and law-related disciplines, and from recent graduates of doctoral programs. The deadline for abstract submissions is December 2, 2014.

October 9, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

The Notorious R.B.G., Exercise, and Tax

The New Republic, Ruth Bader Ginsburg Is an American Hero, by Jeffrey Rosen:

RBGJeffrey Rosen: You are famously a huge opera fan. But recently you’ve become an Internet sensation because of another kind of music. There are all these T-shirts going around the Internet saying, “NOTORIOUS R.B.G.” So my first question is: Do you even know who the Notorious B.I.G. is?

Ruth Bader Ginsburg: My law clerks told me. ... 

JR: Your health is good?

RBG: Yes, and I’m still working out twice a week with my trainer, the same trainer I now share with Justice [Elena] Kagan. I have done that since 1999.

JR: Do you work out together?

RBG: No, she’s a lot younger than I am, younger than my daughter. She does boxing, a great way to take out your frustrations.

JR: And what do you do?

RBG: I do a variety of weight-lifting, elliptical glider, stretching exercises, push-ups. And I do the Canadian Air Force exercises almost every day.

JR: What are the Canadian Air Force exercises?

RBG: They were published in a paperback book put out by the Canadian Air Force.  When I was twenty-nine, that exercise guide was very popular. I was with Marty [Fn 3:  Justice Ginsburg’s husband, the tax law expert Martin D. Ginsburg, who died in 2010] at a tax conference in Syracuse. We stopped to pick up a lawyer to attend the morning program with us. He said, “Just a moment, I have to finish my exercises.” I asked him what those exercises were. He replied they were the Canadian Air Force exercises and said he wouldn’t let a day go by without doing them.

The lawyer who told me about the Canadian Air Force exercises stopped doing them years ago. I still do the warm-up and stretching regime almost every day. ...

JR: You were an admirer of Chief Justice Rehnquist. How have the workings of the Court changed under Chief Justice Roberts?

RBG: I was very fond of the old chief. I am also an admirer of the current chief, who had extraordinary skills as an advocate. He was a repeat player at oral argument, always super prepared, engaging in his presentation, and nimble in responding to the Court’s questions. As to the change, I regard the Roberts / Rehnquist change as a “like / kind exchange,” an expression tax lawyers use. ...

 (Hat Tip: Erik Jensen.)

October 9, 2014 in Tax | Permalink | Comments (1)

Kirk Stark Named Barrall Family Professor of Tax Law and Policy at UCLA

Kirk J. Stark (UCLA) has been named Barrall Family Professor of Tax Law and Policy at UCLA:

Stark (2014)James D. C. Barrall ’75 and Carole Barrall (UCLA ’75) established the UCLA School of Law Barrall Family Endowed Chair in Tax Law and Policy in honor of Jim's parents, Raymond C. and Shirley C. Barrall. James Barrall is a partner in the Los Angeles office of the international law firm Latham & Watkins and serves as the global co-chair of the firm's Benefits and Compensation Practice. The chair recognizes the achievements of a distinguished faculty member whose scholarship and teaching contribute to excellence in the field of tax law and and policy at UCLA School of Law. Professor Kirk J. Stark, whose research focuses on taxation and public finance, with a particular emphasis on state and local tax policy and U.S. fiscal federalism, is the first Barrall Family Endowed Chair in Tax Law and Policy.

 

October 9, 2014 in Legal Education, Tax | Permalink | Comments (0)

Abreu & Greenstein: The Rule of Law as a Law of Standards -- Interpreting the Internal Revenue Code

Alice Abreu (Temple) & Richard K. Greenstein (Temple), The Rule of Law as a Law of Standards: Interpreting the Internal Revenue Code, 63 Duke L.J. Online ___ (2014):

Although fields of law ordinarily comprise both rules and standards, and foundational tax scholars such as Professors Surrey, Warren, and Bittker understood the importance of standards in tax law, many tax scholars and professionals have come to regard federal tax law as “the paradigmatic system of rules.” The vision of tax-as-rules is particularly alluring because rules have been associated with rule-of-law values, and it seems that the rule of law might be especially important in the field of taxation. The rule of law constrains the coercive power of government, and perhaps few powers are viewed with as much suspicion as the taxing power. Our claim that the existence of many rules in the tax law does not dictate the interpretation of all tax formulations as rules seems to threaten critical rule-of-law values. Nevertheless, we believe with Surrey and Warren that tax, like other areas of law, can flourish only if the IRS and the courts are able to respond to “unforeseen cases as they arise” and that this flexibility demands that many Code provisions be interpreted as standards. We also believe that this use of standards does not threaten rule-of-law values. In this essay we defend both propositions.

