TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Thursday, March 2, 2017

Journal of Legal Tax Research Publishes New Issue

AAAThe American Accounting Association has published the Fall 2016 issue of the Journal of Legal Tax Research (Vol. 14, No. 2):

  • Nancy B. Nichols (James Madison University) & Blaise M. Sonnier (University of Colorado (Colorado Springs)), The Consequences of Wynne and a Proposed Congressional Response,  ATA Journal of Legal Tax Research: Fall 2016, Vol. 14, No. 2, pp. 1-25. Abstract: The U.S. Supreme Court's decision in Comptroller of the Treasury of Maryland v. Wynne held that Maryland's individual income tax law violates the Dormant Commerce Clause of the U.S. Constitution because it failed to grant a full credit against both the state and county income tax for income taxes paid to other states. The extension of the Dormant Commerce Clause and the application of the internal consistency test to individual income taxes may lead to taxpayer challenges in other states with individual income taxes. We identify four possible tax regimes that meet the internal consistency test under Wynne and provide an example of the impact of each regime on state and local government revenue in both the resident and nonresident state. We then review current state and local tax regimes, focusing on the 14 states with local income taxes and those that do not grant a tax credit for out-of-state local taxes paid by residents. We evaluate whether those tax regimes may be subject to challenge based on the Wynne decision. Finally, we suggest three policy options that Congress should consider to lessen the budgetary impact of Wynne on county and municipal governments and to allocate the cost of government based on income.

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March 2, 2017 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, March 1, 2017

Alarie Presents Using Machine Learning To Predict Outcomes In Tax Law Today At Toronto

Alarie (2017)Benjamin Alarie (Toronto) presents Using Machine Learning to Predict Outcomes in Tax Law (with Anthony Niblett (Toronto) & Albert H. Yoon (Toronto)) at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Recent advances in artificial intelligence and machine learning have bolstered the predictive power of data analytics. Research tools based on these developments will soon be commonplace. For the past two years, the three of us have been working on a project called Blue J Legal. We started with a view to understanding how machine learning techniques can be used to better predict legal outcomes. In this paper, we report on our experiences so far. The paper is set out in four parts.

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March 1, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Death Of Virginia ('Ginny') Darden Meeks

Charleston

From Kristin Gutting (Charleston):

Professor Virginia (“Ginny”) Darden Meeks
(June 2, 1969 – February 23, 2017)

After a hard-fought battle with triple negative breast cancer, on February 23, 2017, the Charleston School of Law, the legal profession, and to be honest, the world, lost a truly beautiful soul, Professor Virginia (“Ginny”) Darden Meeks [obituary]. I (along with many) lost a great friend and colleague that constantly inspired me to be a better person and whose memory will continue to inspire me. I met Ginny soon after moving to Charleston when I began teaching at the Charleston School of Law. Ginny graduated from the University of North Carolina and was a die-hard Tar Heel fan. She earned her law degree at the University of South Carolina and her Masters of Law in Estate Planning at the University of Miami. She was an estate planning attorney at a boutique tax firm in Charleston. She was well-respected within the community and was always helping others. She provided pro bono legal services to individuals in need and several area nonprofit organizations, including the Center for Heirs’ Property Preservation and Lowcountry Lab Rescue. Ginny also served as a committee member for several professional and civic organizations, including the Grace Church Cathedral, the Charleston County Bar Association, and the South Carolina Bar Association. Within in five minutes of speaking to her, I knew I was in the presence of someone truly special.

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March 1, 2017 in Legal Education, Obituaries, Tax | Permalink | Comments (2)

Zelinsky:  Churches' Lobbying And Campaigning — A Proposed Statutory Safe Harbor For Internal Church Communication

Edward A. Zelinsky (Cardozo), Churches' Lobbying and Campaigning: A Proposed Statutory Safe Harbor for Internal Church Communications, 68 Rutgers L. Rev. ___ (2017):

President Trump, reiterating the position he took during the presidential campaign, has recently reaffirmed his pledge to “get rid of and totally destroy the Johnson Amendment,” the provision of the Internal Revenue Code which prohibits tax-exempt institutions from participating in political campaigns. The Code also bars tax-exempt institutions, including churches, from substantial lobbying activities.

Rather than the blanket repeal of the Johnson Amendment proposed by President Trump, I argue for a statutory safe harbor for the internal communications of churches.

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March 1, 2017 in Scholarship, Tax | Permalink | Comments (1)

Will Trump’s Tax Records Be The Next Pentagon Papers?

Trump Tax ReturnsFollowing up on my previous posts (links below):  Peter Dreier (Occidental College), Will Trump’s Tax Records Be the Next Pentagon Papers?:

A broad coalition of activists—which so far includes the leaders of the January women’s marches that galvanized five million people in cities across the country, MoveOn.org, the American Federation of Teachers, the Indivisible Project (which has inspired more than 7,000 local groups to organize, including protests at local town halls sponsored by members of Congress), Americans For Tax Fairness, the Center for Popular Democracy (a network of local community organizing groups), and Our Revolution (the organization built from Bernie Sanders’s presidential campaign)—are planning a massive Tax March on April 15 to demand that Trump release his tax returns. They intend to walk from the U.S. Capitol to the White House, passing both Trump’s hotel and the IRS building. They also expect to organize marches in more than 60 cities across the country.

