TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, October 14, 2016

Treasury Issues Final Section 385 Debt-Equity Earnings-Stripping Regs

Treasury Department Logo (2017)After the Treasury Department submitted the proposed final section 385 debt-equity regulations on earnings-stripping to the White House Office of Management and Budget on September 30 for its 90-day review, Republicans on the House Ways & Means Committee (on October 5) and Senate Finance Committee (on October 11) requested that the regulations not be issued in haste without addressing their concerns.  Yesterday, the Treasury Department and IRS issued the final regulations:

Press and blogosphere coverage:

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October 14, 2016 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1254

IRS Logo 2The Daily Caller, Obama’s Tax Lawyers Had Conservative Groups’ Confidential Information:

President Barack Obama’s White House hired at least two Department of Justice (DOJ) attorneys who accessed conservative groups’ confidential taxpayer information while defending the Internal Revenue Service (IRS) during the targeting scandal.

The two were among 10 Justice Department Tax Division lawyers Obama has kept on the White House staff without taxpayer privacy training since April 2009, nonprofit government watchdog Cause of Action Institute (CofA) said in a report made public Wednesday [Presidential Access to Taxpayer Information].

Obama “is the first president to have recruited litigation specialists from the DOJ Tax Division, some of whom had knowledge of confidential taxpayer information concerning his political opponents,” the report said. “The DOJ has supplied a regular stream of Tax Division lawyers to the Obama White House for more than seven years, all without any apparent guidance or safeguards to ensure against the unauthorized disclosure of taxpayer information.”

Using Department of Justice tax lawyers may be unique to the current White House, but for “nearly as long as the IRS has existed, presidents have weaponized it against their foes,” the report said. “The Obama administration has made frequent and damaging use of the IRS as a political weapon.”

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October 14, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Thursday, October 13, 2016

David Gamage Leaves UC-Berkeley For Indiana

Gamage (2017)David Gamage (UC-Berkeley) has accepted a lateral offer to join the Indiana law faculty in the fall (announcement). After graduating from Stanford in 2000 (B.A. Economics, M.A. Economic and Organizational Sociology), he worked for Bain Capital before earning his J.D. in 2005 from Yale. He was an Emerging Scholars Program Fellow at Texas in 2005-07 and joined the UC-Berkeley law faculty in 2007. He served as Special Counsel and Senior Stanley S. Surrey Fellow in the Treasury Department's Office of Tax Policy in 2010-12. His publications include:

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October 13, 2016 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (0)

Facebook Pledges To Comply With 'Extraordinarily Broad' IRS Summons, Fight $5 Billion Tax Deficiency From 'Double Irish' Maneuver

Facebook (2016)Bloomberg, Facebook Continues Fight Over U.S. Taxes After Ireland Move:

Facebook Inc. is carrying on its fight with the U.S. Internal Revenue Service over taxes relating to its transfer of global operations to Ireland in 2010 even as the social media giant pledged cooperation with the government’s investigation.

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October 13, 2016 in Tax | Permalink | Comments (1)

Gordon, Joulfaian & Poterba:  Choosing Between An Estate Tax And A Basis Carryover Regime — Evidence From 2010

Robert Gordon (NYU), David Joulfaian (U.S. Treasury Department) & James M. Poterba (MIT), Choosing Between an Estate Tax and a Basis Carryover Regime: Evidence from 2010:

Executors of estates for decedents in 2010 could choose between an estate tax regime and a basis carry-over regime. For most executors, this created a tradeoff between a current estate tax payment and a future capital gains tax liability for beneficiaries who inherited assets with carryover-basis. Various features of a decedent’s estate, including the gross value of assets, outstanding debts, whether the decedent resided in a state with an estate tax, and the basis of assets held at the time of death, affected the relative tax burden under the two regimes. Some executors chose to file estate tax returns for decedents from 2010, but these estate tax filings resulted in very little estate tax revenue. Estate tax filers had more leverage, were more likely to be from a state with an estate tax or from married decedents, were less likely to have made lifetime gifts, and had larger charitable bequests — all factors that are associated with reduced estate tax liability.

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

Field:  Aggressive Tax Planning And The Ethical Tax Lawyer

Heather M. Field (UC-Hastings), Aggressive Tax Planning & the Ethical Tax Lawyer, 36 Va. Tax L. Rev. ___ (2017):

Can a tax planner be both ethical and aggressive? When a client wants help with a transaction in which the lawyer thinks the tax benefits will probably not be sustained on the merits if challenged, what is the ethical response? How low should the tax adviser go?

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

The IRS Scandal, Day 1253

IRS Logo 2Tax Notes, Koskinen Impeachment Paused but Not Forgotten as Elections Near:

The House's extended recess appears to signal a respite from, if not an end to, the 114th Congress's months-long push to impeach IRS Commissioner John Koskinen.

The effort has been directed by conservatives outraged over claims that the IRS targeted Tea Party and other conservative groups for extra scrutiny when they applied for tax-exempt status. The drive sputtered to a halt in late September after pro-impeachment congressmen traded their privileged motion on the House floor for an impeachment hearing in the House Judiciary Committee.

That three-and-a-half-hour hearing on September 21 rehashed accusations that Koskinen had deliberately misled and lied to congressional investigators looking into the targeting controversy. However, the hearing didn't uncover anything substantially new, it didn't seem to change any minds on the committee, and it offered no resolution to the impeachment inquiry, such as a vote by the Judiciary Committee asking the full House to impeach.

