TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, September 16, 2016

The IRS Scandal, Day 1226

IRS Logo 2Wall Street Journal editorial, The Impeachment Distraction: Koskinen and the IRS Deserve Rebuke, but Not If It Costs the Senate:

House Speaker Paul Ryan has managed to unite his fractious GOP caucus around some common campaign goals. So it’s a pity that two months from an election some House Members are driving an issue that could cost Republicans control of the Senate.

Louisiana Rep. John Fleming on Tuesday moved on a privileged resolution to force the House to vote as soon as Thursday to impeach IRS Commissioner John Koskinen. The IRS chief has earned public opprobrium, but the timing of this effort could boomerang and end up making the IRS less accountable.

These columns have been out front in documenting Mr. Koskinen’s failures after he promised to clean up the IRS following its political targeting of conservative nonprofits. Mr. Koskinen has failed to be candid with Congress and defied subpoenas. Documents requested by Congress were destroyed on his watch. He’s done nothing to reform the agency and he has supported a new draft regulation, now in temporary abeyance, that would reinforce the agency’s political vetting.

The question is whether impeachment is the right remedy at the current political moment. The case for it is that Congress needs to reassert its own powers against a runaway executive branch. President Obama has diminished the power of the purse and won’t prosecute contempt citations against witnesses who refuse to testify on Capitol Hill. Impeachment is about all Congress has left.

The problem is that a trial is doomed to fail in the Senate, where a two-thirds vote is required to convict. There are differing views on whether a House impeachment vote triggers an automatic Senate trial, but if it does this could require vulnerable GOP incumbents to stay in Washington at the height of the campaign. This would be a gift to Democrats trying to regain the majority. ...

No doubt many House Members genuinely believe Mr. Koskinen deserves impeachment, but other Republicans have legitimate doubts that his offenses rise to the level of “high crimes and misdemeanors” mentioned in the Constitution. An impeachment trial now will divide Republicans while uniting Democrats. Why take the risk when Mr. Koskinen is leaving office in a mere four months?

Congress needs to think seriously about how to reassert its powers no matter who wins the White House. But the reality is that a Senate Democratic majority would make that task impossible. Republicans should focus on re-electing their majorities in Congress as a check on the next President, instead of making self-defeating political gestures.

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

Thursday, September 15, 2016

Florida Seeks To Hire Three Tax Profs

Florida Logo (GIF)I previously blogged the news that Florida is seeking to hire three Tax Profs (including an Eminent Scholar in Taxation Chair and a Professor of Practice).  Here is the official ad:

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September 15, 2016 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

Lederman Presents Does Enforcement Crowd Out Voluntary Tax Compliance? Today At Boston College

Ledderman (2016)Leandra Lederman (Indiana) presents To What Extent Does Enforcement Crowd Out Voluntary Tax Compliance? at Boston College today as part of its Tax Policy Workshop Series hosted by Jim Repetti and Diane Ring:

Governments commonly use deterrence methods, such as audits and the imposition of penalties, to foster compliance with tax laws. Although this approach is consistent with economic modeling of tax compliance, some scholars caution that deterrence may backfire, “crowding out” intrinsic motivations to pay taxes and thus reducing compliance. This article analyzes the evidence to date to determine the extent of such an effect. Field studies suggest that deterrence tools, such as audits, generally are highly effective at increasing tax collections but that crowding out may occur in some contexts, with respect to certain subgroups of taxpayers. The article argues that more field studies on compliant taxpayers are needed but that the existing evidence suggests that tax collectors should be careful with the explicit and implicit messages they give taxpayers, so as not to undermine the generally positive effects on compliance of enforcement of the tax laws.

Update:  Shu-Yi Oei blogs the workshop here.

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September 15, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Barry & Burke:  Ten Notable Corporate Tax Articles of 2014-2015

Jordan M. Barry (San Diego) & Karen C. Burke (Florida), A Brief Review of Corporate Tax Articles 2014-2015,  151 Tax Notes 207 (Apr. 11, 2016):

  1. Reuven Avi-Yonah (Michigan), Corporate Taxation and Corporate Social Responsibility, 11 N.Y.U. J.L. & Bus. 1 (2014) (review by Kathleen DeLaney Thomas (North Carolina))
  2. Steven Bank (UCLA), Historical Perspective on the Corporate Interest Deduction,’ 18 Chapman L. Rev. 29 (2014)
  3. Joshua Blank (NYU), Reconsidering Corporate Tax Privacy, 11 N.Y.U. J.L. & Bus. 31 (2014)
  4. Christopher Borek (Analysis Group, Inc.), Angelo Frattarelli (U.S. Department of Justice) & Oliver Hart (Harvard), Tax Shelters or Efficient Tax Planning? A Theory of the Firm Perspective on the Economic Substance Doctrine, 57 J. L. & Econ. 975 (2014)
  5. Victor Fleischer (San Diego) & Nancy Staudt (Dean, Washington University), The Supercharged IPO, 67 Vand. L. Rev. 307 (2014)
  6. Dick Harvey (Villanova), Corporate Tax Aggressiveness — Recent History and Policy Options, 67 Nat’l Tax. J. 831 (2014)
  7. Stephanie Hoffer (Ohio State) & Dale Oesterle (Ohio State), Tax-Free Reorganizations: The Evolution and Revolution of Triangular Mergers, 108 Nw. U. L. Rev.
    1083 (2014)
  8. Jeffrey Kwall (Loyola-Chicago) & Katherine Wilbur (Varnum, Grand Rapids, MI), The Outer Limits of Realization: Weiss v. Stearn and Corporate Dilution, 17 Fla. Tax Rev. 47 (2015)
  9. Martin McMahon (Florida) & Daniel Simmons (UC-Davis), When Subchapter S Meets Subchapter C, 67 Tax Law. 231 (2014)
  10. Adam Rosenzweig, A Corporate Tax for the Next One Hundred Years: A Proposal for a Dynamic, Self-Adjusting Corporate Tax Rate, 108 Nw. U. L. Rev. 1029 (2014)

Notable Corporate Tax Articles in prior years:

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September 15, 2016 in Poll, Tax | Permalink | Comments (0)

Capital Without Borders: Wealth Managers And The One Percent

CapitalFollowing up on my previous post, Inside The Secretive World Of Tax-Avoidance Experts:  Brooke Harrington (Copenhagen Business School),  Capital Without Borders: Wealth Managers and the One Percent (Harvard University Press Sept. 2016) (review here):

How do the one percent hold on to their wealth? And how do they keep getting richer, despite financial crises and the myriad of taxes on income, capital gains, and inheritance? Capital Without Borders takes a novel approach to these questions by looking at professionals who specialize in protecting the fortunes of the world’s richest people: wealth managers. Brooke Harrington spent nearly eight years studying this little-known group—including two years training to become a wealth manager herself. She then “followed the money” to the eighteen most popular tax havens in the world, interviewing practitioners to understand how they helped their high-net-worth clients avoid taxes, creditors, and disgruntled heirs—all while staying just within the letter of the law.

Capital Without Borders reveals how wealth managers use offshore banks, shell corporations, and trusts to shield billions in private wealth not only from taxation but from all manner of legal obligations. And it shows how practitioners justify their work, despite evidence that it erodes government authority and contributes to global inequality.

