For the second time in less than a year, the government of Prime Minister Narendra Modi is putting India through a revolution in the way the country does business.
In the fall, the government imposed one of the most radical monetary experiments ever, abruptly banning most of the country’s currency notes in an effort to stem corruption.
Now, it is instituting the country’s biggest tax overhaul since independence. On Saturday, a nationwide sales tax replaces the current hodgepodge of business taxes that vary from state to state and are seen as an impediment to growth. It is expected to unify in a single market 1.3 billion people spread over 29 states and seven union territories in India’s $2 trillion economy.
Federal investigators believe Caterpillar failed to submit numerous required export filings with the government in recent years, adding to questions facing the manufacturing giant, people familiar with the matter said.
The findings are preliminary, these people said, but offer an avenue for investigators to examine whether missing export submissions were part of a possible effort by the Peoria, Ill.-based maker of yellow bulldozers, mining trucks and other heavy equipment to avoid paying taxes.
Congress is moving to prevent the Internal Revenue Service from enforcing one of the more unpopular provisions of the Affordable Care Act, which requires most Americans to have health insurance or pay a tax penalty.
The plan is separate from Republican efforts to repeal the health care law, and appears more likely to be adopted because it would be written into the annual spending bill for the Treasury and the IRS.
The front page of the New York Times this morning features a full-frontal assault on the low-income housing tax credit, the largest federal subsidy for the development of affordable housing. The charge against the credit is that the housing units it subsidizes are “disproportionately built in majority nonwhite communities,” which “means . . . that the federal government is essentially helping to maintain entrenched racial divides.” The first part of that claim is indisputably true: developments receiving low-income housing tax credits are, indeed, disproportionately located in communities with large nonwhite populations. But it does not therefore follow that the federal government, through the credit, is perpetuating residential segregation. ...
The Internal Revenue Service is the agency of the federal government that most people love to hate. As a result, it has been used as a political punching bag on and off for almost as long as it has been in existence. The most recent trend in politicians demonstrating their contempt for the national tax collector — other than trying to get its commissioner impeached — is to starve the agency of funding.
However, despite major budget reductions — or perhaps partly because of them — the agency had been doing more with less over the past several years. One of the metrics the IRS uses to measure its performance is by comparing the amount of money the agency receives from Congress to the amount it collects in taxes due, expressing the result in the cost to collect $100.
In 2015 and 2016, that figure stood at $0.35 per $100, down from $0.53 as recently as 2010. It’s also the lowest cost per $100 collected that the agency has recorded since at least 1981, according to the IRS 2016 Data Book.
This is a bittersweet 4th of July holiday, as my father died ten years ago, and I find myself thinking of him more and more with each passing year. I often wonder what he would think of the man I have become over the past ten years. My eulogy at his funeral did not fully capture the towering presence he was in my life, and he remains so in death. My pastor Al Sturgeon passed along this wonderful song from Chet Atkins that beautifully captures my feelings:
Forget what you may have learned about the Enlightenment: Modern Western democracy is nothing more than a byproduct of a series of tax disputes.
While the Greeks and Romans had democratic institutions, most trace the beginnings of modern Western democracy to the 1215 signing of the Magna Carta at Runnymede. King John, the third of England’s Angevin monarchs, claimed lands in France to which the French also laid claim. John attempted to win them back to no avail. Wars are expensive, and John sought to pay for them by taxing England’s nobles, who did not take kindly to his attentions. They revolted and eventually forced him to sign the Magna Carta—which, among other things, required the king to obtain consent before imposing certain taxes. In other words, the nobles extracted a say in government in return for the king’s right to tax them, conditioning that right upon the consent of the governed. Over time the English built upon these agreements, eventually leading to the democratic parliamentary system that exists today.
One of my favorite teaching exercises in my Introductory Income Taxation class is to go through the New York Times wedding announcements from late December and early January, and to have students identify couples that got married on the “wrong” side of the New Year divide. Some single-earner couples that presumably receive a marriage bonus—e.g., an engineer marrying a grad student—nonetheless wed in early January, though they likely would have been better off accelerating their nuptials to December. Other couples that probably face a marriage penalty—e.g., two associates at the same law firm—wed in late December, though they likely would have been better off waiting a few more weeks. I ask my students, “What were these couples thinking?” The answer that I get is: “They were probably thinking about love and not about tax.”
