TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Monday, August 15, 2016

The IRS Scandal, Day 1194

IRS Logo 2Daily Caller, IRS Bench Slapped Over Targeting Practices:

D.C. Circuit Scolds IRS For Unfair Targeting Practices
The U.S. Court of Appeals for the D.C. Circuit found that the IRS systematically targeted conservative groups for additional scrutiny by delaying their applications for tax-exempt status and submitting the groups to invasive probes, like forfeiting internet usernames and passwords or reviewing the political and charitable activities of family members. The three-judge panel characterized the agency’s arguments in its defense as “puzzling,” rejecting their claim that the agency could not process the tax-exempt applications of groups party to the litigation. Since the D.C. Circuit was not convinced IRS targeting had ceased, it reversed a lower court ruling denying the conservative groups an injunction and remanded the case for further proceedings.

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August 15, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

TaxProf Blog Weekend Roundup

Sunday, August 14, 2016

The Top 5 Tax Paper Downloads

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

  1. [414 Downloads]  Dark Pools, High-Frequency Trading, and the Financial Transaction Tax: A Solution or Complication?, by Doron Narotzki (Akron)
  2. [290 Downloads]  Fiduciary Financial Advice to Retirement Savers: Don't Overlook the Prudent Investor Rule , by Max M. Schanzenbach (Northwestern) & Robert H. Sitkoff (Harvard)
  3. [284 Downloads]  The True Economic Effects of Corporate Inversions, by Doron Narotzki (Akron)
  4. [237 Downloads]  The U.S. Response to OECD-BEPS and the EU State Aid Cases, by Daniel Shaviro (NYU)
  5. [206 Downloads]  Property Is Another Name for Monopoly Facilitating Efficient Bargaining with Partial Common Ownership of Spectrum, Corporations, and Land, by Eric A. Posner (Chicago) & E. Glen Weyl (Yale)

August 14, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Bainbridge:  The Parable Of The Talents

ParableStephen M. Bainbridge (UCLA), The Parable of the Talents:

On its surface, Jesus’ Parable of the Talents is a simple story with four key plot elements: (1) A master is leaving on a long trip and entrusts substantial assets to three servants to manage during his absence. (2) Two of the servants invested the assets profitably, earning substantial returns, but a third servant — frightened of his master’s reputation as a hard taskmaster — put the money away for safekeeping and failed even to earn interest on it. (3) The master returns and demands an accounting from the servants. (4) The two servants who invested wisely were rewarded, but the servant who failed to do so is punished.

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August 14, 2016 in Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1193

IRS Logo 2USA Today, Conservatives Want to Force House Vote to Impeach IRS Chief:

When Congress returns next month from its seven-week recess, conservative rebels in the House vow to force a vote on whether to impeach IRS Commissioner John Koskinen, effectively making an end-run around reluctant House leaders to achieve their goal.

Republicans allege that Koskinen obstructed an investigation into whether the IRS improperly scrutinized conservative Tea Party groups seeking tax-exempt status, although they do not agree on whether the IRS chief should be impeached. Democrats have denounced impeachment efforts against Koskinen as a politically motivated "travesty" that defames an honorable public servant who has done nothing wrong.

"John Koskinen needs to go, and we are committed to that," Rep. Jim Jordan, R-Ohio, chairman of the ultraconservative House Freedom Caucus, said in an interview with USA TODAY.

Although House leaders usually set the agenda, Jordan and other Freedom Caucus members are using a procedural tactic called a "privileged resolution" to force an impeachment vote. They can force the vote two days after they file the resolution.

A resolution filed by caucus members before the congressional recess has expired, but Jordan said they are poised to file it again when Congress reconvenes. Lawmakers are set to return on Sept. 6. ...

Jordan said the caucus has been buoyed by an Aug. 5 decision by a federal appeals court that said the IRS has not proven that it has ended discriminatory practices against conservative groups. The U.S. Court of Appeals for the District of Columbia Circuit reinstated a lawsuit against the agency. "The court just said that the IRS may not have cleaned up its act at all," Jordan said.

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

Saturday, August 13, 2016

This Week's Ten Most Popular TaxProf Blog Posts

Clinton, Trump Tax Return News

The IRS Scandal, Day 1192

IRS Logo 2Daily Signal, Accountability for IRS? What’s Next After New Court Decision:

The IRS has not stopped targeting conservative groups seeking nonprofit status, a federal appeals court has ruled in deciding to reinstate a lawsuit against the agency.

The U.S. Court of Appeals for the District of Columbia Circuit overturned a decision by a lower court that threw out the lawsuit because the Internal Revenue Service had promised voluntarily to end discriminatory practices.

The IRS insisted “there is no reasonable expectation” that discrimination will reoccur, the ruling noted, because the tax agency has “suspended until further notice” tactics it used to target the applications of tea party and other conservative groups for nonprofit status.

That reassurance was unsatisfactory to the appeals court because it appeared temporary. “There is a difference between the controversy having gone away and simply being in a restive stage,” Senior Judge David B. Sentelle, who was appointed by President Ronald Reagan, wrote in a unanimous decision by a three-judge panel. As a result, Sentelle wrote in the opinion released Friday, citing case law, the IRS “is free to return to [its] old ways—thereby subjecting the plaintiff to the same harm, but, at the same time, avoiding judicial review.”

Conservatives greeted the decision as proof that the tax agency isn’t serious about cleaning up its act. “They only stopped the targeting while people were paying attention. They had no intention of stopping the illegal conduct altogether,” lawyer John Eastman told The Daily Signal. ...

While the federal appeals court declined to hold individuals inside the IRS personally responsible for damages, it did agree with Eastman’s argument that political discrimination inside the agency was an ongoing problem. Any suggestion that the IRS no longer targets conservative groups, Sentelle wrote, “is absurd” in light of the fact that “two of the appellant-plaintiff’s applications remain pending.” ...

Conservatives celebrated the decision, which remanded the lawsuit to a lower court for trial and makes possible further discovery, a pretrial procedure that allows plaintiffs to search for additional pertinent information. ... In his interview with The Daily Signal, Eastman, former dean of Chapman University School of Law in Orange, California, predicted the discovery will unearth new facts about the IRS that are “going to be even more explosive than anything we’ve seen so far.”

Plaintiffs would look for evidence of collusion among government agencies, Eastman explained. It would be illegal, for example, if the IRS shared information about conservative nonprofits with the FBI for additional review.

