TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, April 15, 2016

GAO:  Two-Thirds Of All Active Corporations Paid Zero Federal Income Tax

GAO (2016)Government Accountability Office, Most Large Profitable U.S. Corporations Paid Tax but Effective Tax Rates Differed Significantly from the Statutory Rate (GAO-16-363):

In each year from 2006 to 2012, at least two-thirds of all active corporations had no federal income tax liability. Larger corporations were more likely to owe tax. Among large corporations (generally those with at least $10 million in assets) less than half—42.3 percent—paid no federal income tax in 2012. Of those large corporations whose financial statements reported a profit, 19.5 percent paid no federal income tax that year. Reasons why even profitable corporations may have paid no federal tax in a given year include the use of tax deductions for losses carried forward from prior years and tax incentives, such as depreciation allowances that are more generous in the federal tax code than those allowed for financial accounting purposes. Corporations that did have a federal corporate income tax liability for tax year 2012 owed $267.5 billion.

GAO

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April 15, 2016 in Gov't Reports, IRS News, Tax | Permalink | Comments (2)

White House Infographic On Inversions: You Don't Get To Pick Your Tax Rate. Neither Should Corporations.

White House Infographic on Inversions:

Inversions — or tax maneuvers that reward U.S. corporations that declare themselves overseas residents to avoid paying taxes in America — have drawn the ire of many Americans as an example of an unfair corporate tax loophole. The Treasury Department took another step to limit inversions. Get the facts below, and then pass this on.

White House

National Review: White House Puts Out Misleading Infographic on Corporate Inversions, by Veronique de Rugy (George Mason):

This is both a terrible title and a terrible pitch to taxpayers. ... Why can’t I choose my tax rate, Uncle Sam? You think it is okay for me to be trapped in a high tax system? But then there is, of course, the fact is that people actually do make decisions in order to minimize their tax rates such as moving to lower-rate states — ask retirees if there is any tax component to the decision to move to Florida as opposed to staying in New York. ...

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April 15, 2016 in Tax | Permalink | Comments (1)

The IRS Scandal, Day 1072

IRS Logo 2Washington Times, Federal Judge Calls IRS Untrustworthy in Tea Party Case:

A federal judge said the IRS isn’t to be trusted as he and his colleagues tried Thursday to figure out whether the tax agency is still targeting tea party groups for intrusive and illegal scrutiny.

Judge David B. Sentelle of the U.S. Court of Appeals for the D.C. Circuit said there is strong evidence that the IRS violated the constitutional rights of the groups when it delayed their nonprofit status applications and asked inappropriate questions about their political beliefs.

The agency’s insistence that it has retrained employees and instructed managers to behave better did not mollify the judges, who said past IRS behavior doesn’t lend itself to the benefit of the doubt.

“It’s hard to find the IRS to be an agency we can trust,” Judge Sentelle said.

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April 15, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Thursday, April 14, 2016

Craig Boise Named Dean At Syracuse

Boise (2016)Craig M. Boise, Dean (and Tax Prof) at Cleveland-Marshall, has been named Dean at Syracuse:

Recognized as an innovator in legal education, Craig M. Boise has been named dean of Syracuse University’s College of Law. Boise comes to Syracuse University from Cleveland-Marshall College of Law at Cleveland State University, which under his deanship made significant gains in academic programs, national rankings and fundraising. The Executive Committee of the Board of Trustees approved his appointment earlier today. Boise will assume his new role on July 1, 2016.

“Craig Boise is a dynamic and forward-thinking leader who is equally passionate about quality, access and enhancing the student experience,” says Michele G. Wheatly, vice chancellor and provost-designate. “I am impressed by his record of achievements and know the College of Law will make great strides under his leadership.”

Chancellor Kent Syverud echoed Wheatly’s sentiment, saying Boise will achieve great things as dean of the College of Law. “Craig’s bold vision and commitment to academic excellence have enhanced the student experience, improved student outcomes and positioned graduates for career success,” says Chancellor Syverud. “He is the ideal person to lead the College of Law into a new era, particularly as it seeks to enhance its global reputation and continue its ascent in national rankings.” ...

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

Duncan Presents Tax Incidence In The Presence Of Tax Evasion Today At Indiana

DuncanDenvil Duncan (Indiana-Bloomington) presents Tax Incidence in the Presence of Tax Evasion (with Philipp Doerrenberg (ZEW Mannheim and Institute for the Study of Labor (IZA), Germany) at Indiana-Bloomington today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

This paper studies the economic incidence of sales taxes in the presence of tax evasion opportunities. We design a laboratory experiment in which buyers and sellers trade a fictitious good in double auction markets. A per-unit tax is imposed on sellers, and sellers in the treatment group are provided the opportunity to evade the tax whereas sellers in the control group are not. We find that the market equilibrium price in the treatment group is lower than in the control group. This difference is economically and statistically significant, and implies that sellers with access to evasion shift a smaller share of the statutory tax burden onto buyers relative to sellers without tax evasion opportunities.

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

Doran Presents The Puzzle Of Non-Qualified Retirement Pay Today At Colorado

Doran (2015)Michael Doran (Virginia) presents The Puzzle of Non-Qualified Retirement Pay: Optimal Contracting, Managerial Power, and Taxes at Colorado today as part of its Tax Policy Colloquium Series hosted by David Hasen and Sloan Speck:

Pay arrangements for managers of public corporations typically include substantial amounts of compensation deferred through non-qualified retirement plans. As a departure from the familiar baseline of current payment for current services, this presents a longstanding puzzle. The corporate-governance literature offers two explanations for the practice. The “optimal-contracting account” argues that non-qualified retirement pay represents “inside debt” that aligns the interests of managers with the interests of the corporation’s unsecured general creditors. The “managerial-power account” argues that non-qualified retirement pay represents “stealth compensation” that facilitates managers’ extraction of rents from corporate assets. In this paper, I set out a different explanation based on tax considerations.

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

IRS Admits It Encourages Illegals To Steal Social Security Numbers To Get Tax Refunds

IRS Logo 2Forbes:  IRS Admits It Encourages Illegals To Steal Social Security Numbers For Taxes, by Robert W. Wood:

This isn’t exactly the kind of story the IRS wants buzzing around at tax time. The IRS and Justice Department normally want ‘scared straight’ stories just before Tax Day. Ideally, when an indictment or conviction for tax evasion hits the news, it makes you think twice. Somehow, you think just a bit more about all those deductions, or if you really reported all your income, before you sign your return under penalties of perjury.

Instead, we have the top dog at the IRS, the IRS Commissioner himself, admitting that, well, there’s a problem with illegal immigrants and taxes. In fact, the top IRS official this time wasn’t talking about how the IRS wipes some hard drives or can’t find emails. He wasn’t even asking for a bigger budget to give bonuses to IRS employees.