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September 15, 2016 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Walking Meetings Enhance Creativity And Productivity

Wall Street Journal, The Office Walk-and-Talk Really Works:

They don’t require yoga pants or a shower, but the research is clear: Walking meetings count as exercise. ...

Walking meetings are typically held with two or three people over a set route and period—often 30 minutes. They can take place at a nearby park or even in office hallways. Some people are using walking meetings to boost their daily step counts. Others are spurred by mounting research on the physical and mental benefits of being more mobile at work. ...

Walking meetings have been outlined in a TED Talk

and encouraged in a Funny or Die video with the cast of “The West Wing, whose characters were known for their frequent walk-and-talks

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September 15, 2016 in Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1225

IRS Logo 2Politico, GOP Negotiators Reach Deal to Postpone IRS Impeachment Vote:

House Freedom Caucus Chairman Jim Jordan (R-Ohio) and Judiciary Committee Chairman Bob Goodlatte (R-Va.) have reached a tentative compromise to postpone a vote to impeach the IRS commissioner, sources familiar with the talks told POLITICO.

Under the terms of the emerging deal, IRS Commissioner John Koskinen would testify before the Judiciary panel next week, and any impeachment vote would likely be postponed until after the November election rather than take place on Thursday, the sources said.

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

Wednesday, September 14, 2016

America’s Inequality Problem: Real Income Gains Are Brief And Hard To Find

New York Times: America’s Inequality Problem: Real Income Gains Are Brief and Hard to Find, by Eduardo Porter:

Early on Tuesday, the Census Bureau provided some long-awaited good news for the beleaguered working class: The income of the typical American household perched on the middle rung of the income ladder increased a hearty 5.2 percent in 2015, the first real increase since 2007, the year before the economy sank into recession. 

Households all the way down the income scale made more money last year. The average incomes of the poorest fifth of the population increased 6.6 percent after three consecutive years of decline. And the official poverty rate declined to 13.5 percent from 14.8 percent in 2014, the sharpest decline since the late 1960s. ...

And yet this positive news — while clearly undermining Donald J. Trump’s unbridled pessimism about the American economy — does not justify unbridled celebration, either. ... Gains may be finally trickling down to those at the bottom of the ladder. But the numbers still offer a lopsided picture, with a gargantuan share of income rising to the top. While the bottom fifth of households increased their share of the nation’s income, by the census’s definition, to 3.4 percent from 3.3 percent, the richest 5 percent kept 21.8 percent of the pie, the same as in 2014.


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September 14, 2016 in Tax | Permalink | Comments (0)

Kleinbard:  Capital Taxation In An Age Of Inequality

Edward D. Kleinbard (USC), Capital Taxation in an Age of Inequality:

The standard view in the U.S. tax law academy remains that capital income taxation is both a poor idea in theory and completely infeasible in practice. But this ignores the first-order importance of political economy issues in the design of tax instruments. The pervasive presence of gifts and bequests renders moot the claim that the results obtained by Atkinson and Stiglitz (1976) counsel against taxing capital income in practice.

Taxing capital income is responsive to important political economy exigencies confronting the United States, including substantial tax revenue shortfalls relative to realistic government spending targets, increasing income and wealth inequality at the top end of distributions, and the surprising persistence of dynastic wealth. It also responds to a new strand of economic literature that argues that “inclusive growth” leads to higher growth.

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

Clausing:  Strengthening The Indispensable U.S. Corporate Tax

Kimberly A. Clausing (Reed College), Strengthening the Indispensable U.S. Corporate Tax:

The U.S. system of corporate taxation is in desperate need of reform. Observers note that both the high statutory rate (35 percent) and the purported “worldwide” nature of our system place the U.S. system out of line with those of our trading partners. This characterization is misleading because it contradicts the underlying reality. Under the current U.S. corporate tax system, effective tax rates are far lower than statutory rates, and the foreign incomes of multinational firms often face a lighter burden than they would under the tax systems of our trading partners. A key goal of potential reforms to U.S. corporate taxation should be to better align the tax system’s stated features with its true characteristics.

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

U.S. Household Incomes Surged 5.2% in 2015, Biggest Increase In Over 50 Years

U.S. Census Bureau, Income and Poverty in the United States: 2015 (Sept. 13, 2016):

Median household income was $56,516 in 2015, an increase in real terms of 5.2 percent from the 2014 median of $53,718 (Figure 1 and Table 1). This is the first annual increase in median household income since 2007, the year before the most recent recession.

Figure 1

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September 14, 2016 in Gov't Reports, Tax | Permalink | Comments (4)

The IRS Scandal, Day 1224

IRS Logo 2New York Times editorial, Will Speaker Paul Ryan Stand Up to the Freedom Caucus?:

The leadership of the House speaker, Paul Ryan, is about to be challenged by the latest partisan mischief from ultraconservative Republicans — a meritless and unprecedented attempt to impeach the commissioner of the Internal Revenue Service, John Koskinen. ...

To impeach the commissioner, his antagonists aim to bypass the House leadership and bring the measure directly to the floor as a privileged resolution. Such a move threatens to set a dangerous new low in congressional politicking. Should this shabby precedent be established, what sub-cabinet officials and bureaucrats might be singled out next? ...

The speaker could show some leadership by sending any such floor motion to a quick and quiet death in committee. That is exactly what the Democratic Speaker Nancy Pelosi did in 2008, when Representative Dennis Kucinich of Ohio brought a privileged resolution to the floor to impeach President George W. Bush.

But there is already speculation that Mr. Ryan, fearing the Freedom Caucus, might try to appease it with a measure of censure for the same baseless charges. This would be no less damaging to Mr. Koskinen’s reputation — or to the speaker’s. It would be another signal that Mr. Ryan remains hostage to his ultraright members.

Los Angeles Times editorial, Don't Impeach the IRS Commissioner:

[T]he bill of particulars that accompanies the resolution proves, at most, that Koskinen wasn’t as attentive to the importance of securing records sought by Congress as he should have been. It’s also clear that he misspoke when he told a congressional committee that ”every email”  associated with Lois Lerner, a former IRS official responsible for tax-exempt groups, had been preserved; in fact, IRS employees in West Virginia had erased as many as 24,000 of her emails. (A Treasury Department inspector general found no evidence that the erasures were a deliberate attempt to destroy evidence.) But inaccurate or incomplete testimony isn’t the same as willfully lying to Congress.     

In short, there is nothing to suggest that Koskinen is guilty of the “high crimes and misdemeanors” the Constitution cites as grounds for impeachment. And even if the House were to vote to impeach him, there is no chance that the Senate would provide the two-thirds majority necessary for a conviction. 

The GOP’s ire at the apparent targeting of conservative tax-exempt groups is understandable, but that’s not the only thing motivating the Freedom Caucus. Instead, the attempt to impeach Koskinen is a political exercise that can’t be divorced from longstanding efforts by conservatives to demonize and defund the IRS. More directly, it’s tied to Republicans’ apparent determination to stop the IRS from enforcing the law barring political campaigns from masquerading as charities. If the House were to impeach the commissioner — or even censure him — the reputation of that body would suffer and members would be tempted to use the impeachment power to push other pet political causes. The only fair outcome is for the House to refer the resolution to the panel the Freedom Caucus is trying to bypass, the House Judiciary Committee. The resolution is likely to die there, as it should.