That’s within the realm of possibility, Eastman said, considering the experience of Catherine Engelbrecht, founder and president of True the Vote. After her organization, which aims to curb voter fraud, applied for nonprofit status in 2010, Engelbrecht told The Daily Signal, she came under investigation by three government agencies all at once. As first reported by National Review in 2013, the IRS requested she turn over every social media post she’d ever written, lists of political organizations she has addressed, and information on any family members interested in running for public office.

Engelbrecht and her family’s business became the target of probes by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Occupational Safety and Health Administration as well as the FBI. If any evidence of collusion exists among these agencies, Eastman told The Daily Signal, government employees involved could face “serious, five-years-in-prison types of felonies.”

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August 13, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Friday, August 12, 2016

Black Lives Matter Tax Reform Plan

BLM

The Movement for Black Lives Platform: Economic Justice:

What is the problem?

  • There is a desperate need to replace  the current practice of collecting revenue in regressive ways with a more just system for collecting taxes.
  • Across the United States, there are major political obstacles to raising any kind of revenue.
  • As with most faults in our economic and political systems, regressive taxation has hit Black people, low-income people, and people of color the hardest.
  • Many municipalities have resorted to privatization and new taxes and fees in order to save money and generate more revenue. As a result, residents are being forced to pay more for services like trash collection, sewage, public property maintenance, parking meters, and to pay new taxes on a variety of everyday goods.
  • A recent study conducted by the Institute on Taxation and Economic Policy found that when one combines all the state and local income, property, sales and excise taxes that Americans pay, the nationwide average of effective state and local tax rates are 10.9 percent for the poorest fifth of taxpayers, and 5.4 percent for the wealthiest 1 percent.
  • In the ten states with the most regressive tax structures, the poorest fifth pay up to seven times as much in taxes and fees as the wealthiest residents, as a percentage of their income.
  • While states sometimes shift the cost of some services onto poorer residents, at other times they simply cut services all together. Many municipalities have had to increase public school class sizes, shorten school days, close vital city offices, and eliminate a huge number of public sector jobs.
  • As the wealthiest Americans and most powerful corporations continue to evade their fair share of taxes, many programs and initiatives that could contribute to racial and economic justice go underfunded or unfunded.

What does this solution do?

  • Taxing income:
  • Raise marginal tax rates for high earners, specifically the top percentile (for equity and revenue generation reasons —they pay more than 40 percent of federal income tax revenue, yet their average rate has been reduced to around 20 percent) and begin by gradually raising the top marginal rate first to 50 percent and then up to 80 percent.
  • Remove income caps on payroll taxes that fund social security and unemployment insurance.
  • Raise corporate income taxes, especially on large corporations and end tax deferral for foreign income of multinational corporations.
  • Taxing wealth:
  • Increase taxes on capital to the point where they are higher than taxes on labor, as wealth inequality is greater than income inequality. Specifically:
  • Increase capital gains tax
  • Create anti-speculation tax on property transfers
  • Increase estate tax
  • Have states shift to an income-sensitized property tax that focuses on homes above a certain threshold and second homes
  • Impose a wealth tax (on tangible and financial assets)

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August 12, 2016 in Political News, Tax | Permalink | Comments (9)

13th International And European Tax Moot Court Competition

KI13th International and European Tax Moot Court Competition 2016-2017:

KU Leuven (Brussels) and IBFD will organize in academic year 2016-2017 the 13th edition of the International and European Tax Moot Court Competition. ... 

Students will work intensively on a case drafted by IBFD researchers specifically for purposes of this competition. They will draft memoranda and present their case to a panel of renowned judges selected from academia and private practice. The Academic Chairman of the IBFD, Professor Pasquale Pistone, will serve as Arbitrator.

The 13th edition contains two parts. A first, written, phase runs from October till December 2016. The second, oral, phase will be held in Leuven from 26 March till 1 April 2016. There is no pre-selection based on the written phase, hence, all participating teams will defend their case during the oral pleadings.

The 2016-2017 Competition is open to sixteen universities. Universities are invited to send in their application by the specific deadline depending on the start of the academic year:

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August 12, 2016 in Legal Education, Tax, Teaching | Permalink | Comments (0)

Aug. 15 Deadline For AALS Annual Meeting Call For Papers:  Sex, Death, And Taxes

AALSCall for PapersAALS Trusts & Estates Section Program, 2007 AALS Annual Meeting (Jan. 3-7, 2017):

Sex, Death, and Taxes: The Unruly Nature of the Laws of Trusts and Estates

Trusts & Estates is a far-reaching and broad-based discipline of law that impacts private citizens’ decisions about sex, death, and taxes.  This legal discipline is based on speculation about donors and their intentions that, by their very nature, create unintended consequences because the laws exist largely unseen until they come into play.  Moreover, ascertaining these preferences prove difficult because individuals are entrenched with idiosyncratic preconceptions about death, family, property rights, personal legacies, paternalism, altruism, investment strategies, taxes, and many other effective interests.  In addition, the field sits at the crossroads of other legal disciplines such as family law, property law, elder law, and tax law. 

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August 12, 2016 in Legal Education, Tax | Permalink | Comments (0)

Jayne Caron (M.D. 2020, NYU)

My beloved, brilliant, and beautiful daughter Jayne launched her medical career today:

Jayne 1

Jayne is named after my sister, who died shortly after birth. My late mother, a secretary at a nursing school, absolutely loved the medical profession.  Shortly before my mother died in 1992, my pregnant wife and I told her we were going to name our daughter Jayne.  My mother would be bursting with pride and gratitude today, as Jayne's parents and brother are.  For more on my journey with my amazing daughter, see:

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August 12, 2016 in About This Blog, Legal Education, Tax | Permalink | Comments (7)

The IRS Scandal, Day 1191

IRS Logo 2Investor's Business Daily editorial, Will Predatory IRS Finally Be Brought To Justice?:

The Law: Two months ago, it looked as if the IRS scandal over targeting conservative groups had reached a legal dead end. But an appeals court, in a stunning reversal, revived it this week. Will justice finally be done?

We hope so.

The Washington, D.C., Circuit Court, overturning a June lower-court decision, let the suit go forward because, as LSU law professor Philip Hackney noted in the Surly Subgroup blog, "it found that the IRS had not voluntarily ceased its unlawful actions."

In other words, the IRS is still doing what it was accused of in the first place and was supposed to halt.

In particular, the court reinstated two specific complaints made by True The Vote and other Tea Party groups that claimed the IRS had acted in a biased way toward conservative organizations that applied for tax-exempt status.

The two complaints were that the IRS had violated the group's First Amendment rights, and that it had also violated the Administrative Procedures Act — both serious complaints that could land people in jail.

