TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

A Member of the Law Professor Blogs Network

Thursday, January 15, 2015

Testimony at House Hearing on Policies to Promote Job Creation and Economic Growth

House LogoTestimony at Tuesday's House Ways & Means Committee hearing on Moving America Forward: With a Focus on Economic Growth:

The first hearing of the 114th Congress focused on the state of the U.S. economy and policies that can promote job creation and economic growth.

January 15, 2015 in Congressional News, Tax | Permalink | Comments (0)

Kirsch: The Tax Treatment of Citizens Abroad

Florida Tax ReviewMichael S. Kirsch (Notre Dame), Revisiting the Tax Treatment of Citizens Abroad: Reconciling Principle and Practice, 16 Fla. Tax Rev. 117 (2014):

In an increasingly mobile world, the taxation of citizens living abroad has taken on increased importance. Recent international administrative developments — most notably, the weakening of foreign bank secrecy and expansion of global information sharing norms — have further raised the profile of this issue. While U.S. law traditionally has taxed U.S. citizens living abroad in the same general manner as citizens living in the United States, a number of scholars have proposed abandoning the use of citizenship as a jurisdictional basis to tax. In its place, they would apply residence-based principles — i.e., exercising full taxing rights over U.S. citizens only if the citizens reside in the United States. Citizens residing outside the United States would be taxed in the same limited manner as non-citizens residing outside the United States.

Continue reading

January 15, 2015 in Scholarship, Tax | Permalink | Comments (0)

Brunson: It Is Time for the IRS to Enforce the Prohibition on Campaigning by Churches

CHurchSamuel Brunson (Loyola-Chicago), Dear IRS, It Is Time to Enforce the Campaigning Prohibition. Even Against Churches:

In 1954, Congress prohibited tax-exempt public charites, including churches, from endorsing or opposing candidates for office. To the extent a tax-exempt public charity violated this prohibition, it would no longer qualify as tax-exempt, and the IRS was to revoke its exemption.

While simple in theory, in practice, the IRS rarely penalizes churches that violate the campaigning prohibition, and virtually never revokes a church’s tax exemption. And, because no taxpayer has standing to cuhallenge the IRS’s inaction, the IRS has no external imperative to revoke the exemptions of churches that do campaign on behalf of or against candidates for office.

This argment makes the normative case that, notwithstanding the IRS’s administrative discretion and the inability of taxpayers to challenge its nonenforcement in court, the time has come for the IRS to begin enforcing the campaigning prohibition.

Continue reading

January 15, 2015 in IRS News, Scholarship, Tax | Permalink | Comments (5)

The Case for a $200 Federal Tax Credit for Campaign Contributions

CACConstitutional Accountability Center:  Participation and Campaign Finance: The Case for a Federal Tax Credit, by David H. Gans:

Five years after the Supreme Court’s ruling in Citizens United v. FEC, our democracy is badly broken.  Chief Justice John Roberts and his conservative colleagues have turned our Constitution’s promise of democracy of, by, and for the people on its head, striking down a host of federal and state laws designed to limits opportunities for corruption.  Meanwhile, the national conversation over money in politics has grown stale, with Congress gridlocked and unable to accomplish anything.  Now, more than ever, we need to find reforms that can bridge the divide over money in politics and help improve our democracy. 

Continue reading

January 15, 2015 in Tax, Think Tank Reports | Permalink | Comments (0)

The IRS Scandal, Day 616

IRS Logo 2Judicial Watch, New Documents: Lerner Objected to IRS Deputy Director Visit to Cincinnati Office During Congressional Inquiries into Tea Party Targeting:

Judicial Watch today released a new batch of Internal Revenue Service (IRS) documents, including a series of emails from former IRS official Lois Lerner to then-Tax Exempt and Government Entities (TE/GE) Division Deputy Director Joseph H. Grant strongly objecting to his planned visit to the IRS Cincinnati office “smack dab in the middle” of congressional inquiries into the IRS targeting of conservative groups. Lerner also expresses concerns about a pending investigation by the Treasury Inspector General for Tax Administration (TIGTA) into the IRS’s handing of Tea Party applications.

The new IRS internal documents were released in response to a federal court order addressing the October 9, 2013, Freedom of Information Act (FOIA) lawsuit Judicial Watch filed seeking compliance with four separate FOIA requests about the IRS scandal.

Continue reading

January 15, 2015 in IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, January 14, 2015

Chodorow Presents Pope Francis, the Bible, and Tax Policy Today at Pepperdine

ChodorowAdam Chodorow (Arizona State) presents Pope Francis, the Bible, and Tax Policy at Pepperdine today as part of our Tax Policy Colloquium Series:

  1. What does the Bible actually say, either directly about taxes and tax-like institutions or indirectly about principles that should guide policymakers, regarding an appropriate tax system?
  2. To what extent should the Bible or religious views guide votes or opinions on such secular policy matters?