Marches, lawsuits, and demands from members of Congress can keep the issue in the public eye but they may not be enough to actually produce Trump’s tax documents. Perhaps the only way we’ll ever see his returns is if a courageous IRS employee, or one of Trump’s own lawyers or accountants, leaks them to the media, just as Daniel Ellsberg helped to bring down Richard Nixon by releasing the secret Pentagon Papers to The New York Times in 1971. ...

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March 1, 2017 in Tax | Permalink | Comments (11)

Tuesday, February 28, 2017

Osofsky Presents Regulating By Example Today At Georgetown

Osofsky (2016)Leigh Osofsky (Miami) presents Regulating by Example, 35 Yale J. on Reg. ___ (2017) (with Susan C. Morse (Texas)), at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

Agency regulations are full of examples. Regulated parties and their advisors parse the examples to develop an understanding of the applicable law and to determine how to conduct their affairs. However, neither the legal nor theoretical literature contains any study of regulatory examples or explains how they might be interpreted. This Article fills this gap.

In this Article, we explore regulatory examples and set forth a theory for how to interpret them. We examine how regulatory examples, like common law cases, serve as data points that help communicate legal content. We argue that regulatory examples are best understood through analogical, or common law, reasoning, and illustrate this through a variety of examples.

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February 28, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Columbia Hosts Program Tonight On Tax Reform Under The Trump Administration

Columbia LogoColumbia's Richman Center for Business, Law, and Public Policy hosts a program tonight on Tax Reform Under The Trump Administration:

U.S tax reform for corporations and individuals has been discussed for years. Now we have a unified political environment in both the Executive and Legislative branches of government. What are the proposals we can expect from them? What will be the impact? Comments have already been made about a border adjustable tax on imports. How will that work? What will be the likely impact on trade? What changes will impact individuals? Will taxes really be cut for the middle class? Will income inequality get better or worse because of this?

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February 28, 2017 in Conferences, Tax | Permalink | Comments (0)

Why Swedes Overpay Their Taxes

Economist Logo (2015)The Economist, Why Swedes Overpay Their Taxes:

How abnormal are Swedes, and other people in the Nordic region, in paying tax? A general stereotype for Europe holds some truth: unlike tax-shy southern Europeans, those in the far north pay up readily to get comprehensive, efficient government services—plus societies with unusually equitable income distribution. In Sweden, even after years of slashing high taxes (an inheritance tax went in 2005, another for wealth disappeared in 2007, some taxes on residential property went the next year, corporate tax is low at 22%), the share of GDP claimed by the state remains high. The OECD reckons its government spent over 51% of GDP in 2014. Income tax rates, at least for the well-off, can be as high as 57%. And the Swedes comply. Sociologists, economists and others have long debated this readiness to cough up for the common good. Lutheran beliefs about the importance of supporting the whole community might be a factor. A strong sense of cultural homogeneity for the “folk” matters (now some worry this will be undermined by too much immigration). Maybe the generations spent huddling together to survive long, dark winters has played a role.

This week brought a new puzzle, however, with evidence that some Swedes are deliberately overpaying their taxes.

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February 28, 2017 in Tax | Permalink | Comments (1)

SSRN Tax Professor Rankings

SSRN LogoSSRN has updated its monthly rankings of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through February 1, 2017) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

 

 

All-Time

 

Recent

1

Reuven Avi-Yonah (Mich.)

64,760

Reuven Avi-Yonah (Mich.)

11,584

2

Michael Simkovic (S. Hall)

35,349

Lily Batchelder (NYU)

8184

3

Paul Caron (Pepperdine)

32,687

Michael Simkovic (S. Hall)

4840

4

D. Dharmapala (Chicago)

29,703

D. Dharmapala (Chicago)

4123

5

Louis Kaplow (Harvard)

27,662

Ed Kleinbard (USC)

2790

6

Vic Fleischer (San Diego)

23,417

Richard Ainsworth (BU)

2598

7

James Hines (Michigan)

22,600

Paul Caron (Pepperdine)

2394

8

Ed Kleinbard (USC)

22,077

Dan Shaviro (NYU)

2380

9

Richard Kaplan (Illinois)

21,670

Louis Kaplow (Harvard)

2276

10

Ted Seto (Loyola-L.A.)

21,637

William Byrnes (Texas A&M)

2213

11

Katie Pratt (Loyola-L.A.)

19,759

David Weisbach (Chicago)

2204

12

Richard Ainsworth (BU)

19,714

Robert Sitkoff (Harvard)

2193

13

Robert Sitkoff (Harvard)

18,500

Omri Marian (UC-Irvine)

1861

14

David Weisbach (Chicago)

18,145

Jeff Kwall (Loyola-Chicago)

1789

15

Brad Borden (Brooklyn)

17,882

Steven Bank (UCLA)

1786

16

Carter Bishop (Suffolk)

17,785

Yariv Brauner (Florida)

1638

17

Chris Sanchirico (Penn)

17,229

David Gamage (Indiana)

1626

18

Jen Kowal (Loyola-L.A.)

17,182

Jordan Barry (San Diego)

1546

19

Francine Lipman (UNLV)

17,068

Francine Lipman (UNLV)

1544

20

Dan Shaviro (NYU)

16,725

Brad Borden (Brooklyn)

1543

21

Bridget Crawford (Pace)

16,583

Bridget Crawford (Pace)

1529

22

Dennis Ventry (UC-Davis)

16,362

Michael Graetz (Columbia)

1520

23

David Walker (Boston Univ.)