Senior Judge David B. Sentelle was particularly scathing in writing the unanimous decision by a three-judge panel, calling the IRS' contention that it was no longer violating the conservative groups' rights "absurd." ...

The egregious use of a powerful arm of the federal government for explicitly political purposes should never be tolerated. It's the stuff of petty dictatorships, more suitable to a government run by Turkey's Erdogan or Venezuela's Maduro than to a great republic such as the U.S.

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

Thursday, August 11, 2016

Tax Court Denies Deduction For Professor's DirecTV, Internet & Cell Phone As Part Of His 'Lifelong Burden Of Developing Knowledge'

Tax Court Logo 2Tanzi v. Commissioner, T.C. Memo. 2016-148 (Aug. 9, 2016):

During the first half of 2011 the Tanzis were employed by Seminole State College. Dr. Tanzi taught math and communications classes as an adjunct professor, and Mrs. Tanzi was employed as a campus librarian.  

Dr. Tanzi is highly educated—he holds a doctorate in communication. As he explained at trial, individuals holding such terminal degrees bear a lifelong burden of “developing knowledge, finding knowledge, exploring, [and] essentially selfeducating”. Dr. Tanzi therefore insists that all expenses paid in adding to his “general knowledge” should be deductible as unreimbursed employee business expenses. ...

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August 11, 2016 in Legal Education, New Cases, Tax | Permalink | Comments (1)

Ending The Pass-Through Tax Loophole For Big Business

CAPCenter for American Progress, Ending the Pass-Through Tax Loophole for Big Business:

In 2012, more than 100,000 big U.S. businesses managed to shelter billions of dollars of income in a single tax haven and pay no corporate income tax on it.

This tax haven is not Panama, Switzerland, or the Cayman Islands. In fact, it cannot even be found on a map—rather, it exists in the pages of the U.S. tax code. These businesses—with revenue of more than $10 million each—managed to pay no U.S. corporate income tax by pretending to be small businesses and thus saved their wealthy owners billions of dollars.

Most people think of big businesses as traditional corporations, which are organized under Subchapter C of the tax code and are supposed to pay the corporate income tax on their profits. But today many big businesses are organized as partnerships or S corporations, which are business forms that were originally designed for simpler or smaller businesses. The vast majority of partnerships and S corporations do not pay the corporate income tax. Instead, all of their income is passed through to their individual owners, who pay taxes on their individual income tax returns, thus avoiding the corporate income tax altogether.

The share of income going to businesses that use the pass-through form of organization—and therefore pay no corporate income tax—has exploded over the last 30 years, growing from less than 25 percent of net business income in 1980 to more than half in 2012. In fact, the United States is unique in this regard: No other country comes close to having such a large portion of business income that is not subject to the corporate income tax.

Small Business Tax Rate

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August 11, 2016 in Scholarship, Tax, Think Tank Reports | Permalink | Comments (4)

Death Of Bernie Aidinoff

AidinoffM. Bernard Aidinoff (Sullivan & Cromell, New York) died on August 8 at the age of 87.  From the New York Times obituary (guest book):

He graduated from the University of Michigan (Phi Beta Kappa) and the Harvard Law School (Magna Cum Laude) where he was an editor of the Harvard Law Review. A first lieutenant in the Army Judge Advocate General Corps, he then became a law clerk to Judge Learned Hand. Bernie joined the law firm of Sullivan & Cromwell in 1956.

An internationally respected tax expert, he loved the practice of law and took great pleasure in mentoring younger lawyers, before mentoring was a term. As chairman of the American Bar Association Section of Taxation, he testified multiple times before the Senate Finance Committee advocating for a progressive tax code. Bernie also served as chairman of the American Law Institute Tax Program Committee, as editor-in-chief of The Tax Lawyer, as chairman of the Executive Committee of the Association of the Bar of the City of New York and on the Commissioner's Advisory Committee of the Internal Revenue Service.

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August 11, 2016 in Obituaries, Tax | Permalink | Comments (0)

Kamin:  Taxing Capital—Paths To A Fairer And Broader U.S. Tax System

Washington Center for Equitable Growth logoDavid Kamin (NYU), Taxing Capital: Paths to a Fairer and Broader U.S. Tax System:

Taxing capital is a key way to maintain and increase the progressivity in the U.S. tax system and raise the revenue needed to support government activities and investments that in turn will help ensure strong and sustainable economic growth. Why turn to capital as a source of government revenue? Taxing capital is a highly progressive form of taxation that research suggests does not seriously affect the rate of savings among high-income Americans—an important consideration in terms of encouraging future economic growth—and is a key part of optimal taxation in the United States.

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August 11, 2016 in Scholarship, Tax, Think Tank Reports | Permalink | Comments (0)

The IRS Scandal, Day 1190

IRS Logo 2American Center for Law and Justice, President Obama’s IRS Scandal: Seven Years & Counting:

As we continue to bring you analysis this week of our recent win in the IRS case, we are reminded of how much this issue has developed since it was first discovered.

To be clear – the Obama Administration’s IRS targeting of Tea Party and other grassroots conservative groups is one of the longest running scandals in President Obama’s nearly eight-year administration – and it is still ongoing. After nearly seven years this December, one of our clients has still not received a determination on their submitted tax-exempt application.

In full disclosure, a proper and thorough timeline of this scandal would take thousands of pages to fully discuss everything that has occurred to date. For example, one law professor, in particular, has kept a daily blog for years now following the scandal and he just published “The IRS Scandal, Day 1188” earlier this week.

While we cannot cover every development of this scandal, the following timeline provides a clear and concise review of the major developments along the way:

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

Wednesday, August 10, 2016

MIT, NYU, Yale Sued By Faculty, Staff Over Excessive 403(b) Retirement Account Fees

MNYNew York Times, M.I.T., N.Y.U. and Yale Are Sued Over Retirement Plan Fees:

Three prominent universities were sued on Tuesday, accused of allowing their employees to be charged excessive fees on their retirement savings.

The universities — the Massachusetts Institute of Technology, New York University and Yale — each have retirement plans holding more than $3 billion in assets and are being individually sued by a number of their employees in cases seeking class-action status.

The lawyer representing the three groups of plaintiffs, Jerome J. Schlichter, is a pioneer in retirement plan litigation. Over the last decade, he has filed more than 20 lawsuits on behalf of workers in 401(k) retirement plans and has been widely credited with lowering plan fees across corporate America.