Biblical Tax Systems and the Case for Progressive Taxation, 23 J.L. & Relig. 53 (2008):

With the political rise of the religious right, American policymakers have increasingly looked to religion for guidance on important policy issues, including questions of distributive justice and how best to allocate tax burdens. While many claim that Judeo-Christian values require progressivity, the examples of taxation found in the sacred texts apparently refute this claim. This article examines four examples of taxation found in the Bible and Talmud to determine whether it is appropriate to infer from them a Judeo-Christian principle of tax fairness that should apply in a modern, secular tax system. I find that, not only do these examples use different methods for allocating tax burdens, making it impossible to identify one principle, but, more important, each example bears the stamp of its religious purpose or historical circumstances, making it inappropriate to rely on these examples as evidence of a divinely-sanctioned principle of tax justice.

Adam's visit is sponsored by Pepeprdine's Diane and Guilford Glazer Institute for Jewish Studies.

Update:  Post-presentation lunch:

Adam

January 14, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

State Tax Inequality Index

Institute on Taxation and Economic Policy, Who Pays? A Distributional Analysis of the Tax Systems in All 50 States (5th ed. Jan. 2015):

B1

Continue reading

January 14, 2015 in Tax, Think Tank Reports | Permalink | Comments (0)

8th Circuit Rejects Discrimination Claim by Tenured Tax Prof Over Her Termination Following Conviction For Tax Evasion

Magee Following up on my prior posts:

National Law Journal, Eighth Circuit Again Rejects Fired Hamline Prof’s Suit:

A federal appeals court for the second time has affirmed dismissal of a lawsuit brought against Hamline University and its former law dean by a professor who was fired after being found guilty of failing to file state tax returns.

Continue reading

January 14, 2015 in Legal Education, New Cases, Tax | Permalink | Comments (2)

National Taxpayer Advocate Releases Annual Report to Congress

NTATaxpayer Advocate Nina E. Olson today released (IR-2015-2) her 2014 Annual Report to Congress:

National Taxpayer Advocate Nina E. Olson today released her 2014 annual report to Congress, which expresses concern that taxpayers this year are likely to receive the worst levels of taxpayer service since at least 2001 when the IRS implemented its current performance measures.  The report recommends that Congress enact a principles-based Taxpayer Bill of Rights, adopt additional safeguards to make those rights meaningful, and provide sufficient funding to make the “Right to Quality Service” a reality.

In the preface to the report, Olson emphasizes four points:

  • “First, the budget environment of the last five years has brought about a devastating erosion of taxpayer service, harming taxpayers individually and collectively;
  • “Second, the lack of effective administrative and congressional oversight, in conjunction with the failure to pass taxpayer rights legislation, has eroded taxpayer protections enacted 16 or more years ago;
  • “Third, the combined effect of these trends is reshaping U.S. tax administration in ways that are not positive for future tax compliance or for public trust in the fairness of the tax system; and
  • “Fourth, this downward slide can be addressed if Congress makes an investment in the IRS and holds it accountable for how it applies that investment.”

Continue reading

January 14, 2015 in IRS News, Tax | Permalink | Comments (1)

Tax Profs on Twitter

Continue reading

January 14, 2015 in Legal Education, Tax | Permalink | Comments (0)

TurboTax Customers Angry Over Change In Tax Return Software

Turbo Tax (2015)CBS News, TurboTax Customers Angry Over Change In Tax Return Software:

Changes to the popular tax program, TurboTax, has some customers mad.

“People are just livid. They feel deceived,” says consumer advocate Edgar Dworsky. “They feel they’ve used this product for so many years, they’ve trusted it, and now they’re being sandbagged.” Dworsky is a TurboTax customer unhappy after Intuit, the maker of TurboTax, changed the deluxe version of the popular tax preparation software product.

The changes require customers to upgrade to more expensive versions if reporting investment, self-employment, or rental income — costing an extra $30 to $40 — and surprising many long-time Turbo customers. “Imagine their surprise when they get halfway through doing their taxes and there is a roadblock in the program that says you have to upgrade,” added Dworsky.

Continue reading

January 14, 2015 in Tax | Permalink | Comments (35)

Judicial Misconceptions About Domestic Violence and Innocent Spouse Relief

Jacqueline Clarke, (In)equitable Relief: How Judicial Misconceptions About Domestic Violence Prevent Victims From Attaining Innocent Spouse Relief Under I.R.C. Section 6015(f), 22 Am. U. J. Gender Soc. Pol'y & L. 825 (2014):

Although innocent spouse relief has been in existence for a number of years, judges are still grappling with many of the intricacies of the factors promulgated by Revenue Ruling 2003-61. Domestic abuse is a concept not normally addressed by Tax Court judges and tax practitioners alike. Even the U.S. Department of the Treasury, the IRS, and various Tax Court judges have acknowledged that they are not well-versed in the complexities of domestic violence.165 Thus, more needs to be done to ensure that requesting taxpayers who are victims of domestic abuse have the ability to attain equitable relief or, perhaps more significantly, that these individuals are not barred from relief simply because the presiding judge does not understand the intricacies of a relationship plagued by domestic violence. 