15,499

Brian Galle (Georgetown)

1506

24

Steven Bank (UCLA)

14,446

Christopher Hoyt (UMKC)

1499

25

Gregg Polsky (Georgia)

13,551

Vic Fleischer (San Diego)

1469

Note that this ranking includes full-time tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.

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February 28, 2017 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

CBO:  U.S. Is On Path To Highest Budget Deficits And Debt In Our History

Congressional Budget Office, CBO’s Assessment of the Long-Term Budget Outlook and Its Approach to Dynamic Analysis:

If current laws governing federal taxes and spending did not change, the United States would face steadily increasing federal budget deficits and debt over the next 30 years, according to projections by CBO. As a result, CBO estimates, public debt would reach 145 percent of GDP by 2047, higher than any percentage previously recorded in the United States.

CBO 1

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February 28, 2017 in Congressional News, Tax | Permalink | Comments (0)

Mason:  Tax Rulings As State Aid FAQ

Ruth Mason (Virginia), Tax Rulings as State Aid FAQ, 154 Tax Notes 451 (Jan. 23, 2017):

In this report, the first in a series of reports on EU state aid, Mason provides background on state aid law as it applies to income taxes, including the legal standard, recovery mechanism, and case selection by the Commission.

February 28, 2017 in Scholarship, Tax | Permalink | Comments (0)

Monday, February 27, 2017

Manhire:  Unknowable Unknowns Of Tax Reform — Wicked Systems, Cloud Seeding, And The Border Adjustment Tax

Better Way (2017)Jack Manhire (Texas A&M), Unknowable Unknowns of Tax Reform: Wicked Systems, Cloud Seeding, and the Border Adjustment Tax:

This brief comment explores just one of the "unknowable unknowns" concerning the border-adjustment tax proposal in the House Republican Blueprint.

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February 27, 2017 in Scholarship, Tax | Permalink | Comments (2)

Call For Proposals: Association For Mid-Career Tax Law Professors (March 1 Deadline)

The Association for Mid-Career Tax Law Professors (“AMT”) has issued a Call for Proposals:

MCThe AMT organizing committee — Jennifer Bird-Pollan (Kentucky), Miranda Fleischer (San Diego), Will Foster (Arkansas), Brian Galle (Georgetown), and Susie Morse (Texas) — welcomes proposals for our annual conference.

AMT is a recurring conference intended to bring together relatively recently-tenured professors of tax law for frank and free-wheeling scholarly discussion. Our third annual meeting will be held on Monday and Tuesday, May 22 and 23, 2017, on the campus of the University of Arkansas School of Law in Fayetteville, Arkansas. We’ll begin early on Monday and adjourn by noon on Tuesday.

2015 Conference at Ohio State (Day 1, Day 2)
2016 Conference at UC-Davis (Day 1, Day 2)

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

University Of Oregon Withholds From Public Discipline Of Tax Prof Nancy Shurtz For Wearing Blackface To Halloween Party

Shurtz

Register-Guard, University of Oregon Secrecy Keeps Shroud Over Actions Related to Law Professor and Assistant Offensive Coach:

During the past four months, the University of Oregon encountered two unprecedented high-­publicity crises with its employees.

Late last year, a law professor donned a Halloween costume that included blackface for a party at her house — sparking widespread outrage and defense of free speech.

Early this year, a newly hired assistant football coach was ­arrested on drunken driving charges in downtown Eugene — drawing ­public attention to a football program that new head coach Willie Taggart was striving to resuscitate and put a happy face on.

The UO took action on both the law professor and assistant coach, but the public may never know the details, because UO ­lawyers ­maintain that the public has no right to inspect the disciplinary records of these and many other UO employees.

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February 27, 2017 in Legal Education, Tax | Permalink | Comments (2)

TaxProf Blog Weekend Roundup

Sunday, February 26, 2017

Buchanan:  Section 6103(f)(5) Does Not Permit An IRS Whistleblower To Release Trump's Tax Returns

Trump Tax ReturnsFollowing up on my previous posts (links below):  Newsweek: Why Trump's Tax Returns Are Going to Stay Secret, by Neil Buchanan (George Washington):

One interesting question that has arisen is whether another provision in [section 6103(f)] of the tax code might provide a different legal avenue that could result in the release of Trump's returns. Whereas section 6103(f)(1) gives the Republican chairmen of the relevant committees the legal ability to say no if they are hellbent on protecting their man, section 6103(f)(5) is a whistleblower provision that cannot be blocked by [House Ways & Means Committee Chair Kevin] Brady or anyone else.

Specifically, this provision specifies that anyone who has had access to tax information "may disclose such return or return information to" the relevant congressional committees "if such person believes such return or return information may relate to possible misconduct, maladministration, or taxpayer abuse." This means that all members of the committees would receive the information, whether Kevin Brady or Orrin Hatch liked it or not.

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February 26, 2017 in Tax | Permalink | Comments (2)

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 #1 paper and a paper returning to the list at #4:

  1. [1,277 Downloads]  The Known Unknowns of the Business Tax Reforms Proposed in the House Republican Blueprint, by Michael J. Graetz (Columbia)
  2. [713 Downloads]  A Guide to the GOP Tax Plan — The Way to a Better Way, by David A. Weisbach (Chicago)
  3. [347 Downloads]  Accounting for Behavioral Considerations in Business Tax Reform: The Case of Expensing, by Lily L. Batchelder (NYU)
  4. [336 Downloads]  Destination-Based Cash-Flow Taxation: A Critical Appraisal, by Wei Cui (British Columbia)
  5. [317 Downloads]  How Donald Trump can Keep His Campaign Promises, Grow the Economy, Cut Tax Rates, Repatriate Offshore Earnings, Reduce Income Inequality, Keep Jobs in the United States, and Reduce the Deficit, by David S. Miller (Proskauer, New York)

February 26, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, February 25, 2017

This Week's Ten Most Popular TaxProf Blog Posts

Is Sixth Circuit Approval Of Funding Roth IRAs With DISC Commissions A Harbinger Of Greater IRS Adherence To Language Of Tax Code?