This time, he was talking about illegal immigrants, and about the IRS turning a blind eye. Or maybe worse. The IRS actually wants illegal immigrants to illegally use Social Security numbers, he suggested.

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April 14, 2016 in IRS News, Tax | Permalink | Comments (8)

Pandya & Utz:  Designing The Tax Treatment Of Litigation-Related Costs

Sachin S. Pandya (Connecticut) & Stephen Utz (Connecticut), Designing the Tax Treatment of Litigation-Related Costs:

This paper identifies key tax design issues for how income tax law should treat litigation-related costs paid by defendants, such as attorney fees, court courts, and payments to settle claims or satisfy judgments, fines or penalties. After discussing how US and Germany income tax law treat litigated related costs, the paper identifies four important tax-design issues: (1) how to attribute litigation-related costs to any particular income-producing activity; (2) whether to treat liability insurer payments made on a defendant’s behalf as income to that defendant; (3) whether to coordinate the tax treatment of a payer’s damages payments with the tax treatment of those receipts to the payee; and (4) whether litigation-related costs should be treated as capital expenditures related to the right to receipts established or sought to be established by the litigation itself.

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

The IRS Scandal, Day 1071

IRS Logo 2Washington Times, IRS Must Publicize Sensitive Tea Party Data Obtained in Targeting, Obama Administration Says:

The IRS says it has stopped targeting the tea party — but three years later, the tax agency is still holding on to the sensitive information it pried from the conservative groups through invasive questions, and officials are even vowing to make the answers public.

Groups caught up in the scandal say that is proof the targeting is continuing, and they want the IRS to expunge the information or, at the very least, to make sure it is never released.

Obama administration officials insist they have stopped targeting but say the groups are at fault for following the misguided IRS requests for information. Now, the administration says, there is nothing the tax agency can do but make the information public as the law requires.

On Thursday, a federal appeals court in Washington will be asked to referee the dispute, just one of the legal problems still plaguing the IRS after its 2013 admission that it inappropriately singled out conservative and tea party groups for intrusive scrutiny.

“They asked for things to which they were not entitled,” said Cleta Mitchell, an attorney for True the Vote, one of the tea party nonprofits that got caught up in the targeting scandal. “This is the fruit of the poisonous tree.”

The IRS acknowledged that the questions it asked were inappropriate and weren’t needed to decide on tea party groups’ applications for nonprofit status.

Questions included such sensitive information as the names of all financial contributors; lists of family members, details of their political affiliations and speculation about their plans to run for office; and details of organization members’ outside jobs.

Groups were even told that they must detail members’ private communications with their local legislators or any contact with reporters.

Tea party groups said the questions trampled on their First Amendment rights to freedom of speech and association.

Some tea party organizations, advised by their attorneys, refused to comply. Others figured that the IRS had the upper hand, so they turned over the information despite misgivings.

The IRS has apologized for the intrusive questions but still holds on to the information it gleaned from dozens of tea party groups from 2010 through 2013.

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

Wednesday, April 13, 2016

Senator Warren Introduces Bill To Simplify Tax Filing Endorsed By Dozens Of Tax Profs And Economists

Tax MazePress Release, Senator Warren Introduces Bill to Simplify Tax Filing:

United States Senator Elizabeth Warren (D-Mass.) today introduced the Tax Filing Simplification Act of 2016 to simplify and decrease the costs of the tax filing process for millions of American taxpayers. This year, taxpayers will spend an average of 13 hours preparing and filing their returns, and will pay $200 for tax preparation services — a cost equal to almost 10 percent of the average federal tax refund.

The legislation introduced today would direct the Internal Revenue Service (IRS) to develop a free, online tax preparation and filing service that taxpayers can use to prepare and file their taxes directly with the federal government, if they choose to do so, and would prohibit the IRS from entering into agreements that restrict its ability to provide free online tax preparation or filing services. The Act would give all taxpayers the right to download third-party-reported tax information that the IRS already has, and would provide those with simple tax situations with a return-free option.

In conjunction with the introduction of the Tax Filing Simplification Act, Senator Warren released a staff report [fact sheet] that describes how - for decades - the tax preparation industry has blocked the IRS from implementing laws that would make tax preparation and filing easier for taxpayers. Corporate capture of the filing process means that taxpayers have to absorb billions of dollars in costs and share their personal information with third parties just to file their taxes.

The legislation has been endorsed by dozens of law professors and economists including Austan Goolsbee of the University of Chicago, Emmanuel Saez of the University of California - Berkeley, and Joe Bankman of Stanford University.

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April 13, 2016 in Congressional News, Tax | Permalink | Comments (12)

Gentry Presents Capital Gains Taxation And Entrepreneurship Today At Penn

Penn (2016)William Gentry (Williams College) presents Capital Gains Taxation and Entrepreneurship at Pennsylvania today as part of its Center for Tax Law and Policy Seminar Series hosted by Chris Sanchirico and Reed Shuldiner:

The taxation of capital gains is a perennial issue in tax policy. One critical aspect for understanding the overall effects of capital gains taxation is how these taxes affect entrepreneurs. While many analyses focus on the disincentive effects created by capital gains taxes for investors in large corporations, these disincentives may be even more important for entrepreneurs. This paper discusses several mechanisms through which capital gains taxes can affect entrepreneurs’ decisions. First, capital gains taxes may create an additional level of taxation on successful entrepreneurs. Second, asymmetric taxation of capital gains and losses (in which gains are taxed more heavily than losses) may be an especially important issue for entrepreneurs; the asymmetries in the tax system may discourage entrepreneurs from taking risk. Third, much like the commonly-referenced lock-in effect of capital gains taxes on investments in stock, entrepreneurs may become locked into closely-held businesses; this lock-in effect may distort whether firms are owned by the most efficient manager for the firm. Fourth, capital gains taxes can affect the cost of capital for entrepreneurs.

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

Hickman Presents Treasury's Retroactivity Today At Cambridge

Hickman 2014 2Kristin Hickman (Minnesota) presents Treasury's Retroactivity at Christ's College, Cambridge today at a conference on The Role of Judges in Developing the Content of Tax Law:

In Bowen v. Georgetown University Hospital, the Supreme Court described retroactivity as "not favored in the law" and generally rejected allowing federal administrative agencies to adopt regulations "altering the past legal consequences of past actions."  Unlike most regulatory agencies, Treasury and the IRS are expressly authorized by Congress to adopt regulations with precisely such primary retroactive effect.  Specifically, IRC § 7805(b) grants Treasury and the IRS the power to backdate tax regulations under a variety of circumstances.  Preliminary analysis shows that Treasury and the IRS utilize this authority regularly with little judicial oversight for abuse of discretion.  Using empirical data, this article will explore more fully Treasury and IRS utilization of the authority to adopt retroactively effective regulations interpreting the Internal Revenue Code

April 13, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (1)

NY Times:  European Union Calls For Big Companies To Disclose More Tax Data

New York Times, European Union Calls for Big Companies to Disclose More Tax Data:

European Union officials on Tuesday waded into the fight against international tax dodging, calling for the world’s biggest companies to disclose more data about their tax arrangements with the bloc’s member governments and to share information about offshore havens where they shelter money. ...