Responsible Republicans — including Speaker Paul Ryan and Majority Leader Kevin McCarthy — need to support that action and stand against this abuse of the impeachment power.

Washington Times, Impeach IRS Commissioner John Koskinen:

The House Freedom Caucus will attempt to force a vote on impeaching IRS Commissioner John Koskinen Tuesday on the House floor.

Good. The man needs to go. Or at least be held accountable. ...

What are Mr. Koskinen’s crimes?

He’s actively tried to stonewall congressional investigation into the tea-party scandal. He’s failed to comply to several congressional subpoenas. In 2014, he was asked to supply all of Ms. Lerner’s emails, but he did nothing to track or preserve such documentation. Weeks after the subpoena, IRS employees in West Virginia erased 422 backup tapes, destroying as many as 24,000 of Ms. Lerner’s emails (obstruction of justice, anyone?), despite an agency preservation order.

In congressional hearings, Mr. Koskinen withheld from Congress both the preservation order and the destruction of tapes and also failed to disclose details regarding Ms. Lerner’s destroyed hard drive.

Mr. Koskinen also assured Congress that his agency has gone to “great lengths” to retrieve Ms. Lerner’s lost emails, however, when the Treasury Department inspector general did its own search, it found 1,000 new emails in 14 days. It appeared the IRS never searched disaster backup tapes, Ms. Lerner’s BlackBerry and laptop, the email server and its backup tapes.

Then, to put salt in the wounds, Mr. Koskinen then declined to show up to his own impeachment hearing.

It’s Congresses job to be a check on the executive branch’s power, and Mr. Koskinen has repeatedly shown his disrespect for legislative branch.

Jonathan Turley, of the George Washington University Law School, said in June testimony to the House Judiciary Committee that the Koskinen controversy “falls at the very crossroads of expanding executive power, diminishing congressional authority, and the rise of the Fourth Branch,” which consists of “federal agencies that exercise increasingly unilateral and independent powers.” ...

For Congress’s job to hold the executive branch accountable, to serve as a check on its power, it must act if it doesn’t want to become irrelevant.

Wall Street Journal Law Blog, Scholars Say Impeaching IRS Commissioner Would Set Dangerous Precedent:

As House Republicans weigh impeachment proceedings against IRS commissioner John Koskinen, a group of constitutional scholars are urging lawmakers to hold back. ...

In a letter last week addressed to House Speaker Paul Ryan and House Minority Leader Nancy Pelosi, a group of constitutional law professors say impeaching the IRS chief would set a dangerous precedent. ...

A larger group of tax scholars also said they opposed impeachment proceedings in an earlier letter to House leaders.

National Society Of Accountants Send Letter to House Leaders Opposing Koskinen Impeachment:

Leaders of the National Society of Accountants (NSA) have sent a letter to leaders of the U.S. House of Representatives opposing any resolution to impeach or censure Internal Revenue Service (IRS) Commissioner John Koskinen.

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September 14, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Tuesday, September 13, 2016

Avi-Yonah & Shaviro:  Human Rights And Tax In An Unequal World

HRDaniel Shaviro (NYU), Interrogating the Relationship between 'Legally Defensible' Tax Planning and Social Justice:

This article, prepared for presentation on September 23, 2016 at a conference at NYU Law School, organized by the Center for Human Rights and Global Justice and entitled Human Rights and Tax in an Unequal World, mainly takes the form of a dialogue between two fictional individuals. The conclusions that the discussants reach (insofar as they are able to agree) can be summarized as follows:

Large-scale tax avoidance by wealthy individuals and large companies that is legally defensible under relevant national tax laws can nonetheless have major adverse effects on social justice and/or public morale. However, its legal defensibility complicates analyzing its ethical implications, as compared to the more straightforward case of committing tax fraud. Legal defensibility also complicates the analysis of the extent to which human rights advocates should focus on such desiderata as “good corporate tax behavior” and the ethics of tax professionals.

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September 13, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Call For Tax Papers And Panels: Law & Society Annual Meeting

Mexico CityNeil Buchanan (George Washington) has issued his annual call for tax papers and panels for next year's annual meeting of the Law & Society Association in Mexico City (June 20-23, 2017):

For the thirteenth year in a row, I will organize sessions for the the Law, Society, and Taxation group (Collaborative Research Network 31).  New this year, I am joined in my organizational efforts by Professors Jennifer Bird-Pollan and Mirit Eyal-Cohen.

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

Good news:  Law & Society now only requires a 1500- to 3000-character description of your topic.  This is less demanding than last year’s new 6000 character requirement, which was the subject of many (well founded) complaints.

The deadline for submissions is Wednesday, October 19, 2016.  To submit your proposal, please follow the instructions immediately below.

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September 13, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Viswanathan:  The Hidden Costs Of Cliff Effects In The Internal Revenue Code

Manoj Viswanathan (UC-Hastings), The Hidden Costs of Cliff Effects in the Internal Revenue Code, 164 U. Pa. L. Rev. 931 (2016):

Cliff effects in the Internal Revenue Code trigger a sudden increase of federal tax liability when some attribute of a taxpayer—most commonly income—exceeds a particular threshold value. As a result, two taxpayers in nearly identical economic situations can face considerably different tax liabilities depending on which side of the triggering criterion they fall. The magnitude of the equity and efficiency costs associated with cliff effects is significant: cliff effects are attached to tax provisions amounting to hundreds of billions of dollars, the majority of which are targeted at low- and moderate-income taxpayers.

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September 13, 2016 in Scholarship, Tax | Permalink | Comments (3)

Five Myths About Economic Inequality In America

CatoMichael D. Tanner (Cato Institute), Five Myths about Economic Inequality in America:

Over the past several years, economic inequality has risen to the forefront of American political consciousness. Politicians, pundits, and academics paint a picture of a new Gilded Age in which a hereditary American gentry becomes ever richer, while the vast majority of Americans toil away in near-Dickensian poverty. As economist and New York Times columnist Paul Krugman puts it, “Describing our current era as a new Gilded Age or Belle Époque isn’t hyperbole; it’s the simple truth.” Political candidates have leapt on the issue. ...

It’s a compelling political narrative, one that can be used to advance any number of policy agendas, from higher taxes and increases in the minimum wage to trade barriers and immigration restrictions. But it is fundamentally wrong, based on a series of myths that sound good and play to our emotions and sense of fairness, but that don’t hold up under close scrutiny.

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September 13, 2016 in Scholarship, Tax, Think Tank Reports | Permalink | Comments (5)

The IRS Scandal, Day 1223

IRS Logo 2Seattle Times, Conservative Effort to Impeach IRS Chief Won’t Succeed:

A campaign-season drive by conservative House Republicans to impeach the IRS commissioner won’t succeed. With solid Democratic opposition and resistance from many in the GOP, there simply aren’t enough votes to oust John Koskinen from his post.

