TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Saturday, September 30, 2017

This Week's Ten Most Popular TaxProf Blog Posts

Do BigLaw Partners Qualify For Trump's 25% Rate On Income From Pass-Through Entities?

Tax ReformAmerican Lawyer, Law Firms, Partners Await Answers on Trump Tax Plan:

Will big law firms and their partners benefit from the new Republican tax plan promoted by President Donald Trump? Not necessarily, according to tax experts who said some gains may be eroded by loss of crucial deductions.

The one thing tax experts all agree on is that the proposed framework is very short on details and not clear enough to make any conclusions.

In one of its general statements, the framework said it would limit the maximum tax rate applied to the business income of small and family-owned businesses conducted as sole proprietorships, partnerships and S corporations — known as pass through entities — to 25 percent.

So if a law firm qualified — and that’s a big if — partners who pay 39.6 percent may pay 25 percent instead.

But the framework suggests this is only for small businesses, and tax experts said large law firms probably wouldn’t be included in that group.

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September 30, 2017 in Legal Education, Tax | Permalink | Comments (0)

California Lawmakers Approve Bill Requiring Presidential Candidates To Release Five Years Of Tax Returns

Trump Tax ReturnsABA Journal, California Lawmakers Approve Bill Requiring Presidential Candidates to Release Tax Returns:

Presidential candidates who want to appear on the California ballot would have to release their tax returns if a bill passed earlier this month is signed into law.

Senate Bill 149 passed on Sept. 15 despite questions about its constitutionality, report the San Jose Mercury NewsBloomberg BNA and an op-ed in the Los Angeles Times.

The bill requires presidential candidates on the ballot to release five years of tax returns. A redacted version would be posted online.

The deadline for California Gov. Jerry Brown to sign or pass the bill is Oct. 15, but it’s unclear what he will do. Brown released his tax returns in his first two gubernatorial races, but didn’t do so in 2010 or 2014 when his opponents didn’t release theirs.

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September 30, 2017 in Tax | Permalink | Comments (2)

Law’s Picture Books: Illustrating The Letter Of The (Tax) Law

YaleWall Street Journal, ‘Law’s Picture Books: The Yale Law Library Collection’: Illustrating the Letter of the Law:

Picture books about the law are as superfluous as songs about economics. In legal codices and textbooks, illustrations can even seem frivolous. Before visiting the Grolier Club’s exhibition Law’s Picture Books: The Yale Law Library Collection, you might also believe this is as it should be: Justice typically devalues the visual. Not for nothing is Lady Justice blindfolded — as we see in many texts displayed at this unusual exhibition. The law library’s rare book librarian, Michael Widener, has been collecting illustrated law books for the institution, and now he and his co-curator, the legal scholar Mark S. Weiner, have offered an eye-opening survey of that specialty.

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September 30, 2017 in Book Club, Legal Education, Tax | Permalink | Comments (1)

Friday, September 29, 2017

Weekly SSRN Tax Article Review And Roundup

This week, David Gamage (Indiana) reviews a new draft article by Allison Christians (McGill Law), Buying in: Residence and Citizenship by Investment.

Gamage (2017)Want to buy yourself a citizenship?  According to Christians’s new draft article, doing so from Panama would cost you $5,000 USD, doing so from the United Kingdom would cost you $62,525 USD, and doing so from Singapore would cost you $1,794,000 USD.

Would this be worth the cost?  Christians discusses how some of these nations hope to attract wealthy citizens from other nations.  However, emigrating from the U.S. is harder to accomplish, at least from a tax perspective, due the U.S. practice of taxing its citizens on worldwide income.  Christians thus also discusses barriers to exit, again from a citizenship tax perspective. 

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September 29, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

Lesson From The Tax Court: The Overlooked Power Of Offset

Tax Court (2017)Last week the Tax Court issued an opinion in Williams v. Commissioner, T.C. Memo 2017-182.  Although it involves small amounts, the opinion teaches a big lesson about the IRS power of offset

Mr. Williams filed his 2013 return reporting $503 of taxable income and withholding of $1,214.  So he claimed an overpayment of $711.  The IRS accepted his return as filed but did not refund the $711.  Instead, it used its offset powers under section 6402(a) to credit that supposed $711 overpayment against Mr. Williams' unpaid tax liabilities from 2011.  Later, the IRS audited Mr. Williams' return and proposed a deficiency of $1,403.  Mr. Williams' protest to Tax Court was not the usual one.  He agreed with the amount of the deficiency, but he thought that since there was not actually an overpayment, per the audit, then the IRS should not have credited that $711 to his 2011 liability but should instead apply it to his 2013 liability.  After all, it was part of the wage withholding for 2013.  Note that it was to Mr. Williams' benefit to pay off the most recent tax liabilities to increase the chances that the older ones would age out.

