Paul L. Caron

Saturday, August 31, 2013

Tax Court Rejects Small Business Owner's Use of 'John Edwards Sub S Tax Shelter'

Tax Court Logo 2Wall Street Journal Tax Report:  Income Tricks Under Fire  by Laura Saunders:

The IRS has won its second clear victory in three years over a tax-cutting maneuver available to—and used by—millions of small-business owners.

In 2010, an Iowa federal court slapped down a popular move in which small-business owners underpay themselves in order to minimize Social Security and Medicare taxes, while taking compensation in other ways [David E. Watson P.C. v. United States, No. 4:08-cv-442 (S.D. Iowa Dec. 23, 2010)]. On appeal, the Eighth Circuit affirmed the decision [David E. Watson, P.C. v. United States, No. 11-1589 (8th Cir. Feb. 21, 2012)].

Earlier this month, the U.S. Tax Court sided with the agency in the case of Sean McAlary Ltd. Inc. v. Commissioner [T.C. Summ. Op. 2013-62 (Aug. 12, 2013)]. It ruled that a Subchapter S firm whose sole owner was Mr. McAlary, a California real-estate broker, should have paid him $83,200 in wages for 2006. Instead, he was paid zero. ...

This issue is a perennial one, although it has become more important as payroll taxes have risen. "There's a constant push and pull between small-business owners wanting their wages to be as low as possible and the IRS wanting them high," says Jeffrey Porter, a certified public accountant in Huntington, W.Va., with many small-business clients The court ruled that the firm owed nearly $13,700 in payroll and unemployment taxes, plus more than $4,300 in penalties, for that year.

Prior TaxProf Blog coverage:

August 31, 2013 in Tax | Permalink | Comments (0) | TrackBack (0)

Law Prof: Law Schools Are Still Reporting 'Inaccurate' Employment Numbers

Bloomberg Law:  Law Prof: Law Schools Still 'Inaccurate' on Employment Numbers:

Ben Trachtenberg, associate professor at the University of Missouri School of Law, talks with Bloomberg Law's Lee Pacchia about how a recent set of disciplinary actions against law school administrators for misrepresenting employment data will impact the movement to reform legal education.

Prior TaxProf Blog coverage:

August 31, 2013 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Conan O'Brien: ConservoTax: The New Tax Software for Republicans

The IRS Scandal, Day 114

IRS Logo 2

Prior TaxProf Blog coverage:

Continue reading

August 31, 2013 in IRS News, IRS Scandal, Tax | Permalink | Comments (0) | TrackBack (0)

Friday, August 30, 2013

Herzig: Rev. Rul. 2013-17, Gay Marriage, and Taxes

HerzigDavid Herzig (Valparaiso), Rev. Rul. 2013-17, Gay Marriage, and Taxes:

I last posted here when the Windsor decision came out in June. In that post, I wondered how, without DOMA, the federal government would define marriage for same-sex couples for the purposes of the tax code. In his Windsor dissent, Justice Scalia posed a series of tax questions related to the full-faith and credit issue post-DOMA.

The thumbnail sketch of the problem is as follows. Section 3 of DOMA created a federal definition of marriage for the purpose of federal statutes. Having struck down Section 3 in Windsor, the Court allows state law to define marriage. The U.S. Department of the Treasury (“Treasury”) must now determine which state’s definition of marriage applies for federal tax purposes: the state where the couple married (state of ceremony) or the state where the couple resides (state of domicile).

Either choice would result in various distortions and opportunities for taxpayers. Yesterday, Treasury issued Revenue Rule 2013-17, in which Treasury (and thus the IRS) stated that, for federal tax purposes, same-sex couples legally married in jurisdictions that recognize their marriages will be treated as married regardless of whether the state of domicile recognizes that marriage. In other words, Treasury chose the state of ceremony as determinative for federal tax purposes. This was not surprising based on numerous prior statements by the administration and the actions of other administrative agencies (e.g., DHS).

Why is this ruling important?