Following up on last week's post, Sixth Circuit Reverses IRS, Tax Court: 'Citizens Can't Comply With Tax Laws They Can’t See':  Wall Street Journal Tax Report, The Secret to Avoiding Taxes on $6 Million: Exports and an IRA:

In less than a decade, two brothers turned a $3,000 investment into $6 million. Thanks to a federal appeals court, they won’t owe income taxes on this monster return.

To lower their taxes, the brothers paired a common retirement account with an obscure export incentive. The Internal Revenue Service challenged these moves in court, arguing that even if the transactions didn’t break the letter of tax law, they violated the spirit of it.

But the transactions were upheld by the U.S. Sixth Circuit Court of Appeals. The decision, Summa Holdings Inc. v. Commissioner, provides new ballast for taxpayers who use legal techniques in ways the Internal Revenue Service objects to. 

“It says that if there are two ways to structure a transaction and one incurs less tax, then the IRS can’t force the taxpayer into the other one,” says Robert Willens, an independent tax expert based in New York. ...

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February 25, 2017 in New Cases, Tax | Permalink | Comments (1)

Friday, February 24, 2017

Weekly Tax Highlight And Roundup

This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) highlights the lesson of a recent Tax Court case:  friends shouldn't let friends claim the business bad debt deduction:

KristanYou can have a friend, or you can have a bad debt.

With friends like this, who needs deductions? When you lose money on an investment, a business bad debt deduction for the loss is the best consolation. A business bad debt is an ordinary loss, fully deductible against any other taxable income. A “non-business” bad debt, in contrast, is a capital loss, deductible only against capital gains, plus (for most individuals) $3,000 of other income. If the investment isn’t a loan, the best you can hope for is a capital loss.

The best result is the hardest to get, as a Virginia financial advisor learned in Tax Court this week. The advisor had a friend, a Mr. Zinn, who ran a business negotiating reduced interest rates for credit card borrowers with high balances. The advisor got involved in the business, called CFS, as Judge Lauber explains:

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February 24, 2017 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Article Review And Roundup

This week, Daniel Hemel (Chicago) reviews a new working paper by David M. Schizer (Columbia), Subsidies and Nonprofit Governance: Comparing the Charitable Deduction with the Exemption for Endowment Income (Columbia Univ. Sch. of Law, Ctr. for Law & Econ. Studies, Working Paper No. 558, 2017).

HemelDavid Schizer’s new paper offers a fresh take on two long-running debates in tax law: should we allow a deduction for charitable contributions, and should we exempt the passive investment income of charities from tax? Schizer’s central claim is that the exemption (but not the deduction) distorts donors’ decisions as to the timing of charitable contributions—and, specifically, that the exemption inefficiently encourages donors to accelerate their giving. This post summarizes Schizer’s argument and then offers a reason why the deduction, at least in its current form, might distort donors’ decisions as to the timing of charitable contributions in the opposite direction.

The tax exemption for passive investment income earned by charities “creates an important inconsistency,” writes Schizer: “If donors keep an investment, their return (generally) is taxable. But if they donate the investment to charity, the return is no longer taxed” (p. 16). This gives the donor “a tax incentive to transfer assets to charities, and thus to give up control of these resources” (p. 20). That “can have two unfortunate effects,” according to Schizer: “it can erode the motivation and ability of charities to change with the times, and also can impede the ability of donors to monitor the performance of managers.” And while acknowledging that endowments might be desirable under some circumstances, Schizer writes that “it is hard to see why the tax law should put a thumb on the scale” (p. 24). 

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February 24, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (2)

Tax Policy In The Trump Administration

Fleischer Presents Subsidizing Charity Liberally Today At Columbia

Fleischer (Miranda)Miranda Perry Fleischer (San Diego) presents Subsidizing Charity Liberally at Columbia today as part of its Public Law Workshop Series hosted by David Pozen:

When visiting America over 150 years ago, Alexis De Tocqueville was amazed by the role of charities in American society. Since De Tocqueville’s visit, the sector’s size and influence have grown enormously. So too have the legal benefits accorded them, the most important of which are governmental subsidies in the form of exemption from the corporate income tax and the ability to receive tax-deductible contributions. Given the sector’s importance and the cost of these benefits, whether the sector’s legal treatment reflects our society’s broader ideals merits examination. More specifically, our Constitution enshrines two bedrock principles of Western liberal democracies: limited government and equal opportunity. Does the legal treatment of the charitable sector further these ideals, or undermine them?

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February 24, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (2)

Desai & Kleinbard:  A Workable Compromise For The Release Of President Trump's Tax Information

Trump Tax ReturnsFollowing up on my previous posts (links below):  Washington Post op-ed:  A Win-Win Path to Getting the Trump Tax Information That Really Matters, by Mihir Desai (Harvard) & Edward Kleinbard (USC):

President Trump’s spokespeople have made it perfectly obvious that he will not release his federal income tax returns during his presidency. Appeals to the tradition of presidents publishing their returns will not change this president’s resolve. Nor is a more forceful approach likely to pry the returns into public view.