To do so we engage pointedly with Professor Larry Zelenak’s critique of the position we took in our earlier article, Defining Income [11 Fla Tax Rev. 295 (2011)], where we claimed that the category of “gross income” in the Internal Revenue Code is best understood as a standard, not a rule. In Custom and the Rule of Law in the Administration of the Income Tax, Professor Zelenak worried that our position threatened the rule of law by “stretch[ing] beyond the breaking point” the concept of interpretation [Custom and the Rule of Law in the Administration of the Income Tax, 62 Duke L.J. 855 (2012)].

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October 9, 2014 in Scholarship, Tax | Permalink | Comments (1)

Washburn Seeks to Hire a TaxProf

Washburn LogoWashburn University School of Law invites applications for tenure-track faculty positions in taxation and decedent estates and trusts. For more information or to apply, contact Nancy G. Maxwell, Chair, Faculty Recruitment Committee.

October 9, 2014 in Tax, Tax Prof Jobs | Permalink | Comments (0)

WSJ: France Challenges Google's Tax Structure

Wall Street Journal, Google’s Tax Setup Faces French Challenge; Arrangement Channels European Revenue to Country With Favorable Tax Laws:

GoogleGoogle Chief Executive Larry Page met with France’s premier late last month and quietly pressed home a message: Google has invested heavily in France and is willing to do more. ...

Barely mentioned, according to one of the people, was an elephant in the room: Google is in the midst of a battle with France over a March tax assessment of possibly over a billion euros. More than just a wrangle over a bill, the fight calls into question an arrangement Google and many other companies use that shields revenue originating in European countries from those countries’ tax authorities.

“France is not anti-Google. But when you look at the profit that they make in France, and the number of customers they have, and the tax they pay, it’s outrageous,” says French Deputy Minister for Digital Affairs Axelle Lemaire.

Google’s prickly relationship with France reflects an era of conflict between Europe and technology’s superpowers. National governments and regulators are pursuing American tech firms over issues ranging from their handling of personal data to their marketplace power. The European Union on Tuesday said it will probe Amazon’s tax arrangements with Luxembourg, just a week after the EU attacked tax deals granted by Ireland to Apple as illegal state aid. ... 

The French tax dispute is one of the more fundamental conflicts because it takes aim at a structure in such widespread use. The structure channels most revenue from various European countries to a single corporate unit in a country that has favorable tax laws. [See How Google's French Tax Structure Works.]

This is a crucial first step in a process that some companies take further by ultimately routing much of the income to where it faces no tax at all. For Google to lose could have ripple effects for multinationals across Europe, potentially leading to other investigations and pressures to change structures.

“This could open the floodgates,” says Edward Kleinbard, a law professor at the University of Southern California and former chief of staff for Congress’s Joint Committee on Taxation. “If France falls, so do Germany and the rest.”

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October 9, 2014 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 518

IRS Logo 2Bloomberg BNA, U.S. Sidesteps NetJets' Accusations It Destroyed E-Mail Evidence in $643 Million Tax Case, by Marc Heller:

The Justice Department avoided addressing accusations from fractional aircraft ownership company NetJets that the IRS destroyed e-mail evidence sought as part of a fight over $643 million in taxes in an Oct. 6 reply brief.

NetJets had argued in a Sept. 29 motion before the U.S. District Court for the Southern District of Ohio that the Internal Revenue Service was “reckless” in its destruction of hard drives that contained information being sought by the company and in violation of an order from a magistrate judge. NetJets said the proper sanctions against the government would be to deny DOJ's motion for summary judgment.

DOJ, however, dodged the issue of evidence and argued in its reply brief that changing Federal Aviation Administration regulations can't give NetJets a pass on paying federal transportation taxes on its fractional aircraft program.

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October 9, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, October 8, 2014

The Tax Lawyer Publishes New Issue

The Tax Lawyer (2013)The Tax Lawyer has published Vol. 67, No. 4 (Summer 2014):

October 8, 2014 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)