Continue reading

August 30, 2013 in IRS News, Scholarship, Tax | Permalink | Comments (3) | TrackBack (0)

Weekly Tax Roundup

Weekly Roundup

August 30, 2013 in Tax, Weekly Tax Roundup | Permalink | Comments (0) | TrackBack (0)

Weekly SSRN Tax Roundup


August 30, 2013 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0) | TrackBack (0)

Weekly Student Note Tax Roundup

Weekly Roundup

August 30, 2013 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0) | TrackBack (0)

Elite Liberal Arts Colleges Face Credit Ratings Downgrade

Inside Higher Ed, Downgrading Elite Colleges:

Over the past several months, the credit ratings of several prestigious liberal arts colleges have been downgraded or assigned a negative outlook by Moody’s Investors Service.

These are institutions -- Haverford College [#9 in the U.S. News Rankings of Liberal Arts Colleges], Morehouse College [#124], Oberlin College [#26] and Wellesley College [#6] -- that top students seek out, yet they are showing small but noticeable signs of fiscal stress several years after the end of the recession. Their downgraded ratings are still better than those of plenty of other institutions, and Moody's has issued plenty of gloomy projects about  colleges during the economic downturn. But the recent actions are notable because they affect colleges that are by many measures -- money, prestige, history -- among the most fortunate in the country.

August 30, 2013 in Legal Education | Permalink | Comments (2) | TrackBack (0)

Should the IRS Investigate Johnny Football?

Manzel 2The NCAA and Texas A&M yesterday agreed on the suspension of Heisman Trophy winning quarterback Johnny Manziel for the first half of Saturday's season-opening game at Rice for violating NCAA bylaw, which states that student-athletes cannot permit their names or likenesses to be used for commercial purposes, including to advertise, recommend or promote sales of commercial products. or accept payment for the use of their names or likenesses.

Louisville Courier-Journal, Maybe IRS Should Take a Look at Johnny Manziel, by Tim Sullivan:

The Johnny Manziel case has been settled. Whether it’s over may depend on the IRS. The IRS has investigatory tools unavailable to the NCAA, and someone with subpoena power might be wondering how a college quarterback signs autographs in bulk and no money changes hands. It might be worth looking at some of the memorabilia dealers selling the Heisman Trophy winner’s signature to see if they have undeclared income or large, unspecified expenses. It might be worth squeezing some of these guys until some truth comes out.

August 30, 2013 in Celebrity Tax Lore, IRS News, Tax | Permalink | Comments (1) | TrackBack (0)

John Mayer, Legal Rebel

John MayerKudos to John Mayer, Executive Director of the The Center for Computer-Assisted Legal Instruction ("CALI"), who has been selected by the ABA Journal as one of 2013's Legal Rebels:

“It’s been fun and frustrating,” John Mayer says about his work in the sometimes stuffy legal profession. “It’s fun pushing the envelope, but frustrating because people do not want to change.”

Mayer is now leading what could be a very big change in legal education. The Center for Computer-Assisted Legal Instruction, a nonprofit consortium of law schools, produces online interactive tutorials written by law professors. “It gives students a hypothetical and a flowchart that walks through various choices,” says Mayer, who’s known for donning whimsical attire at the annual Conference for Law School Computing—dressing up as a race car driver this year and as a Lego figure last year.

Mayer joined CALI in 1994 after seven years as director of computing services at Chicago-Kent College of Law. Shortly after starting, center leaders told him the organization might shut down. For his job interview, Mayer had brought a list of 50 project proposals. Those that came to fruition include software for faculty to write tutorials and book readers like the Franklin AnyBook.

“This was 1994, before widely available Internet,” he says. “Faculty were just starting to get PCs on their desktops.”

Mayer and his wife, Jane McBride, a lawyer with the state attorney general’s office, founded the animal advocacy group Illinois Humane. “When you look at some of the problems these animals face, your problems are small in comparison,” he says.