Members of the conservative House Freedom Caucus are pushing it anyway, and it could come to a head over the next week or two. A look at the effort:

Q: Why do conservatives want to impeach Koskinen?

A:  They accuse him of lying to Congress, not answering subpoenas and overseeing an agency that destroyed documents. They say those actions hindered the House GOP’s long-running investigation of how the Internal Revenue Service unfairly treated tea party groups that sought tax exemptions several years ago, before Koskinen was with the agency.

Two months to the election, going after Koskinen and the IRS is popular with many conservative voters, for whom the IRS has long been a dirty word. They’ve not forgiven its handling of tea party organizations. And Koskinen was appointed by President Barack Obama, another favorite conservative target.

Q: What do Koskinen and Democrats say?

A: They say the accusations are unfounded. “There is no evidence that Commissioner Koskinen ever in any way sought to impede Congress’ oversight of the IRS,” Koskinen’s personal lawyers wrote in documents they provided Sunday.

While the IRS acknowledged it subjected tea party groups to unfairly harsh treatment, the Justice Department and the IRS inspector general found no evidence the agency was motivated by political bias, and it’s not been proved that documents were purposely destroyed. Democrats say the impeachment effort is aimed at stirring up conservative votes and campaign donations.

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September 13, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Monday, September 12, 2016

Book Presents Taxpayer Rights, Social Psychology And The EITC Today At Loyola-L.A.

BookLes Book (Villanova) presents Thinking About Taxpayer Rights and Social Psychology to Improve Administration of the EITC at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Katherine Pratt:

The IRS is a reluctant but key player in delivering social benefits to the nation’s working poor. The earned income tax credit (EITC) is generally praised for its role in reducing poverty and incentivizing low-wage work. While the EITC has generally received bipartisan support, the IRS faces strong criticism over EITC compliance issues. Opponents focus on headline-generating reports of improper payments and a characterization of errors as likely due to fraud. Advocates look to the intersection of legal complexity and the characteristics of recipients as the main driver of error and the relatively low share of the tax gap that is attributable to refundable credits in general and the EITC in particular.

The current compliance challenge presents an opportunity to think about the compliance problem differently than before.

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

JFK & Reagan Provide Path Toward Brighter Economic Future: Bipartisan Tax Cuts

JFKWall Street Journal op-ed: Return to JFK’s ‘Rising Tide’ Model: Kennedy and Reagan Both Spurred Growth Through Bipartisan Tax Cuts. That’s Just What Is Needed Now., by Lawrence Kudlow & Brian Domitrovic (co-authors, JFK and the Reagan Revolution: A Secret History of American Prosperity” (Sept. 6, 2016)):

since 2000, U.S. economic output has inched along at a rate of 1.8% a year, an astoundingly low number almost half of the long-term average of over 3%. This is not the way America is supposed to be. The United States has regularly achieved more than 3% economic growth as a matter of course, as it has led the global industrial and technological revolutions with millions of new jobs, entrepreneurial wonders and mass prosperity in tow.

The two greatest political figures in America since World War II staked their presidencies on economic growth: John F. Kennedy in the 1960s and Ronald Reagan in the 1980s. Kennedy was the pioneer. When Reagan rallied to the cause of growth 20 years later, he did so explicitly following Kennedy’s “a rising tide lifts all boats” model. ...

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September 12, 2016 in Book Club, Scholarship, Tax | Permalink | Comments (1)

WSJ:  A Stealth Death Tax Increase

DiscountsFollowing up on my previous posts (links below):  Wall Street Journal editorial, A Stealth Death Tax Increase:

January 20 cannot come soon enough for the owners of family businesses. Less than five months before President Obama leaves office, his Treasury Department is rushing to implement a de facto increase in the federal estate tax.

Since Congress does not agree that the Internal Revenue Service should suck more cash out of family firms, Treasury Secretary Jack Lew is up to his usual tricks, trashing established interpretations of tax law to bypass the legislative branch. Not even Mr. Lew has the gall to claim he can raise the federal death-tax rate of 40% without congressional approval. So the game here is to contrive ways to expose more of the value—or imagined value—of an estate to IRS revenue collectors.

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

The 100th Anniversary Of The Federal Estate Tax

The IRS Scandal, Day 1222

IRS Logo 2Washington Times, IRS Refuses to Abandon Targeting Criteria Used Against Tea Party, Conservative Groups:

The IRS is refusing to recant the targeting criteria it used to single out tea party groups for intrusive scrutiny, according to court filings made public Wednesday that show the tax agency still struggling with the fallout from the scandal.

At least three tea party groups are still awaiting approval from the IRS more than three years after agents publicly admitted they’d asked inappropriate questions and put the groups through unreasonable delays in obtaining tax-exempt status.

Last month the IRS told both Congress and a federal judge that it would start processing the outstanding applications — but the agency has refused to say how or when, leaving the groups themselves struggling to make sense of things.

Making matters ever more difficult, the IRS specifically refused in court papers to reject further use of the criteria it used to single out tea party and conservative groups in the first place.

“Despite all the representations made by the IRS about having changed its ways, it still asserts that the viewpoint-based Targeting Criteria are relevant for making a determination of tax-exempt status,” Edward Greim, the lawyer representing tea party groups in a class-action lawsuit, told the U.S. District Court for the Southern District of Ohio.

Just weeks ago, IRS Commissioner John G. Koskinen had assured Congress the targeting was a thing of the past, and said his agency will no longer use the “Be on lookout,” or BOLO, lists. ...

Mr. Greim said to be wary of IRS promises, saying the agency has been willing to mislead the court in the past with a “willingness to say one thing (in a sworn declaration, no less) and do the other.” And he said the IRS has hinted that while it may replace its targeting list, which delays or blocks applications at the front end, it could step up “less well-known forms of scrutiny,” including ongoing reviews of tea party groups.

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

TaxProf Blog Weekend Roundup

Sunday, September 11, 2016

The Top 5 Tax Paper Downloads

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and new papers debuting on the list at #4 and #5:

  1. [411 Downloads]  The True Economic Effects of Corporate Inversions, by Doron Narotzki (Akron)
  2. [340 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)
  3. [323 Downloads]  Executive Pay: What Worked? , by Steven A. Bank (UCLA), Brian R. Cheffins (Cambridge) & Harwell Wells (Temple)
  4. [208 Downloads]  Framework for U.S. Transfer Pricing Analysis Under Treasury Regulation Section 1.482 and the OECD Guidelines Compared , by William Byrnes (Texas A&M) & Robert Cole (Deceased)
  5. [165 Downloads]  Ten Observations Concerning International Tax Policy, by Daniel Shaviro (NYU)

September 11, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 1221

IRS Logo 2The Daily Signal, ‘Just a Charade’: House Conservatives Decry IRS Chief’s Capitol Hill Visit:

Internal Revenue Service Commissioner John Koskinen made the rounds Wednesday on Capitol Hill to discuss his potential impeachment, meeting with two of the largest GOP House caucuses.

Members of the conservative House Freedom Caucus were furious about Koskinen’s visits with lawmakers who belong to the moderate Tuesday Group or the conservative-leaning Republican Study Committee.