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September 29, 2017 in Bryan Camp, New Cases, Tax, Tax Practice And Procedure | Permalink | Comments (2)

Mann:  Controlling The Environmental Costs Of Obesity

Roberta F. Mann (Oregon), Controlling the Environmental Costs of Obesity, 47 Envt'l L. 697 (2017):

Obesity is increasingly viewed as a major health problem across the world. Obesity presents both external and internal costs. Obesity alone may be responsible for some $2 trillion in medical costs and lost productivity, representing significant external costs. Internal costs occur because people make eating and drinking choices without being aware of the eventual damage to their health. Obesity also carries environmental costs. Consumption of certain energy-dense foods made from corn and soy (including meat) increases soil erosion and water pollution from fertilizer use. Governmental policy encourages the production of such crops. Being overweight decreases physical activity and personal mobility, leading to increased use of motor vehicles. Environmental factors such as sprawl and transportation policy affect obesity rates. When people cannot walk or take public transportation to work, they spend more time in their cars. They have less time to exercise and prepare healthy meals. Hence, both obesity’s effect on the environment and the environment’s effect on obesity lead to increased carbon emissions and exacerbate climate change. Taxes can potentially control both the external and internal costs of obesity. By increasing the cost of certain foods, taxes can discourage their consumption. A number of national and subnational jurisdictions have enacted such taxes, including Denmark, Finland, France, Mexico, the Navajo Nation, and the city of Berkeley, California in the United States.

This Article will examine a variety of economic instruments for controlling obesity, including regulation, taxes, and nudges.

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September 29, 2017 in Scholarship, Tax | Permalink | Comments (0)

Thursday, September 28, 2017

Kleinbard: The Republican Tax 'Plan' Is A Deficit-Busting Mess

Vox op-ed:  The Republican Tax “Plan” Is a Deficit-Busting Mess. And It Would Slash the President’s Taxes, by Edward Kleinbard (USC):

Here is what you need to know about the Republican tax plan released Wednesday: It’s not a tax reform plan at all.

It is a sketch of an outline of a preliminary notion of a tax cut for some — and a tax hike for others. The components read like the jumble of ideas you might expect a table of slightly inebriated Chamber of Commerce types to shout out when polled for their tax reform suggestions.

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September 28, 2017 in Tax | Permalink | Comments (3)

Bartlett: I Helped Create The GOP Tax Myth. Trump Is Wrong: Tax Cuts Don’t Equal Growth

Washington Post op-ed:  I Helped Create the GOP Tax Myth. Trump Is Wrong: Tax Cuts Don’t Equal Growth, by Bruce Bartlett:

Four decades ago, while working for Rep. Jack Kemp (R-N.Y.), I had a hand in creating the Republican tax myth. Of course, it didn’t seem like a myth at that time — taxes were rising rapidly because of inflation and bracket creep, the top tax rate was 70 percent and the economy seemed trapped in stagflation with no way out. Tax cuts, at that time, were an appropriate remedy for the economy’s ills. By the time Ronald Reagan was president, Republican tax gospel went something like this:

  • The tax system has an enormously powerful effect on economic growth and employment.
  • High taxes and tax rates were largely responsible for stagflation in the 1970s.
  • Reagan’s 1981 tax cut, which was based a bill, co-sponsored by Kemp and Sen. William Roth (R-Del.), that I helped design, unleashed the American economy and led to an abundance of growth.

Based on this logic, tax cuts became the GOP’s go-to solution for nearly every economic problem. Extravagant claims are made for any proposed tax cut. Wednesday, President Trump argued that “our country and our economy cannot take off” without the kind of tax reform he proposes. Last week, Republican economist Arthur Laffer said, “If you cut that [corporate] tax rate to 15 percent, it will pay for itself many times over. … This will bring in probably $1.5 trillion net by itself.”

That’s wishful thinking. So is most Republican rhetoric around tax cutting. In reality, there’s no evidence that a tax cut now would spur growth. ...

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September 28, 2017 in News, Tax, Tax Policy in the Trump Administration | Permalink | Comments (2)

Chodorow:   One Of Ted Cruz’s Favorite Ideas To 'Simplify' The Tax Code Is An Attack On The Corporate Income Tax

Slate:  One of Ted Cruz’s Favorite Ideas to “Simplify” the Tax Code Is Really an Attack on the Corporate Income Tax, by Adam Chodorow (Arizona State):

During the campaign, Donald Trump told us he knew the tax code better than anyone and promised that he alone could fix it. Now his party is finally poised to take on tax reform. As with health care, Trump has offered no details and issued contradictory statements. (After promising big tax cuts for all, he’s more recently stated that the wealthy won’t benefit from reform.) So what can we expect from the plan Republicans say they’ll release this week? One possibility touted by the conservative Tax Foundation and recently floated by Texas Sen. Ted Cruz is immediate expensing, which would allow businesses to deduct the cost of any assets they acquire right away.

Expensing sounds like a simple accounting change and is being sold as a way to simplify the tax code. In fact, it represents a direct attack on the idea of a corporate income tax, one that provides a significant and unwarranted tax break to a small subset of favored entities. It could also fundamentally alter how our tax system works. ...

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September 28, 2017 in Tax | Permalink | Comments (2)

Seven Tax Profs Arrested On Corruption Charges In Rigging Academic Research Award

The Italian Insider, Professors Arrested on Corruption Charges:

Seven university professors of tax-law have been arrested on charges of corruption as part of a national investigation into rigged competitions for research posts.

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September 28, 2017 in Legal Education, Tax | Permalink | Comments (3)

Tax Code Statutes With No Hammer?