January 14, 2015 in Scholarship, Tax | Permalink | Comments (0)

Tax Court Finds Tax Protester Joe Banister (Former CPA, IRS Agent) Liable for Fraud and Frivolous Argument Penalties

BanisterAccounting Today, Former CPA and IRS Agent Liable for Fraud and Frivolous Argument Penalties:

The Tax Court has held that a former special agent in the IRS Criminal Investigation division was liable for additional tax and penalties.

In the case, Banister v. Commissioner, T.C. Memo. 2015-10 (Jan. 12, 2015), Joseph Banister, a CPA who had previously worked at KPMG (then KPMG Peat Marwick), was employed by the IRS as a special agent from 1993 to 1999. In 1999 he authored a book in which he presented a variety of arguments that citizens were not obligated to pay federal income tax for reasons including that the payment was voluntary, that the Sixteenth Amendment had not been legally ratified, and that government financing operations are unconstitutional. He began providing tax consultation services, speaking at conventions throughout the country, operating Web sites, and selling books, CDs and DVDs setting forth his views on the income tax.

Continue reading

January 14, 2015 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 615

IRS Logo 2Washington Times, IRS Keeps Albuquerque Tea Party in Limbo 5 Years After Tax-exempt Status Application:

Before there were the lost Lerner emails, the congressional hearings and the retaliatory budget cuts, there was the Albuquerque Tea Party, a group of politically minded folks in New Mexico who wanted to get together and share ideas for taking back their country. The IRS had other ideas about them.

Five years after the Albuquerque Tea Party applied for tax-exempt status under section 501(c)(4) of the tax code, they remain in limbo — their application apparently no closer to being approved or denied than it was the day they mailed it to the IRS on Dec. 29, 2009.

Continue reading

January 14, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, January 13, 2015

Virginia Tax Review Publishes New Issue

Virginia Tax Review (2014)The Virginia Tax Review has published Vol. 34, No. 1 (Summer 2014):

January 13, 2015 in Scholarship, Tax | Permalink | Comments (0)

49th Annual Heckerling Institute on Estate Planning

Heckerling Cover_Page_1Tax Prof speakers at this week's 49th Annual Heckerling Institute on Estate Planning in Orlando:

  • Sam Donaldson (University of Washington), Recent Developments 2014
  • David Herzig (Valparaiso), The Most Important Elements, Clauses and Ideas for Trust Design
  • Susan Gary (Oregon), Restricted Charitable Gifts: Drafting Agreements that Stand the Test of Time
  • Tom Gallinas (Iowa), A Closer Look at Powers of Appointment in the Current Planning Environment
  • Mary Radford  (Georgia State), Case Studies in the Ethical Considerations in Acting as an Executor or Trustee

January 13, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (1)

Occupy Wall Street, Distributive Justice, and Tax Scholarship

OccupyPatrick Crawford (Crawford Tax Law Group, Los Angeles), Occupy Wall Street, Distributive Justice, and Tax Scholarship: An Ideology Critique of the Consumption Tax Debate, 12 U. N.H. L. Rev. 137 (2014):

This Article argues that the pro-consumption tax literature is wrong to claim that no legitimate fairness objections to the consumption tax exist. It argues that the persistent and widespread wariness about replacing our current hybrid consumption tax/income tax system with a pure consumption tax is, contrary to what the pro-consumption tax literature asserts, completely justified. In fact, our reservations about the consumption tax’s fairness reflect legitimate concern about the role of capitalist power in America, particularly over the past thirty years. Indeed, the more the nation continues to experience the social welfare effects of increased capitalist power, the more compelling these objections become. History proves these concerns not just legitimate, but paramount. A full account, not a dismissal, of how capitalist power might benefit from a consumption tax is what would be required to meet these fairness objections.

Continue reading

January 13, 2015 in Scholarship, Tax | Permalink | Comments (0)

Bid to Lower Corporate Tax Rate Stirs Backlash From Pass-Through Entities

Bloomberg, Bid to Lower Corporate Tax Rate Stirs Backlash From Business, by Richard Rubin:

Pass-ThroughThe latest plan in Congress to cut business tax rates faces a major obstacle: U.S. businesses.

Many Democrats and Republicans, including new House Ways and Means Committee Chairman Paul Ryan, agree that they will try to reduce the 35 percent corporate tax rate and curb business tax breaks to help pay for it. They’ll leave individual rates alone to avoid a politically charged fight.

The complication is that millions of U.S. businesses -- from the largest hedge funds to neighborhood restaurants -- don’t pay taxes through the corporate system. Instead, income and tax breaks appear on the individual returns of those businesses’ owners, in effect intertwining the corporate and individual parts of the tax code.

Continue reading

January 13, 2015 in Tax | Permalink | Comments (0)

Luttmer & Singhal: Tax Morale

Erzo F. P. Luttmer (Dartmouth) & Monica Singhal (Harvard), Tax Morale, 28 J. Econ. Perspectives 149 (Fall 2014):

There is an apparent disconnect between much of the academic literature on tax compliance and the administration of tax policy. In the benchmark economic model, the key policy parameters affecting tax evasion are the tax rate, the detection probability, and the penalty imposed conditional on the evasion being detected. Meanwhile, tax administrators also tend to place a great deal of emphasis on the importance of improving "tax morale," by which they generally mean increasing voluntary compliance with tax laws and creating a social norm of compliance. We will define tax morale broadly to include nonpecuniary motivations for tax compliance as well as factors that fall outside the standard, expected utility framework. Tax morale does indeed appear to be an important component of compliance decisions. We demonstrate that tax morale operates through a variety of underlying mechanisms, drawing on evidence from laboratory studies, natural experiments, and an emerging literature employing randomized field experiments. We consider the implications for tax policy and attempt to understand why recent interventions designed to improve morale, and thereby compliance, have had mixed results to date.