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April 13, 2016 in Tax | Permalink | Comments (0)

Government's $5 Billion Settlement With Goldman Sachs Will Cost Bank 70% Less, Due To Credits And Deductions To Fund Priorities Like Low Income Housing

GoldmanNew York Times, In Settlement’s Fine Print, Goldman May Save $1 Billion:

State and federal officials said on Monday that Goldman Sachs would pay $5.1 billion to settle accusations of wrongdoing before the financial crisis.

But that is just on paper. Buried in the fine print are provisions that allow Goldman to pay hundreds of millions of dollars less — perhaps as much as $1 billion less — than that headline figure. And that is before the tax benefits of the deal are included.

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April 13, 2016 in Tax | Permalink | Comments (0)

The Taxation Of Crowdfunding

CrowdfundingPaul Battista (Law Office of Paul Battista, Manhattan Beach, CA), The Taxation of Crowdfunding: Income Tax Uncertainties and a Safe Harbor Test to Claim Gift Tax Exclusion, 64 U. Kan. L. Rev. 143 (2015):

Crowdfunding is the process of asking a large number of separate third parties for relatively small amounts of money to fund an endeavor. Although the concept of asking for financial “contributions” is not new, seeking funds from others via websites on the internet is relatively new. As with any distinctly new financing vehicle, there are many legal issues raised by crowdfunding that have not been explored or answered. One such issue is the income tax consequences associated with crowdfunding. The academy has not yet widely addressed the issues and the Internal Revenue Service (IRS) has yet to provide any formal guidance which has created a lack of clarity that needs to be addressed.

This article provides an overview of the most popular types of crowdfunding models and addresses the tax aspects of crowdfunding models that raise funds through a tax-exempt entity and that provide loans or equity investments through crowdfunding. The article also explores the tax uncertainties that arise under current income and gift tax laws and shows that the current tax laws do not provide bright-line answers to whether or not a crowdfunding transaction is taxable income or excluded from tax as a “gift.

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

The IRS Scandal, Day 1070

IRS Logo 2American Center for Law and Justice, Free Speech Appellate Court’s Blistering Takedown of IRS, DOJ over Targeting Conservatives is Awe-Inspiring:

It’s one of the most stunning judicial opinions I’ve ever read.  It is as clear in its scathing retort of the Obama Administration’s IRS and DOJ as it is precise in its legal acumen.

In what can only be described as a judicial takedown, the Sixth Circuit Court of Appeals unanimously delivers a scorching rejoinder to the IRS and DOJ’s brazen refusal to comply with a federal judge (even calling into question whether the Department of Justice is even seeking to provide “justice”) in one of the ongoing federal lawsuits over the IRS targeting scandal.

What you are about to read (and if you have the time, the entire opinion is well worth reading) is the opening salvo – a line drawn in the sand – by the federal judiciary against the out-of-control, politically corrupt IRS and DOJ:

Among the most serious allegations a federal court can address are that an Executive agency has targeted citizens for mistreatment based on their political views. No citizen—Republican or Democrat, socialist or libertarian—should be targeted or even have to fear being targeted on those grounds. Yet those are the grounds on which the plaintiffs allege they were mistreated by the IRS here. The allegations are substantial: most are drawn from findings made by the Treasury Department’s own Inspector General for Tax Administration. Those findings include that the IRS used political criteria to round up applications for tax-exempt status filed by so-called tea-party groups; that the IRS often took four times as long to process tea-party applications as other applications; and that the IRS served tea-party applicants with crushing demands for what the Inspector General called “unnecessary information.”

Yet in this lawsuit the IRS has only compounded the conduct that gave rise to it. The plaintiffs seek damages on behalf of themselves and other groups whose applications the IRS treated in the manner described by the Inspector General. The lawsuit has progressed as slowly as the underlying applications themselves: at every turn the IRS has resisted the plaintiffs’ requests for information regarding the IRS’s treatment of the plaintiff class, eventually to the open frustration of the district court. At issue here are IRS “Be On the Lookout” lists of organizations allegedly targeted for unfavorable treatment because of their political beliefs. Those organizations in turn make up the plaintiff class. The district court ordered production of those lists, and did so again over an IRS motion to reconsider. Yet, almost a year later, the IRS still has not complied with the court’s orders. Instead the IRS now seeks from this court a writ of mandamus, an extraordinary remedy reserved to correct only the clearest abuses of power by a district court. We deny the petition.

The entire opinion is a blistering exposition of the IRS’s intractable refusal to comply with not only the law but the federal courts as well.

The Sixth Circuit highlights this mind-blowing statement from the federal district judge in this case (and yes what you are about to read is extraordinarily rare from a federal judge):

My impression is the government probably did something wrong in this case. Whether there’s liability or not is a legal question. However, I feel like the government is doing everything it possibly can to make this as complicated as it possibly can, to last as long as it possibly can, so that by the time there is a result, nobody is going to care except the plaintiffs. . . . I question whether or not the Department of Justice is doing justice.

That statement, from a federal judge no less, cuts directly to the core of the IRS targeting scandal itself.  The Obama Administration’s IRS attempted to shutdown and silence conservative groups.  When it was caught, it attempted to stonewall and drag its heels with Congress.  Now it is trying to evade the reach of the federal courts.  It’s astonishing

But what the IRS did next was even more brazenly astounding.  It filed a writ of mandamus, which is reserved for “‘exceptional circumstances’ involving a ‘judicial usurpation of power’ or a ‘clear abuse of discretion.’”

That’s right, the IRS accused a federal district judge of usurping its power, merely by requiring the IRS to provide simple information about the names of the IRS officials involved in the IRS targeting and a list of the groups targeted – a simple, legally required step in a class action lawsuit.