With the suits filed in federal courts on Tuesday, the focus has turned to a lesser-known corner of the retirement savings market, 403(b) plans, which are named for a section of the tax code. The accounts are similar to 401(k) plans, but are offered by public schools and nonprofit institutions like universities and hospitals.

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August 10, 2016 in Tax | Permalink | Comments (1)

Posner & Weyl:  Using Self-Assessed Property Taxes And Forced Sales To Increase Efficiency

Eric A. Posner (Chicago ) & Glen Weyl (Yale), Property Is Another Name for Monopoly Facilitating Efficient Bargaining with Partial Common Ownership of Spectrum, Corporations, and Land:

The existing system of private property interferes with allocative efficiency by giving owners the power to hold out for excessive prices. We propose a remedy in the form of a tax on property, based on the value self-assessed by its owner at intervals, along with a requirement that the owner sell the property to any third party willing to pay a price equal to the self-assessed value. The tax rate would reflect a tradeoff between gains from allocative efficiency and losses to investment efficiency, and would increase in line with expected developments in information technology.

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August 10, 2016 in Scholarship, Tax | Permalink | Comments (5)

The IRS Scandal, Day 1189

IRS Logo 2The Surly Subgroup:  DC Circuit Seems to have Decided IRS Violated Constitution Before Trial in True the Vote Appeal, by Philip Hackney (LSU):

In 2014, a District Court dismissed (based on 12(b)(6) and 12(b)(1) motions) the complaint of a number of conservative organizations who alleged that the IRS “targeted” them by subjecting them to greater scrutiny in their applications for tax exemption. The lead organization, True the Vote, sought 501(c)(3) charitable organization status; the others primarily sought 501(c)(4) social welfare organization status. The world became aware of this targeting controversy in May 2013 when Lois Lerner, the head of the Exempt Organizations division of the IRS apologized to the Tea Party and other conservative groups for how the IRS treated their applications. To this day Taxprof Blog continues the IRS Scandal post over three years later dedicated at least in part to this controversy.

The primary complaints were the second and fifth claims:  (2) the IRS violated the organizations First Amendment rights to freedom of speech, and (5) the IRS violated the Administrative Procedures Act. The District Court concluded that because the IRS had granted exempt status to these organizations, the complaints were moot. True the Vote appealed this dismissal to the DC Circuit Court of Appeals.

Last week the Circuit Court breathed new life into claims 2 and 5. Though the Court found that some of the complaints were moot (including Bivens complaints against IRS employees and a claim of violation of 6103 disclosure rules), it allowed claims 2 and 5 forward because it found that the IRS had not voluntarily ceased its unlawful actions.

In reading the opinion, I find astonishing that the Circuit Court appears to have already concluded, without trial, that the IRS acted unconstitutionally. I recognize that for a 12(b)(1) motion the court is to assume the complaint true, but the court appears to have done much more than make assumptions. I focus on this issue.

Frankly a trial testing this situation seems to me the right thing for two reasons. First, many people in our country genuinely believe the IRS behaved unconstitutionally (as is evidenced by the continuing coverage given in places like Taxprof Blog). Second, the IRS failed numerous organizations in how it processed this group of applications that touched on First Amendment issues. These two factors suggest to me that the organizations involved deserve a real hearing and not just a pre-trial dismissal.

What worries me is that the DC Circuit Court judges appear to have already judged the case; I find that as problematic as what the DC Circuit Court judges find problematic in the IRS actions at issue. Remember, the issue before the appeals court is a 12(b)(1) motion to dismiss for lack of subject matter jurisdiction because the IRS had approved the applications for tax exemption and there was no case to be decided by the court. Thus, no one has presented evidence or law in a trial on the substantive issues before the court. The court is to take the allegations as true for purposes of the motion but should give those claims close scrutiny. The DC Circuit though seems to do much more than assume the complaint is true.

The court starts its opinion stating: “Instead of processing these applications in the normal course of IRS business, as would have been the case with other taxpayers, the IRS selected out these applicants for more rigorous review on the basis of their names, which were in each instance indicative of a conservative or anti-Administration orientation.” Later in the opinion it continues: “It being plain to the Inspector General, the district court, and this court that the IRS cannot defend its discriminatory conduct on the merits, the governing issue is now whether the controversy is moot.” There is a lot of nonsense in those statements.

Because I don’t believe that the IRS failed by using names to screen applicants nor in picking out the conservative groups’ applications for closer scrutiny (as I discussed in an article called Should the IRS Never ‘Target’ Taxpayers), and I don’t believe any credible evidence has been put forward establishing that IRS employees acted with any intent to harm conservative causes, I feel like I am living in bizarro world to read a US appeals court opinion that states without a trial fairly establishing the law and facts that the these actions violated the constitution. I will take a look at separate parts of the statements to explain what I mean. ...

Perhaps the court’s opinion is nothing but dicta except for the holding that the case is not moot. But it is not at all clear that this is the way this opinion will be used. It is fine if the DC Circuit Court wants to see this case go forward, but it should let this case go forward without judging the case before it hears any evidence or law in a trial. The IRS, just like the conservative organizations, deserves to be treated with respect and fairness.

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August 10, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Tuesday, August 9, 2016

NYU Tax Law Review Publishes New Issue

NYU Law (2014)The Tax Law Review has published a new issue (Vol. 69, No. 1 (Fall 2015)):

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August 9, 2016 in Scholarship, Tax | Permalink | Comments (1)

Trump Tax Plan 2.0

Trump Tax Plan

Donald Trump yesterday unveiled dramatic changes in his original tax plan, embracing the plan announced by House Speaker Paul Ryan in June (critiqued here).

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August 9, 2016 in Political News, Tax | Permalink | Comments (3)

Chason:  Taxing Losers

Florida Tax Review  (2015)Eric D. Chason (William & Mary), Taxing Losers, 18 Fla. Tax Rev. 541 (2016):

The U.S. tax system (like most in the world) benefits capital gains in two ways. Investors can defer paying tax until they “realize” any gain (typically by sale) rather than when the gain simply occurs via rising prices. And, individual investors pay a lower, preferred rate on their long-term capital gains as compared to their other ordinary income (like compensation or business profits).

Investors face a burden, though, with respect to their capital losses. Rather than allowing for unlimited capital loss deductions, the Internal Revenue Code largely forces investors to match their capital losses against their capital gains. Limits on capital losses could be justified in several ways. The most prominent justification holds that should not be able to “cherry pick” loss elements out of an overall winning portfolio. This Article seeks to clarify the nature of the cherry-picking argument. It drops “cherry picking” in favor of the somewhat more descriptive “loss harvesting” used in wealth management literature. We will imagine a world in which Congress does not force taxpayers to match losses against gains. In this world, taxpayers could harvest isolated losses whenever they arise and enjoy the benefits of loss deductions — even if the taxpayer has an overall winning portfolio. Using insights from option theory, we can estimate the cost of aggressive loss harvesting.