These conservatives have been calling for the top taxman’s impeachment since October.

One of the members who quarterbacked the impeachment effort, Rep. Tim Huelskamp, R-Kan., described the Koskinen tour as tantamount to allowing a defendant to chat up a jury “while the prosecuting attorney is away.”

“You’re going to give the most hated official in the Obama administration a free platform, without testifying under oath, to defend himself and his targeting of conservative groups?” Huelskamp told The Daily Signal. “This is just a charade.” ...

One member of the Freedom Caucus suggested conservatives might be persuaded to soften their stance on Koskinen if the establishment would agree to keep any spending bills from taking flight during the lame-duck session.

”It might very well be that we back off of Koskinen until the first of [next] year,” the lawmaker told The Daily Signal on condition of anonymity, “if you [GOP leaders] do a continuing resolution through March.”

Other members of the Freedom Caucus remain intent on getting their political pound of flesh. The IRS targeting scandal has been a focal point for Republicans since the public first learned in 2013 that the agency put conservative groups under extra scrutiny.

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

Saturday, September 10, 2016

This Week's Ten Most Popular TaxProf Blog Posts

Federal College Tax Credits Cost $32 Billion/Year And Have Zero Effect On Applications Or Enrollment

Peter Bergman (Columbia), Jeffrey T. Denning (BYU) & Dayanand Manoli (Texas), Is Information Enough? Evidence from a Tax Credit Information Experiment with 1,000,000 Students:

This study examines the effect of information about tax credits for college using a sample of over 1 million students or prospective students in Texas. We sent emails and letters to students that described tax credits for college and tracked college outcomes. We find that for all three of our samples—already enrolled students, students who had previously applied to college but were not currently enrolled, and rising high school seniors—that information about tax credits for college did not affect reenrollment, application, and enrollment respectively.

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

The IRS Scandal, Day 1220

IRS Logo 2Washington Post op-ed: Congress Should Impeach The IRS Commissioner — Or Risk Becoming Obsolete, by George F. Will:

Republican congressional leaders ardently want conservative members of the House to not force a vote on impeaching the IRS commissioner. The public does not care about John Koskinen’s many misdeeds. And impeachment will distract attention from issues that interest the public. And because Democrats are not ingrates, the required two-thirds of the Senate will never vote to convict Koskinen, whose behavior continues the pattern of doing what Democrats desire with the most intrusive and potentially punitive government agency.

These Republican leaders’ reasons are cumulatively unpersuasive. Resuscitating the impeachment power would contribute to revitalizing Congress’s Article I powers. Impeachments are rare — no appointed official of the executive branch has been impeached in 140 years. But what James Madison called the “indispensable” power to impeach should not be allowed to atrophy, as has Congress’s power to declare war. ...

In June testimony to the House Judiciary Committee, Jonathan Turley of the George Washington University Law School noted that the Obama administration stands accused of “effectively weaponizing the IRS.” And the Koskinen controversy comes as Congress “is facing an unprecedented erosion of its authority vis-a-vis the executive branch.” The “increasing obstruction and contempt displayed by federal agencies in congressional investigations reflects the loss of any credible threat of congressional action. Congress has become a paper tiger within our tripartite system — a branch that often expresses outrage, yet fails to enforce its constitutional authority.”

The Koskinen controversy, Turley said, “falls at the very crossroads of expanding executive power, diminishing congressional authority, and the rise of the Fourth Branch,” which consists of “federal agencies that exercise increasingly unilateral and independent powers.” As Turley noted (and as Hillary Clinton can ruefully attest), “private litigants like Judicial Watch” are nowadays more successful than Congress in prying information from the executive branch. And (as the Lerner case illustrates) “the administration has effectively foreclosed avenues like the referral of criminal contempt and other sanctions that should be imposed for providing misleading statements to Congress.” ...

The Constitution authorizes impeachment for “high crimes and misdemeanors.” Madison favored this language and interpreted it to include “maladministration,” which surely encompasses perjury and obstruction of Congress. The idea that an IRS commissioner is not a high enough official for impeachment ignores, Turley says, “the realities of the modern regulatory state.” Commissioners have authority over 90,000 employees collecting $2.5 trillion in revenues annually. ...

One of the articles of impeachment filed by the House against Richard Nixon was that he, “acting personally and through his subordinates ” (emphasis added), had “endeavored” to use the IRS to violate Americans’ rights, causing IRS actions “to be initiated or conducted in a discriminatory manner.” If presidents are, as McCarthy says, “derivatively responsible” for misconduct by executive branch subordinates, surely those officials are responsible for their own misconduct and that of underlings. Refusing to impeach Koskinen would continue the passivity by which members of Congress have become, in Turley’s words, “agents of their own obsolescence.”

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September 10, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, September 9, 2016

Weekly SSRN Tax Article Review And Roundup

This week, David Gamage (UC-Berkeley) reviews a new paper by Dave Owen (UC-Hastings), Water and Taxes, 50 UC Davis L. Rev. ___ (2016):

Gamage (2016)The article begins by reviewing the basics of both water law and tax law, to explain that there are currently only modest interactions.  Water rights are indeed taxed, especially by state and local property tax regimes.  Yet the article explains that the ways in which water rights are currently taxed do not serve to meaningfully address concerns about inadequate water conservation.  The article thus proposes more robustly taxing water rights as a means for achieving better water conservation.

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September 9, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Corporate Inversions Benefit CEOs More Than Shareholders

Cato at Liberty:  Corporate Inversions, by Peter Van Doren:

Among industrialized countries, the United States has the highest official corporate tax rate and one of the highest effective tax rates. To take advantage of lower taxes in other countries, some U.S. firms elect to sell themselves to smaller foreign firms, a process called “inversion.”

For shareholders of those firms, the tax consequences of inversions are complicated. Some are harmed by the move while others benefit. Individual shareholders, who own shares in taxable accounts, are taxed on the increased value of their shares. This can result in different tax outcomes from inversions for shareholders who have held the stock for a long time prior to the inversion and short-term shareholders (including corporate officers exercising company stock options).

In the summer issue of Regulation, I described a new research paper that investigates 73 inversions that occurred from 1983 to 2014 [Anton Babkin (Wisconsin), Brent Glover (Carnegie Mellon) & Oliver Levine (Wisconsin), Are Corporate Inversions Good for Shareholders?]. For those investors who had owned stock for three years, half of the inversions resulted in a negative return. So if many long-term shareholders lose money on inversions, why do they occur?

The answer appears to be that corporate executives gain from inversions even if shareholders lose.

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September 9, 2016 in Scholarship, Tax, Think Tank Reports | Permalink | Comments (0)

Case Western Seeks To Hire A Tax Visitor

Case Logo (2014)Case Western Reserve University School of Law invites applications from entry-level or lateral candidates for a visiting assistant professor of law position beginning in the 2017-2018 academic year:

Areas of focus include business law and tax, including Business Associations, Mergers & Acquisitions, Business Planning and Corporate Tax. This is a one-year visiting position with the possibility of a one-year renewal at the end of the contract term based on Law School needs.