Generally, the Tax Code contains statutory consequences for taxpayers who fail to obey statutory commands.   Most of those statutory consequences are in the form of: "Additions to Tax" found in sections 6651-6658; "Accuracy-Related and Fraud Penalties" found in sections 6662-6664; "Assessable Penalties" found in sections 6671-6725; and, of course, all the various criminal and forfeiture statutes found in 7201-7345.

But what about statutory commands imposed on the IRS?  It turns out not all such commands carry a statutory hammer.  Let me give one example.  When the IRS assesses a tax and the tax is unpaid, section 6303 requires the IRS to send the taxpayer notice and demand for the unpaid tax within 60 days of the assessment.  But the statute is silent as to what consequence, if any, should occur if the IRS sends the notice and demand later than 60 days.  Treas. Reg. 301.6303-1 provides "the failure to give notice within 60 days does not invalidate the notice."

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September 28, 2017 in Bryan Camp, Tax, Tax Practice And Procedure | Permalink | Comments (3)

Wednesday, September 27, 2017

Yin Presents Tax Law Codification And The Emergence Of The Joint Committee On Taxation Staff Today At Penn

Yin (2015)George Yin (Virginia), presents Codification of the Tax Law and the Emergence of the Staff of the Joint Committee on Taxation at Pennsylvania today as part of its Tax Policy Workshop Series hosted by Chris Sanchirico and Reed Shuldiner:

In 1926, Congress created the Joint Committee on Taxation (JCT) and its staff. This article explains how, partly by design but largely by happenstance, the JCT staff helped change the nature of the legislative process. By serving at or near the intersection of three great divides in government — those between the parties, the houses of Congress, and the legislative and executive branches — the staff demonstrated the value of unelected professionals assisting directly in the formation of legislation and led Congress to rely more on its own resources in the legislative process rather than those of the executive branch.

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September 27, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Lukic Presents The Taxation On Goods And Services In Brazil Today At Toronto

LukicMelina Rocha Lukic (Getulio Vargas Foundation (FGV) Law School, Brazil) presents The Taxation on Goods and Services in Brazil: The Canadian System as a Model? at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

The paper aims to analyze the possibility to implement a VAT system in Brazil based on the Canadian GST system. The tax system of goods and services in Brazil is composed of several taxes that were divided according to different bases (distribution of goods, services provisions, industrialization and revenue/turnover). The competence for imposition and collection was distributed to the three federal entities: Federal Government, States and Municipalities. This peculiarity — segmentation of the tax bases and several taxes levied on the same basis — causes various problems and obstacles to Brazilian system, as we describe in the paper.

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September 27, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Helge: Why The IRS Denies Tax Exemption To 501(c)(3) Applicants

Terri Lynn Helge (Texas A&M), Rejecting Charity: Why the IRS Denies Tax Exemption to 501(C)(3) Applicants, 14 Pitt. Tax. Rev. 1 (2016):

New charitable organizations generally must file an application for exemption (Form 1023) and await approval from the Internal Revenue Service. Unfortunately, the criteria the Internal Revenue Service uses to evaluate applications has not always been transparent. If an application is approved, the Internal Revenue Service determination letter and the application for exemption are required to be made publicly available and can be requested from the Internal Revenue Service or the organization itself. Prior to 2004, in the case of denials, neither the application nor the Internal Revenue Service’s correspondence setting forth its rationale for the denial were made publicly available.

This project is the first of its kind. While others have commented on isolated denial letters, this study is the first to conduct a comprehensive analysis of the Internal Revenue Service denial letters issued from when they first became available in 2004 through January 31, 2017.

Table 1B

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September 27, 2017 in Scholarship, Tax | Permalink | Comments (0)

Burke: Exploiting The Medicare Tax Loophole

Karen C. Burke (Florida), Exploiting the Medicare Tax Loophole:

Section 1411 imposes a 3.8 percent surtax on investment income of high earners that mirrors Medicare taxes on earned income. The enactment of the net investment income tax highlights gaps in the employment tax rules for passthrough entities — particularly limited partnerships, S corporations, and limited liability companies. This article considers how businesses can be structured to allow active high-income owner-employees of passthrough entities to avoid all three of the 3.8 percent Medicare taxes (SECA, FICA and section 1411).

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September 27, 2017 in Scholarship, Tax | Permalink | Comments (0)

Follow Up On § 7434 Suits For Filing False Information Returns

ABA Tax Section (2017)I previously blogged about a great panel presentation I attended at the Fall ABA Tax Section Meeting in Austin. The presentation was about how to sue someone under § 7434 for filing a false information return.

This past week one of the panelists, Stephen Olson, has blogged more about this subject here and here.  The blogs are worth calling to your attention. He dives a bit deeper into this subject to look at whether an Information Return that states the correct payment amount but is otherwise false and misleading, is sufficient to support suit under § 7434.

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September 27, 2017 in ABA Tax Section, Bryan Camp, Tax, Tax Practice And Procedure | Permalink | Comments (0)

India Eyes Spending Cuts As Glitches In New Tax Hit Revenue

Reuters, India Eyes Spending Cuts as Glitches in New Tax Hit Revenue 

India could be forced to cut spending on key infrastructure such as railways and highways as lower-than-expected tax collections and sluggish growth have upset the government’s budget calculations, two finance ministry officials said.