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April 13, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, April 12, 2016

Shay Presents R&D Tax Incentives: Growth Panacea Or Budget Trojan Horse? Today At Georgetown

Shay (2014)Stephen E. Shay (Harvard) presents Essay on R&D Tax Incentives: Growth Panacea or Budget Trojan Horse? (with J. Clifton Fleming, Jr. (BYU) & Robert J. Peroni (Texas)) at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

Research and development (R&D) activity has long held a privileged place in the U.S. income tax system and in policy debates. The premises for R&D tax incentives, however, are grounded in theory regarding a market failure for investment in R&D that does not align well with the target of U.S. R&D tax incentives. Moreover, factors contributing to innovation are now understood to include, in addition to R&D, other “knowledge-based capital” (KBC) investment in training and other human capital development, developing organizational processes, computer software, and architectural and engineering designs. The combination of existing R&D tax incentives, income shifting, and deferral of foreign income from U.S. tax, with intellectual property protection for successful R&D, result a poorly designed mix of overlapping benefits only loosely related to fostering innovation. Proposed “innovation box” tax incentives would add to the incoherence of the existing incentives.

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

Kahng Presents Who Owns Human Capital? Today At NYU

Kahng (2017)Lily Kahng (Seattle) presents Who Owns Human Capital?, 93 Wash. U. L. Rev. ___ (2016), at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Chris Sanchirico:

This Article analyzes the tax law’s capital income preference through the lens of intellectual capital, an increasingly important driver of economic productivity whose value derives primarily from workers’ knowledge, experience and skills. The Article discusses how business owners increasingly are able to “propertize” labor into intellectual capital — to control their workers and appropriate the returns on their labor through the expansive use of intellectual property laws, contract and employment laws, and other legal mechanisms. The Article then shows how the tax law provides significant subsidies to the process of propertization and thereby contributes to the inequitable distribution of returns between business owners and workers. The Article’s analysis further reveals the tax law’s fundamental capital-labor distinction to be questionable, perhaps even illusory, an insight which has profound implications for the tax law.

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

Harvey, Kleinbard Fact-Check Bernie Sanders's Claim That U.S. Multinationals Owe $620 Billion In U.S. Taxes On Cash Stashed Overseas

Browde:  The Need For Increased Penalties To Deter Tax Identity Theft

Florida Tax Review  (2015)Pippa Browde (Montana), Many Unhappy Returns: The Need for Increased Tax Penalties for Identity Theft-Based Refund Fraud, 18 Fla. Tax Rev. 53 (2015):

The growing problem of fraudulent tax returns being submitted based on stolen identities is a “tsunami of fraud,” and victims, lawmakers, and law enforcement are struggling with how to deal with the fallout. The issues surrounding identity theft-based tax fraud are complex. Current IRS efforts to stem the tide involve pouring resources into assisting victims, updating IRS processes to detect and prevent refund fraud, and increasing the number of criminal investigations and prosecutions it pursues. The IRS’s approach and pending proposed legislation are not enough to address the problems created by identity theft-based tax fraud. This article argues the IRS and Congress must use a holistic approach to attack this specie of tax fraud. To that end, this article supports enhanced criminal penalties and proposes new civil tax penalties aimed specifically at identity theft tax fraud.

This article pursues two goals. First, it documents and explains the problem of identity theft-based refund fraud, highlighting particular issues with respect to tax compliance. In so doing it analyzes existing civil and criminal tax penalties to punish and deter identity thieves, an analysis which reveals that existing criminal penalties are insufficient and that there is no directly applicable existing civil penalty. Second, to address the gaps in existing law, the article proposes standards for Congress to use in crafting a comprehensive penalty scheme to apply to identity theft-based refund fraud.

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April 12, 2016 in Scholarship, Tax | Permalink | Comments (1)

McCormack:  Postpartum Taxation

Shannon McCormack (University of Washington), Postpartum Taxation: The Internal Revenue Code and the Opt Out Mom, 104 Geo. L.J. ___ (2016):

Legislation seeking to ensure that women receive equal pay for equal work has been on the books for decades. Nevertheless, the average American woman still receives less than eighty cents for every dollar earned by the average American man. Happily, the gender pay gap between men and childless women is narrowing over time. Meanwhile, the gap between mothers and others continues to widen. Career interruptions contribute significantly to this disturbing trend — nearly half of mothers opt out of the workforce at some point in their lives, most often to care for young children. Faced with too-short (or non-existent) maternity leaves, inflexible work schedules and the soaring costs of childcare in the United States, this opt out phenomenon is hardly surprising. But with the decision to opt out comes grave cost. Over 90% of opt out moms want to return to the workforce several years after off ramping. Unfortunately, many discover that they are unable to do so. A mother that does manage to reenter the workforce will find that even a short off ramp results in a sizeable and disproportionate reduction in her annual earnings that will persist for every year of her remaining life.

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April 12, 2016 in Scholarship, Tax | Permalink | Comments (7)

Hasen:  Taxation And Innovation

David Hasen (Colorado), Taxation and Innovation: A Sectorial Approach:

A number of tax rules have been adopted or proposed to promote innovation. The primary justification for these rules is that they can be effective in reducing or eliminating chronic market failure in the innovation sector. This paper argues that special tax rules for innovation generally are inappropriate. The basic circumstance giving rise to market failure in the innovation sector is the positive externality associated with information production. Special tax rules do not correct the externality; they merely compensate for it through other mechanisms that themselves create deadweight loss. In place of special tax rules that promote innovation, policy makers should adopt rules that counteract disproportionately large tax-induced distortions in the innovation sector. Among these distortions is excess risk-taking, a phenomenon attributable to the lognormal nature of returns to risk-bearing.

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

The IRS Scandal, Day 1069

IRS Logo 2Politico, The Ghost of Lois Lerner:

Probably the biggest news to come out Sunday was President Barack Obama’s defense of Democratic frontrunner Hillary Clinton’s handling of classified information while secretary of State on “Fox News Sunday” — and his assertion that Clinton won’t get any special treatment from a Justice Department investigation. Well, you probably have a decent idea of how conservative commentators Karl Rove and George Will responded to that notion.

“In the midst of what was supposed to be a Justice Department investigation of Lois Lerner and the IRS, and the president said prejudging the whole process, there is not a smidgeon of evidence of a scandal at the IRS,” Will said. “Now, we know that the Justice Department investigation was a sham. It was part of the cover-up. They gave the investigation to an Obama contributor working in the Justice Department.” (Both Democrats and the Justice Department found that the IRS handled tea party applications incompetently, but without “criminal intent,” as Justice put it.)

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

Monday, April 11, 2016

Oh Presents How The Rich Drive Progressive Marginal Tax Rates Today At Pepperdine

OhJason S. Oh (UCLA) presents How the Rich Drive Progressive Marginal Tax Rates at Pepperdine today as part of our Tax Policy Workshop Series funded in part by a generous gift from Scott Racine:

Why do income tax systems consistently feature progressive marginal rates? The existing literature tells a political story focusing on the preferences of the poor and middle class – high rates at the top of the rate schedule can fund greater redistribution. This Article argues that progressive marginal rates can alternatively be explained by focusing on the preferences of the middle class and the rich regarding the bottom of the rate schedule. Specifically, these groups benefit from inframarginal rate cuts at low levels of income. This alternative explanation of marginal rate progressivity is attractive because it focuses on the rich, a group which intuition and research suggest wields disproportionate political power.