January 13, 2015 in Scholarship, Tax | Permalink | Comments (0)

Pepperdine Tax Policy Workshop Series (Spring 2015)

Here is the schedule for my Spring 2015 Pepperdine Tax Policy Workshop Series:

  • Jan. 14    Adam Chodorow (Arizona State), Pope Francis, the Bible, and Tax Policy
  • Feb. 2     Michael Graetz (Columbia), The Tax Reform Road Not Taken -- Yet
  • Feb. 18   Ed Kleinbard (USC), We Are Better Than This: How Government Should Spend Our Money
  • Mar. 2    Shu-Yi Oei (Tulane), Human Equity? Regulating the New Income Share Agreements
  • Mar. 23  Gregg Polsky (North Carolina), Private Equity Tax Games
  • Apr. 6     Miranda Fleischer (San Diego), Libertarianism and the Charitable Tax Subsidies
  • Apr. 20   Heather Field (UC-Hastings), Aggressive Tax Planning and the Ethical Tax Lawyer

I will of course blog each professor's paper on the day of their presentation.  Southern California professors and practitioners are welcome to attend any of the sessions (11:00 a.m. - 12:30 p.m.) -- just let me know.

Pepperdine Tax Policy Workshop Series (Spring 2014)

Pepperdine 2015 (2)

January 13, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Johnson: The Circular 230 Regulations May Be Invalid

Tax Analysys Logo (2013) Steve Johnson (Florida State), How Far Does Circular 230 Exceed Treasury's Statutory Authority?, 146 Tax Notes 221 (Jan. 12, 2015):

In this report, Johnson discusses the future of Circular 230 and argues that if the approach of recent cases is confirmed by litigation and if Congress chooses not to act, significant portions of the circular may be at risk of invalidation.

January 13, 2015 in Scholarship, Tax, Tax Analysts | Permalink | Comments (1)

Armstrong: The Overreaction to Codification of the Economic Substance Doctrine

Monica D. Armstrong (Mercer), OMG! ESD Codified!: The Overreaction to Codification of the Economic Substance Doctrine, 9 Fla. A&M U. L. Rev. 113 (2013):

Section 7701(o) is not inherently flawed as the critics suggest. The decision not to provide further guidance with respect to the application of the economic substance test will not result in taxpayer uncertainty and a halt in normal business practices. If nothing else, it brings about certainty to the taxpayer, as well as to the government and the courts as to how to apply the proper test. Taxpayers engaging in legitimate transactions should feel comfortable continuing with such transactions. The questions that the critics demand from the government such as what constitutes a “meaningful change” and “substantial,” will be answered by the proper authority--the courts.

January 13, 2015 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 614

IRS Logo 2Politico, GOP Set to Strengthen Committee Chairmen’s Subpoena Power; One Democrat Says the Move Amounts to ‘Exporting the Issa Model.’:

House Republicans are about to give more of their committee leaders the same unilateral subpoena power that former Oversight Chairman Darrell Issa wielded against the Obama administration in his probes into the Internal Revenue Service and “Fast and Furious.” ...

Democrats denounce the moves as a power grab, repeating their complaints that Issa (R-Calif.) “abused” his subpoena authority by bombarding the administration with hundreds of demands when he led the Oversight and Government Reform Committee. But Republicans say it’s necessary after Obama’s agencies stonewalled GOP-led probes into the IRS, the health care law, the Fast and Furious gun-walking program and the 2012 attacks in Benghazi, Libya.

Continue reading

January 13, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, January 12, 2015

More Proof That Tax Lawyers Are Cooler Than Rock Stars

(Hat Tip: Ahmed Taha.)

January 12, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (3)

The Contemporary Tax Journal Publishes New Issues

Contemporary Tax JournalsThe San Jose State University Masters of Science in Taxation Program in the Lucas Graduate School of Business has published the fourth (Volume 3, No. 2 (Spring 2014)) and fifth (Volume 4, No. 1 (Fall 2014)) issues of The Contemporary Tax Journal.

January 12, 2015 in Scholarship, Tax | Permalink | Comments (0)

Driessen: Should Tax Lawyers Mount an Inchon Invasion at CBO?