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October 13, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, October 12, 2016

Laura Rosenbury Stakes Her Deanship On Raising Florida's Ranking To #35; Amidst Claims Of Sexism, Her Regime Comes Under Fire, With The Graduate Tax Program Its Flashpoint

Rosenberry (2016)Following up on my previous posts (links below) on the turmoil at the University of Florida College of Law:  Chronicle of Higher Education, As U. of Florida Law Dean Calls Out Sexism, Her Rankings-Driven Regime Comes Under Fire:

An alumnus in Orlando told her he didn’t remember a dean with "legs like that."

The star editor of the law review described her as "young and vivacious," parroting a phrase he’d picked up from his mentor.

Faculty members and graduates have called her a careerist, whose singular focus on national rankings has come at the expense of collegial consultation and respect for beloved professors.

This is the turbulent and lately tortured world of Laura A. Rosenbury, the first woman to lead the University of Florida’s Fredric G. Levin College of Law. Ms. Rosenbury has sought to shake up a 107-year-old school with a reputation that is more often described as good than great. She has staked her deanship on a promise to move the school up 13 spots in the U.S. News & World Report rankings, which would bring Florida to No. 35. It could all happen, Ms. Rosenbury says, as soon as 2019. That is, if the dean and the Gator faithful don’t devour each other first.

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October 12, 2016 in Legal Education, Tax | Permalink | Comments (14)

Mason Presents Citizenship Taxation Today At Pennsylvania

Mason (2015)Ruth Mason (Virginia) presents Citizenship Taxation, 89 S. Cal. L. Rev. 169 (2016), at Pennsylvania today as part of its Tax Policy Workshop Series hosted by Chris Sanchirico and Reed Shuldiner:

The United States is the only country that taxes its citizens’ worldwide income, even when those citizens live indefinitely abroad. This Article critically evaluates the traditional equity, efficiency, and administrability arguments for taxing nonresident citizens. It also raises new arguments against citizenship taxation, including that it puts the United States at a disadvantage when competing with other countries for highly skilled migrant.

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

Johnston:  Who Else Doesn't Pay Taxes?

David Cay Johnston, Who Else Doesn't Pay Taxes?:

A big and important story about America’s failing tax system lurks in the revelation (which Donald Trump seemed to confirm in Sunday’s debate) that he had tax losses that could allow him to spend almost $4 million a month for nearly two decades while paying no federal income taxes.

Trump is part of a growing wave of people who enjoy lavish lifestyles, but pay little or no federal income taxes, my analysis of the official tax data going back two decades shows. There are enough of them that they even have their own IRS nickname.

The taxes paid by most Americans subsidize those who do not pay — including a strikingly high number of affluent, not poverty stricken, Americans. Let’s take a look at the latest IRS data, which I have analyzed annually for more than two decades.

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October 12, 2016 in IRS News, Tax | Permalink | Comments (21)

Sen. Hatch Demands Treasury Clarify Use Of Secret Memo In Section 385 Debt-Equity Regs

Senate LogoFollowing up on my previous post, Sen. Hatch Demands Release Of Secret Reagan-Era DOJ Tax Memo Supporting Obama's Expansive Use Of Presidential Power:  Press Release, Hatch Demands Treasury Clarify Use of Secret Memo Regarding Section 385 Debt-Equity Regulations:

Now Public Memo of Agreement Used to Justify Absence of Economic Impact Analysis for Proposed Regulations

Senate Finance Committee Chairman Orrin Hatch (R-Utah) today wrote to Treasury Secretary Jack Lew with a series of questions regarding a long-secret Memorandum of Agreement (MOA) with the Office of Management and Budget (OMB) concerning the economic and regulatory effects of tax regulations.  The Treasury Department uses the memo, recently made public at Chairman Hatch’s urging, to justify forgoing a cost-benefit analysis required by federal law and executive order when issuing tax regulations, including proposed regulations relating to the Internal Revenue Code’s section 385 debt-equity rules.  

“Today, I write to 1) set forth the details of that MOA and request information on its use, and 2) raise additional questions concerning the proposed regulation and the Treasury Department’s unusual process in moving toward a final rule,” Hatch wrote. “These issues matter a great deal to me because federal regulations have grown in quantity and scope to unprecedented levels in recent decades, and tax regulations are no exception.”

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October 12, 2016 in IRS News, Tax | Permalink | Comments (1)

The IRS Scandal, Day 1252

IRS Logo 2USA Today editorial, Impeachment Won't Reform IRS:

You have to give a band of conservative Republicans known as the House Freedom Caucus credit for one thing: No matter how bad one of their ideas is, they never quit.

Right now, they’re battling the Obama administration, House Democrats, their own leadership and Republican moderates to push a futile and absurd effort to impeach IRS Commissioner John Koskinen. ...

While the allegations against Koskinen are serious, wiser Republicans know they are not the stuff of impeachment. In fact, the underlying issue that has driven impeachment goes back years: the agency’s misuse of its immense powers to target conservative groups. It occurred before Koskinen was even at the agency.

He was brought in to clean up the mess after revelations in 2013 that the agency’s tax-exempt division had singled out conservative organizations, including Tea Party groups, because of their political beliefs. The IRS sent the groups burdensome inquiries and delayed their applications for tax exemption, actions that President Obama acknowledged were “intolerable and inexcusable.”

Congress investigated, and high-level officials were forced out. The FBI also investigated but found no criminal wrongdoing, a finding Republicans have found hard to swallow.