CALI does wonderful work on a variety of projects for faculty, including A2J Author, Classcaster, eLangdell, Free Law Reporter, InstaPoll, Lawdibles, Legal Education Commons, LibTour, MediaNotes, and Webinars and Online Courses, in addition to their bread and butter CALI lessons for students (Jim Maule has produced over 250 tax lessons, which I highly recommend). (Disclosure: I am Vice President of the CALI Board of Directors.)

Here is the ABA's description of its Legal Rebels:

Excuse us for waving our own flag, but we are exceedingly proud of our fifth-year selections for the ABA Journal’s Legal Rebels.

Our annual honors program for the change leaders of the legal profession has again found, thanks to your nominations, 10 outstanding new members. They join the 81 free thinkers selected in the previous four years of Legal Rebels. And though this year’s program was open to anyone in the legal services business, an interesting pattern arose as the final selections were made: Seven of our 10 choices are directly connected to legal education. Well, with the disruptive innovations of technology remolding the practice of law, it’s only normal that those charged with training the next generations of legal service providers are reshaping the way those generations are taught and what they learn.

August 30, 2013 in Legal Education | Permalink | Comments (0) | TrackBack (0)

The 47 Percent Is Now the 43 Percent

DOJ Announces Cooperation Agreement With Switzerland on Tax Investigations

DOJ Logo (2013)Department of Justice Press Release, United States and Switzerland Issue Joint Statement Regarding Tax Evasion Investigations:

The Department of Justice today announced a program that will encourage Swiss banks to cooperate in the department’s ongoing investigations of the use of foreign bank accounts to commit tax evasion. The department also released a joint statement with the Swiss Federal Department of Finance, stating that Switzerland will encourage its banks to participate in the program.

August 30, 2013 in IRS News, Tax | Permalink | Comments (0) | TrackBack (0)

The IRS Scandal, Day 113

Thursday, August 29, 2013

IRS Recognizes Same-Sex Marriage, Regardless of State

TaxesThe IRS anounced today that same-sex couples who are legally married in states that recognize same-sex marriage will be treated as married for federal tax purposes.

Press and blogosphere coverage:

August 29, 2013 in IRS News, Tax | Permalink | Comments (0) | TrackBack (0)

Thomas: A Prospect Theory Approach to Increasing Small Business Tax Compliance

Kathleen DeLaney Thomas (North Carolina), Presumptive Collection: A Prospect Theory Approach to Increasing Small Business Tax Compliance:

The lack of progress over the past decade in reducing the tax gap, particularly the failure to reduce the rate of noncompliance among the self-employed, demonstrates the need for innovative approaches. Recent increases in information reporting likely will have an impact in some areas, but the elephant in the room is the cash economy. Given the limitations of standard deterrence techniques, prospect theory has much to offer in improving tax compliance among small business owners for whom information reporting or withholding is not feasible.

A number of economists and psychologists have found that prospect theory is a relevant predictor of taxpayer behavior. In the context of framing, the theory predicts that taxpayers claiming a refund tend to view the outcome as a gain, and thus will demonstrate risk aversion, making them more likely to comply. On the other hand, taxpayers facing a balance due, generally framed as a loss, tend to be risk-seeking, making them more likely to evade. This behavior has been confirmed by numerous empirical studies involving laboratory subjects, and by studies of IRS compliance data covering hundreds of thousands of actual taxpayers.

Thus far, the legal community has made little use of this empirical evidence. To fill this gap, this Article proposes a novel approach to target small business noncompliance that relies on the demonstrated connection between tax compliance and the presence of a tax refund. I propose that tax for small business owners be collected on a presumptive basis (what I call "presumptive collection") throughout the year based on principles used in presumptive tax regimes employed by other countries, which impute income based on external factors rather than relying on self-reporting. However, unlike true presumptive taxes, presumptive collection would collect tax on a presumptive basis, but the regular income tax would ultimately apply to determine a small business owner’s final tax liability at year-end, analogous to withholding. Because individuals are more likely to comply if they find themselves facing a refund at the time of filing, the goal of presumptive collection would be to increase the number of small business owners that will face such a frame at year-end.