For those of us who love thinking about tax, this is all somewhat of a puzzle. Do people really make such momentous life decisions without considering the tax implications? Ed Fox seeks to answer that question in a creative new paper. His main finding is that, at least historically, tax incentives have had a quantitatively and statistically significant effect on marriage patterns. While anecdotes from the Times might lead us to believe that couples make marriage choices without considering the tax consequences, Fox’s study suggests that tax incentives do indeed affect the decisions of some couples to say “I do.”
Bernie Sanders and others have scolded the company for (legally) paying no taxes. Here’s how the Boston newcomer could emerge a hero.
Don’t worry. This isn’t yet another screed calling you out as the king of all corporate tax dodgers. By now, most people probably have a general understanding that you’ve been both aggressive and effective in reducing what you owe Uncle Sam over the years, though I suspect few appreciate just how effective. If there is more art than science at play at the highest echelons of the tax world, then you, General Electric, are our nation’s corporate Picasso. Just last month, the Institute on Taxation and Economic Policy, or ITEP, reported that, averaged out over the last eight years, you paid no US corporate income taxes, in large part because you received a total federal tax subsidy of $15.4 billion, despite raking in $40 billion in profits during that period. Imagination at work, baby.
I know you dispute those figures, and we’ll get into that later. For now, though, let’s just agree that the members of your best-in-the-business tax team more than earned whatever you’ve paid them in bonuses. ...
Ms. Olson states that the IRS ran a generally successful filing season. But she says taxpayers who require assistance from the IRS are continuing to face significant challenges obtaining it. While taxpayer services and enforcement activities are both essential for effective tax administration, Ms. Olson says taxpayer services require more emphasis than they are currently receiving. She recommends the IRS expand its outreach and education activities and improve its telephone service and that Congress both provide the IRS with sufficient funding to provide high quality taxpayer service and conduct more oversight to ensure the IRS is spending the funding as intended.
With the Senate effort to upend Obamacare suspended for the Fourth of July holiday, there’s a chance to step back and examine the assumptions behind Republicans’ longstanding objections to the social safety net — as well as the flaws in those assumptions.
From Ronald Reagan’s invocation of a “welfare queen,” to Mitt Romney’s derision of “takers,” to the House and Senate bills to cut taxes for the rich by taking health insurance away from tens of millions of people, the premise of incessant Republican tax cutting is that the system robs the rich to lavish benefits on the poor.
Pregame meals provided to Boston Bruins players and personnel before away games qualify as a de minimis fringe benefit under Sec. 274(n)(2)(B) and are not subject to the 50% limitation under Sec. 274(n)(1), the Tax Court held (Jacobs, 148 T.C. No. 24 (6/26/17)). The petitioners, Jeremy and Margaret Jacobs, co-own the Boston Bruins National Hockey League (NHL) team through two S corporations. The IRS had disallowed 50% of the Bruins’ deduction for expenses for meals provided to the Bruins’ employees when traveling to away games, which resulted in deficiencies of $45,205 and $39,823 in the Jacobses’ 2009 and 2010 federal income taxes.
The IRS has struggled to close down abusive family limited partnerships. At first unreceptive to IRS arguments, the courts eventually embraced section 2036 as an estate-tax tool for attacking such partnerships. Because the section was not designed to apply to partnerships, difficulties have arisen as the courts have struggled with the fit. In its most recent encounter, the Tax Court in Powell grappled with a fit-related issue that implicates the Supreme Court’s landmark decision in Byrum.
Last Term, a sharply divided Supreme Court decided a landmark dormant Commerce Clause case, Comptroller of the Treasury of Maryland v. Wynne. Wynne represents the Court’s first clear acknowledgement of the economic underpinnings of one of its main doctrinal tools for resolving tax discrimination cases, the internal consistency test. In deciding Wynne, the Court relied on economic analysis we provided. This Essay explains that analysis, why the majority accepted it, why the dissenters’ objections to the majority’s reasoning miss their mark, and what Wynne means for state taxation.
Part II of this article provides an overview — accompanied by more than a little authorial commentary— of the development (such as it has been) of the income taxation of transactions in human body materials, from the 1950s to the present. Part III situates the property-versus-services issue with respect to the taxation of body materials in the broader context of the differing income tax treatments of income from property and income from services. After explaining why the tax characterization of body materials resists easy resolution, it concludes that the well-established treatment of taxpayer-created assets as property strongly suggests that body materials should also be treated as property. Part IV explores the questions of capital asset status, holding period, and basis that govern the amount and the character of the gain recognized by a taxpayer on the sale of body materials, on the assumption that the materials are classified as property. Part V considers a miscellany of other issues relating to the income taxation of body materials. Finally, Part VI discusses the possible application of other federal taxes — the gift, estate, and self-employment taxes — to transactions in body materials. Part VII briefly concludes.