Certainly, the public deserves to know exactly what happened, see the relevant records, and be convinced that it won't happen again. Instead, Koskinen’s “cleanup” has raised more suspicions. It has been marred by disappearing emails and bungled searches for backups. Federal court rulings excoriated the agency for secrecy.

A few months ago, the agency was still stonewalling. In March, the 6th U.S. Circuit Court of Appeals  blasted the IRS for resisting “at every turn” a judge’s orders to disclose a list  of the groups targeted. And just last month, a federal appeals court in the nation’s capital revived a lawsuit against the IRS by conservative groups that had been targeted. A three-judge panel cited the agency’s own admission that two groups still had not gotten their tax exemption, years  after seeking it. The IRS’ excuse? Because the groups had sued the agency.

Republicans have good reason to want the IRS to come clean and release any documents that shed light on what happened. But impeachment of a man who wasn't even there when the scandal occurred? No. ...

There are plenty of things the IRS needs — more money to provide better customer service and combat ID fraud, a simpler tax code to administer, and reforms to ensure it will never again target anybody for political beliefs. Republicans would do better to turn to the serious work of governing than to press a frivolous impeachment vote.

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October 12, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Tuesday, October 11, 2016

Zelenak Presents Tax-Free Basis Step-Up At Death And The Charitable Deduction Of Unrealized Appreciation Today At Columbia

Zelenak (2016)Lawrence Zelenak (Duke) presents The Tax-Free Basis Step-Up at Death, the Charitable Deduction for Unrealized Appreciation, and the Persistence of Error at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

This essay recounts, as a study in the remarkable persistence of some early errors even when the errors were promptly recognized and addressed, the legislative and administrative histories of the tax-free basis step-up at death and the charitable deduction for unrealized appreciation.

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October 11, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Presidential Campaign Tax News

Kahn & Kahn:  The Fallacious Objections To The Tax Treatment Of Carried Interest

Florida Tax Review  (2015)Douglas A. Kahn (Michigan) & Jeffrey H. Kahn (Florida State), The Fallacious Objections to the Tax Treatment of Carried Interest, 18 Fla. Tax Rev. ___ (2016):

Carried interest is the term used to describe a profits interest in a partnership that invests in entities. A managing partner typically will receive a 20% profits interest in exchange for managing the investments of the partnership. The complaint against the treatment of carried interest is aimed at the characterization of the managing partner's share of the partnership's subsequent capital gains. The contention is that since the managing partner receives her share of the partnership's income for services performed, she should be taxed at ordinary income tax rates rather than the preferentially lower capital gains rate.

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October 11, 2016 in Scholarship, Tax | Permalink | Comments (1)

The Practical Tax Lawyer Issues Call For Articles

Practical Tax LawyerThe Practical Tax Lawyer, published by ALI-CLE and supported by the ABA Tax Section, has issued a call for "how-to" or “intro to” sorts of articles that are oriented towards the general practitioner:

We especially welcome articles that help practitioners think about how to deal with any recent changes in the law, regulations, or IRS litigating position that might affect a tax practice. PTL articles tend to be very short (3,000-5,000 words).

Here are the submission deadlines for each issue:

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October 11, 2016 in Scholarship, Tax | Permalink | Comments (0)

Donald Trump And Hillary Clinton: I've Had The Time of My Life

The IRS Scandal, Day 1251: Bill O'Reilly Calls For A Special Prosecutor

IRS Logo 2Fox News, O'Reilly: Enough Evidence of Corruption in DOJ for an Independent Prosecutor:

In his Talking Points Memo tonight, Bill O'Reilly said a major scandal could erupt in the Justice Department.

He explained that many Americans believe the fix was in during investigations into the IRS' targeting of conservative groups and Hillary Clinton's private email server.

O'Reilly noted that former IRS official Lois Lerner was never held legally accountable for allegedly targeting right-wing groups for audits, and Attorney General Eric Holder subsequently refused to explain why.

Meantime, the number of immunity deals the DOJ granted in the Clinton email investigation is "strange to say the least," O'Reilly said.

"The FBI and the Justice Department have a lot of explaining to do on the email front," O'Reilly stated.

"Talking Points believes there is now enough evidence of corruption in the Justice Department that an independent prosecutor should be appointed. We all know Mr. Obama is not going to do that. But he should. We need honest government."

Media Matters, O’Reilly Uses Old, Repeatedly Debunked Right-Wing Myths To Call For “Independent Prosecutor” Of “Corrupt” DOJ:

Fox News host Bill O’Reilly used debunked right-wing myths to claim there is “enough evidence of corruption in the Justice Department” to warrant appointing an “independent prosecutor” for the FBI and the DOJ, citing the closed investigation relating to Democratic presidential nominee Hillary Clinton’s use of private email as secretary of state, and the long-debunked IRS targeting pseudo-scandal. ...

O’Reilly also alleged there was corruption regarding the investigation into the IRS allegedly targeting right-wing organizations, complaining that then-IRS head Lois Lerner "was never really held legally accountable." But a congressional investigation revealed that progressive groups were also subjected to the same kind of scrutiny as conservative groups, evidence which Fox News itself ignored when it first came to light. And months before that, in June 2013, the congressional investigation found the culprit behind the increased scrutiny of organizations applying for tax-exempt status: not Lois Lerner, but a Cincinnati-based IRS manager who told investigators that he “instructed his team of screeners” to look for cases of political-sounding groups applying for tax-exempt status, and that “he took this action on his own.”

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October 11, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (8)

Monday, October 10, 2016

Tokić Presents Taxing Greed Today At Loyola-L.A.