DriessenTaxProf Blog op-ed:  Should Tax Lawyers Mount an Inchon Invasion at CBO?, by Patrick Driessen (former revenue estimator, Joint Committee on Taxation and Treasury Department):

The two top tax policy positions in the federal government, the Chief of Staff of the Joint Committee on Taxation and the Assistant Secretary for Tax Policy at the Treasury Department, are occupied by economists Tom Barthold and Mark Mazur. With the exception of Larry Woodworth (who held both positions consecutively in the 1960s and 1970s), up until now JCT and Treasury heads were esteemed tax lawyers. Although Barthold and Mazur have been known to frequent with lawyers and in the past both have undertaken typical legal tasks like statutory drafting and long footnoting, make no mistake about it: The current top JCT and Treasury tax staffers are economists through and through -- they likely believe in the concept of imputed rental value of home ownership, the marginal disutility of income, and yes, notwithstanding what happened to Larry Summers, maybe even the theoretical possibility of exporting pollution from the United States (provided there are proper side payments).

Continue reading

January 12, 2015 in Congressional News, IRS News, Tax | Permalink | Comments (0)

Joint Tax Committee Releases List of Expiring Federal Tax Provisions, 2014-2024

Joint Tax CommitteeThe Joint Committee on Taxation has released its annual List of Expiring Federal Tax Provisions 2014-2024 (JCX-1-15):

This document ... provides a listing of Federal tax provisions (other than those providing time-limited transition relief after the repeal of an underlying rule) that expired or are currently scheduled to expire in 2014-2025 (with references to the applicable section of the Internal Revenue Code of 1986 or other applicable law).

For purposes of compiling this list, the staff of the Joint Committee on Taxation considers a provision to be expiring if, at a statutorily specified date, the provision expires completely or reverts to the law in effect before the present-law version of the provision. Certain provisions terminate on dates that refer to a taxpayer’s taxable year and not a calendar year. For these provisions, the expiration dates listed in this document apply with respect to calendar year taxpayers. The expiration dates of such provisions may differ, however, with respect to fiscal year taxpayers or taxpayers with short taxable years. Years in which there are no expiring provisions are not listed in the document. Under present law, there are no Federal tax provisions scheduled to expire in years after 2021.

January 12, 2015 in Conferences, Tax | Permalink | Comments (0)

TIGTA: IRS Made $14.5 Billion in Erroneous of EITC Payments in 2013, a 24% Error Rate

TIGTA The Treasury Inspector General for Tax Administration has released The Internal Revenue Service Is Working Toward Compliance With Executive Order 13520 Reporting Requirements (2015-40-009):

Although the IRS has reported an overall decline in the Earned Income Tax Credit (EITC) improper payment rate since Fiscal Year 2003, the amount of payments made in error has increased from $10.5 billion in Fiscal Year 2003 to $14.5 billion in Fiscal Year 2013. The IRS’s Fiscal Year 2013 EITC improper payment report to TIGTA estimates that in Fiscal Year 2013, EITC claims totaled approximately $60 billion and that 24 percent of the EITC payments were paid in error.

Continue reading

January 12, 2015 in Gov't Reports, IRS News, Tax | Permalink | Comments (1)

The IRS Scandal, Day 613

IRS Logo 2CNN, IRS Scandal Fast Facts:

Here’s some background information about the Internal Revenue Service (IRS) scandal involving the targeting of certain groups. In May 2013, the Treasury Inspector General for Tax Administration released a report indicating the targeting involved delaying the processing of applications by certain conservative groups and requesting information from them that was later deemed unnecessary.

The Justice Department is investigating circumstances surrounding the disappearance of IRS emails that Republicans believe could shed light on the possible targeting of conservative and other political groups by the agency.

Other Facts:
The investigation into the email disappearance, which the IRS said was due to a crash of former IRS official Lois Lerner’s hard drive, is part of a wider criminal probe of whether any IRS employees broke the law in unfairly singling out specific political groups for extra scrutiny.

Continue reading

January 12, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, January 11, 2015

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 new papers debuting on the list at #3, #4, and #5.  The #1 paper is now #71 in all-time downloads among 10,625 tax papers:

  1. [1587 Downloads]  A Compendium of Private Equity Tax Games, by Gregg D. Polsky (North Carolina)
  2. [207 Downloads]  The Rise and Fall of the Consumption Tax: A Historical Perspective, by Reuven Avi-Yonah (Michigan)
  3. [154 Downloads]  Important Developments in Federal Income Taxation (2014), by Edward A. Morse (Creighton)
  4. [112 Downloads]  Do Audits Matter?: A Parallax Theory of the Relation between Tax Enforcement and Underreporting, by J. T. Manhire (U.S. Treasury Department)
  5. [110 Downloads]  Thomas Piketty and Inequality: Legal Causes and Tax Solutions, by Paul L. Caron (Pepperdine)

January 11, 2015 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 612

IRS Logo 2Washington Post:  Questions For Attorney General Nominee Loretta Lynch, by George F. Will:

Senate confirmation hearings put nominees on notice that, as a Michigan state legislator reportedly once said, “I’m watching everything you do with a fine-toothed comb.” Loretta Lynch, a talented lawyer and seasoned U.S. attorney, should be confirmed as attorney general. Her hearing, however, should not be perfunctory. Questions like the following would highlight some festering problems: ...

The Justice Department has been, to say no more, unhelpful regarding attempts to fully investigate and properly punish the politicization and corruption of the Internal Revenue Service. Given the department’s seeming complicity in the coverup, would it not be appropriate to appoint a special prosecutor to investigate the IRS practice of suppressing the political activity of conservative groups?