As others have explained, Congress’s Joint Committee on Taxation, composed of the senior tax writers from the two political parties in both the House and the Senate, has the authority to examine the president’s tax returns in closed session. The committee can then report its findings or release those returns to the Congress as a whole (and thereby the public). The tax code is clear on this.

Democrats on the committee might leap at the chance, but Republican leadership plainly is not ready to confront the president here through unilateral demands. And yet the day may come soon enough that those leaders find it in their strategic interest to embrace this authority, if it can be asserted adroitly.

In the meantime, the public interest demands more than accepting the current stalemate. The path forward requires sensitivity to the president’s presumptive reasons for his tax disclosure reticence — in other words, compromise. ...

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February 24, 2017 in Tax | Permalink | Comments (4)

Pew:  How Governments Support Higher Education Through The Tax Code

Pew Charitable Trusts, How Governments Support Higher Education Through the Tax Code (2017):

To maximize the impact of higher education investments and achieve desired policy goals, policymakers should have knowledge of the full range of assistance provided to institutions and students. This means having an understanding of the billions of dollars made available through spending programs and the tax code. However, too frequently these two types of support are not considered in tandem, and most states lack the cost estimates they would need to determine how tax provisions for higher education compare in size to other postsecondary investments.

The federal government and the states each invested more than $70 billion in higher education-related spending programs, excluding loans, in academic year 2014, the latest year for which data are available. But that figure, as substantial as it is, does not paint a full picture of federal and state investments in higher education. It excludes the billions of dollars that the federal government and the 41 states plus the District of Columbia that levy personal income taxes provide to students and their families through tax expenditures—such as credits for tuition and college savings incentives—to help offset postsecondary costs.

Figure 1

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February 24, 2017 in Tax, Think Tank Reports | Permalink | Comments (1)

Thursday, February 23, 2017

Osofsky Presents Regulating By Example Today At Duke

Osofsky (2016)Leigh Osofsky (Miami) presents Regulating by Example, 35 Yale J. on Reg. ___ (2017) (with Susan C. Morse (Texas)), at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

Agency regulations are full of examples. Regulated parties and their advisors parse the examples to develop an understanding of the applicable law and to determine how to conduct their affairs. However, neither the legal nor theoretical literature contains any study of regulatory examples or explains how they might be interpreted. This Article fills this gap.

In this Article, we explore regulatory examples and set forth a theory for how to interpret them. We examine how regulatory examples, like common law cases, serve as data points that help communicate legal content. We argue that regulatory examples are best understood through analogical, or common law, reasoning, and illustrate this through a variety of examples.

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February 23, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Mehrotra Presents Law, Politics And The Rise Of Progressive Taxation (1877-1929) Tonight At UNLV

Mehrotra (2017)Ajay Mehrotra (American Bar Foundation & Northwestern) delivers the Philip Pro Lectures in Legal History at UNLV tonight on Making the Modern American Fiscal State: Law, Politics, and the Rise of Progressive Taxation, 1877-1929 (Cambridge University Press, 2013) (reviews)  (awards):

At the turn of the twentieth century, the U.S. system of public finance underwent a dramatic transformation. The late-nineteenth-century regime of indirect, hidden, partisan, and regressive taxes was eclipsed in the early twentieth century by a direct, transparent, professionally administered, and progressive tax system. This book uncovers the contested roots and paradoxical consequences of this fundamental shift in American tax law and policy. It argues that the move toward a regime of direct and graduated taxation marked the emergence of a new fiscal polity — a new form of statecraft that was guided not simply by the functional need for greater revenue but by broader social concerns about economic justice, civic identity, bureaucratic capacity, and public power.

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February 23, 2017 in Book Club, Colloquia, Scholarship, Tax | Permalink | Comments (0)

IRS Audit Rate Of Individuals (0.7%), Businesses (0.5%) Falls To 10+ Year Lows Due To Budget Cuts

Audit (2016)Wall Street Journal, IRS Audits of Individuals Drop for Fifth Straight Year:

U.S. tax audits of individuals declined for the fifth straight year in 2016 to reach the lowest level since 2003, showing the effects of budget cuts at the Internal Revenue Service.

The IRS, which has lost 30% of its enforcement staffing since the 2010 peak, audited 0.7% of tax returns in the fiscal year that ended Sept. 30, according to preliminary data released Wednesday. That means the IRS audited roughly 1 in every 143 individual tax returns, down from 1 in 90 back in 2010.

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February 23, 2017 in IRS News, Tax | Permalink | Comments (5)

Camp & Thuronyi:  An IRS Whistleblower Could Release Trump's Tax Return To Congress Under § 6103(f)

Trump Tax ReturnsFollowing up on my previous posts (links below):  Forbes, Disclosing President Trump's Tax Returns — An Unconventional Idea, by Bryan Camp (Texas Tech) & Victor Thuronyi (former Lead Counsel, (Taxation), IMF):

Lots of folks want to see Donald Trump’s tax returns. Conventional wisdom is that the returns cannot be disclosed unless he consents. That conventional wisdom is based on the general rule contained in 26 U.S.C. § 6103(a). The general rule forbids IRS employees (and some folks who receive information from IRS employees) from disclosing “return information.” That is a term of art that means not just tax returns but also just about anything in the IRS files.