 (LTokicGenevieve Tokić (Northern Illinois) presents Taxing Greed at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Katherine Pratt:

Appeals to greed in support of various tax proposals have become increasingly commonplace in response to a populist mood in politics. References to ensuring that the greedy rich “pay their fair share” sate a populist attitude towards wealth and wealth accumulation, and may be used to garner political support for a policy or proposal. However, there has been little academic consideration of the role of greed in the law, and in the tax law in particular. This paper seeks to fill that hole by taking a close look at the concept of greed.

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

Yale Symposium On Seminole Rock:  The Past, Present, And Future Of Deference To Agency Regulatory Interpretations

Yale Notice & CommentThe Yale Journal on Regulation's Notice & Comment Blog, an affiliate of our Law Professor Blogs Network, hosted an online symposium on Reflections on Seminole Rock: The Past, Present, and Future of Deference to Agency Regulatory Interpretations with contributions from twenty-five contributors, including three Tax Profs:

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October 10, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

New Research On Inequality: ‘Whatever You Thought, It’s Worse’

Washington Post Wonkblog, Striking New Research on Inequality: ‘Whatever You Thought, It’s Worse’:

Social mobility, the amount that a typical American moves up or down the economic ladder from where their parents and grandparents stood, has became a major focus of political discussion, academic research and popular outrage in the years since the global financial crisis. While Americans have traditionally seen their country as a place where anyone can make through hard work and a stroke of luck, data collected in the past decade have shown otherwise.

Compared with many European countries, for example, few Americans end up with an income or educational level that is substantially different than their parents. Research by economists from Harvard and Berkeley found that fewer than 10 percent of people in the bottom fifth of the wealth distribution will make it into the top fifth [Raj Chetty (Stanford), Nathaniel Hendren (Harvard), Patrick Kline (UC-Berkeley), Emmanuel Saez (UC-Berkeley), Nicholas Turner (U.S. Treasury Department), Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility]. Things weren't much better for the middle class: Only about 20 percent of people in the middle fifth would rise into the top fifth over the course of their lives.

Now, new research suggests that social mobility in America may be even more limited than researchers have realized. In a new paper, Joseph Ferrie of Northwestern University, Catherine Massey of the University of Michigan and Jonathan Rothbaum of the U.S. Census Bureau draw on a newly constructed dataset about American families reaching back to 1910 [Do Grandparents and Great-Grandparents Matter? Multigenerational Mobility in the US, 1910-2013]. Unlike past studies, which have mainly compared parents and children, the new work adds data on grandparents and great-grandparents to show just how fixed the fortunes of many Americans have become.

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October 10, 2016 in Scholarship, Tax | Permalink | Comments (8)

33% Of $800 Million California Film Tax Credits Went To Projects That Would Have Been Made In The State Anyway

Following up on my previous post, Starstruck States Squander $10 Billion In Film Tax Incentives Producing Minimal Economic Returns:  California Legislative Analyst's Office, California's First Film Tax Credit Program:

Figure 1California provides tax incentives for qualified film and television productions to be made in the state. The first film tax credit program was adopted in 2009 and provided $800 million ($100 million per year over eight years) in credits to selected feature films and television projects. In 2014, the Legislature created a new film tax credit program that increased the available amount of tax credits to $330 million per year—beginning in the 2015–16 fiscalyear—and modified the program in various ways.

In this report, as required by law, we evaluate the economic effects and the administration of the first film tax credit program passed in 2009. We find that about one–third of the film and television projects receiving incentives under this program would probably have been made in California anyway. We suspect that this level of “windfall benefits” to some credit recipients may be low compared to other tax credits, which would suggest that the first film tax credit program targeted the types of production vulnerable to being filmed outside the state relatively well.

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October 10, 2016 in Tax, Think Tank Reports | Permalink | Comments (0)

Trump's Accountant/Lawyer Committed 'Grievous' Violation Of Legal And Professional Ethics In Discussing His Tax Returns With Media

Following up on Saturday's post, Trump’s Ex-Accountant Jack Mitnick: He’s No Tax Genius:  National Review, Confidentially Yours:  Even a Scoundrel Like Trump Deserves Ethical Legal Representation:

Is there anyone concerned at the ugly turn the election has taken with the release of a few pages of Donald Trump's taxes from 1995? The ugliness is not that Trump's taxes have been revealed, per se, but that it was done, in part it appears, by getting an elderly lawyer to violate his duty of confidentiality to his client. One might say that Trump deserves what he gets. But in this age of ever-eroding privacy, it is alarming when the official rules meant to guard privacy come under assault. ...

Mr. Mitnick has committed a grievous violation of legal and professional ethics.

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October 10, 2016 in Political News, Tax | Permalink | Comments (6)

The IRS Scandal, Day 1250

IRS Logo 2World Tribune, Unforgiven: IRS Has Not Only Continued Its War on Tea Party Groups, But Taken It Public:

After admitting it targeted tea party groups for special scrutiny in 2013, the IRS promised to process the groups’ applications in a timely fashion.

Three years later, tea party groups say the tax agency has begun a new round of harassment.

The IRS has sent a new set of “prodding questions” to the groups, demanding still more information, according to an Oct. 4 report by The Washington Times.

The IRS also publicly released one of the sets of questions it sent to the Texas Patriots Tea Party (TPTP), which made public secret taxpayer information that is supposed to be protected, the group’s lawyer said. ...

Two other tea party groups that were targeted by the IRS are still awaiting approval. Unite in Action, a Michigan-based group, applied in 2010, and the Albuquerque Tea Party applied nearly seven years ago, in December 2009.