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

Fleischer Presents Alpha: Labor Is The New Capital Today At UC-Irvine

Fleischer (2016)Victor Fleischer (San Diego) presents Alpha: Labor is the New Capital at UC-Irvine today as part of its Tax Law and Policy Colloquium Series hosted by Omri Marian:

What taxpayers report as capital gains income is often a form of labor income in disguise. This is especially true at the very top of the income distribution, where a large and rising share of national income is derived from partnership allocations of carried interest, the sale of founders’ stock, and the sale of investment services partnership interests. Rich people sometimes say they are lightly taxed because they have investment income. This is not always true. Often, they are lightly taxed because corporate executives, founders of technology companies, and investment fund managers earn income that measures the value of their labor by reference to the value of a capital asset, thus transforming labor income into capital gains. This kind of income—what I call alpha income—accounts for the lion’s share of the recent rise of income inequality in the United States.

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

NYU Hosts 7th Annual Tax Movie Night

Hemel:  The Vanguard Case Reconsidered

VanguardDaniel Hemel (Chicago), The Vanguard Case Reconsidered, 150 Tax Notes 1466 (Mar. 21, 2016):

Recent news reports have suggested that the Vanguard Group family of mutual funds may need to quadruple investors’ fees to cover corporate income tax liabilities. Professor Reuven Avi-Yonah has estimated that Vanguard’s federal tax liability for the 2007-2014 period is roughly $34.6 billion. For the more than 20 million investors in Vanguard funds, the potential financial implications of the tax dispute are significant: Vanguard would presumably pass its tax costs along to customers, leading to higher expense ratios and lower returns. For observers of the IRS, the issue is an important one as well: A $34.6 billion recovery from Vanguard would be multiples more than what the IRS has ever recouped from a taxpayer in a transfer pricing case.

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

Caron & Soled:  New Prominence Of Tax Basis In Estate Planning

Paul L. Caron (Pepperdine) & Jay A. Soled (Rutgers), New Prominence of Tax Basis in Estate Planning, 150 Tax Notes 1569 (Mar. 28, 2016):

In this article, Caron and Soled discuss how section 1014(b)(6) offers a bridge for taxpayers to maximize the tax basis they have in their assets. Whether Congress should retain this anachronistic provision is an open issue. The authors explain the historical background of section 1014(b)(6), demonstrate the potential income tax savings from applying it, and outline several planning strategies to achieve those savings.

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

The IRS Scandal, Day 1068

IRS Logo 2Patriot Post, IRS Meets Some Justice:

The Internal Revenue Service long has been exposed in its overtly political and sleazy maneuvering, but little has been done thus far to hold rogue bureaucrats to account. Fortunately, the Sixth Circuit Court of Appeals took a step toward halting the deny-delay-and-destroy tactics of this government agency. ...

For just shy of three years, Barack Obama’s weaponized tax-collecting agency has fought to hide data being sought by conservative groups the IRS targeted in the 2012 election cycle. Specifically, the IRS petitioned for a writ of mandamus to block the discovery efforts of the plaintiffs.

But the Sixth Circuit has ordered that the taxpayer-funded agency immediately turn over requested information about its activity. Writing for the unanimous three-judge appellate panel, Judge Raymond Kethledge noted that mandamus is “an extraordinary remedy reserved to correct only the clearest abuses of power by a district court.” In other words, the offense was greeted with a flat denial of the IRS’s petition.

The Court’s response begins: “Among the most serious allegations a federal court can address are that an executive agency has targeted citizens for mistreatment based on their political views. No citizen — Republican or Democrat, socialist or libertarian — should be targeted or even have to fear being targeted on those grounds. Yet those are the grounds on which the plaintiffs allege they were mistreated by the IRS here. The allegations are substantial: most are drawn from findings made by the Treasury Department’s own Inspector General for Tax Administration.”

The Cincinnati-based three-judge appeals panel charged with this matter has lost patience with the legal representation of the IRS. And who represents the IRS in this lawsuit that’s clearly being avoided only through the lack of cooperation? None other than the Obama Justice Department.

Judge Kethledge authored the decision and wrote that the Justice Dept. lawyers “have a long and storied tradition of defending the nation’s interests and enforcing its laws — all of them, not just selective ones — in a manner worthy of the Department’s name. The conduct of the IRS’s attorneys in the district court falls outside that tradition. We expect that the IRS will do better going forward.”

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April 11, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, April 10, 2016

The Top 5 Tax Paper Downloads

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

  1. [623 Downloads]  Lexisnexis® Guide to FATCA Compliance: Chapter 1, by Willliam Byrnes (Texas A&M) & Robert J. Munro (Texas A&M)
  2. [300 Downloads]  The Tax Lives of Uber Drivers: Evidence from Internet Discussion Forums, by Shu-Yi Oei (Tulane) & Diane M. Ring (Boston College)
  3. [264 Downloads]  Ownership of the Means of Production, by E. Glen Weyl (Chicago) & Anthony Lee Zhang (Stanford)
  4. [243 Downloads]  Taxing Wealth Seriously, by Edward J. McCaffery (USC)
  5. [233 Downloads]  The Law of the Platform, by Orly Lobel (San Diego)

April 10, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Atheists Try Again To Strike § 107 Housing Allowance for 'Ministers of the Gospel'

Law 360, Atheists Try Again To Strike Clergy Housing Tax Exemption:

An atheist group on Wednesday filed a suit in a Wisconsin federal court alleging that a tax exemption for housing allowances paid to ministers violates the Establishment Clause of the U.S. Constitution after an earlier challenge was dismissed for lack of standing.

A lawsuit filed by the Freedom From Religion Foundation in 2011 was dismissed by the Seventh Circuit in 2014 because the staff members never requested tax refunds. In the new complaint filed Wednesday, the foundation claims that following the appellate court's dismissal, its staff members sought a refund of income taxes paid on housing allowances received from the group but were denied by the Internal Revenue Service. 

The suit seeks an end to Tax Code Section 107, which provides that a housing allowance paid to a “minister of the gospel” is not included in taxable income. The provision is discriminatory because it is provided exclusively to religious clergy, the group says.