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September 27, 2017 in Tax | Permalink | Comments (0)

Tuesday, September 26, 2017

Homonoff Presents The Timing Of SNAP Issuance, Food Expenditures, And Grocery Prices Today At Columbia

HomonoffTatiana Homonoff (NYU) presents Is There an Nth of the Month Effect? The Timing of SNAP Issuance, Food Expenditures, and Grocery Prices (with Jacob Goldin (Stanford) & Katherine Meckel (Texas A&M)) at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

Previous research on the Supplemental Nutrition Assistance Program (SNAP) suggests that participants consume more food on days immediately following benefit issuance, prompting retailers to raise food prices to capture a portion of the transfer. Partly in response to such findings, some have called for states to stagger benfit issuance over multiple days of the month. To study the effect of staggering benefits, we link variation among states in the timing of benefit issuance to a large panel of transaction-level data from households and retailers. We document large intra-month cycles in food expenditures among SNAP-eligible households that closely track state issuance policies. However, we rule out economically signficant effects on retailer pricing, which suggests that staggering benfits would not meaningfully shape the incidence of SNAP benfits.

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September 26, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Perry Fleischer And Leff Present Tax Papers Today At Basic Income Earth Network Annual Congress In Lisbon

BienMiranda Perry Fleischer (San Diego) and Benjamin Leff (American) are presenting tax papers at the Basic Income Earth Network Annual Congress (program) in Lisbon, Portugal:

Miranda Perry Fleischer, Atlas Nods: The Libertarian Case for a Universal Basic Income:

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September 26, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

11th Circuit: Gay Man Cannot Deduct Costs To Father Children Through In Vitro Fertilization As Medical Expenses

Morrissey v. United States,  No. 8:15-cv-02736 (11th Cir. Sept. 25, 2017)(citations omitted):

This is a tax case. Fear not, keep reading. In determining whether the IRS properly denied a taxpayer’s claimed deduction on his 2011 return, we must decide two important and (as it turns out) interesting questions. First up: Was the money that a homosexual man paid to father children through in vitro fertilization — and in particular, to identify, retain, compensate, and care for the women who served as an egg donor and a gestational surrogate — spent “for the purpose of affecting” his body’s reproductive “function” within the meaning of I.R.C. § 213? And second: In answering the statutory question “no,” and thus in disallowing the taxpayer’s deduction of his IVF-related expenses, did the IRS violate his right to equal protection of the laws either by infringing a “fundamental right” or by engaging in unconstitutional discrimination?

We hold that the costs of the IVF-related procedures at issue were not paid for the purpose of affecting the taxpayer’s own reproductive function — and therefore are not deductible — and that the IRS did not violate the Constitution in disallowing the deduction. ...

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September 26, 2017 in New Cases, Tax | Permalink | Comments (2)

Kahn: The Business And Personal Casualty Loss Deductions

Florida Tax Review  (2015)Jeffrey H. Kahn (Florida State), The Misfortune of the Deductions for Business and Personal Casualty Losses, 21 Fla. Tax Rev. ___ (2017):

Losses suffered on an individual’s personal property generally are not deductible. One exception to this rule applies when “such losses arise from fire, storm, shipwreck, or other casualty, or from theft.” The principal issue that arises is determining the meaning of the term “other casualty.” Taking what they deemed to be the common elements in the three explicitly identified casualties, the courts and the Internal Revenue Service determined that an event will qualify as an “other casualty” only if it is “sudden, unusual and unexpected.”

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September 26, 2017 in Scholarship, Tax | Permalink | Comments (0)

Thimmesch: Tax Privacy?

Adam B. Thimmesch (Nebraska), Tax Privacy?, 89 Temp. L. Rev. ___ (2017):

Legal scholars have discussed the concept of privacy at length, but that discussion has virtually ignored the federal income tax and its impact on individual privacy. Tax privacy has developed in that void to mean only a limited right of confidentiality notwithstanding the Tax Code’s extensive use of personal information. That limited form of privacy is at odds with how scholars generally view privacy and fails to account for the numerous privacy interests identified in the broader literature. Recent tax scholarship has recognized this deficiency and has called for greater academic attention to tax-privacy interests. What is missing in the current literature, though, is a discussion of what exactly tax privacy means. This Article fills that void.

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September 26, 2017 in Scholarship, Tax | Permalink | Comments (1)

Monday, September 25, 2017

Mazur: Social Impact Bonds As A Tax-Favored Investment

Orly Mazur (SMU), Social Impact Bonds: A Tax-Favored Investment?:

Social impact bonds (SIBs) have recently generated a lot of excitement nationwide as an innovative way to finance social projects. A SIB is a financing mechanism that uses private capital to fund social services, with the government only repaying investors their capital plus a potential return on investment if improved social outcomes are achieved. As such, it brings together the private, public and non-profit sector in a manner that unlocks an additional source of capital to fund social service providers, promotes innovation, encourages interagency cooperation and creates more accountability. Despite these benefits, the tax law likely hinders the development of SIB-funded programs in the United States by discouraging private investment in SIBs.

This Article is the first to consider the role of the U.S. tax law in promoting SIB investments by examining the tax implications of a SIB investment from both a doctrinal and policy perspective.