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

TaxProf Blog Weekend Roundup

Sunday, October 9, 2016

The Top 5 Tax Paper Downloads

SSRN LogoThere is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #1 (and already #47 in all-time downloads among 12,250 tax papers):

  1. [2,543 Downloads]  Families Facing Tax Increases Under Trump's Latest Tax Plan, by Lily L. Batchelder (NYU)
  2. [241 Downloads]  Transfer Pricing Money: The Chevron Case, by Richard J. Vann (Sydney) & Graeme S. Cooper (Sydney)
  3. [182 Downloads]  Financial Advisers Can't Overlook the Prudent Investor Rule, by Max M. Schanzenbach (Northwestern) & Robert H. Sitkoff (Harvard)
  4. [176 Downloads]  Law and Macroeconomics: The Law and Economics of Recessions, by Yair Listokin (Yale)
  5. [168 Downloads]  Taxation and Human Rights: A Delicate Balance, by Reuven Avi-Yonah (Michigan) & Gianluca Mazzoni (S.J.D. 2017, Michigan)

October 9, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

New York City Law Firm Launched To Serve Legal Needs Of Religious Institutions And Individuals

FaithWall Street Journal, Law Firm for Churches Launches in New York City:

A new law firm has opened its doors near Times Square founded on the faith that churches, synagogues, mosques and other religious institutions in New York City could use some legal help.

Nelson Madden Black LLP, as the firm is called, says it’s the first private law firm based in the city that’s “dedicated to the legal representation of religious institutions and individuals.” Announcing its launch this week, the firm said it will offer a “full spectrum of litigation, transactional and advisory legal services” to clients of all faiths.

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October 9, 2016 in Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1249

IRS Logo 2Bill Moyers & Company, This Week in Political Money: Billionaire Backs IRS Impeachment:

The Republican Party is waging war on the IRS (again). The cause du jour is impeachment of the agency’s head, John Koskinen, who was in that role when employees at the IRS destroyed records sought during a previous congressional crusade against the agency.Koskinen says he knew nothing about it, but Republicans want to hold him accountable anyway.

The “Impeach Koskinen” caucus is backed by the 45Committee, a political nonprofit funded by billionaire Todd Ricketts, a major GOP donor whose family owns the Chicago Cubs.Politico reported on Monday that 45Committee was spending more than $1 million on a week of advertising. Federal Communications Commission records compiled using the Center for Responsive Politics’ new political ad watch tool and reviewed by show ad buys on several television stations in two swing states: Florida and Nevada.

Drumming up anger at the IRS could help turn out conservative voters in these key states, where there are also Senate races that could help determine control of Congress’ upper chamber. But it could also backfire. Some GOP senators have been hoping to put off the impeachment push until after the election, worried that another crusade to demonize an Obama-appointed bureaucrat might not play well with moderates in the party.

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October 9, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, October 8, 2016

This Week's Ten Most Popular TaxProf Blog Posts

Trump’s Ex-Accountant Jack Mitnick: He’s No Tax Genius

The Daily Beast, Trump’s Ex-Accountant Jack Mitnick: He’s No Tax Genius:

This past week, Donald Trump's campaign surrogates attempted to argue that the candidate is a "genius" for turning a nearly $1 billion loss into a tax avoidance strategy for up to 18 years. But now the accountant who compiled Trump's 1995 tax return — and helped verify it for The New York Times — has refuted that narrative in a series of interviews. Jack Mitnick, who handled Trump's taxes until 1996, told Inside Edition on Tuesday, “I did all the tax preparation. He never saw the product until it was presented to him for signature." Pushing back at Trump's own suggestion that he "brilliantly" used tax laws to his own advantage, Mitnick added, “I’m the one who did all the work."

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

The IRS Scandal, Day 1248

IRS Logo 2The Atlantic, The Conservative Crusade Against the IRS Commissioner:

Feeling wrung out by the grossness of the presidential race, the hurricane buffeting the East Coast, and the nationwide epidemic of scary clowns? Buck up, camper, and at least be thankful that you are not IRS Commissioner John Koskinen.

Heading the most loathed agency in the federal government takes a psychic toll on a good day. But the past 17 months or so have been a pig pile of lousy days for Koskinen, as conservatives have led a multi-pronged crusade to publicly humiliate him, drive him from office, and strip him of his pension. On September 21, shortly before Congress fled town for the remainder of election, Koskinen had to go before the House Judiciary Committee for a formal impeachment hearing.

Then, last week, the dark-money group 45Committee announced that it was dropping more than $1 million on ads lobbying for the commissioner’s ouster. “Call the House of Representatives and tell them to vote to impeach Commissioner Koskinen now,” urges the spot, which presents impeachment as the last, best hope for beating back “the arrogance of the Obama administration.”

What did Koskinen do to deserve all this? It’s complicated. The roots of conservatives’ outrage lie in the 2013 revelation that the IRS had improperly scrutinized Tea Party groups (among others) seeking tax-exempt status. An FBI probe found no evidence of “enemy hunting.” But conservatives have been super miffed at the agency ever since.

“The government went after people for their political beliefs,” fumes Rep. Jim Jordan, head of the House Freedom Caucus, which has made Koskinen’s impeachment a pet cause. ‘This is not just any old agency,” Jordan reminded me. “This is the IRS. Most people get a letter from the IRS, they sit down, wipe their brow, and their resting heart rate suddenly gets higher. Now we know that they systematically targeted people for their political persuasion.” ...