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September 9, 2016 in Tax, Tax Prof Jobs | Permalink | Comments (0)

How Amazon Saved Billions In Taxes

Amazon logoNewsweek, How Amazon Saved Billions in Taxes:

In the early 2000s, Amazon embarked on a yearslong mission to save billions by setting up operations in Luxembourg to radically reshape its tax structure. Using a complex patchwork of subsidiaries, the online shopping behemoth managed to shift vast quantities of its profit through a sophisticated mechanism that took external consultants and in-house tax specialists—who reported directly to Amazon CEO Jeff Bezos—years to dream up.

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September 9, 2016 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 1219

IRS Logo 2Wall Street Journal, House Republicans Weigh Impeaching IRS Commissioner John Koskinen:

House Republicans have no affection for the Internal Revenue Service after three years of mounting frustration about what they see as the tax agency’s slow and incomplete responses to congressional investigations. But many are shying away from the aggressive step urged by some hard-liners: impeaching IRS Commissioner John Koskinen now.

Lawmakers are debating how far to go as they weigh the political risks of irritating some of their most ardent supporters with any vote that even resembles letting Mr. Koskinen off the hook. What is giving them pause about impeachment are conservatives’ push to bypass the Judiciary Committee and the slim chances of removing Mr. Koskinen from office. That would require Senate Republicans to overcome their reluctance and also attract more than 20 Democratic votes—the number needed to get the necessary two-thirds majority in the Senate—making it a clear dead end.

House Republicans’ internal standoff shows the limits of raw politics in the general-election season after years of conservatives rallying against the IRS, a movement that has helped to restrict the agency’s budget and inspired calls from the right to eliminate the IRS entirely. ...

Impeachment backers plan to use a procedural tactic to force a vote on the House floor as soon as next week, and House Republicans will meet behind closed doors beforehand in an effort to hash out the internal disagreement. ...

The bill of particulars against Mr. Koskinen stems from his response to congressional investigations. Under his watch, the agency destroyed backup data that included emails belonging to Lois Lerner, who had led the office that oversaw nonprofit groups. The impeachment resolution says Mr. Koskinen “failed to act with competence and forthrightness” in disclosing the destruction and that the agency didn’t try hard enough to preserve all documents.

Mr. Koskinen has said the destruction was unintentional and that he waited to inform Congress until he had complete information.

Republicans say Mr. Koskinen’s actions prevented them from uncovering the truth about what happened to tea-party groups and why.

Democrats say there is no evidence the agency’s actions were politically motivated. Instead, they say it is clear the IRS was trying—clumsily and slowly—to come up with a rule for judging whether tax-exempt groups met the tax code’s rules that limit political involvement of nonprofits.

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September 9, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Thursday, September 8, 2016

Kleinbard, Warren And Others On The EU-Apple $14.5 Billion Tax Dispute

Apple EUFollowing up on my previous coverage of the EU-Apple tax dispute (links below):

Financial Times op-ed: The Myths Behind Apple's Manufactured Tax Crisis, by Ed Kleinbard (USC):

The op-ed responds to the spin put on the case by Apple and its allies, by arguing that the controversy is not a tax case at all. To claim otherwise just confuses the core finding (that Ireland delivered subsidies to Apple in exchange for jobs) with the instrument used by Ireland to deliver those subsidies. The piece further debunks the claim that the US is the jurisdiction with the best claim to tax Apple’s pot of essentially tax-free income. Space constraints required that some of the thoughts had to be truncated a bit; had I unlimited room, I would have concluded the piece with something along these lines:

The myths put forward by the Apple spin machine, abetted by the US Treasury, threaten to fracture international tax administration comity when no tax crisis in fact exists. Tax here was just the instrument for delivering state aid. The US Treasury is expert in detecting tax shams used to disadvantage US tax collections, and should have recognized that the EC similarly is making a sham arrangement argument.

The Hill op-ed: Apple’s Ireland Tax Avoidance Should Spur Major Reforms, by Ed Kleinbard (USC):

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September 8, 2016 in Tax | Permalink | Comments (0)

Tax Development Journal Publishes New Issue

TDJ4The Tax Development Journal of California State University, Northridge (a double-blind, peer-reviewed journal), has published Volume 6 (Fall 2016):

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September 8, 2016 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1218

IRS Logo 2The Hill, IRS Chief Makes His Case to GOP Lawmakers:

IRS Commissioner John Koskinen on Wednesday made his case against impeachment to two groups of House Republicans. Koskinen met with members of the moderate Tuesday Group as well as with members of the conservative Republican Study Committee, where some lawmakers support his impeachment. “He just wanted to state his case,” said Tuesday group co-chair Charlie Dent (R-Pa.).

Bloomberg, House Will Hold Vote on Whether to Impeach IRS Chief, Ryan Says:

Speaker Paul Ryan said Wednesday the House will vote on whether to impeach Internal Revenue Service Commissioner John Koskinen, and he indicated members won’t be pressured to vote one way or the other.

Daily Caller, Hatch Insists The Senate Will Never Impeach IRS Commissioner:

Republican Sen. Orrin Hatch says there is not even the “slightest chance” the Senate will impeach IRS Commissioner John Koskinen anytime soon.

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September 8, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, September 7, 2016

Hackney Presents Labor Unions And Tax Exemption Today At Northwestern

HackneyPhilip Hackney (LSU) presents Subsidizing the Heavenly Chorus: Labor Unions and Tax Exemption at Northwestern today as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

Labor interests are historically politically weak in our US democracy. They face classic collective action problems. Laborers are great in number, do not have strong political skills, and are unlikely to recoup the cost of participating in labor union activity. Without assistance, we should expect labor interests to engage in limited and sporadic organized political efforts. This presents big problems for a modern democratic state that depends upon organized interests to represent the interests of its citizens. This Article examines the impact of our federal income tax system on labor interests in the context of the provision of tax exemption to labor unions and the deduction of labor union dues.

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September 7, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

GAO:  IRS Needs To Clarify Authority Of Published Guidance

GAO (2016)Government Accountability Office, Treasury and OMB Need to Reevaluate Long-standing Exemptions of Tax Regulations and Guidance (GAO- 16-720):

The Internal Revenue Service (IRS) uses a variety of documents to communicate its interpretation of tax laws to the public, but only considers Internal Revenue Bulletin (IRB) guidance to be authoritative. IRS information published outside of the IRB can help taxpayers understand tax laws and make informed decisions, but does not always include information clarifying the limitations of its use. IRS has detailed procedures for identifying, prioritizing, and issuing new guidance. However, it lacks procedures for documenting the decision about what type of guidance to issue.

Hierarchy of Authority for IRS Guidance and Other Information Sources

Hierarchy of Authority for IRS Guidance and Other Information Sources

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September 7, 2016 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

SSRN Tax Professor Rankings

SSRN LogoSSRN has updated its monthly rankings of 750 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 September 1, 2016) 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):







Reuven Avi-Yonah (Mich.)


Reuven Avi-Yonah (Mich.)



Michael Simkovic (S. Hall)


Michael Simkovic (S. Hall)



Paul Caron (Pepperdine)


D. Dharmapala (Chicago)



D. Dharmapala (Chicago)


Paul Caron (Pepperdine)



Louis Kaplow (Harvard)


Richard Ainsworth (BU)



Vic Fleischer (San Diego)


Robert Sitkoff (Harvard)



James Hines (Michigan)


Dan Shaviro (NYU)



Ted Seto (Loyola-L.A.)