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September 25, 2017 in Scholarship, Tax | Permalink | Comments (0)

Kleinbard: A Grand Bipartisan Bargain On Tax Reform — Fund Lower Corporate Rates With A Carbon Tax

Wall Street Journel op-ed:  A Grand Bipartisan Bargain on Tax Reform, by Edward Kleinbard (USC):

A levy on carbon would satisfy Democrats, while Republicans would get far lower corporate rates.

As Republicans take on tax reform, they seem hell-bent on repeating the tactical mistakes they made during their attempts at health-care reform. Again GOP policy makers have cloistered themselves to develop a bill whose prospects will hang by a thread in the Senate. Yet there is a powerful bipartisan grand bargain in corporate tax policy waiting to be struck.

Democratic and Republican policy makers agree that the corporate tax system is irredeemably broken. They even concur on the broad direction of a replacement system—lower rates and fewer loopholes. But the two parties are far apart on the most important issues in corporate tax reform: what exactly the new corporate tax rate will be, and whether companies can write off their business investments in the year those investments are made. ...

Republicans are between a rock and a hard place. Growth comes from a permanent low corporate tax rate, not one that expires in 10 years. The GOP should embrace a new revenue-raiser that can attract moderate Democrats without undercutting the economic benefits of reform. The answer? A carbon tax, which raises revenue, satisfies long-term economic efficiency and environmental goals, and is as important to Democrats as corporate tax rate reduction is to Republicans.

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September 25, 2017 in Tax | Permalink | Comments (2)

New European Commission Report On The Taxation Of The Digital Single Market

European_CommissionThe European Commission published a new report on Thursday, September 21, 2017, on the taxation of the digital economy:  Communication from the Commission to the European Parliament and the Council: A Fair and Efficient Tax System in the European Union for the Digital Single Market:

The Digital Single Market (DSM) is one of the 10 political priorities of the European Commission. The DSM strategy1 aims to open up digital opportunities for people and businesses in a market of over 500 million EU consumers. Completing the Digital Single Market could contribute to EUR 415 billion per year to Europe's economy, create jobs and transform our public services. In the 18 months following the adoption of the DSM Strategy, the European Commission delivered the announced proposals. In the mid-term review of the strategy 2 it has updated its analysis and focused on the next series of challenges. Digital technologies are transforming our world and having an important impact on taxation systems. They help improving their management, offering solutions to reduce administrative burdens, facilitate collaboration between tax authorities, and address tax evasion. However, they transform business models, with intangibles playing an increasingly important role, putting pressure on Europe's taxation system.

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September 25, 2017 in Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, September 24, 2017

Gamage & Shanske: Using Taxes To Support Multiple Health Insurance Risk Pools

David Gamage (Indiana) & Darien Shanske (UC-Davis), Using Taxes to Support Multiple Health Insurance Risk Pools, 85 State Tax Notes 871 (Aug. 28, 2017):

In most markets, it is considered desirable for consumers to have more choices. But health insurance regulation is different. When it comes to health insurance, giving consumers more choices can result in the market collapsing — leaving the sickest and most needy consumers without any good choices at all. To mitigate this problem, the Affordable Care Act’s Exchanges were designed around maintaining a single exchange-based risk pool. However, one problem with this approach taken by the Affordable Care Act is that the regulations designed to maintain the single exchange-based risk pool have the side effect of limiting some potentially positive aspects of consumer choice and provider competition.

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September 24, 2017 in Scholarship, Tax | Permalink | Comments (0)

IFA International Tax Student Writing Competition

IFA Logo (2015)The International Fiscal Association is sponsoring the 2017 International Tax Student Writing Competition:

Subject:  Any topic relating to U.S. taxation of income from international activities, including taxation under U.S. tax treaties.

  • Open to:  All students during the 2016-17 academic year pursuing a graduate degree. Any appropriate papers written in fall 2016 or spring and summer 2017.
  • Submission Deadline:  September 30, 2017.
  • Prize:  $2,000 cash, plus expenses-paid invitation to the IFA USA Branch Annual Meeting in February 2018.

Here are the recent winners:

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September 24, 2017 in Legal Education, Scholarship, Tax, Teaching | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list:

  1. [640 Downloads]  Federal Tax Procedure (2017 Practitioner Ed.), by John Townsend (Houston)
  2. [347 Downloads]  Is Efficiency Biased?, by Zachary Liscow (Yale)
  3. [240 Downloads]  When Did Tax Avoidance Become Respectable?, by Steven Bank (UCLA)
  4. [162 Downloads]  Codification of the Tax Law and the Emergence of the Staff of the Joint Committee on Taxation, by George Yin (Virginia)
  5. [151 Downloads]  Distributive Justice and Donative Intent, by Alexander A. Boni-Saenz (Chicago-Kent)

September 24, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, September 23, 2017

This Week's Ten Most Popular TaxProf Blog Posts

Helicopter Pilot Lands In Tax Court, Successfully Establishes That His Tax Home Is In Iraq

Forbes, Helicopter Pilot Lands In Tax Court, Successfully Establishes That Tax Home Is In Iraq

Cowardice, it seems, is not a trait Jesse Linde and I share. A two-time Army helicopter pilot, after struggling to find work in the private sector, Linde jumped at the opportunity to relocate to the Middle East in order to continue flying. To date, he has successfully navigated the many dangers to be found in Iraq, but even halfway across the globe, he couldn't escape one domestic menace: the IRS.