The Treasury Department’s Inspector General ruled the loss of the tapes an unintentional screw up. Conservatives have decided nonetheless that Koskinen must go. The commissioner has been hauled before multiple committees multiple times in both chambers of Congress. House Republicans have accused him of arrogance, dishonesty, obstruction, foot-dragging, and being generally unhelpful in their investigation. Last October, Rep. Jason Chaffetz, head of the Government Oversight and Reform Committee, introduced a resolution to begin impeachment proceedings. ...

At this point, Jordan doesn’t much care whether the destruction of the backup tapes was part of a cover up or simply the result of incompetence. “No one is saying this was all intentional,” Jordan assured me. “But where was the gravity of the situation?” He also acknowledges that Koskinen is not at fault for the original targeting offense. Impeachment advocates, however, really feel that someone’s head needs to roll. “It was political speech they targeted,” marveled Jordan. “And for no one to be held accountable?”

Even so, impeaching a public official is like going nuclear: a measure reserved for the very worst transgressions. ...

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October 8, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, October 7, 2016

Weekly SSRN Tax Article Review And Roundup

This week, Daniel Hemel (Chicago) reviews a new article by Edward A. Zelinsky (Cardozo), The Political Process Argument for the Supreme Court to Overrule Quill, 82 Brook. L. Rev. (forthcoming 2017).

HemelIn Quill Corp. v. North Dakota, 504 U.S. 298 (1992), the Supreme Court held that states cannot collect sales tax from out-of-state vendors who lack a “physical presence” within the state. While the constitutional justification for Quill’s holding was questionable from the outset, Quill’s future is suddenly in doubt as well. In a concurring opinion last year, Justice Kennedy called on the Court to reconsider Quill, and Alabama and South Dakota have both taken steps to generate a test case since then.

The pragmatic case for overruling Quill is clear. Quill drives a hole in state budgets: by one estimate, states lost more than $23 billion in sales tax revenue on transactions with out-of-state vendors in 2012 alone. Moreover, Quill puts vendors with a brick-and-mortar presence at a disadvantage vis-à-vis remote competitors, leading (arguably) to unfairness and (almost certainly) to inefficiency. Perhaps the best that can be said in Quill’s favor is that it’s up to Congress—not the courts—to fix this mess. Because Quill was decided under the dormant Commerce Clause, Congress has the power to overturn it via legislation. In a provocative new article, Edward Zelinsky considers whether Quill’s fate should be left to the political process.

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October 7, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Goldilocks Meets Private Equity: Taxing Carried Interest Just Right

Tax Polcy Center Logo (2017)Donald Marron (Tax Policy Center), Goldilocks Meets Private Equity: Taxing Carried Interest Just Right:

Controversy rages about how to tax carried interest. One view sees carry as compensation that should be taxed like other labor income. Another sees carry as a reward for financial risk-taking that should be taxed like capital income. A third sees carry as creating a costly tax arbitrage. In this paper, Donald Marron shows how we can reconcile these three views. Current practice taxes carry too little. Treating it as labor income without other reforms taxes it too much. To tax carried interest just right, it should be labor income for managers and deductible against ordinary income for investors.

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October 7, 2016 in Tax, Think Tank Reports | Permalink | Comments (0)

6th Annual NYU/UCLA Tax Policy Symposium:  Tax Policy And Upward Mobility

NYU UCLA (2016)The Sixth Annual NYU/UCLA Tax Policy Symposium on Tax Policy and Upward Mobility takes place today at UCLA:

This year’s symposium will showcase recent research regarding social mobility and examine how federal, state, and local tax policies promote or frustrate the ability of individuals to climb the income ladder in American society. 

Raj Chetty (Stanford) & Miles Corak (Ottawa), Overview of Research on Upward Mobility
Discussant:  Alan Auerbach (UC-Berkeley)

Susan Dynarski (Michigan), Tax Benefits for College Attendance (with Judith Scott-Clayton (Columbia))
Discussant:  Deborah Schenk (NYU)

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October 7, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

University Of Washington Hosts 2016 Tax Symposium

University of Washington Logo (2016)The University of Washington hosts its Fourth Annual Tax Symposium today:

Panel #1:  Taxpayer Information Rights:

  • Michael Hatfield (Washington), Cybersecurity, Privacy, and Taxpayer Information
  • Adam Thimmesch (Nebraska), Tax Privacy Framework
  • Filip Debelva (KU Leuven, Belgium), Privacy and Confidentiality in Exchange of Information Procedures: Some Uncertainties, Many Issues, but Few Solutions
  • Shannon McCormack (Washington) (moderator)

Panel #2:  Compliance and Administration – Part 1:

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October 7, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1247

IRS Logo 2Forbes: The IRS: A Law Unto Itself, by Bill Archer:

Americans have long had an uneasy relationship with the nation’s tax collector. In the early 1990s, investigative reporter David Burnham wrote an excellent book, “A Law Unto Itself: The IRS and the Abuse of Power” which catalogued a lengthy and continuing history of the Internal Revenue Service’s (IRS) misconduct and mistreatment of taxpayers. This history of misconduct will once again come under close examination later this week as the IRS Commissioner John Koskinen testifies before Congress’ Judiciary Committee to explain the agency’s actions. ...

[R]ecent events make it clear the IRS remains abusive towards taxpayers and often unaccountable. Prior to a 2013 Treasury Inspector Report that would highlight damning IRS misconduct, the IRS head of the tax-exempt organizations group attempted to sneak in an apology for inappropriately flagging conservative organization exemption applications for additional scrutiny. Lois Lerner claimed the practice was initiated by low-level workers in Cincinnati. As we now know, that story was false; scrutiny of the conservative groups was directed by Lerner and other high level IRS officials. The IRS to this day continues to stonewall investigations in an attempt to cover their tracks of misconduct.