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April 10, 2016 in New Cases, Tax | Permalink | Comments (3)

The IRS Scandal, Day 1067

Hackney Philip Hackney (LSU), Incorrect Claims About IRS Given Bullhorn on TaxProf:

Just a heads up that a story you posted on April 9, 2016 on the "IRS Scandal, Day 1066" entitled Renew America, Most Dangerous Year for Free Speech in U.S. History, by Bryan Fischer, contains incorrect information that appears to me to be a deliberate falsehood. It claims that the IRS denied the applications for tax-exempt status of 67 organizations last year. That is true. But it also claims that of those 67 denials, 57 were denials of "religious groups." I see a lot of bad information in the stories you post regarding the "IRS scandal," but this one jumped out at me as clearly wrong and likely to cause harm. 

Fischer based his claims on the Free Beacon story entitled IRS Denied Tax-Exempt Status to 57 Religious Groups in 2015. The IRS report from which the reporter derived her information is here. In Table 24 of that document the IRS states that it denied 57 501(c)(3) "religious, charitable and similar organizations" during the particular taxable period. In other words the denials the reporter claims were for strictly "religious groups" were denials for 501(c)(3) organizations generally. She just conveniently left off the other qualifiers from that report and that failure still shows up on TaxProf blog, in Fischer’s story, and in the headline to the reporter’s story.  

While from the information the reporter used, it might have been theoretically possible that all 57 were in fact "religious groups," a little bit of work would have shown that claim to be false. I located 42 of the 57 denials issued during the taxable period (technically 10/1/14 - 9/30/15) and listed them below. Only two of 42 denials I located were denials as to "religious groups." The reporter failed to do any work to track that down. Fischer repeated that falsehood and TaxProf Blog magnified that falsehood.

The author plays fast and loose with the facts in order to presumably inflame tensions on this issue. There are other issues with the article, but that one is the most egregious. Many of the stories you post from right wing or religious press contain such significant problems. Such lies have real world consequences on real people who work for the IRS. Such lies have deep implications for the administration of the tax system. I wish you would reconsider the publication of reporting that contains such deliberate falsehoods. Please consider posting corrections as other media outlets do when the facts are found to be incorrect. This one deserves a correction.

Thanks for hearing me out.

UPDATE: In what appears to be a modest modification of the story after I first sent you this letter, the reporter in the Free Beacon now claims: “The IRS rejected a total of 67 applications for tax-exempt status in 2015, and religious groups comprised the majority of denials.” This claim is still wrong for same reasons discussed above.

Denials in the relevant period that were on mundane EO matters such as helping kids, working with open source software, fundraising and stock racing cars: Denial 201452017, 201502017, 201503016, 201504017, 201505039, 201505042, 201507023, 201507026, 201505040, 201505041, 201507025, 201509039, 201510059, 201511024, 201514011, 201514013, 201516066, 201515037, 201517019, 201517008, 201519035, 201523021, 201525011, 201525012, 201525014, 201527043, 201529012, 201529013, 201533014, 201534020, 201535019, 201540016, 201540019, 201545030, 201545031, 201545028, 201545029, 201548021, 201548025, 20155004

RELIGIOUS GROUP Denial 201523022, 201526020 

Editor's note:  As I have repeatedly said:

“My goal [in covering the IRS Scandal is] to link to every single press report about the scandal – from both the right and the left. Because the right covers the scandal much more than the left, I have linked to many more stories from the right than from the left. Check out Day 883.”

I do not need to "consider posting corrections as other media outlets do when the facts are found to be incorrect" — my policy since Day 1 of my coverage has been to post all corrections and opposing views on TaxProf Blog.  Indeed, when Professor Hackney contacted me yesterday, I encouraged him (as I have done with others who have objected to particular posts) to write the response that appears above.

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April 10, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (7)

Saturday, April 9, 2016

This Week's Ten Most Popular TaxProf Blog Posts

WSJ:  Taxation Without Exasperation—It's Time To Adopt Michael Graetz's 'Competitive Tax Plan'

100 2Wall Street Journal, Taxation Without Exasperation:

It doesn’t have to be this way. Raising revenue for the federal government doesn’t have to intrude so much into the lives of so many Americans. Nothing dictates our current system except habit, familiarity and vested interest.

It isn’t hard to imagine a system that would be less of an administrative hassle, less perverse in its incentives and less of an impediment to economic initiative and growth. We could move back to an income tax far more like that of 1913—one that imposes a tolerable burden on upper-middle-class families and the truly rich while leaving the rest of us completely untouched. ...

[A] new tax system that can increase economic freedom, raise just as much revenue as we do today, and foster higher wage and productivity growth is in our grasp. All we need to do is get over our irrational fear of the value-added tax, or VAT, a consumption tax on goods and services that is used by almost all of the world’s rich market democracies.

What would a better tax system look like? It turns out that Mr. Cruz has roughly the right idea. He has come out in favor of a growth-friendly tax on consumption that would allow us to rely less heavily on the income tax. Rather sneakily, he’s calling his consumption tax a “business flat tax,” but everyone knows that it’s a VAT.

The problem with Mr. Cruz’s plan, and it’s a big one, is that he doesn’t use the revenue from the VAT to remove the middle class from the income-tax rolls. He uses it to abolish payroll taxes, the corporate income tax, the estate and gift taxes, and, as if that weren’t enough, to radically reduce income taxes on the rich.

There is a more realistic reform plan out there, only it’s not from one of the presidential candidates. For almost two decades, Michael J. Graetz, a professor at Columbia Law School and one of the country’s leading experts on tax law, has been urging Americans to adopt a saner, more sensible tax system, which he calls the Competitive Tax Plan. The time has come for us to listen.

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April 9, 2016 in Book Club, Tax | Permalink | Comments (1)

Friday, April 8, 2016

Let The Fed, Not Congress, Set Tax Rates

Fed 2Los Angeles Times op-ed: Forget Congress and Let the Fed Handle Tax Rates, by Aaron Goldzimer (Yale) & David Gamage (UC-Berkeley):

The Democratic presidential candidates want the wealthy to pay a lot more in taxes while the Republican candidates say they think everyone, very much including the wealthy, should pay less. That disagreement has been at the crux of America's rapid-fire budget-related crises, from the near-default in 2011 that sent the stock market reeling, to the automatic, arbitrary budget cuts that Congress keeps having to partially lift.

Here's a solution: Congress should give up the job of setting tax rates altogether.

Politicians in general want to spend but don't want to tax — even Democrats are gun-shy below the top 10% — and they usually do a poor job of both when it comes to managing the ups and downs of the economy. As a result, we often end up with big deficits even in relatively good times (as in the late 1980s and the mid-aughts). And this leaves us with less flexibility, even if only politically, to stimulate the economy when it tanks. In modern times, politicians have not been able to raise taxes much either to shrink the deficit or to help pay for expensive military engagements like the Iraq War, let alone social programs.