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August 9, 2016 in Scholarship, Tax | Permalink | Comments (0)

SEALS 2016 Annual Conference

SEALs Logo (2013)The Southeastern Association of Law Schools 2016 Annual Conference concludes today in Amelia Island, FL.  Among today's highlights:

Tax Policy Discussion Group
This discussion group is broadly concerned with issues of taxation. Discussants address individual income tax, corporate income tax, state and local tax, estate and gift tax, tax expenditure policy, international tax, and entitlements. While these disparate themes might seem only loosely related, a common thread of the difficulties of balancing equity, simplicity, incentives, and transparency runs through all of them. These scholars will grapple with the central tax topics of the day and address the looming concerns that must be dealt with by all levels of government.

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August 9, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

NY Times:  States Vie To Shield The Wealth Of The 1%

1%New York Times, States Vie to Shield the Wealth of the 1 Percent:

Steven J. Oshins, a Nevada lawyer who specializes in estate planning, has never met the wealthy software entrepreneur Dan Kloiber, but he is nonetheless intensely interested in Mr. Kloiber’s contentious divorce.

“I have had a Google news alert on that for a couple years,” Mr. Oshins said as he discussed the case from his office in a squat pink complex about a 20-minute drive from the Las Vegas Strip. What animates Mr. Oshins is not the juicy marital feud, but the legal arcana governing a trust in Delaware where the Kloiber family parked assets worth hundreds of million of dollars, sheltered from estate taxes.

Mr. Oshins, with a gleeful grin spreading across his face, relished the thought of the no-longer-beloved Mrs. Kloiber busting through the trust and exposing a potential chink in the formidable trust protection armor promised by Delaware — which just happens to fiercely compete with Nevada for the lucrative business of shielding assets owned by the superrich.

Although most out-of-town visitors are drawn to the city’s roulette wheels and slot machines, Mr. Oshins and a battalion of tax lawyers, accountants, advisers, trust administrators and bankers cater to an elite clientele that insists on a much more reliable way to build a fortune.

With their backing, Nevada has stoked an aggressive rivalry among a smattering of states to babysit the wealth of the nation’s top 1 percent, pressing public officials to pass laws, streamline regulations, lower fees and replace D.M.V.-level service with concierge treatment.

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August 9, 2016 in Tax | Permalink | Comments (1)

The IRS Scandal, Day 1188

IRS Logo 2Wall Street Journal editorial, The Dissembling IRS: Documents Show the Agency Misled About its Political Targeting:

The IRS has spent three years trying to slow-roll discovery in lawsuits about the way it slow-rolled the applications of conservative nonprofits. The latest episode is on display in federal court in Washington, D.C., in the lawsuit brought by the pro-Israel group Z Street.

Readers may recall that in 2009 Z Street filed for 501(c)(3) status and had its application caught in the net of IRS targeting for groups that opposed Administration policy. When Z Street called the IRS to check on the hold up, an agent confirmed that its application had been sent for special screening for groups connected with Israel.

Z Street sued the IRS in 2010 for viewpoint discrimination, arguing that the agency’s behavior violates the First Amendment. The IRS tried to claim immunity but lost in federal court, clearing the way for discovery that produces evidence and internal documents. Now taxpayers are getting their first glimpse of how the IRS misled about the reasons for its decision to target Z Street. ...

Discovery has also revealed documents that show the IRS made early attempts to shield and obfuscate its special Israel policy. In a November 29, 2010 email, IRS deputy commissioner Steven Miller asked IRS employee Sarah Ingram about “an article on a letter we apparently sent to an org on Israel settlements. What can you tell me.” Ms. Ingram replied that she “Just told Ruth to pull me out when you have a minute. Not doing email on this.”

There are other emails on the subject that have been produced in discovery but redacted to the point that they are unreadable. The IRS is blocking them on grounds that the documents are protected by so-called deliberative process privilege. But that privilege was created to safeguard internal government deliberations not to prevent the public from getting information about government wrongdoing.

The IRS wants to stonewall evidence production until the clock runs out on the Obama Administration on January 20. Let’s hope the courts keep the pressure on the agency so Z Street can see how and why it was mistreated for partisan purposes.

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August 9, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Monday, August 8, 2016

Kleinbard:  The Real Reason Trump Won't Release His Tax Returns

Trump (2016)The Hill: Trump’s Pushback on Tax Return Release Reveal True Ambitions, by Edward Kleinbard (USC):

With his nomination secure, Donald Trump has made it clear that he will not release his tax returns. Democrats have responded with outrage, and even bounties for their publication, while Trump supporters scramble to explain why this time is different, and the returns should remain confidential. Trump’s refusal already is costing him in the polls, and the issue will only grow as the election approaches.

So why has Mr. Trump staked out this politically unpalatable position? The answer lies not in any sordid details that Trump’s tax returns might reveal, but rather in what the refusal itself says about the man and his ambitions.

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August 8, 2016 in Political News, Tax | Permalink | Comments (7)

NY Times:  Brookings, Other Think Tanks Push Donors’ Agendas, Calling Their Objectivity And Tax-Exempt Status Into Question

Brookings (2016)New York Times, Researchers or Corporate Allies? Think Tanks Blur the Line:

Think tanks, which position themselves as “universities without students,” have power in government policy debates because they are seen as researchers independent of moneyed interests. But in the chase for funds, think tanks are pushing agendas important to corporate donors, at times blurring the line between researchers and lobbyists. And they are doing so while reaping the benefits of their tax-exempt status, sometimes without disclosing their connections to corporate interests.

Thousands of pages of internal memos and confidential correspondence between Brookings and other donors — like JPMorgan Chase, the nation’s largest bank; K.K.R., the global investment firm; Microsoft, the software giant; and Hitachi, the Japanese conglomerate — show that financial support often came with assurances from Brookings that it would provide “donation benefits,” including setting up events featuring corporate executives with government officials, according to documents obtained by The New York Times and the New England Center for Investigative Reporting.

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August 8, 2016 in Tax | Permalink | Comments (1)

The IRS Scandal, Day 1187

IRS Logo 2CNN, Court: IRS Needs to Prove It Isn't Targeting Conservative Groups:

A federal appeals court says the Internal Revenue Service has not proven it has ended discriminatory practices against conservative groups seeking tax-exempt status, reinstating a lawsuit against the troubled agency.