Although not every type of small business would be amenable to presumptive collection, it could be an important additional tool for reducing tax evasion that is targeted at specific industries. If presumptive collection could be applied to groups of identifiable cash businesses that are currently able to avoid information reporting, then policymakers could make significant gains in reducing small business tax evasion.

August 29, 2013 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Disability Groups Defend California's LSAT Anti-Flagging Law

LSACNational Law Journal, Disability Groups Defend California's LSAT Anti-Flagging Law:

Disability rights groups have lined up to defend a California law that prohibits the Law School Admission Council from “flagging” LSAT scores—that is, alerting law schools when test takers received extra time as an accommodation for a disability.

Thirteen state and national advocacy organizations, including the Association on Higher Education and Disability and the National Association of Law Students with Disabilities, on Tuesday filed an amicus brief in a lawsuit filed by the council that is pending before California’s Third District Court of Appeal.

The amici, along with the state of California, want the appellate court to uphold the anti-flagging law and reverse a preliminary injunction against its enforcement.

According to the amicus brief, the law imposes “no irreparable harm to the LSAC. Rather, the ongoing harm is to Californians with disabilities who seek to enter the legal profession, but face unnecessary hurdles in obtaining testing accommodations, followed by the unwarranted disclosure of their testing accommodations, due to LSAC’s policies.”

August 29, 2013 in Legal Education | Permalink | Comments (3) | TrackBack (0)

NY Times: U.S. and Switzerland Are Close to Deal on Penalizing Banks in Tax Case

NY Times DealBookNew York Times DealBook:  U.S. and Switzerland Are Close to Deal on Penalizing Banks in Tax Case, by David Jolly & Lynnley Browning:

Switzerland and the United States are close to announcing an agreement to end their long dispute over how to punish banks that helped Americans evade taxes, banking and government officials said on Wednesday. ...

In a conference call with journalists on Wednesday, a senior Justice Department official, who spoke on the condition of anonymity, said banks that had helped Americans evade taxes would be required to admit wrongdoing and pay penalties in exchange for deferred prosecution agreements, in addition to handing over informatThe final agreement will include penalty provisions “starting at 20 percent of the value of accounts starting in 2008,” she said. The penalties would increase for accounts opened after the Swiss bank UBS reached a deferred prosecution agreement in 2009, she added.

Another person briefed on the matter said the penalties could rise to as much as 50 percent of the value of the banks’ undeclared American accounts. The total penalties, the Justice Department official added, would probably be “in the hundreds of millions, exceeding a billion dollars.”ion on account holders. ...

A deal would not mean an end to Swiss banking secrecy because it would affect only the accounts of Americans, but it would represent a continuing erosion of the once-ironclad Swiss guarantee that banking information was sacrosanct.

Switzerland is working separately on a tax deal with the European Union, of which it is not a member. And it has agreed to cooperate with the United States on the Foreign Account Tax Compliance Act, a wide-reaching United States initiative to find American assets hidden overseas.

August 29, 2013 in Tax | Permalink | Comments (0) | TrackBack (0)

Academics Really Use Way Too Many Adjectives and Adverbs

Adam Okulicz-Kozaryn (Rutgers-Camden), Cluttered Writing: Adjectives and Adverbs in Academia, 96 Scientometrics 679 (2013):

When you catch an adjective, kill it. Mark Twain

The road to hell is paved with adverbs. Stephen King

Scientific writing is about communicating ideas. Today, simplicity is more important than ever. Scientist are overwhelmed with new information. The overall growth rate for scientific publication over the last few decades has been at least 4.7% per year, which means doubling publication volume every 15 years. I measure simplicity/readability with proportion of adjectives and adverbs in a paper, and find natural science to be the most readable and social science the least readable.

Proportion of Adjectives and Adverbs in Published Research by Academic Discipline Group Relative to the Field With the Smallest Proportion.


(Hat Tip: Inside Higher Ed.)