Continue reading

January 11, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, January 10, 2015

NY Times: How the Tax Law Subsidizes Private Art Collections of the Rich and Famous

New York Times, Writing Off the Warhol Next Door: Art Collectors Gain Tax Benefits From Private Museums:

Brant 2The Brant Foundation Art Study Center — a picturesque gallery space inside a converted 1902 stone barn — is just down the road from the Greenwich, Conn., estate of its creator, Peter M. Brant, the newsprint magnate and avid art collector. There are no identifying signs for the center, whether at the turnoff on North Street, at the security gate or on the building itself, though the location is known to the art-world cognoscenti and celebrities who attend the twice-a-year gala openings, held at the private polo club next door that Mr. Brant also founded. Visits to the center itself are by appointment only.

Mr. Brant’s five-year-old museum, cloistered as it is, nonetheless is the beneficiary of what is in effect a federal subsidy. Operated by a nonprofit charitable foundation created and controlled by Mr. Brant, this cozy museum is tax-exempt.

Wealthy collectors, of course, have long saved millions of dollars in federal taxes by donating art and money to museums and foundations. But what distinguishes Mr. Brant’s center and a growing number of private tax-exempt exhibition spaces like it is that their founders can deduct the full market value of any art, cash and stocks they donate, even when the museums are just a quick stroll from their living rooms.

Continue reading

January 10, 2015 in IRS News, Tax | Permalink | Comments (1)

Drumbl: Protecting Taxpayers from Tax Preparers

Tax Analysys Logo (2013)Michelle Drumbl (Washington & Lee), When Helpers Hurt: Protecting Taxpayers from Preparers, 145 Tax Notes 1365 (Dec. 22, 2014):

How and whether the tax return preparer industry can or should be regulated is a fiercely debated question and has been the subject of recent litigation. This article explores return preparer regulation as a policy matter. It argues that an extensive regulation scheme will not provide meaningful protection to taxpayers. There are more effective ways to curb unscrupulous return preparation. Nonetheless, there is meaningful expressive value in subjecting return preparers to the ethical standards of Circular 230. Doing so may instill a greater professional pride in those return preparers who are not unscrupulous, and this benefits the system and the taxpayers served.

January 10, 2015 in Scholarship, Tax | Permalink | Comments (1)

The IRS Scandal, Day 611

IRS Logo 2Washington Post, Shrinking IRS Struggles to Keep Up With Growing Number of Tax-exempt Charities:

Remember when conservatives accused the Internal Revenue Service of being too aggressive toward nonprofit tea party groups? Now the agency faces criticism for the opposite problem, this time related to a different type of tax-exempt organization.

An independent review released last month faulted the IRS for scant oversight of charities, saying the agency examined the groups less frequently while its budget and workforce steadily shrank in recent years.

The Government Accountability Office said in its report that the IRS audited 0.7 percent of charities in 2013, down from 0.81 percent in 2011. By comparison, the agency audited individuals and corporations at rates of 1 percent and 1.4 percent, respectively, in 2013.

Meanwhile, the IRS’s budget decreased by $900 billion after 2010, and its workforce lost 10,000 full-time employees over the same period, according to the review. The staff reductions included 47 positions within the IRS’s exempt-organizations division, which examines charities, nonprofit advocacy groups and other entities that qualify for tax-free status. ...

But congressional Republicans, who now represent a majority in both chambers, have shown little desire to boost the IRS’s resources. A comprehensive spending bill lawmakers passed in December trimmed $346 million from the agency’s budget.

It’s worth noting that the IRS has shown little appetite for challenging tax-exempt groups after its tea party controversy, in which the agency was found to have targeted nonprofit advocacy groups based on their names and policy positions.

Continue reading

January 10, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Friday, January 9, 2015

Weekly Tax Roundup

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

Kamin: How to Tax the Rich

Tax Analysys Logo (2013) David Kamin (NYU),  How to Tax the Rich, 146 Tax Notes 119 (Jan. 5, 2015):

In this article, Kamin reviews options for increasing tax liabilities for the richest Americans. He concludes that several options that have received considerable attention and support are not viable as a practical matter -- taking into account amounts of revenue raised and administrative considerations. Those options include taxing capital gains as ordinary income, annual wealth taxes, and broad mark-to-market accounting. Kamin identifies more viable options, including substantially expanding transfer taxes, increasing the tax rate on ordinary income, and taxing -- at least partially -- unrealized gains at death or gift, which may be the most promising.

Continue reading

January 9, 2015 in Scholarship, Tax, Tax Analysts | Permalink | Comments (2)

Harvard: Corporate Inversions and Tax Reform

Harvard Law School Logo (2014)Tax Turnaround Time? Proposals For Reversing the Corporate Inversion Trend Bring Home the Need for Tax Reform, Harvard Law Bulletin (Fall 2014):

Last summer, as more American companies like Mylan and Walgreen announced plans to relocate their headquarters overseas to avoid paying U.S. taxes—typically through combining under a new foreign holding company—the issue of “tax inversions” gained increasing attention in the media. Some 75 companies have inverted in the past two decades, most in the last seven years, according to the Congressional Research Service. The Joint Committee on Taxation reports that this has resulted in the loss of as much as $20 billion in tax revenue for the U.S. over the past decade. ...