The US Court of Appeals for the District of Columbia Circuit's unanimous order on Friday reversed a 2014 lower district court ruling that previously dismissed the lawsuit, which was originally filed the year before.

The federal appeals court found that the IRS had committed some "unconstitutional acts against at least a portion of the plaintiffs," including "Be-On-The-Lookout" or "BOLO" lists where certain organizations' applications for tax-exempt status "were subjected to extended delay" and "were not receiving the same processing as those of other organizations."

Although the IRS announced that it had suspended the use of "BOLO" lists in the application process, the federal appeals court stated that the IRS' use of the word "suspend" indicated that it is not a permanent change.

Additionally, the court ruled that even if the IRS did voluntarily cease all discriminating practices, "it is absurd" to suggest the unlawful activity by the IRS has been eradicated "when two of the appellant-plaintiffs' applications remain pending."

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August 8, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Sunday, August 7, 2016

SEALS 2016 Annual Conference

SEALs Logo (2013)The Southeastern Association of Law Schools 2016 Annual Conference continues today in Amelia Island, FL.  Among today's highlights:

New Tax Scholars Workshop:

  • Neil Buchanan (George Washington) (moderator)
  • Tessa R. Davis (South Carolina), Citizenship and Taxation (Mentor: Patrick Tolan (Western Michigan-Cooley))
  • Adam Smith (Florida), Tax Law Confidential: Limitations on the Attorney-Client Privilege for Tax Lawyers (Mentor: Jennifer Bird-Pollan (Kentucky))
  • Elaine Waterhouse Wilson (West Virginia), Cooperatives in the Exempt Organization Space (Mentor: Terri Helge (Texas A&M))

International Tax Policies and Practices
Papers in this panel address a variety of concerns in the topic of international tax law. Presenters will consider consequences of international tax design questions, as well as issues of international tax enforcement. As international organizations and countries all over the world consider the issue of coordinated international tax enforcement, the topics considered by this panel are more important than ever.

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August 7, 2016 in Conferences, Legal Education, Scholarship, Tax | Permalink | Comments (0)

The Top 5 Tax Paper Downloads

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

  1. [365 Downloads]  Dark Pools, High-Frequency Trading, and the Financial Transaction Tax: A Solution or Complication?, by Doron Narotzki (Akron)
  2. [269 Downloads]  Fiduciary Financial Advice to Retirement Savers: Don't Overlook the Prudent Investor Rule , by Max M. Schanzenbach (Northwestern) & Robert H. Sitkoff (Harvard)
  3. [242 Downloads]  The True Economic Effects of Corporate Inversions, by Doron Narotzki (Akron)
  4. [232 Downloads]  Wealth Management, Tax Evasion and Money Laundering: The Panama Papers Case Study, by Ehi Esoimeme (Cardiff)
  5. [210 Downloads]  The U.S. Response to OECD-BEPS and the EU State Aid Cases, by Daniel Shaviro (NYU)

August 7, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 1186

IRS Logo 2Walter Olson, DC Circuit Reinstates Conservative Groups’ Lawsuits against IRS Targeting:

Remember the claims from Obama administration fans that the scandal of the Internal Revenue Service targeting Tea Party and conservative groups wasn’t really much of a scandal after all; that it was the result of inadvertence or incompetence and, in any event, has been fully addressed so that it won’t happen again?

A unanimous panel of the DC Circuit Court of Appeals isn’t buying it. Today the circuit’s three-judge panel unanimously reinstated lawsuits against the IRS over the targeting program. With scathing language, it ruled that a lower court had improperly credited the IRS’s promises that it had ended its abusive targeting and sought to rectify the harms being sued over. In fact, the court said, evidence indicates that the IRS has not only failed to provide adequate guarantees of future good behavior, but continues even now to hassle some of the groups it harassed.

American Center for Law & Justice, ACLJ Wins Significant Victory Against the Obama Administration’s IRS Targeting:

We just secured a major victory in federal appeals court against the Obama Administration’s IRS.  The court unequivocally agreed with our position that the IRS’s targeting of conservatives has not ended and that our clients – numerous conservative, Tea Party, and pro-life groups – deserve to have their day in court.

Just hours ago, the U.S. Court of Appeals for the D.C. Circuit issued a decision in our IRS targeting scandal case, affirming in part and reversing in part the district court’s decision of dismissal, and remanding the case for further proceedings on all constitutional claims.

In its opinion, the appellate court agreed that the district court’s decision dismissing our clients’ – thirty-eight non-profit organizations from twenty-two states subjected to numerous violations of their First Amendment rights – claims was made in error on the unfounded position that the IRS had since ceased all allegedly illegal activity.

The court was quick to criticize the IRS’s absurd arguments that it had voluntarily ceased all illegal activity, stating unequivocally in the opinion that “voluntary cessation [by the IRS of the alleged illegal activity] has never occurred.”

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August 7, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Saturday, August 6, 2016

This Week's Ten Most Popular TaxProf Blog Posts

Friday, August 5, 2016

Oei Reviews Dick's U.S. Tax Imperialism In Puerto Rico

Jotwell (2016)Shu-Yi Oei (Tulane), U.S. Tax Policy and Puerto Rico's Fiscal History, JOTWELL (2016) (reviewing Diane Lourdes Dick (Seattle), U.S. Tax Imperialism in Puerto Rico, 65 Am. U. L. Rev. ___ (2016):

U.S. Tax Imperialism in Puerto Rico is a careful, interesting, and timely account of how the U.S. has designed tax policies with respect to Puerto Rico since 1898, but its contribution does not end there. The article also raises broader questions.

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August 5, 2016 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1184

IRS Logo 2Washington Free Beacon, Obama Donor, DOJ Prosecutor Spent More Than 1,500 Hours Looking Into IRS Targeting of Conservative Groups:

A Department of Justice prosecutor and Obama donor spent more than 1,500 hours investigating the IRS’ targeting of conservative groups, Judicial Watch reported.

Judicial Watch filed a Freedom of Information Act (FOIA) request to find out how much time Barbara Bosserman had spent looking into the IRS’ targeting of conservative groups.

“As compiled from the Interactive Case Management System, Ms. Bosserman’s investigative efforts totaled 1,529.25 hours,” according to the letter.

Federal Election Commission records show Bosserman contributed $6,750 to Barack Obama campaigns and the Democratic National Committee between 2004 and 2012. She made twelve contributions to Obama for America from 2008 to 2012.