August 29, 2013 in Legal Education | Permalink | Comments (3) | TrackBack (0)

ABA Journal: Law Prof Bets Future -- His and His Students' -- On Technology

Legal RebelsABA Journal, Tech Skills Are the Key to Law Students’ Future Employment, Says ‘13 Legal Rebel Dan Katz:

Law professor Daniel Martin Katz is betting the pot–his future and those of his students–on a radical model of legal training and job placement.

Katz's ReInvent Law Laboratory, which he co-founded and co-directs with fellow Michigan State University College of Law professor Renee Newman Knake, aims to prepare students and practicing lawyers for what the face of law will become as traditional delivery models stagnate and legal technology startups and alternative service providers continue to expand.

August 29, 2013 in Legal Education | Permalink | Comments (0)

Seventh Circuit Joins Majority of Circuits in Upholding Valuation Misstatement Penalties in DAD Tax Shelter

Superior Trading LLC et al. v. Commissioner, Nos. 12-3367 to 12-3371 (7th Cir. Aug. 23, 2013) (Posner, J.):

There is a disagreement among courts of appeals concerning the applicability of the penalties for misstating valuation when the transaction involving the overvalued asset is itself disregarded because it lacks economic substance. Compare, e.g., Crispin v. Commissioner, 708 F.3d 507, 516 n. 18 (3d Cir. 2013); Gustashaw v. Commissioner, 696 F.3d 1124, 1136-37 (11th Cir. 2012), and Fidelity Int'l Currency Advisor A Fund, LLC v. United States, 661 F.3d 667, 672 (1st Cir. 2011), with Keller v. Commissioner, 556 F.3d 1056, 1059-61 (9th Cir. 2009), and Heasley v. Commissioner, 902 F.2d 380, 383 (5th Cir. 1990). The majority view, which we now join, is that a taxpayer who overstates basis and participates in sham transactions, as in this case, should be punished at least as severely as one who does only the former. The Supreme Court has granted certiorari to resolve the circuit conflict. United States v. Woods, 133 S. Ct. 1632 (2013).

August 29, 2013 in Tax | Permalink | Comments (0) | TrackBack (0)

NY Times: Growth in Global Disputes Drives Spike in Law Firm Overseas Offices, Law School Arbitration Enrollments

NY Times DealBookNew York Times DealBook:  Growth in Global Disputes Brings Big Paychecks for Law Firms, by Elizabeth Olson:

Debt woes, broken contracts and soured business deals may cost global investors billions in losses and create seemingly never-ending headaches for policy makers. But there is a set of specialists profiting from such geopolitical problems: arbitration lawyers.

The legal profession is facing corporate cutbacks in spending and pushback over billable hours, but at least a dozen law firms based in the United States are in line for huge paydays stemming from myriad international issues.

About a dozen legal heavyweights like White & Case, Shearman & Sterling and King & Spalding are benefiting from the growing number of lucrative, complex international disputes. About 120 such actions worth more than $1 billion each are pending at international arbitration tribunals worldwide, according to a recent tally by American Lawyer magazine.

Often, these awards result from suits brought by companies or commercial interests against foreign governments or entities they control, invoking investment protections in international or bilateral treaties. Big awards also stem from contract disputes between two or more private entities that have invested internationally. ...

“The volume and complexity of deals are ramping up, illustrated by the 163 percent growth in the number of U.S. law firm offices opened overseas last year,” said William D. Henderson, director of the Center on the Global Legal Profession at Indiana University’s Maurer School of Law.

Law firms are vying to recruit law partners with international experience, and law schools like Columbia University’s are adding graduate courses in the field, said George A. Bermann, who teaches arbitration at Columbia and is director of its new Center for International Commercial and Investment Arbitration. “Not only are courses multiplying,” he said in an e-mail, but “enrollment — in all — is growing.”

(Hat Tip: Maureen Weston.)