Congress should therefore delegate setting the level of taxes to, say, the Federal Reserve.

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April 8, 2016 in Tax | Permalink | Comments (6)

Weekly Tax Roundup

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

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April 8, 2016 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

NY Times, WSJ Debate Obama Administration's New Anti-Inversion Rules

Treasury Department (2016)Following up on my previous posts (links below) on the Obama Administration's new anti-inversion rules:

New York Times editorial, A Corporate Tax Dodge Gets Harder:

Of course, instead of that straightforward approach, lawmakers, chiefly Republicans, have seized upon the wave of inversions as proof that corporate taxes are too high and must be cut. They say that the only real fix for inversions is a complete overhaul of the corporate tax code. But broad tax reform is pie-in-the-sky in today’s hyper-partisan Congress, and they know it. Their argument does nothing but avoid dealing with these gigantic tax-avoidance schemes.

The Treasury Department deserves credit for tackling the problem. But its regulatory powers, though powerful, are limited. Only Congress can fully stop inversions and the looting of the American corporate taxes.

New York Times op-ed: Free Pfizer! Why Inversions Are Good for the U.S., by Diana Furchtgott-Roth (Manhattan Institute):

Donald J. Trump wants to build a bricks-and-mortar wall to keep immigrants out of the United States. President Obama wants to build a virtual wall to keep companies from leaving. Neither is likely to work.

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

Take A Big Gulp And Pay Your Taxes In Cash ... At 7-Eleven

711IRS2IR-2016-56, IRS Offers New Cash Payment Option (Apr. 6, 2016):

The Internal Revenue Service announced today a new payment option for individual taxpayers who need to pay their taxes with cash. In partnership with ACI Worldwide’s OfficialPayments.com and the PayNearMe Company, individuals can now make a payment without the need of a bank account or credit card at over 7,000 7-Eleven stores nationwide.

“We continue to look for new ways to provide services for our taxpayers. Taxpayers have many options to pay their tax bills by direct debit, a check or a credit card, but this provides a new way for people who can only pay their taxes in cash without having to travel to an IRS  Taxpayer Assistance Center," said IRS Commissioner John Koskinen.

Individuals wishing to take advantage of this payment option should visit the IRS.gov payments page, select the cash option in the other ways you can pay section and follow the instructions ...

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

Call For Papers:  NTA 109th Annual Conference On Taxation

NTA LogoThe National Tax Association has issued a Call for Papers for its 109th Annual Conference on Taxation to be held Nov. 10-12, 2016 in Baltimore:

The 109th Annual Conference on Taxation will cover a broad range of topics including, but not limited to, taxation and tax policies; expenditure policies; government budgeting; intergovernmental fiscal relations; and subnational, national, and international public finance. The conference will focus, as always, on policy-relevant research bearing on taxation and government spending.

You are invited to submit a paper or a complete session. May 1, 2016 is the deadline for submitting papers or sessions. Decisions concerning the inclusion of papers and sessions will be announced in July 2016. Authors of accepted papers will be offered the opportunity to include them in the Proceedings. All presenters will be required to register and pay a conference registration fee.

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

The IRS Scandal, Day 1065

IRS Logo 2 American Thinker, Should California AG Harris Be Investigated for Tax Code Violations?:

Following revelations that Richard Nixon used the IRS to target his “enemies” for tax audits, Congress amended the Internal Revenue Code to restrict access by federal and state government officials to federal tax return information. The post-Watergate reforms include civil and criminal penalties for inspection and disclosure of federal tax returns not expressly authorized for legitimate and expressly identified law enforcement purposes.

The tax code requires that an annual tax return be filed by charities and other nonprofit organizations -- IRS Form 990. Under Section 6104 of the tax code, those returns of charities and other nonprofits must be made available for public inspection. Now, many Forms 990 are even made available on public websites such as Guidestar.org. The tax code, however, treats the names and addresses of donors listed on those Form 990 Schedule B’s quite differently than any of the other information on that form. Information about donors remain subject to the Code’s strict confidentially provisions.

California attorney general Kamala Harris is the state’s top charity regulator, overseeing California’s Registry of Charitable Trusts. Ms. Harris has decided to bypass federal law expressly requiring her to obtain Schedule B information directly from the IRS on a case-by-case basis if she has a legitimate need for donor information to enforce her state’s charitable solicitation laws. Instead of abiding by federal law, she’s employing a dragnet method, demanding that all charities registering with her office submit their Schedule B donor lists to the Registry in order to solicit contributions from Californians.

Charities even outside the state that wish to communicate with potential supporters in California are first required to register with Harris’ office before they may ask Californians for contributions, giving Ms. Harris tremendous power over “national” nonprofit organizations. By demanding the donor lists of not only California-based charities, but all charities seeking support from Californians, she has extended her reach to violate the right of private association of donors and charities throughout the entire country.

People may wonder why federal confidentiality laws should apply to names and addresses of donors filed with the IRS on Schedule B of charities’ tax returns. In the 1950s, the Alabama attorney general wanted to disrupt the civil rights movement in his state by obtaining the names of financial supporters of the NAACP. The Supreme Court shut down his demands in the landmark case NAACP v. Alabama. The court said that forced disclosure to government officials of the NAACP’s financial backers and members would seriously harm the right of private association protected by the First Amendment.

These principles were the law of the land when Congress enacted the donor confidentiality provisions, and are reflected in the federal confidentiality laws helping to protect charities and their donors from abuse and intimidation by government officials.

Lois Lerner’s IRS was caught violating the tax code confidentiality laws when it disclosed donor names and addresses of the National Organization for Marriage to opponents of that nonprofit organization. In addition, IRS emails obtained under the Freedom of Information Act show Lerner’s IRS gave the Federal Election Commission “detailed, confidential information concerning the tax exempt application status and returns of conservative groups” in violation of the tax code’s confidentiality laws. The tax code’s penalties applicable to acquisition, inspection, and disclosure of charities’ confidential federal tax return information applies to state officials.

Ms. Harris’ actions make a statement that she believes she is above the rule of law, and she’s willing to use the heavy hand of her office to abuse Americans’ right to private association. The Obama Justice Department has given many passes to lawbreaking by government officials who are political allies, and the ambitious candidate for U.S. Senate Kamala Harris could also escape investigation by this administration for violating federal law. However, Congress and the next administration do appear to have grounds to question Ms. Harris about these matters, and take a hard look into whether she and her office are engaged in criminal violations of the federal tax code.