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August 5, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, August 4, 2016

Chamber Of Commerce Sues To Block Inversion Regs For Violation Of APA's Notice And Comment Requirement

Reuters, Business Groups Sue Over New U.S. Limit on Tax-Driven Foreign Buyouts:

Two business groups sued the Obama administration on Thursday over a crackdown on U.S. companies that try to reduce their U.S. taxes by rebasing abroad in a process known as inversion. The U.S. Chamber of Commerce and the Texas Association of Business filed a lawsuit in Texas federal court that said a regulation from the U.S. Treasury Department in April exceeded what the law allows the department to do.

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August 4, 2016 in IRS News, New Cases, Tax | Permalink | Comments (0)

Marian Named National Reporter For Congress Of The European Association of Tax Law Professors

Marian (2016)Press Release, Omri Marian Named National Reporter for Congress of the European Association of Tax Law Professors:

The University of California, Irvine School of Law tax Professor Omri Marian has been appointed the United States national reporter for next year’s Congress of the European Association of Tax Law Professors (EATLP), a professional organization of professors teaching tax law at universities in Europe. The annual Congress will be held June 2017 in Lodz, Poland. This year’s topic is “Corporate Tax Residence and Mobility” and national reporters are called upon to submit a report describing the legal status in their jurisdiction on the topic. ...

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August 4, 2016 in Legal Education, Tax | Permalink | Comments (1)

Tax Court Gives Whistleblowers Big Win: Award Includes Percentage Of Criminal Fines And Civil Forfeitures, In Addition To Taxes

IRS Whistleblower (2014)Wall Street Journal, Big Win for Tax Whistleblowers as Pair Gets $17.8 Million:

The U.S. Tax Court awarded $17.8 million to a pair of whistleblowers in a decision that significantly expands the scope of what can be claimed in such cases. The ruling for the first time allowed the whistleblowers to get a portion of criminal fines and civil forfeitures in addition to part of the taxes the government recouped because of information they provided.

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August 4, 2016 in New Cases, Tax | Permalink | Comments (5)

SEALS 2016 Annual Conference

SEALs Logo (2013)The Southeastern Association of Law Schools 2016 Annual Conference continues today in Amelia Island, FL.  Among today's highlights:

Productive and Fulfilling Scholarship Across the Tenure Spectrum
This panel covers strategies for achieving scholarly success and satisfaction both before and after tenure. Panelists with a range of experience address opportunities for and limitations on scholarly development during all stages of the tenure process: years 1-2, years 3-4, years 5-6, and post-tenure. The panel examines the role of law review articles as the primary form of scholarly output and explores other forms of scholarship. Panelists share their perspectives on co-authoring, finding mentors, gaining readership, leveraging past projects, and networking as well as the joys and perils of bar journal contributions, books, book chapters, book reviews, blogging, casebooks, CLE materials, essays, monographs, newsletters, and reports.

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August 4, 2016 in Conferences, Legal Education, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1183

IRS Logo 2Forbes:  Heading The IRS Shouldn't Be Mission Impossible: GOP Call To Impeach Koskinen Is Tragic Political Theater, by Len Burman:

The 2016 Republican Party platform demands that Congress impeach and convict Internal Revenue Service Commissioner John Koskinen. His “high crimes and misdemeanors” primarily consist of annoying congressional leaders and heading an agency charged with interpreting and enforcing the incoherent tax laws that Congress has inflicted on the American public—the definition of a thankless job. Impeaching the commissioner may be good political theater, but it’s bad for the country.

Over the years, the IRS has been led by a long list of admirable public servants of both parties. One, Mort Caplin, just celebrated his 100th birthday. Mort, a war hero decorated for valor at Normandy, probably saw serving as JFK’s Commissioner as a comparatively safe job.

Current Commissioner John Koskinen is only dodging metaphorical bullets, but the hail of fire is unrelenting. ...

He probably didn’t anticipate that his hard work would result in some House leaders and the official GOP platform calling for his impeachment. The charges: some emails lost by IRS staff and making a House committee wait a few weeks before responding to a subpoena. The same Treasury inspector general who flagged the targeting of conservative groups called Koskinen “exceptionally cooperative.” (AEI’s Norm Ornstein published an excellent dissection  of what he calls the House “show trial” in The Atlantic.) ...

Koskinen, who is tough as nails, will be okay, but the damage to our fiscal system could be longer lasting. If the goal is to improve the IRS—as it should be—the agency needs more people like Koskinen, Caplin, and the admirable souls who served between them (many of whom have rallied to Koskinen’s defense). Public servants willing to take on the enormous challenges facing the IRS shouldn’t have to face a hail of metaphorical bullets for trying to do their job.

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August 4, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Wednesday, August 3, 2016

Walker:  The Practice And Tax Consequences Of Nonqualified Deferred Compensation

David I. Walker (Boston University), The Practice and Tax Consequences of Nonqualified Deferred Compensation:

Although nonqualified deferred compensation plans lack explicit tax preferences afforded qualified plans, it is well understood that nonqualified deferred compensation results in a joint tax advantage when employers earn a higher after‐tax return on deferred sums than employees could do on their own. Several commentators have proposed tax reform aimed at leveling the playing field between cash and nonqualified deferred compensation, but reform would not be easy or straightforward. This Article investigates nonqualified deferred compensation practices and shows that joint tax minimization often takes a backseat to accounting priorities and participant diversification concerns.

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August 3, 2016 in Scholarship, Tax | Permalink | Comments (0)

Schumer Decries 'Victory Tax,' Urges House To Pass Senate Bill Exempting Olympic Medals From Tax

Olympic RingsPress Release, Schumer Urges House of Representatives to Immediately Pass Bipartisan Legislation That Will Block IRS From Taxing Olympic Medals; Senator Says Olympic and Paralympic Athletes Should Not Have To Pay a Victory Tax:

During a visit to the Olympic Training Center in Lake Placid, U.S. Senator Charles E. Schumer joined with Olympic athletes and launched a major push to urge the U.S. House of Representatives to pass legislation that would prevent the Internal Revenue Service (IRS) from taxing Olympic and Paralympic athletes on medals or other prizes awarded to them in future Olympic games.