In early August, the U.S. Court of Appeals for the District of Columbia in True the Vote, Inc. v. IRS delivered a stinging rebuke to the IRS for attempting to dismiss a lawsuit over an organization’s exemption application. The IRS argued the case was moot because following the 2013 scandal the IRS (it claimed) had ceased its misconduct. The court wrote: “ Parallel to Joseph Heller’s catch, the IRS is telling the applicants in these cases that ‘we have been violating your rights and not properly processing your applications. You are entitled to have your applications processed. But if you ask for that processing by way of a lawsuit, then you can’t have it.’ We would advise the IRS: if you haven’t ceased to violate the rights of the taxpayers, then there is no cessation.”

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October 7, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, October 6, 2016

Fleming Presents Defending Worldwide Taxation Today At Vienna University

FlemingJ. Clifton Fleming, Jr. (BYU) presents Defending Worldwide Taxation and Addressing Inversions with a Shareholder-Based Definition of Corporate Residence, 2016 BYU L. Rev. ___ (with Robert Peroni (Texas) & Stephen Shay (Harvard)), at the Institute for Austrian and International Tax Law at Vienna University of Economics and Business:

This article argues that a principled, efficient, and practical definition of corporate residence is necessary even if some form of corporate integration is adopted, and that such a definition is a key element in designing either a real worldwide or a territorial income tax system as well as a potential restraint on the inversion phenomenon. The article proposes that the United States adopt a shareholder-based definition of corporate residence that is structured as follows:

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October 6, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Common Claims About Proposition 13

How Hillary Clinton And Donald Trump Would Tax The 1 Percent

Vox, How Hillary Clinton and Donald Trump Would Tax the 1 Percent, in One Chart:

On Monday, Marc Goldwein of the Committee for a Responsible Federal Budget shared an updated analysis of how each candidate’s tax plans would affect the top 1 percent of American income earners:


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October 6, 2016 in Political News, Tax | Permalink | Comments (1)

Aprill & Mayer:  The Relationship Between The Trump Foundation And Trump’s Tax Returns

AM4TaxProf Blog op-ed:  Assigning a Tax Lesson: The Relationship between the Trump Foundation and Trump’s Tax Returns, by Ellen P. Aprill (Loyola) & Lloyd Hitoshi Mayer (Notre Dame):

As the debate between the Vice Presidential candidates Wednesday night made clear, Donald Trump’s refusal to release his tax returns remains an important campaign issue. The extraordinary tax losses that Donald J. Trump reportedly had in 1995 emphasize the need for him to fully disclose his tax returns for all years from then forward. Without disclosure of his federal income tax returns, we cannot begin to evaluate fully his claim on Tuesday that he has “legally” and “brilliantly” complied with all of our complicated tax laws.

The ongoing tax issues relating to his foundation came to light only because of the required disclosure of those returns. Those issues — and the foundation’s failure to register to solicit charitable contributions that has now resulted in a cease and desist order from the New York Attorney General — seem to demonstrate a woeful ignorance of the applicable law or a complete disregard of it, either of which would be of even greater concern if also reflected in his personal and business tax positions. And at least one issue raised by the foundation’s tax filings can be resolved only with full disclosure of Mr. Trump’s personal tax situation.

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October 6, 2016 in Political News, Tax | Permalink | Comments (4)

2016 International Tax Competitiveness Ranking: U.S. Is 5th From The Bottom

ITCPress Release:

[T]he Tax Foundation released the third annual International Tax Competitiveness Index. Once again, the United States ranks among the bottom 5 countries with the 5th least competitive tax system in the OECD. Only Greece, Portugal, Italy, and France have less competitive tax codes. On the other end of the spectrum, Estonia takes the number one spot once again, with New Zealand and Latvia having the second and third most competitive tax systems, respectively.

Table 5

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October 6, 2016 in Tax, Think Tank Reports | Permalink | Comments (0)

The IRS Scandal, Day 1246

IRS Logo 2Washington Times. IRS Subjects Tea Party Groups to New Round of Scrutiny, Publicizes Tax Return Data:

The IRS‘ battle against holdout tea party groups is heating up again, after the tax agency promised it would begin processing their long-delayed applications, but sent a new round of prodding questions demanding still more information.

More jarringly, the IRS then publicly released one of the sets of questions it sent to the Texas Patriots Tea Party — a move the group’s lawyer says puts secret taxpayer return information, supposed to be protected, out in the public.

Tax experts say the IRS may be on safe legal ground, since the filing was made as part of a court case, and that’s one of the few narrow exceptions to strict IRS privacy laws.

Still, the move to release the information has inflamed an already tense class action legal battle between the IRS and tea party groups who feel the agency is still targeting them more than three years after it promised to cease. “The IRS has taken the unprecedented step of publicly filing actual return information,” said Edward Greim, who is handling the case on behalf of more than 400 groups targeted by the IRS. He said the questions asked by the IRS show the agency has not ceased the intrusive questioning that landed it in trouble in the first place back in 2013. Mr. Greim said releasing the letter is proof that the IRS can’t be trusted to fairly handle the cases. ...

In addition to the TPTP, two other tea party groups that were targeted by the IRS are still awaiting approval. Unite in Action, a Michigan-based group, applied in 2010, and the Albuquerque Tea Party applied nearly seven years ago, in December 2009.