Section 6103 is a really complex statute, mostly because of the exceptions to the general rule. The exceptions are found in subsections (c) through (o). These exceptions balance a taxpayer’s privacy with the needs of government officers and employees to do their jobs. So the exceptions to the general rule can get quite gnarly.

Several commentators have begun to explore some of the lesser-known exceptions to the general rule of nondisclosure. George Yin has a nice op-ed piece that explains one exception to the general rule in § 6103: Congress can ask for Trump’s returns. Andy Grewal also explores this idea in a well-done post over at the Yale regulation blog. Both posts are worth reading.

Both George and Andy focus on the power of certain congressional committees and staff to ask for tax returns as part of their oversight function. That power is found in § 6103(f)(1) through (f)(4). Democrats have acted on the ideas in George and Andy’s blogs. Stephen Ohlemacher from the AP reports that Democrats on the House Ways and Means Committee tried to get the committee to ask for Trump’s returns, but were outvoted by committee Republicans.

But what if the returns were dumped on the committee’s lap by an IRS employee without the Committee having made a request? That could happen under the very last paragraph in subsection (f).

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February 23, 2017 in Congressional News, IRS News, Tax | Permalink | Comments (1)

Hayashi & Murphy:  Savings Externalities In A Second-Best World

Andrew T. Hayashi (Virginia) & Daniel Patrick Murphy (Virginia), Savings Externalities in a Second-Best World:

The debate among legal scholars about individuals’ failure to save enough for retirement happens on a “micro” level. It focuses on the causes and consequences of undersaving from the perspective of individuals and analyzes how legal interventions, such as tax subsidies and nudges, can best address individual saving mistakes. This debate depends on certain assumptions about how the macroeconomy operates. When these assumptions do not hold, neither do the implications of the micro analysis, turning the conventional analysis of undersaving on its head. In fact, in a variety of circumstances, saving imposes a negative externality. Consequently, what looks like undersaving at the individual level may result in oversaving in the aggregate, and private vice may become a public virtue.

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February 23, 2017 in Scholarship, Tax | Permalink | Comments (0)

Soled:  The $250 Billion Price Tag Associated With Gift Tax Repeal

Jay A. Soled (Rutgers), The $250 Billion Price Tag Associated with Gift Tax Repeal, 154 Tax Notes 429 (2017):

For close to a century, many commentators, academics, and politicians have considered the gift tax as an important backstop to preserve the integrity of the nation’s estate tax. Indeed, in the absence of a viable gift tax, taxpayers could easily circumvent their estate tax obligations. But what these very same people often fail to realize is that the gift tax also serves an entirely different, yet significant purpose as well: it acts as an integral backstop to ensure the progressive nature of the nation’s income tax. Indeed, in the absence of a viable gift tax, taxpayers could easily circumvent their income tax obligations.

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February 23, 2017 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, February 22, 2017

Kara Getz Named Democratic Chief Counsel For House Ways & Means Committee

Ways & Means (2016)House Ways & Means Committee Ranking Member Richard Neal (D-MA) announced yesterday that Kara Getz has been named Chief Counsel for the committee:

“I have known Kara for many years and I am happy to welcome her back to the House in this Chief Counsel role,” said Ranking Member Neal. “Kara has proven herself to be an indispensable adviser to many Congressional leaders, and moving forward she will be absolutely integral to House Democrats’ efforts as she works on tax, trade, pension, and retirement policy.”

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February 22, 2017 in Congressional News, Tax | Permalink | Comments (0)

Snuggies Are Blankets, Not Garments, For Tax Purposes

Snuggie2Prior Probability, The Snuggies Case:

Have you seen those cheesy infomercials for Snuggies, those wearable fleece coverings–blankets with sleeves? Now, as a matter of tax law, is a Snuggie more like a blanket or more like a garment? (Blankets are subject to a lower import tax than articles of clothing are.) The United States Court of International Trade recently decided this close question, ruling that Snuggies are blankets for import tax purposes [citations omitted]:

Parties do not dispute that specifications, purchase orders, and invoices describe the Snuggie® as a blanket, and Allstar has trademarked "Snuggie®" to use on blankets and throws. The Snuggie® is marketed as a blanket, albeit one with sleeves. Retail packaging depicts people wearing the Snuggie® in the types of situations one might use a blanket; for example, while seated or reclining on a couch or bed, or outside cheering a sports team. The television commercial additionally shows a woman wearing a Snuggie® in place of a blanket that failed to sufficiently cover her. All of the above indicates that the Snuggie® is designed, used, and functions as a blanket, and is regarded in commerce and described in sales and marketing literature as a blanket.

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February 22, 2017 in Tax | Permalink | Comments (0)

Should New York State Give President Trump’s Federal Tax Returns To Congress?

Trump Tax ReturnsBalkinization:  Does New York State Have a Copy of President Trump’s Federal Returns?, by Gregory Klass (Georgetown):

There has been a lot of talk about the new role state attorneys general have been taking on as a check on federal overreach. ... There is something else state attorneys general might do. It is now absolutely clear that the President will not release his federal tax returns.

Any state with a copy of those returns could choose to share them with Congress.

Section 6103(f)(1) of the Tax Code gives House Ways and Means Committee, the Senate Finance Committee, and the Joint Committee on Taxation the power to request individual returns from the IRS. Representative Bill Pascrell is a member of the House Ways and Means Committee. On February 1, he sent a letter to the Chairman, Republican Kevin Brady, requesting that that the Committee obtain from the IRS President Trump’s returns. Last week Brady rebuffed Pascrell.