Continue reading

January 9, 2015 in Tax | Permalink | Comments (0)

Shanske: The Federal Role in Municipal Debt Finance

Darien Shanske (UC-Davis), The Feds Are Already Here: The Federal Role in Municipal Debt Finance, 33 Rev. Banking & Fin. L. 795 (2014):

Should the federal government be involved in the regulation of municipal debt finance? The answer is arguably not. But this theoretical dispute is not the focus of this Article because, in fact, the federal government already regulates municipal debt finance extensively, generally much more extensively than the states regulate their municipalities’ use of debt. The primary source of federal regulation is the securities laws. Less well-known is that federal tax law also serves as an important constraint. This Article surveys and critically evaluates these federal laws, and comes to three tentative conclusions. First, the current federal oversight “system,” unplanned and ad hoc as it is, has been effective. Second, in part because the current system has never been thought of as a comprehensive system, there are low-hanging fruit in terms of making the system work better. To the extent the federal government does not put these reforms in place, states should. Third, even an optimally operating federal overlay does not absolve the states from more careful regulation of the financial affairs of their localities, particularly as to the use of debt. Above all, what the federal government does not — and ought not — do is provide localities with the expertise to use debt optimally; this is another area where the states should focus their reform efforts.

January 9, 2015 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 610

IRS Logo 2National Review, Ask Lynch About the IRS Scandal:

Confirming a new attorney general is near the top of the new Senate's to-do list. The power not to confirm the president's nominees is near the top of the Republicans' new consignment of political clout. ... They should focus on the president’s AG nominee, Loretta Lynch, and they should refuse to confirm her until she commits to appointing a Special Prosecutor to investigate the IRS.

So long as the Justice Department is controlled by the Obama administration, it's going to obstruct any investigation that might embarrass the White House. ... [T]he IRS’s persecution of Americans of a particular political stripe is far and away the most important scandal of the bunch. It's the defining corruption of the era.

Requiring Lynch to promise a full investigation, headed by a special prosecutor, has ironclad precedent. In 1973, the Senate Judiciary Committee threatened to reject the appointment of Elliot Richardson unless he appointed Archibald Cox as a Watergate special prosecutor. Richardson was confirmed as attorney general on May 25, 1973; a week before that, on May 18, it was announced that "Attorney General-designate Elliot L. Richardson" had appointed Cox, and agreed, per the Judiciary Committee's demands, to give him "an unprecedented degree of independence from Federal interference and influence in investigating and prosecuting the case," according to a contemporaneous report in the Harvard Crimson. (Richardson was a Harvard alumnus.)

Continue reading

January 9, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Thursday, January 8, 2015

Hasen: Income Taxation and Risk-Taking

David Hasen (Colorado), Income Taxation and Risk-Taking:

The literature on income taxation and risk-taking has tended toward the view that a true, or “normative,” income tax is ineffective at taxing the returns to risk-taking. The theory is that investors increase the size of their portfolios in response to the tax, because the tax causes the government both to absorb a portion of the gains realized from risk-based investment and to subsidize in analogous fashion any losses sustained. When the increased investment makes money, the larger return covers the associated tax liability, and when it loses money, the deduction for the enlarged loss compensates for the excess over the loss that would have been realized in a world without the tax. At the end of the day, the investor is mostly returned to the position he occupied in the non-tax world.

Continue reading

January 8, 2015 in Scholarship, Tax | Permalink | Comments (0)

Houston Business & Tax Journal Publishes New Issue

HB&TJ The Houston Business & Tax Law Journal has published Vol. 14, Part 1 (2014):

January 8, 2015 in Scholarship, Tax | Permalink | Comments (0)

Judge Goldberg and the Federal Tax Law

William D. Elliott, Judge Irving L. Goldberg and the Federal Tax Law, 46 Tex. Tech. L. Rev. 849 (2014):

From 1966 to 1995, Irving Goldberg served as a judge on the United States Court of Appeals for the Fifth Circuit. ... This Article concerns Goldberg's tax opinions. ... Like Henry Friendly of the Second Circuit, Richard Posner of the Seventh Circuit, and a few other circuit judges who have developed a unique reputation and perhaps even a close identity with a certain area of law, Irving Goldberg placed his personal stamp on federal tax law.

January 8, 2015 in Scholarship, Tax | Permalink | Comments (0)

2014 Tax Person of the Year: Dave Camp

Tax Analysys Logo (2013) The 2014 Tax Person of the Year, 146 Tax Notes 7 (Jan. 5, 2015):

It may be a year or two or several before Congress actually passes tax reform legislation, but the plan released in 2014 by recently retired House Ways and Means Committee Chair Dave Camp, R-Mich., will help set the stage for the next tax code overhaul. The tax community's anticipation and ongoing reaction -- both good and bad -- to Camp's plan has earned him the designation of Tax Notes' 2014 Person of the Year.