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October 6, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Wednesday, October 5, 2016

Fleischer Presents The Libertarian Case For A Universal Basic Income Today At Northwestern

Fleischer (Miranda)Miranda Perry Fleischer presents The Libertarian Case for a Universal Basic Income (with Daniel Hemel (Chicago)) at Northwestern today as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

Imagine a society in which each member regardless of need, receives an unconditional basic income – perhaps $1,000 a month, perhaps more, perhaps less. This idea (known as a universal basic income, or “UBI”) is garnering support around the globe and across the political spectrum, from the conservative thinker Charles Murray to the entrepreneurs of Silicon Valley to the social democratic state of Finland. Tax law scholars will recognize this concept as a variation of the negative income tax. Despite this obvious overlap and the UBI’s growing popularity among policymakers, the UBI has not attracted widespread attention from legal scholars in recent years. This Article begins to fill that gap by examining the theoretical underpinnings of a UBI and analyzing how those underpinnings illuminate relevant design questions.

Notably, this Article argues that a nuanced exploration of libertarian theory justifies the provision of a UBI on normative – and not simply pragmatic – grounds. We ground this argument in libertarian ideals for three reasons. ...

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October 5, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (6)

Merrill Presents Innovation Boxes: BEPS And Beyond Today At Pennsylvania

MerrillPeter Merrill (PricewaterhouseCoopers; former Chief Economist, Joint Committee on Taxation) presents Innovation Boxes: BEPS and Beyond at Pennsylvania today as part of its Tax Policy Workshop Series hosted by Chris Sanchirico and Reed Shuldiner:

Over the last 15 years, 16 countries have adopted intellectual property (IP) or patent box regimes, including three G7 countries. This paper explains the IP box concept, outlines recent U.S. IP box proposals with a focus on the Boustany-Neal discussion draft, and explains changes adopted in 2015 to the Organisation for Economic Co-operation and Development (OECD) standards for determining whether IP boxes should be treated as “harmful preferential tax regimes.” \

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October 5, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

NY Times:  When It Comes To Tax Avoidance, Donald Trump’s Just A Small Fry

USP ShellGamesNew York Times: When It Comes to Tax Avoidance, Donald Trump’s Just a Small Fry, by Andrew Ross Sorkin:

Not paying taxes “makes me smart,” Donald J. Trump said last week. His surrogates called him “a genius” for his recently revealed tax avoidance strategies.

Well, if they are right, the executives running corporate America are absolute virtuosos.

An exhaustive study being released on Tuesday by a group of researchers shows in detail how Fortune 500 companies have managed to shelter trillions of dollars in profits offshore from being taxed. Mr. Trump’s efforts pale by comparison. Worse, the companies have managed to hide many of their tax havens completely, in many cases reporting different numbers to different government agencies to obfuscate exactly how they’ve avoided Uncle Sam.

And, yes, it is all legal.

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October 5, 2016 in Tax | Permalink | Comments (0)

California State University Issues Call For Tax Papers

Cal StateThe Bookstein Institute for Higher Education in Taxation at California State University, Northridge, in collaboration with the School of Business at Pacific Lutheran University, has issued a Call for Papers for The 2017 Tax Development Conference to be held at California State University, Northridge on Saturday, April 29, 2017:

The conference aims to bring together tax professors at business schools to facilitate the exchange of ideas and promote collaboration. Papers on any aspect of tax research, practice, or classroom pedagogy should be submitted electronically to Fabio Ambrosio no later than February 17, 2017. Papers at any stage (other than those already accepted for publication) are invited.

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

More Trump Tax News

The IRS Scandal, Day 1245

IRS Logo 2Politico, GOP Mega-Donors Ready New IRS Impeachment Ads:

A new conservative outside group with deep pockets is planning a robust ad campaign urging Congress to impeach the IRS commissioner — a move sure to cause GOP leaders some headaches this fall.

Founded by GOP mega-donor Todd Ricketts, 45Committee will spend nearly $1 million on a week’s worth of cable TV and digital ads encouraging voters to pressure Congress to impeach tax chief John Koskinen.

Officials at the tax-exempt 501(c)(4), run by family owners of the Chicago Cubs, told POLITICO the ads will start Tuesday and air nationwide in every congressional district, from FOX to MSNBC to CNN and more. More could follow, they added, in an effort to keep the issue front and center.

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

Tuesday, October 4, 2016

Graetz Presents Can A 20th Century Business Income Tax Regime Serve A 21st Century Economy? Today At Columbia

Graetz (2015)Michael J. Graetz (Columbia) presents Can a 20th Century Business Income Tax Regime Serve a 21st Century Economy? (in Follow the Money: Essays on International Taxation Introduction & Ch. 7 (Yale 2016) at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

Chapter 7 is the most recently published essay of this collection. It reviews the contemporary challenges of international tax policy, as set forth in my Parsons Lecture, delivered to the University of Sydney Law School in April 2015. After describing the decisionmaking choices and flexibility of multinational corporations and the pressures of inter-nation tax competition, the chapter explains why our 20th Century international tax system is poorly equipped to cope with the 21st Century’s technologically driven, integrated global economy. The chapter concludes with a number of predictions about directions international tax policy is likely to take.

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October 4, 2016 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Clinton, Obama, Trump, And Congress Wage Estate Tax War

The Hill, War Over the Estate Tax Returns:

Battles are flaring over the estate tax, with the issue receiving increased attention from the presidential candidates, the Obama administration and Congress.

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October 4, 2016 in Political News, Tax | Permalink | Comments (3)