But there is another option. Since 1998, another subsection of section 6103 has given whistleblowers permission to share federal returns with Congress. Section 6103(f)(5) provides:

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

ABA Tax Section Publishes New Issue Of Tax Times

ABA Tax Times (2016)The ABA Tax Section has published 36 Tax Times No. 2 (Feb. 2017):

FROM THE CHAIR
Interesting Times
By William H. Caudill, Norton Rose Fulbright LLP, Houston, TX
As I write this column, we are well into the Tax Section’s 2016–2017 year. I am pleased that we have made good progress on many tasks, but there is much that remains to be accomplished, not least of which is how we as tax lawyers will prepare for the tax reforms that will likely come our way as a result of this last election cycle and how the Section can contribute to the process.

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February 22, 2017 in ABA Tax Section, Tax | Permalink | Comments (0)

Tuesday, February 21, 2017

Oh Presents Are the Rich Responsible for Progressive Marginal Rates? Today At NYU

OhJason Oh (UCLA) presents Are the Rich Responsible for Progressive Marginal Rates? at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Rosanne Altshuler:

Why do income tax systems across the world consistently feature progressive marginal rates? The existing literature tells a political story focusing on the top of the rate schedule and the preferences of the poor and middle class. According to the standard view, higher rates at the top result from the poor and middle class using the political process to “soak the rich.” However, this explanation is inconsistent with research showing that public policy is generally more responsive to the preferences of the rich. Explaining marginal rate progressivity as a universal (and exceptional) triumph of the poor and middle class rings hollow.

This Article resolves this tension in the extant literature by showing how progressive marginal rates are in fact consistent with the preferences of the rich.

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February 21, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Fleming:  The EU Apple Case

J. Clifton Fleming Jr. (BYU), The EU Apple Case: Who Has a Dog in the Fight?, 154 Tax Notes Int'l 251 (Jan. 9, 2017):

This is a reductionist article. It provides a simplified diagram and explanation of Apple's foreign tax planning that eliminates complexities not necessary to an understanding of either the relevant EU or U.S. tax issues. The primary focus of the article is identification of the stakeholders in the controversy over the EU Commission's Apple decision, analysis of their interests, and evaluation of the impact of the Apple decision on those interests.

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February 21, 2017 in Scholarship, Tax | Permalink | Comments (0)

Hemel & Lederman:  The Impact Of Repeal Of The Affordable Care Act On The Economic Substance Doctrine

Daniel Hemel (Chicago), Repealing Economic Substance Codification and Replacing It With What?:

The Republican effort to repeal the Affordable Care Act appears to be stalling. If and when it picks up again, the fate of section 7701(o) of the Internal Revenue Code will be far from the most consequential issue at stake. But section 7701(o), the provision added by the ACA that codifies the tax law economic substance doctrine, matters still — to the tune of $5.8 billion in federal revenue that will be lost over the next decade if the provision is repealed. Or so the Congressional Budget Office estimates; what repeal of section 7701(o) would actually accomplish is something of a mystery. ...

One can imagine (at least) three possible interpretations:

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February 21, 2017 in Tax | Permalink | Comments (0)

Oei & Ring:  Leak-Driven Tax Law

Shu-Yi Oei (Tulane; moving to Boston College) & Diane M. Ring (Boston College), Leak-Driven Law:

Over the past decade, a number of well-publicized data leaks have revealed the secret offshore holdings of high-net-worth individuals and multinational taxpayers, leading to a sea change in cross-border tax enforcement. Spurred by leaked data, tax authorities have prosecuted offshore tax cheats, attempted to recoup lost revenues, enacted new laws, and signed international agreements that promote “sunshine” and exchange of financial information between countries.

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February 21, 2017 in Scholarship, Tax | Permalink | Comments (0)

2017 Tannenwald Tax Writing Competition

Tannenwald (2013)The Theodore Tannenwald, Jr. Foundation for Excellence in Tax Scholarship and American College of Tax Counsel are sponsoring the 2017 Tannenwald Tax Writing Competition:

Named for the late Tax Court Judge Theodore Tannenwald, Jr., and designed to perpetuate his dedication to legal scholarship of the highest quality, the Tannenwald Writing Competition is open to all full- or part-time law school students, undergraduate or graduate. Papers on any federal or state tax-related topic may be submitted in accordance with the Competition Rules.

Prizes:

  • 1st Place:   $5,000, and publication in the Florida Tax Review
  • 2nd Place:  $2,500
  • 3rd Place:  $1,500

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February 21, 2017 in Legal Education, Tax, Teaching | Permalink | Comments (0)

Monday, February 20, 2017

Blank Presents The Timing Of Tax Transparency Today At Pepperdine

Blank (2017)Joshua Blank (NYU) presents The Timing of Tax Transparency, 90 S. Cal. L. Rev. ___ (2017), at Pepperdine today as part of our Tax Policy Workshop Series funded in part by a generous gift from Scott Racine:

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

Revenge Of The Tax Nerds

Revenge of the NerdsWeekly Standard, Revenge of the Nerds:

How the Prosperity Caucus and the Joint Economic Committee drove the tax reform debate.

If some sort of fundamental tax reform does occur this year—and the odds of its happening are looking good—the politicians, economists, tax lawyers, congressional staffers, trade associations, think tanks, academics, corporations, and others claiming credit for having influenced the legislation that finally becomes law will be legion.