Yesterday, Linde found himself in the Tax Court, and it's a decision that all tax professionals would be wise to review, as it addresses a fascinating area of the law:

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September 23, 2017 in New Cases, Tax | Permalink | Comments (2)

Friday, September 22, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Ari Glogower (Ohio State) reviews a new work by Gladriel Shobe (BYU), Private Benefits in Public Offerings: Tax Receivable Agreements in IPOs, 71 Vand. L. Rev. ___ (forthcoming 2018).   

Glogower (2016)Gladriel Shobe’s new work describes the evolution of Tax Receivables Agreements (TRAs) in IPOs, and evaluates the policy implications of these increasingly common agreements.

A TRA is contract entered into in connection with an IPO whereby the new public company agrees to pay the pre-IPO owners for the value of tax assets held by the historic company, which can offset the company’s future taxable income.  The most common such assets are depreciable asset basis and net operating losses (NOLs).  Under a TRA, the public company pays the pre-IPO owners for the value of these tax assets over a period of years following the IPO as the value is realized.

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September 22, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

Galle: Deal To Swing Alaska Senator's Vote May Violate Uniformity Clause

Brian Galle (Georgetown), The "Alaska Purchase" Is Probably Unconstitutional

As Republican leadership searches for the 51st vote in favor of Cassidy-Graham-Heller, their apparently randomly chosen vehicle for repealing the ACA, rumors abound of a sweetheart deal aimed at securing Lisa Murkowski’s vote. The so-called “Alaska Purchase” would maintain existing premium support credits for those purchasing health insurance on the individual market…but only in Alaska and Hawaii.

They probably can’t do that. Article I, section 8 of the Constitution says “all Duties, Imposts and Excises shall be uniform throughout the United States.” Joseph Story, writing in 1834, thought that the point of that provision was to prevent coalitions of states from ganging up, in Congress, to benefit themselves at the expense of others. While the “uniformity clause” has been watered down over time, it’s still enough to swamp the Alaska Purchase proposal.

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September 22, 2017 in Tax | Permalink | Comments (1)

The IRS Scandal, Day 1597: New Details Of Targeting Of Conservative Groups Emerge In Tea Party Lawsuits

IRS Logo 2Cincinnati Enquirer, New Details Emerge in Tea Party Suit Against IRS:

The IRS used the political views of conservative "tea party" groups trying to get nonprofit status as a reason for extra scrutiny and continued delaying applications until 2013 — long after they said they'd stopped — new federal court filings allege.

The new accusations counter previous IRS claims that agents did not consider political beliefs when slowing down tax-exempt applications from right-leaning groups in the months leading up to the 2012 presidential election.

The IRS had instead argued that it was merely monitoring whether the groups were conducting more political activity than was allowed.

The filings by conservative groups suing the IRS also state the agency continued the practice after IRS officials said it had stopped in 2011. ...

"By trying to make this about whether this was done to help Obama win is setting the goalpost artificially too high," Eddie Greim, a lawyer representing conservative groups in the class-action suit, said in an interview with The Enquirer. "All we have to prove is whether they had the intent and if they indeed treated a set of groups differently based on their ideology. ...

U.S. Sen. Rob Portman, R-Terrrace Park, who was one of the first in Congress to publicly complain in 2012 about the IRS' possible discrimination against conservative nonprofit groups, said that the practice was "an appalling abuse of power" in a statement to The Enquirer. “It’s clear that the Obama administration’s IRS illegally and intentionally targeted conservative groups for their ideological beliefs, and those responsible ... need to be held accountable," Portman said. ...

[O]thers testified in depositions that Lerner ordered IRS agents to send requests for additional information from the affected groups following that 2011 meeting. That included requests for donor information, normally considered off-limits. Lerner "wanted everyone to know that we are handling the cases as we should," testified Cindy Thomas, the top nonprofit official in Cincinnati at the time.

"So after they were told that this was possibly improper, they doubled down and kept going," Greim said. "This goes well beyond the narrative of what's been reported before."

Greim also said that the IRS removed two Washington agents who had raised questions about the extra scrutiny on the tea party cases. "These two found that ideology was indeed being used, raised questions about it and told their superiors about it and that it was going to cause delay," Greim said. "And wouldn't you know it, they were moved off the matter soon thereafter."

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September 22, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Thursday, September 21, 2017

IRS FAQs Are A Trap For The Unwary

IRSFAQMarketWatch, What the IRS Does on its Website That’s Unfair to Taxpayers:

Taxpayers can’t rely on Frequently Asked Questions (FAQs) and answers and other “unofficial” guidance that the IRS posts on its website, National Taxpayer Advocate Nina Olson recently explained in a blog post [IRS Frequently Asked Questions Can Be a Trap for the Unwary]. While tax professionals already know about this issue, you may find it unsettling. Here’s what you need to understand.