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August 3, 2016 in Congressional News, Tax | Permalink | Comments (5)

Professional Ethics For The Tax Lawyer To The Holmesian Bad Man

Bret N. Bogenschneider (Vienna), Professional Ethics for the Tax Lawyer to the Holmesian Bad Man, 49 Creighton L. Rev. 775 (2016):

The “manufacture” of factual indeterminacy in furtherance of tax avoidance activity constitutes potentially unethical attorney conduct. The structuring of facts toward tax avoidance is not merely the rendering of legal advice as contemplated by the Model Code of Professional Conduct, and instead may assist the Holmesian “bad man” client toward conduct which is normatively prohibited under the tax laws. As such, only tax planning via factual structuring, which results in determinative tax avoidance, is ethical attorney conduct.

Since a purely formalistic method of legal interpretation is not applied in the United States, the circumstance of determinative tax avoidance is extraordinarily rare in the modern era. The moral aspects of legal representation in furtherance of tax evasion are also re-evaluated from both the parochial and postmodern perspectives.

August 3, 2016 in Scholarship, Tax | Permalink | Comments (0)

Utah Seeks To Hire A Tax Prof

Utah Logo (2016)The University of Utah S.J. Quinney College of Law invites applications for faculty positions at the rank of associate professor (tenure track), professor (with tenure), or career line (long-term clinical or other non-tenure track, rank consistent with experience) beginning academic year 2017-2018:

Qualifications include a record of excellence in academics or practice, successful teaching experience or potential as a teacher, and strong scholarly distinction or promise for tenure track or tenured positions. The College is particularly interested in candidates in the area of tax law. Interested persons should submit an application to the University of Utah Human Resources website.

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August 3, 2016 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

Trump Wants To Repeal The Johnson Amendment And Make Churches The New Super PACs

Following up on my previous posts (here and here):  The Atlantic, Trump Wants to Make Churches the New Super PACs: His Promise to Repeal the 1954 Johnson Amendment Isn’t About Free Speech—It’s About Cash:

Why have some religious conservatives decided to support Donald Trump for United States president? Leaders have named their reasons: He’s promised toappoint pro-life Supreme Court justices; he’s allegedly good at business. But they have also consistently cited something else, perhaps more unexpected: the tax code.

Trump has promised to repeal the so-called Johnson Amendment, a 1954 provision that prohibits tax-exempt organizations from participating in political activities. Proposed by then-Senator Lyndon B. Johnson and later revised by Congress, it keeps churches and other non-profits from lobbying for specific causes, campaigning on behalf of politicians, and supporting or opposing candidates for office.

While opponents of the Johnson Amendment often frame their objections in terms of free speech, the provision’s primary impact may be financial. Right now, the IRS makes a clear distinction between non-profit groups—from charities and universities to certain private schools and houses of worship—and political organizations.

If the Johnson Amendment were repealed, pastors would be able to endorse candidates from the pulpit, which they’re currently not allowed to do by law. But it’s also true that a lot more money could possibly flow into politics via donations to churches and other religious organizations. That could mean religious groups would become much more powerful political forces in American politics—and it would almost certainly tee up future court battles. ...

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August 3, 2016 in Political News, Tax | Permalink | Comments (9)

The IRS Scandal, Day 1182

IRS Logo 2Politico, Morning Tax: Sounds About Right:

A new document release from Judicial Watch shows that then-interim IRS chief Steven Miller was none too pleased when first informed about the tea party controversy that would eventually lead to his ouster. As Joseph Lawler of the Washington Examiner put it: “Miller threw his pencil across the room and yelled, ‘Oh, s — t,’” when told in the spring of 2012 that the agency had been improperly scrutinizing conservative organizations. Full Examiner story.

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August 3, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, August 2, 2016

Does Vic Fleischer's Appointment As Senate Finance Committee Co-Chief Tax Counsel Imperil Tax Reform, Or Give It A Shot In The Arm?

Fleischer (2016)Following up on my recent posts:

Forbes:  Senator Ron Wyden Endangers Tax Reform With Hire of Radical Partisan Victor Fleischer, by Ryan Ellis:

While most Americans over the past two weeks were consumed with the drama and intrigue of the two party conventions, a major hire was made in Washington, D.C. which could have devastating negative implications for fundamental tax reform prospects in 2017.

Senate Finance Committee Ranking Member Ron Wyden (D-Ore.) has hired University of San Diego law professor Victor Fleischer as co-chief tax counsel. Should the Democrats gain a majority in the Senate this fall, Fleischer would have a key role in shaping the direction of tax reform discussions next year with the new president and with a presumably Republican House of Representatives. Wyden called Fleischer a “true outside thought leader in this space.”

That is very bad news if you were hoping to see fundamental tax reform finally become a reality next year.

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August 2, 2016 in Congressional News, Legal Education, Tax | Permalink | Comments (4)

Treasury Issues Proposed Regs To Limit Valuation Discounts For Fractional Interests

DiscountsWall Street Journal, U.S. Aims to Clamp Down on Tactic to Avoid Estate Tax:

The U.S. government on Tuesday proposed making it harder for wealthy business owners to transfer assets to heirs without paying estate and gift taxes.

The Treasury Department and Internal Revenue Service plan would place new limits on a common technique used to transfer interests in illiquid businesses.

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August 2, 2016 in Tax | Permalink | Comments (2)

San Francisco ‘Tech Tax’ Is Dead

Tech TaxFollowing up on my previous post, NY Times: San Francisco Considers 'Tech Tax' To Pay For Boom’s Downside:  Time, The San Francisco ‘Tech Tax’ Is Dead:

In a committee meeting on Monday, one of the more controversial proposals to bubble up in San Francisco in recent years was effectively killed. But the angst that the proposed “tech tax” exposed was left in its wake, after being put on display during an afternoon of commentary from lawmakers and members of the public.

The measure, intended for the November ballot, would have levied a 1.5% payroll tax solely on the booming tech sector, and the estimated $140 million in annual revenue from that special tax would have been earmarked for projects like housing the homeless and building affordable housing. While supporters argued that there was a Robin Hood-esque justice this would bring to the city — well-paid tech workers have flowed in and lower-income residents have been pushed out — critics like Supervisor Mark Farrell described the proposal as simplistic “scapegoating” that threatened to drive economic powerhouses to other places.

One of the city’s 11 lawmakers and the chair of the committee that stopped the measure from moving forward, Farrell opened by comparing the spirit of the tax to “the politics of Donald Trump,” describing him as one of “those who divide us.” The allusion did not sit well in a city where lawmakers are often distinguished by being progressive or moderate Democrats, leading at least one supporter of the measure to hold back tears of anger. While everyone agreed that rising rents and limited housing stock have reached crisis levels, there was not agreement on how much the tech boom is to blame, nor on what the true character of the tech industry is. ...

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August 2, 2016 in Tax | Permalink | Comments (0)