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

Thursday, April 7, 2016

Kahng Presents Who Owns Human Capital? Today At Indiana

Kahng (2016)Lily Kahng (Seattle) presents Who Owns Human Capital?, 93 Wash. U. L. Rev. ___ (2016), at Indiana-Bloomington today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

This Article analyzes the tax law’s capital income preference through the lens of intellectual capital, an increasingly important driver of economic productivity whose value derives primarily from workers’ knowledge, experience and skills. The Article discusses how business owners increasingly are able to “propertize” labor into intellectual capital — to control their workers and appropriate the returns on their labor through the expansive use of intellectual property laws, contract and employment laws, and other legal mechanisms. The Article then shows how the tax law provides significant subsidies to the process of propertization and thereby contributes to the inequitable distribution of returns between business owners and workers. The Article’s analysis further reveals the tax law’s fundamental capital-labor distinction to be questionable, perhaps even illusory, an insight which has profound implications for the tax law.

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April 7, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Blank Presents The Timing Of Tax Transparency Today At Duke

Blank (2016)Joshua Blank (NYU) presents The Timing of Tax Transparency, 90 S. Cal. L. Rev. ___ (2017), at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

Fairness in the administration of the tax law is the subject of intense debate in the United States. As recent headlines reveal, the Internal Revenue Service has been accused of failing to enforce the tax law equitably in its review of tax-exempt status applications by political organizations, the international tax structures of multinational corporations, and the estate tax returns of millionaires, among other areas. Many have argued that greater “tax transparency” would better empower the public to hold the IRS accountable and the IRS to defend itself against accusations of malfeasance. Mandatory public disclosure of taxpayers’ tax return information is often proposed as a way to achieve greater tax transparency. Yet, in addition to concerns regarding exposure of personal and proprietary information, broad public disclosure measures pose potential threats to the taxing authority’s ability to enforce the tax law.

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

Lederman Presents Does Enforcement Crowd Out Voluntary Tax Compliance? At Tulane

Ledderman (2016)Leandra Lederman (Indiana-Bloomnington) presented Does Enforcement Crowd Out Voluntary Tax Compliance? at Tulane as part of its Regulation and Coordination Workshop Series:

Governments commonly use deterrence methods, such as audits and the imposition of penalties, to foster compliance with tax laws. Although this approach is consistent with economic modeling of tax compliance, some scholars caution that deterrence may backfire, “crowding out” intrinsic motivations to pay taxes and thus reducing compliance. This article analyzes the evidence to date to determine the extent of such an effect. Field studies suggest that deterrence tools, such as audits, generally are highly effective at increasing tax collections but that crowding out may occur in some contexts, with respect to certain subgroups of taxpayers.

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

Prisinzano & Yagan Present Business In The U.S.: Who Owns It And How Much Do They Pay? At NYU

NYU Law (2016)Richard Prisinzano (U.S. Treasury Department, Office of Tax Analysis) & Danny Yagan (UC-Berkeley) presented Business in the United States: Who Owns It and How Much Do They Pay? at NYU as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Chris Sanchirico:

"Pass-through" businesses like partnerships and S-corporations now generate over half of U.S. business income and account for much of the post-1980 rise in the top-1% income share. We use administrative tax data from 2011 to identify pass-through business owners and estimate how much tax they pay. We present three findings. (1) Relative to traditional business income, pass-through business income is substantially more concentrated among high-earners. (2) Partnership ownership is opaque: 20% of the income goes to unclassifiable partners, and 15% of the income is earned in circularly owned partnerships. (3) The average federal income tax rate on U.S. pass-through business income is 19%--much lower than the average rate on traditional corporations. If pass-through activity had remained at 1980's low level, strong but straightforward assumptions imply that the 2011 average U.S. tax rate on total U.S. business income would have been 28% rather than 24%, and tax revenue would have been approximately $100 billion higher.

Dan Shaviro (NYU):

This is an important contribution, or rather the first of what are likely to be a series of important contributions, that attempt to increase our knowledge by making use of U.S. federal tax return information about businesses in the U.S. that are taxed as pass-throughs (i.e., partnerships or S corporations). In particular, it seeks to link information from partnership-level Form 1065 returns to that from partner-level Schedule K-1 returns, thereby presenting a comprehensive picture of who reports partnership income and how much U.S. federal income tax is paid on such income. In a more rational world, this would have been done years ago, and doing it would be easier than it actually is. I'll focus here just on partnerships, although there is also some information in the paper in re. S corporations.

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

Stark Presents Regional Taxation And Regional Tax Base Sharing In State Tax Reform Today At Colorado

Stark (2014)Kirk Stark (UCLA) presents Regional Taxation and Regional Tax Base Sharing in State Tax Reform at Colorado today as part of its Tax Policy Colloquium Series hosted by David Hasen and Sloan Speck:

This article describes and evaluates a specific subset of state tax reforms—i.e., those involving regional approaches to funding subnational public goods. Reforms examined include those where policymakers devise new multijurisdictional fiscal arrangements to address regional objectives that conventional local governments, by virtue of their more limited geographic scope, are unlikely to tackle. As used in this article, the term “region” refers to a geographic area (1) constituting less than the entire jurisdiction of a state, and (2) encompassing more than one local government jurisdiction. A “regional tax” is therefore any tax (fee, assessment, etc....) limited in its application to a geographic area so defined. A closely related policy is “regional tax base sharing”—i.e., the imposition of a tax on a base that is shared among several local jurisdictions, with the proceeds distributed among those localities.

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

Law Student Estate Planning/Estate & Gift Tax Writing Competitions

ACTECThe Legal Education Committee of the American College of Trust and Estate Counsel (ACTEC), 2016 Law Student Writing Competition:

This competition is open to any law student in good standing (full-time or part-time) who is currently or recently enrolled at the time of submission or during the 90-day period prior to submission as a J.D. or LL.M. candidate in an ABA-accredited law school within the United States or its possessions.

ABA RPP&T (2016)ABA Section of Real Property, Trust and Estate Law, 2016 Law Student Writing Contest:

Open to any law school student in good standing, over the age of 18, who is currently attending an ABA-accredited law school within the United States and its possessions, and who is a citizen or legal permanent resident of the United States.

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April 7, 2016 in Legal Education, Tax | Permalink | Comments (0)

Brunson:  The Taxation Of Mutual Funds

Samuel D. Brunson (Loyola-Chicago), The Taxation of RICs: Replicating Portfolio Investment or Eliminating Double Taxation?, 20 Stan. J.L. Bus. & Fin. 222 (2015):

Mutual FundsMutual funds and other regulated investment companies currently occupy a central space in American households’ financial lives. Is spite of their near-ubiquity, though, regulated investment companies occupy a strange tax limbo as quasi-pass-through entities, neither fully taxable nor fully tax-transparent. To qualify for this quasi-pass-through status, regulated investment companies must, among other things, distribute the bulk of their income to shareholders annually.

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