Other finalists:

Continue reading

January 8, 2015 in Tax | Permalink | Comments (0)

Shapiro: Anatomy of a Special Tax Break and the Case for Corporate Tax Reform

Robert J. Shapiro (Georgetown), Anatomy of a Special Tax Break and the Case for Broad Corporate Tax Reform:

This essay provides a case study of the difficulties entailed in reforming the corporate tax code by examining the costs and distortions associated with one large special tax preference, Section 199 of the corporate code. Enacted in 2005, this provision provides a special deduction for some of the profits arising from certain designated “domestic production activities.” Our analysis shows that while the provision was originally intended to help manufacturing, it now provides tax benefits for a number of other, selected industries, including the information industry (including film production), mining, and construction. In many cases, eligibility is arbitrary: For example, food processing qualifies but not retail food businesses – unless the food establishment roasts beans used to brew coffee. At the same time, vital areas such as health care, finance, insurance, and educational services receive no benefit, and neither do many labor-intensive industries such as transportation and warehousing, administration and support, retail trade, and accommodations and food services. From 2005 to 2009, for example, Section 199 provided the information and movie industry, on average, 60 times the benefits received by these other vital and job-intensive industries. And within the manufacturing sector, Section 199 provided by far the greatest benefits, relative to the size of manufacturing sub-industries, to beverage and tobacco producers, followed by chemicals, and then by computer and electronic products. Traditional manufacturing industries such as textiles, apparel, wood products, leather products, printing, and furniture cannot claim significant benefits from Section 199. We also show that that while these allocations distort investment, there is no evidence that the provision promotes job creation in those industries that use it most.

Continue reading

January 8, 2015 in Scholarship, Tax | Permalink | Comments (0)

Hill: Citizens United and § 501(c)(4) Organizations -- Guidance, Compliance, and Enforcement

Frances R. Hill (Miami), Citizens United and Social Welfare Organizations: The Tangled Relationships Among Guidance, Compliance, and Enforcement, 43 Stetson L. Rev. 539 (2014):

This Article explores the roles of the IRS and the Supreme Court in creating the conditions for the redesign of § 501(c)(4) organizations as campaign finance vehicles, which resulted in the current crisis. Part II discusses the long-term failure of the IRS to issue guidance relating to § 501(c)(4), including its failure to issue any guidance in response to Citizens United. Part III discusses the impact of Citizens United on the structure and operation of § 501(c)(4) organizations. Part IV examines the impact of the Court's insistence in Citizens United that regulatory agencies play a limited role in campaign finance regulation and that tests based on facts and circumstances are themselves constitutionally impermissible burdens on political speech. Part V discusses the response of the reconstituted but not yet reformed IRS. Part VI offers a brief conclusion focused on the challenges going forward.

January 8, 2015 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 609

IRS Logo 2Tribune-Review, BNY Mellon Hires Official Who Headed IRS During Tea Party Targeting:

Bank of New York Mellon hired a former Internal Revenue Service commissioner who modernized the agency's infrastructure but later was the subject of criticism from congressional Republicans over his handling of what they believed was a conspiracy targeting conservative groups.

Douglas Shulman, 47, was appointed senior executive vice president and global head of Client Service Delivery at BNY Mellon and joined the firm's executive committee, the bank said Wednesday.

He will oversee more than 18,500 employees at the world's largest custody bank, BNY Mellon said. He brings experience using technology to manage immense amounts of financial data, most notably in his previous job as commissioner of the IRS from 2008 to 2012. ...

Shulman's time at the IRS has been the subject of political controversy. The agency under his watch was accused of targeting conservative groups seeking a tax exemption. Starting in 2010, an IRS unit picked certain organizations for intensive scrutiny based on their politics, particularly those identifying with so-called Tea Party conservatives, according to a May 2013 report from the Treasury Inspector General for Tax Administration.

Shulman, who was appointed by President George W. Bush in 2008, told Congress before the report was released that there was no targeting happening. Once the general inspector's report emerged, he faced skeptical Republicans on the Senate Finance Committee who said he should have known about the practice and moved to shut it down.

Shulman said he was “dismayed” by the report's conclusions, but he admitted no wrongdoing on his part.

“I certainly am not personally responsible for creating a list that had inappropriate criteria on it,” Shulman told the committee, adding “With that said, this happened on my watch. And I very much regret that it happened on my watch.”

Continue reading

January 8, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, January 7, 2015

Cauble Presents Taxing Publicly Traded Entities Today at Toronto

Cauble (2015)Emily Cauble (DePaul) presents Taxing Publicly Traded Entities at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Publicly traded entities are generally treated as corporations for U.S. tax purposes. Under various exceptions, however, publicly traded entities may obtain special treatment if they earn predominately certain specified types of qualifying income. This Article examines potential rationales for granting special tax treatment to certain publicly traded entities. As the analysis in this Article will show, many of the potential rationales are unconvincing. In addition, to the extent that some rationales may be persuasive, the current rules are not designed in a way that best comports with these potential justifications. Therefore, reform is needed.

Continue reading

January 7, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)