Ed Kleinbard (USC)



Richard Kaplan (Illinois)


William Byrnes (Texas A&M)



Ed Kleinbard (USC)


Nancy McLaughlin (Utah)



Katie Pratt (Loyola-L.A.)


Jeff Kwall (Loyola-Chicago)



Richard Ainsworth (BU)


Chris Hoyt (UMKC)



Robert Sitkoff (Harvard)


David Weisbach (Chicago)



Carter Bishop (Suffolk)


Omri Marian (UC-Irvine)



Brad Borden (Brooklyn)


Louis Kaplow (Harvard)



David Weisbach (Chicago)


Vic Fleischer (San Diego)



Jen Kowal (Loyola-L.A.)


Steven Bank (UCLA)



Chris Sanchirico (Penn)


Yariv Brauner (Florida)



Francine Lipman (UNLV)


Jack Manhire (Texas A&M)



Dennis Ventry (UC-Davis)


Brad Borden (Brooklyn)



Bridget Crawford (Pace)


Katie Pratt (Loyola-L.A.)



Dan Shaviro (NYU)


Francine Lipman (UNLV)



David Walker (Boston Univ.)


Richard Kaplan (Illinos)



Steven Bank (UCLA)


Jordan Barry (San Diego)



Herwig Schlunk (Vanderbilt)


Stephen Shay (Harvard)


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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September 7, 2016 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

The IRS Scandal, Day 1217

IRS Logo 2Washington Post editorial, House Conservatives Want to Impeach the IRS Director. That Would be a Big Mistake:

Congress returned from its summer break Tuesday to what may be a brief but contentious pre-election legislative spell. Among the likely arguments: whether Congress should radically change its relationship with the executive branch and hobble the government in the process.

For months, a group of hard-line conservative lawmakers has been pressing to impeach Internal Revenue Service Commissioner John Koskinen, in an effort that may soon come to a head. The context for the campaign against Mr. Koskinen is the continuing GOP obsession with the way the IRS reviewed nonprofit groups’ tax-exempt status, following reports that conservative groups were disproportionately scrutinized. The initial reports turned out not to reflect much of a scandal, which was more about bureaucratic obliviousness than purposeful anti-conservative activity. ...

The Founders designed federal impeachment procedures to be used sparingly, erecting barriers to removing executive officers that did not exist in the English system, Michael J. Gerhardt, a University of North Carolina law professor, told the House Judiciary Committee in June. They also purposely avoided allowing impeachment in cases of mere “maladministration,” raising the bar to the much more serious “high crimes and misdemeanors” standard. “The Founders did not want high-ranking officials in the executive or judicial branches to be subject to impeachment for their mistakes in office,” Mr. Gerhardt testified.

The cumbersome and partisan Senate confirmation process has made it hard enough to fully staff the highest realms of government with competent people. Never-ending, partisan impeachment proceedings against executive officers would make it even harder to keep the essential mechanics of government working. The result would be more bureaucratic bungling, not less.

Politico, Senate GOP Plots Way to Dodge Koskinen Impeachment:

Fighting to hold onto their slim majority, Senate Republicans are planning to wriggle out of considering the impeachment of IRS Commissioner John Koskinen even if the House forces the issue.

It's a two-part plan: First Senate Republicans are attempting to convince their conservative House brethren to avoid the matter entirely. Then, if the House passes an impeachment resolution by a simple majority, Senate Republicans will seek a procedural out to avoid a controversial impeachment trial that would draw attention to a Senate GOP that's tried to portray itself as the stable arm of Congress.

But with House Republicans divided over the Freedom Caucus's charge to impeach Koskinen over his alleged obstruction of a congressional investigation, it's not too late, GOP senators say, to change course and punt on impeachment at least until after the November election.

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September 7, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Tuesday, September 6, 2016

The 100 Most Influential People In Tax And Accounting

Accounting Today CoverI am honored to be included on the list of Accounting Today's 100 Most Influential People in Tax and Accounting for the eleventh consecutive year:

A prolific blogger, Caron’s widely read site thoroughly covers the latest developments in the field of tax, particularly with his ongoing coverage of the scandal involving IRS employees’ extra scrutiny of tax-exempt applications from conservative groups. Caron also blogs extensively about issues related to academia.

Accounting Today also mentioned tax bloggers in its discussion of Just a Few More ...:

We need to find a way to cram more people into the Top 100, because new and interesting people keep rising up to change the profession. Until we can get 150 or so people into a 100-person list, however, we offer our annual list of Ones to Watch — men and women whose influence is waxing, and whom we’ll be keeping an eye on. ...

While we’ve long noted the influence of tax blogger Paul Caron, many others are now using the blogosphere to share tax information, analysis, insights and, occasionally, humor. This year we’re going to cite two, both of whom appear on WithumSmith+Brown partner Anthony Nitti (who also writes on taxes for many other outlets, and frequently teaches well-received CPE courses), and Kelly Phillips Erb, a tax lawyer whose Tax Girl blog draws lots of eyeballs. And while we’re on the subject of taxes, you might want to keep an eye on Howard Gleckman, a fellow at the Tax Policy Center think tank, whose thoughts on tax policy are often sought after by the mainstream media.

I am honored to be on the Top 100 list with such high-powered people in the tax and accounting worlds, including:

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September 6, 2016 in About This Blog, Legal Education, Tax | Permalink | Comments (3)

Call For Papers:  Iowa-ACTEC Symposium On Wealth Transfer Law In Comparative And International Perspective

IowaACTECThe University of Iowa College of Law and American College of Trust and Estate Counsel have issued a Call for Papers for a symposium on Wealth Transfer Law in Comparative and International Perspective, to be held at the University of Iowa College of Law on Friday, September 8, 2017, with the papers to be published in the Iowa Law Review:

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September 6, 2016 in Conferences, Legal Education, Scholarship, Tax | Permalink | Comments (0)

Rumsfeld Sides With McGonagall Rather Than Snape On Taxes


Following up on this morning's TaxProf Blog op-ed:   McGonagall Replies to Snape on Taxes: 'Be Proud Of The Tax Law You Have, Rather Than The One You Wish You Had', by Alice G. Abreu (Temple):

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September 6, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Abreu:  McGonagall Replies to Snape on Taxes—'Be Proud Of The Tax Law You Have, Rather Than The One You Wish You Had'

McGonagalTaxProf Blog op-ed:  McGonagall Replies to Snape on Taxes, by Alice G. Abreu (Temple):

Because Professor Minerva McGonagall is my favorite member of the Hogwarts faculty, particularly as played by the inimitable Dame Maggie Smith, and because she and Severus Snape led rival houses, here’s how I think she would reply to Adam Chodorow’s reimagined Snape, who as a TaxProf warns his students on the first day of class that because there is “little foolish argument by analogy here, many of you will hardly believe this is law.”

Humph . . . It’s high time you learned to be proud of the tax law you’ve got, rather than the one you think you ought to have.