While still relatively few in number compared to traditional nonprofit and for-profit organizations, the rise of social enterprises represents a possible disruption of not only existing models of doing business but also areas of law that in many respects have seen little fundamental change for decades. One such area is domestic tax law, where social enterprises currently find themselves subject to the rules of for-profit activities and entities. Here, both scholars and policymakers are beginning to ask whether it is either necessary or desirable to modify existing tax provisions to better accommodate social enterprise: that is, whether to create a distinct tax space for social enterprise.
FROM THE CHAIR Tax Reform Discussions and Other Developments By William H. Caudill, Norton Rose Fulbright LLP, Houston, TX We are now heading into the last part of this 2016-2017 Tax Section year, having most recently completed the Section’s May Meeting in Washington—the third and largest meeting in our annual cycle of Section meetings. We have made good progress on many tasks, not least of which is the vital role of educating and informing our members and the public at large about tax reform.
This book is not about the latest study that will help you make money in the stock market or that will nudge you into saving more.
And it’s not about the optimal allocation of your retirement assets.
This book is about humanizing finance by bridging the divide between finance and literature, history, philosophy, music, movies, and religion.
This book is about how the philosopher Charles Sanders Peirce and the poet Wallace Stevens are insightful guides to the ideas of risk and insurance, and how Lizzie Bennet of Pride and Prejudice and Violet Effingham of Phineas Finn are masterful risk managers. This book looks to the parable of the talents and John Milton for insight on value creation and valuation; to the financing of dowries in Renaissance Florence and the movie Working Girl for insight on mergers; to the epic downfall of the richest man in the American colonies and to the Greek tragedies for insight on bankruptcy and financial distress; and to Jeff Koons’s career and Mr. Stevens of Remains of the Day for insight on the power and peril of leverage.
Uncertain legal standards are pervasive but understudied. The key theoretical result showing an ambiguous relationship between legal uncertainty and optimal deterrence remains largely undeveloped, and no alternative conceptual approaches to the economic analysis of legal uncertainty have emerged. This Article offers such an alternative by shifting from the well-established and familiar optimal deterrence theory to the new and unfamiliar probabilistic compliance framework. This shift brings the analysis closer to the world of legal practice and yields new theoretical insights. Most importantly, lower uncertainty tends to lead to more compliant positions and greater private gains. In contrast, the market for legal advice tends to reduce compliance over time — a trend that a regulator may counter either by clarifying the law or by reiterating the law’s continuing ambiguity. If detection is uncertain, the probabilistic compliance framework reveals why, contrary to the prevailing view, the standard damages multiplier should be used to counter detection uncertainty but not legal uncertainty.
Empirical testing of the tax laws, and in particular testing the incidence of the tax laws, may sound boring. But virtually any modern public policy goal that could be implemented through tax policy ultimately turns precisely on this question. For example: Should the United States adopt a tax on sugary drinks? Is a high cigarette tax effective in preventing smoking deaths? Would a carbon tax help to reduce global warming? Ultimately, the answers to these questions turns on who, in fact, ends up bearing the burden of these taxes.
I don’t mean the God of the philosophers or the scholars, but, as Blaise Pascal said, the “God of Abraham, God of Isaac, God of Jacob.” With no disrespect, I hope the question comes as a jolt. And without being outraged or quick to accuse me of “blasphemy,” know, too, that I am a hopeful monotheist. I might even be called a Christian, only I continue, every day of my life, to fail. Friedrich Nietzsche’s observation weighs heavily on me: “There was only one Christian and he died on the cross.” Call me a failed and broken Christian, but a Christian nevertheless.
So, is your God dead? Have you buried God in the majestic, ornamental tombs of your churches, synagogues and mosques? Perhaps prosperity theology, boisterous, formalistic and mechanical prayer rituals, and skillful oratory have hastened the need for a eulogy.
Raid your 401(k). Ask your boss for a loan, load up on your credit cards, or put up your house as collateral by taking out a second mortgage.
Those are some of the financially risky strategies that Pioneer Credit Recovery suggested to people struggling to pay overdue federal tax debt. The company is one of four debt collection agencies hired by the Internal Revenue Service to chase down late payments on 140,000 accounts with balances of up to $50,000.