Unofficial guidance
The IRS puts out what it calls unofficial guidance in many forms. Unofficial guidance includes IRS tax forms and instructions (believe it or not), press releases, online publications, website articles, and website FAQs and answers. Such unofficial guidance is generally not subject to careful internal review or public commentary before being released. Worse yet, the IRS takes the position that taxpayers cannot rely on unofficial guidance even though the IRS has put it out there for public consumption. For example, FAQs and answers that are posted at www.irs.gov can be changed at any time and without any public notice. Ditto for information in IRS publications that are posted on its website. So if you rely on unofficial IRS guidance in taking a position on a federal tax return, the IRS can potentially audit you and assess additional taxes, interest, and even penalties because you did not “follow the rules” even though what you did was consistent with what the IRS said at the time. Not good!

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September 21, 2017 in IRS News, Tax | Permalink | Comments (0)

Suing Someone for a False Information Return

ABA Tax Section (2017)Last week I went to the ABA Tax Section Meeting in Austin and really enjoyed attending a terrific panel on Section 7434.  The moderator was Professor Leslie Book, of Villanova School of Law and the presenters were Stephen Olsen, of Gawthrop Greenwood, PC; and Mandi Matlock, of Texas RioGrande Legal Aid Inc., Austin, TX.  

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September 21, 2017 in ABA Tax Section, Bryan Camp, Tax, Tax Practice And Procedure | Permalink | Comments (2)

Wednesday, September 20, 2017

Glogower Presents Progressive Taxation Of Income And Wealth Today At Northwestern

Glogower (2016)Ari Glogower (Ohio State) presents Progressive Taxation of Income and Wealth today at Northwestern as as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

Rising economic inequality has led commentators to reassess the base for progressive taxation, and to argue that wealth should be taxed in addition to, or instead of, income. This Article claims that, if income and wealth should both be periodically taxed as factors in economic well-being, then taxing an integrated measure of both factors is preferable to taxing income and wealth under separate instruments. Separate income and wealth taxes cannot consistently compare taxpayers on the basis of their total economic well-being during the taxing period, and will favor or disfavor taxpayers depending whether their economic well-being results from income, wealth, or a combination thereof.

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September 20, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (4)

Batchelder: Opportunities And Risks In Individual Tax Reform

Lily Batchelder (NYU), Opportunities and Risks in Individual Tax Reform: Testimony Before the US Senate Committee on Finance:

This testimony before the US Senate Committee on Finance on individual tax reform makes five main points.

First, the current tax reform effort is occurring at a time when low- and middle-income families are facing deep financial challenges. Economic disparities are vast and have been widening for decades. The US also has one of the lowest levels of economic mobility relative to our competitors. Our debt as a share of GDP is projected to grow to unprecedented levels in coming decades, largely because of the retirement of the Baby Boom and increasing life expectancy. This growth in debt will be a drag on economic growth. For all these reasons, tax reform should increase revenues and enhance progressivity. Doing so would boost economic growth and make the tax code fairer at the same time. At a bare minimum, tax reform should maintain the current level of revenues and progressivity—and these both should be measured consistently and without resort to budget gimmicks like a “current policy” baseline.

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September 20, 2017 in Congressional News, Scholarship, Tax | Permalink | Comments (0)

Ryznar: A Practical Solution To The Marriage Penalty

Margaret Ryznar (Indiana-Indianapolis), A Practical Solution to the Marriage Penalty, 44 Pepp. L. Rev. 647 (2017):

In the federal income tax code, there is a marriage penalty resulting from tax brackets that do not double upon marriage. This marriage penalty persists despite universal condemnation of it, penalizing a significant portion of married women who work and many same-sex couples.

This Article proposes a novel way to deal with this marriage penalty by creating a filing status for dual-income couples that earn an amount within a particular percentage of each other. This filing status would be the same as the current married filing status, except it would double the rates of single filers by accommodating two incomes.

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September 20, 2017 in Scholarship, Tax | Permalink | Comments (0)

Perkins: The Threat of Law — Is Treasury Using Regulatory Blackmail Or Responding To Congressional Inaction?

Rachelle Holmes Perkins (George Mason), The Threat of Law: Regulatory Blackmail or an Answer to Congressional Inaction, 65 Kan. L. Rev. 621 (2017):

In light of the obstacles affected taxpayers are up against in the face of regulations of dubious authority, Treasury is able to wield what I term an effective “threat of law.” While certainly less binding than an actual legitimately exercised “force of law,” the effects (at least in the nearterm) can be identical. For example, with respect to the Inversion Notice, taxpayers could either comply with Treasury’s Inversion Notice or potentially face a myriad of negative consequences. When faced with these options, while some taxpayers rolled the proverbial dice and found ways to structure around the Inversion Notice, others declined to play this game of tax chicken with Treasury and called off their transactions.

In this Article, I will explore the contours of this so-called “threat of law” that Treasury can employ even in the absence of legitimate congressional authority to do so.

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September 20, 2017 in Scholarship, Tax | Permalink | Comments (0)

It's Bigger Than Bitcoins: The Matrix Is Here

ABA Tax Section meetings are fun!  Last week I attended a fascinating panel presentation at the Austin meeting titled "Beyond Bitcoin: Blockchain and the Tax System."  The panel was moderated by Stow Lovejoy, of Kostelanetz & Fink, LLP and included Amanda Wilkie, CIO of Withum Smith & Brown; Tony Tuths, of KMPG in Short Hills; and Lisa Zarlenga, of Steptoe & Johnson.