Our rival houses are the House of Tax Exceptionalism and the House of Tax as Everylaw. Snape as a TaxProf may wish that the tax law were exceptional, different from other fields of law in such fundamental ways that it is perhaps not law at all, but that is not the tax law we actually have.

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September 6, 2016 in Celebrity Tax Lore, Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1216

IRS Logo 2Charlotte Observer editorial, Should IRS Chief Be Impeached?:

Congress returns to work Tuesday, and at the top of several members’ to-do list is impeaching IRS Commissioner John Koskinen. ...

It’s hard, we know, to gin up much sympathy among Americans for the chief tax collector. It’s even harder when the Internal Revenue Service has made so many missteps in recent years. The extent of Koskinen’s imperfections, though, is debatable; they almost surely fall far short of the “high crimes and misdemeanors” that impeachment requires. ...

It’s possible his performance has been sporadic and his commitment to transparency inconsistent. That would, unfortunately, make him a Washington regular, but not a criminal traitor.

At a minimum, he deserves an exhaustive hearing and opportunity to defend himself in front of the House Judiciary Committee before such an extraordinary — and politically motivated — action is taken.

That’s not what Freedom Caucus members like North Carolina’s Rep. Mark Meadows envision. They are willing to take Koskinen’s fate to the House floor for an up-or-down vote with no due process. That would violate tradition and establish an ominous precedent.

Koskinen (a Duke grad and former chair of Duke’s board of trustees) took over in December 2013, charged with cleaning up the mess made by Lois Lerner. Lerner was at the center of a scandal prior to Koskinen’s arrival in which the IRS mostly targeted conservative political groups in their applications for nonprofit tax-exempt status.

Congress issued a subpoena to Koskinen seeking all of Lerner’s emails. Weeks later, IRS employees in West Virginia erased 422 backup tapes that contained as many as 24,000 of Lerner’s emails.

There is no evidence that Koskinen was personally involved in the deletion. The Republican-appointed inspector general investigating Lerner’s actions said the erasure was an accident stemming from a miscommunication.

The rest of the resolution to impeach Koskinen is flimsy. It accuses him of making “false and misleading statements” to Congress. Koskinen says he testified to what he thought was true at the time, even if some of it later turned out not to be accurate. ...

Lerner’s actions were unacceptable, and the IRS’s failure to retain vital documents in the case is disturbing. So Congress is right to continue to pursue questions. Impeachment, though, is almost certainly using a bazooka to kill a roach. At the least, Koskinen, who has offered a lifetime of public service and ethical behavior, deserves a chance to fully tell his side of the story.

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September 6, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

TaxProf Blog Holiday Weekend Roundup

Monday, September 5, 2016

IRS Issues Final Regulations Redefining Marriage For Tax Purposes To Include Same-Sex Couples

ObergefellNational Law Journal, New IRS Rules Reflect Supreme Court's Same-Sex Marriage Decisions:

If the only certainties in life are death and taxes, then two U.S. Supreme Court decisions involving same-sex marriages are now certain—effective today. The Internal Revenue Service on Friday formally put into place amendments to regulations that define who is married for tax purposes.

The Supreme Court in 2013 in United States v. Windsor struck down the definition of marriage as only between a man and a woman in the federal Defense of Marriage Act. Two years later, the high court in Obergefell v. Hodges made same-sex marriages legal throughout the nation.

The Windsor case stemmed from a tax dispute. Edie Windsor sought to claim the federal estate tax exemption for surviving spouses after her spouse, Thea Spyer, left her entire estate to Windsor. She paid nearly $400,000 in estate taxes. The IRS denied Windsor a refund.

The IRS regulations, published in the federal register and effective Sept. 2, reflect the holdings of those two high court decisions and define terms in the Internal Revenue Code describing the marital status of taxpayers.

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September 5, 2016 in IRS News, Tax | Permalink | Comments (0)

Labor Day And The Tax Burden On Labor

Kyle Pomerleau & Kevin Adams (Tax Foundation), A Comparison of the Tax Burden on Labor in the OECD, 2016:

Although the United States and most OECD countries are known for having progressive tax systems that tax high-income earners more than low- or moderate-income earners, a large portion of the tax burden still falls on the average worker. Even here in the United States, which has a lower tax burden than most other OECD countries, average workers end up paying nearly one-third of their incomes in taxes. It is true that governments in the OECD, especially European countries, provide more government programs. However, their workers end up paying a much higher price for them.

Tax Foundation 1

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September 5, 2016 in Tax, Think Tank Reports | Permalink | Comments (1)

Labor Day, The Minimum Wage, And The Earned Income Tax Credit

Labor Day 2Joe Kristan (Tax Update Blog), Labor Day and the Earned Income Tax Credit:

[Y]ou may want to ponder the hot “labor” issue of the moment — the minimum wage and its alternatives. ... Many economists argue that an increased Earned Income Tax Credit is a better way to support the working poor.   For example, in The minimum wage versus the earned income tax credit for reducing poverty, Cornell University economist Richard V. Burkhauser states:

Introducing or increasing a minimum wage is a common policy measure aimed at reducing poverty. But the minimum wage is unlikely to achieve this goal. While a minimum wage hike will increase the wage earnings of some poor families and lift them out of poverty, some workers will lose their jobs, pushing their families into poverty. In contrast, improving the earned income tax credit can provide the same income transfers to the working poor at far lower cost. Earned income tax credits effectively raise the hourly wages only of workers in low- and moderate-income families, while increasing labor force participation and employment in those families.

The argument for a perfect earned income tax credit is compelling, but the credit is far from perfect. It is estimated that around 25% of the Earned Income tax credit paid out is paid improperly, including billions in fraud. Earned income tax credit fraud is a big part of the business of corrupt preparers. Many other taxpayers who could properly claim it fail to because of its complexity.

Even if the waste and fraud problem could be solved or overlooked, a properly-functioning EITC is still a poverty trap. The credit phases out as incomes rise, creating a high effective marginal tax rate on each additional dollar earned by a low-income family. It provides help at low income levels, but it discourages improving those income levels.

Implicit 2

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September 5, 2016 in Tax | Permalink | Comments (3)

The IRS Scandal, Day 1215

IRS Logo 2The Hill, House GOP Braces For Spending, IRS Fights:

House GOP leaders are preparing their members for fights over government funding and whether to impeach the commissioner of the Internal Revenue Service when Congress returns from its long summer recess. ...

Freedom Caucus members are pushing to vote on a resolution to impeach Koskinen, who they allege wasn't forthcoming with documents regarding the IRS's scrutiny of conservative nonprofits.

Reps. John Fleming (R-La.) and Tim Huelskamp (R-Kan.) introduced a "privileged" resolution on the House's last day of session before the recess to force a vote on impeachment. It's unclear if members of the Freedom Caucus would have to re-file the resolution, given that House rules state that privileged measures must be acted on within two legislative days.

GOP leaders have been wary of staging an impeachment vote, given that the House has only voted one other time in history to impeach a Cabinet official: Secretary of War William Belknap in 1876.

House Republicans' first conference meeting upon returning the day after Labor Day is expected to focus on strategy for the spending bill, with another on the IRS the following week.

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September 5, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)