Income and wealth inequality have been rising as issues of national concern. One would think that these concerns should motivate tax reform proposals designed to address income and wealth inequality. However, many leading tax law experts believe that the current structure of the U.S. income tax cannot support much higher tax rates at the high end. As Avi-Yonah and Zelik have persuasively explained, the reason is that we are “trapped” by our realization and capital gains rules.
The realization rule—that gains are not taxed until realized by sale or similar transaction—has long been understood as the “Achilles heel” of the income tax. The higher the tax rate on capital gains, the more that wealthy taxpayers are incentivized to delay realization of gains, and accelerate realization of losses, while borrowing to the extent that money is needed to fund consumption. Because of these sorts of realization games, economists estimate that the revenue maximizing tax rate on capital gains is probably in the range of between 28% and 32%. Hiking the capital gains tax rate above this range would thus be expected to decrease revenues.
West Virginia University College of Law has selected its 2017 Facility Significant Scholarship Award recipient, an in-house honor that recognizes work addressing significant public issues.
Elaine Wilson, a WVU tax professor and president of the West Virginia Tax Institute, won for her article titled Cooperatives: The First Social Enterprise. It examines the issues of “charitable values and economic benefit within the corporative business model,” the WVU announcement said. She joined the university's faulty in 2012. Her work will be published in DePaul Law Review in the coming months.
“I was surprised, especially because of the talent (here) – there’s a lot of really great scholars who are doing really interesting work and competition is stiff," Wilson told The West Virginia Record.
The fiscal constitutions of many states limit the ability of governments to raise taxes. These same constitutions typically do not impose similar limits on the ability of governments to impose a fee, say a building permit fee. But what if a locality chose to levy a gigantic building permit fee and used the proceeds to fund general services? Such a fee would – and should – be considered a “hidden tax” and thus subject to the same limitations as ordinary taxes.
Tax transparency is all the rage these days. The brouhaha around the disclosure (or, in one instance, the non-disclosure) of presidential candidates’ tax returns during the 2016 presidential campaign brought the matter of tax transparency to the front and center of public discourse in the United States. Around the world, recent revelations that multinational corporations dramatically reduced their tax bills by securing secretive rulings from tax authorities, and that billionaires are able to use intricate offshore shell structures to evade taxation, are causing major popular uproar and a demand for increased transparency on tax matters. The demand is heard by intergovernmental as well as national bodies. For example, the Organisation for Economic Co-operation and Development (OECD) recently adopted country-by-country reporting standards, which would require multinational corporations to disclose to tax authorities their activities and tax payments in each country in which they operate. Remarkably, some countries have announced they are considering making the reports public. Another example is Luxembourg, which—responding to international criticism—recently announced it will start publishing redacted versions of advance tax agreements with taxpayers. This represents a dramatic shift in Luxembourg’s usual secretive tax stance.
The IRS collects information on more Americans and handles more money than any other agency. The cybersecurity risks are high. This Article takes seriously both the challenges and the agency's limitations in solving those problems through technological advances. This Article describes the cybersecurity problem as a legal problem for Congress to address rather than merely a digital problem for IRS technicians. By legislation, Congress defines what information is tax relevant, and then the IRS digitally collects, stores, and process the information. Over the years, without any regard for information security, Congress has designed a tax system that requires the IRS to collect more information than it can now protect. But there is ample flexibility for Congress to reform tax law to decrease the information held by the IRS and increase the likelihood the IRS can defend it. This Article explores specific ways in which the tax laws and its administration could be changed to simplify the information needs of the IRS, making its information system both a less appealing and a more defensible cyberattack target. In short, if the tax law were simpler in specific ways, the information technology needs at the IRS would be simpler, and adequate cybersecurity for it would be easier.
The year 2014 marked the first opportunity for American taxpayers to receive subsidized health insurance through the Affordable Care Act’s (“ACA”) new Premium Tax Credit (“PTC”). About 4.8 million people enrolled in an ACA plan in 2014 were eligible, and nearly 97% of these claimants were approved for advance payments of the PTC.
The year 2015 marked the first tax return where taxpayers received the unpleasant surprise that they must repay excess credits due to reconciliation. Advance PTC estimates turned out to be highly inaccurate, with only 8% of claimants receiving accurate advance payments. A majority, 51%, had to repay some or all of the advance payments.
These figures reveal systemic problems in the PTC’s design. While the PTC’s function is to entice the uninsured to purchase insurance (and dive into insurance risk pools), reconciliation lurks as a financial danger for those who make the plunge. A shark is swimming in the pool.