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September 20, 2017 in ABA Tax Section, Bryan Camp, Conferences, Miscellaneous, Tax | Permalink | Comments (0)

Tuesday, September 19, 2017

Barry Presents Tax And The Boundaries Of The Firm Today At Columbia

Barry (2017)Jordan Barry (San Diego) presents Tax and the Boundaries of the Firm (with Victor Fleischer (San Diego)) at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

How does the income tax shape the boundaries of the firm? This Article goes back to foundational ground — Coase’s inquiry into the nature of the firm— to gain some traction on this elementary question. ...

Part II revisits the literature on Coase and the boundaries of the firm, setting the stage for a discussion of how transaction cost economics can inform tax policy. Part III explores some of the ways in which the income tax distorts the boundary of the firm. In doing so, it provides numerous examples of provisions that can grow or shrink firms at the margin or alter the relative size of their components. It also discusses how firms can respond to income tax law incentives without significantly changing their economic behavior by engaging in regulatory arbitrage.

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September 19, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Harrison: Spite And Tax Law

Jeffrey Harrison (Florida), Spite: Legal and Social Implications:

Spite is not a simple concept. The same actions may be motivated by a desire to harm others as a source of the actor’s satisfaction. They may also be a reaction to a personal sense of injustice. Finally, spite-like actions are consistent with simply righting a wrong. This Article makes the case that spite, in its worst from, is comparably to theft. It is a taking of someone’s sense of well-being without consent. It also claims that the purchase of positional goods is ultimately spite driven. It canvasses tort law, contracts, tax law, trademark, and criminal law in an effort to assess the reaction of the law to spite.

September 19, 2017 in Scholarship, Tax | Permalink | Comments (1)

CBO: An Analysis of Corporate Inversions

Congressional Budget Office, An Analysis of Corporate Inversions (Sept. 18, 2017):

U.S. multinational corporations—businesses incorporated and operating in the United States that also maintain operations in other countries—can use a variety of strategies to change how and where their income is taxed. One such strategy is a corporate inversion, which can result in a significant reduction in worldwide tax payments for a company. U.S. companies have engaged in corporate inversions since 1983, and public and government attention to them has varied over the years. Concern grew most recently in 2014 because the group of corporations that announced plans to invert that year included some that were very large: Their combined assets were $319 billion, more than the combined assets of all of the corporations that had inverted over the previous 30 years.

CBO1

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September 19, 2017 in Congressional News, Tax | Permalink | Comments (1)

ABA Tax Section Reduces Support For Tax Profs

ABA Tax Section (2017)I was sad to learn that at the Austin meeting the ABA Tax Section Council voted to significantly reduce the academic speaker and academic leadership reimbursement policy, retaining it only for academics who meet the Tax Section's definition of "young lawyer" (under 40 or less than 5 years in practice). I believe this is a penny-wise, pound-foolish policy change and can serve only to damage the historically salutary close ties between tax practitioners and tax academics. I think my personal involvement with the ABA Tax Section would likely be much less had those reimbursements not been available to me. I explain more below the fold.

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September 19, 2017 in ABA Tax Section, Bryan Camp, Conferences, Legal Education, Tax, Tax Profs | Permalink | Comments (6)

Crawford & Spivack: Tampon Taxes, Discrimination and Human Rights

Bridget J. Crawford (Pace) & Carla Spivack (Oklahoma City), Tampon Taxes, Discrimination and Human Rights, 2017 Wis. L. Rev. 491:

In recent months, activists around the globe have harnessed the power of the Internet to raise awareness of the so-called “tampon tax,” an umbrella term to describe sales, VAT and similar “luxury” taxes imposed on menstrual hygiene products. In response to pressure from constituents, five U.S. states and Canada have repealed their tampon tax. Active campaigns are underway in Australia, the United Kingdom and several other countries. Where public pressure has not been an effective technique, those seeking to challenge the tampon tax in the United States have turned to litigation. In four U.S. states, class action lawsuits have been filed seeking repeal of the tax and a refund for back taxes paid, alleging equal protection violations. In the international context, human rights law provides a promising foundation for similar legal challenges to the tampon tax because human rights law takes a capacious approach to gender equality. In the European Court of Human Rights, for example, there are several tax cases that recognize gender-differentiated taxes as a form of impermissible discrimination. This Article explains how the tampon tax violates equal protection and human rights norms. The tax also shows how deeply embedded gender is in matters of tax policy. Full realization of gender equality will require revision of tax laws.

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September 19, 2017 in Scholarship, Tax | Permalink | Comments (0)

Monday, September 18, 2017

Bankman Presents The Global Battle To Capture MNE Profits Today At Loyola-L.A.

Bankman (2017)Joseph Bankman (Stanford) presents Collecting the Rent: The Global Battle to Capture MNE Profits (with Mitchell Kane (NYU) & Alan Sykes (Stanford)) at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Katherine Pratt:

Multinational enterprises (MNEs) earn substantial rents in the current global economy. Governments have an interest in capturing some of these rents for their citizens or national treasuries, and regularly pursue policies to that end. Some rents are realized in the country in which the MNE is headquartered and domiciled. In theory, at least, that country (the "resident country") can collect these rents through its power to tax or regulate. Other rents are realized in nations outside that of the MNE's residence. Collection of these rents by nations in which the MNE operates, but does not reside, has proven more difficult.

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September 18, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)