But the critical impetus for reform has arguably come from a loose clique of policy wonks with ties to an inconsequential congressional committee—a group that came to be called the Prosperity Caucus. Its monthly meetings—which began 30 years ago, shortly after the last big tax reform passed in 1986—have been a regular abode for a long list of thinkers who have greatly influenced Republican thinking about tax reform. Its alumni now hold key positions in Congress and the Trump administration, and one happens to be the current speaker of the House. If any entity can rightly lay claim to credit for the reform, the Prosperity Caucus can.

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February 20, 2017 in Congressional News, Tax | Permalink | Comments (2)

Ball & Viswanathan:  From Business Tax Theory To Practice

Alina S. Ball (UC-Hastings) & Manoj Viswanathan (UC-Hastings), From Business Tax Theory to Practice:

The past decade has seen a dramatic increase in the number of business law clinics in legal academia. This increase in clinical transactional courses has not, however, resulted in a proliferation of transactional tax clinical offerings. Although tax issues, including federal, state, and local tax matters, are an integral consideration of nearly every business transaction, most business law clinics explicitly exclude tax representation from their client services. For clients of business law clinics that are social enterprises — companies that combine market-based business strategies and social mission — this lack of tax-focused representation is problematic for two reasons.

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

Sixth Circuit Reverses IRS, Tax Court:  'Citizens Can't Comply With Tax Laws They Can’t See'

CaligulaSumma Holdings v. Commissioner, No. 16-1712 (Feb. 16, 2017):

Caligula posted the tax laws in such fine print and so high that his subjects could not read them. Suetonius, The Twelve Caesars, bk. 4, para. 41 (Robert Graves, trans., 1957). That’s not a good idea, we can all agree. How can citizens comply with what they can’t see? And how can anyone assess the tax collector’s exercise of power in that setting? The Internal Revenue Code improves matters in one sense, as it is accessible to everyone with the time and patience to pore over its provisions.

In today’s case, however, the Commissioner of the Internal Revenue Service denied relief to a set of taxpayers who complied in full with the printed and accessible words of the tax laws. The Benenson family, to its good fortune, had the time and patience (and money) to understand how a complex set of tax provisions could lower its taxes.

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February 20, 2017 in IRS News, New Cases, Tax | Permalink | Comments (11)

Hawaii Seeks To Hire A Tax Prof

Hawaii LogoThe University of Hawaii Law School invites applications from entry level and lateral candidates for a tenure-track or tenured tax position beginning in the 2017-18 academic year:

We are seeking applicants with the ability and interest to teach in the area of federal taxation and preferably also trusts and estates. ...

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February 20, 2017 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (0)

Florida Names Fred Murray Professor Of Tax Practice

Muray (2018)Dean Laura Rosenbury has announced that Fred Murray will join the faculty of the University of Florida Levin College of Law as a full-time Professor of Tax Practice:

Since 2007, Professor Murray has been at Grant Thornton LLP, where he serves as a Managing Director, International Tax Services. In addition, he has taught International Tax as an adjunct Professor of Law in the LL.M. program at the Georgetown University Law Center since 2005. Professor Murray started his career as a tax lawyer at Chamberlain, Hrdlicka in Houston, Texas, where he was a partner, before he left to serve as Special Counsel (Legislation) to the Chief Counsel for the Internal Revenue Service from 1992 to 1996. Professor Murray also has served as a Deputy Assistant Attorney General in the Tax Division of the U.S. Department of Justice, as General Counsel and Director of Tax Affairs of the Tax Executives Institute, and as Vice President for Tax Policy at the National Foreign Trade Council.

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February 20, 2017 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, February 19, 2017

Bill Gates:  Robots That Displace Workers Should Be Taxed

Quartz, The Robot That Takes Your Job Should Pay Taxes, Says Bill Gates:

Robots are taking human jobs. But Bill Gates believes that governments should tax companies’ use of them, as a way to at least temporarily slow the spread of automation and to fund other types of employment.

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February 19, 2017 in Celebrity Tax Lore, Tax | Permalink | Comments (4)

Bob Jones University Regains Tax-Exempt Status 34 Years After It Was Stripped By IRS, Supreme Court Due To Interracial Dating Ban

Bob JonesGreenville News, Bob Jones University Regains Nonprofit Status 17 Years After It Dropped Discriminatory Policy:

In a move that’s been more than two years in the making, Bob Jones University announced Wednesday it would regain its federal tax-exempt status on March 1, more than three decades after the IRS stripped its nonprofit status following a landmark U.S. Supreme Court ruling.

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February 19, 2017 in Tax | Permalink | Comments (1)

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 #2:

  1. [2,131 Downloads]  Problems with Destination-Based Corporate Taxes and the Ryan Blueprint, by Reuven S. Avi-Yonah (Michigan; moving to UC-Irvine) & Kimberly A. Clausing (Reed College)
  2. [1,019 Downloads]  The Known Unknowns of the Business Tax Reforms Proposed in the House Republican Blueprint, by Michael J. Graetz (Columbia)
  3. [677 Downloads]  A Guide to the GOP Tax Plan — The Way to a Better Way, by David A. Weisbach (Chicago)
  4. [326 Downloads]  Accounting for Behavioral Considerations in Business Tax Reform: The Case of Expensing, by Lily L. Batchelder (NYU)
  5. [274 Downloads]  How Donald Trump can Keep His Campaign Promises, Grow the Economy, Cut Tax Rates, Repatriate Offshore Earnings, Reduce Income Inequality, Keep Jobs in the United States, and Reduce the Deficit, by David S. Miller (Proskauer, New York)

February 19, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)