August 29, 2013 in Legal Education | Permalink | Comments (1) | TrackBack (0)

Call for Proposals: Tax Law and Love

Pepperdine Campus PhotoThe Herbert and Elinor Nootbaar Institute on Law, Religion and Ethics at Pepperdine has issued a Call for Proposals on Love and Law: "What would law be like if we organized it around the value of Christian love [agape]?" at Pepperdine on Feb. 7-8, 2014:

In a provocative essay, philosopher Jeffrie Murphy asks the question which serves as the subtitle of this conference: "What would law be like if we organized it around the value of Christian love [agape]?" Analogous questions arise within other theological and moral traditions. What would be the implications for the substance of law and for the practice of law? Join us for the conversation. The following speakers are already confirmed:

  • Barbara Armacost (Virginia), Restorative Justice
  • Stephen Bainbridge (UCLA), The Relevance of Agape to Fiduciary Duties, If Any
  • Patrick Brennan (Villanova), Love, Justice, and Polity in Catholic Social Doctrine
  • Zachary Calo (Valparaiso), Sacralizing Law? Political Forgiveness and Liberal Justice
  • Charles Mathewes (Virginia), Be Instructed, All You Who Judge the Earth: The Dialectic of Law and Love During the World in Psalm 2:10 and Augustine
  • Richard Mouw (Fuller Theological Seminary), Calvin, Law, and Love
  • Jeffrie Murphy (Arizona State), Law Like Love: Does Love Require the Abandonment of Punishment?
  • Joel A. Nichols (St. Thomas), Love, Indeterminacy, and Family Law
  • Ellen Pryor (UNT Dallas), Agape and Legal Education
  • Meghan J. Ryan (SMU), Dignity and Rehabilitation
  • Chaim Saiman (Villanova), Law As Love: A View From the Talmud
  • Michael Scaperlanda (Oklahoma), Love, Law, and the Immigrant
  • Varun Soni (USC), Love as Law: From Dharma to Kama
  • Najeeba Syeed-Miller (Claremont), Humanizing Legal Systems: Exploring the Capacity for a Humane Approach to Justice from a Muslim Perspective
  • Amy Uelmen (Georgetown), Love, Obligation, and the Common Law No Duty to Rescue
  • David VanDrunen (Westminster Seminary), Why Christian Love Is an Improper Category to Apply to Civil Law: A Contrarian Perspective
  • Robert K. Vischer (St. Thomas), Is Agape the Last, Best Hope for the Legal Profession?
  • James Boyd White (Michigan), Agape: the Activity of Reframing

If you would like to present a paper or organize a panel, please submit your proposal by September 13, 2013 via email. Proposals should include a short abstract and bio (one page total). Speakers will be arranged into panels and will have 12-15 minutes to present. Unfortunately, we are unable to assist with funding. If you have questions about the substance of the conference, contact Bob Cochran.

August 29, 2013 in Scholarship, Tax, Tax Conferences | Permalink | Comments (0) | TrackBack (0)

The IRS Scandal, Day 112

Wednesday, August 28, 2013

Tahk: Taxing with Purpose

Susannah Camic Tahk (Wisconsin), Taxing with Purpose:

The Article draws on public choice theory to argue that the manner in which the federal income tax distributes its costs and its benefits undergirds the massive fiscal crises that the federal government is now experiencing. Then, this Article offers recent historical evidence on 1500 state-level taxes to develop a way out of the current tax lawmaking paralysis at the federal level. At present, the federal income tax spreads its benefits widely among large yet diffuse groups, which makes the income tax easy to undermine and difficult to improve. The Article proposes, however, that restructuring the manner in which the federal income tax allocates its costs and benefits can circumvent its self-destructive shortcomings. For this purpose, state-level tax laws offer useful templates. In particular, states “earmark” tax revenues for specific purposes. That arrangement gives rise to fundamentally different tax lawmaking dynamics than those operating at the federal level. To understand how and why these dynamics succeed, the Article presents evidence on the cost-benefit structure of all state-level earmarked taxes from the 1997-2005 historical period. Analysis of this evidence demonstrates that how state-level earmarked taxes laws assign their costs and benefits relates to how revenue-productive and durable these tax laws are. This conclusion furnishes federal tax policymakers with a promising way of revising the federal income tax code to overcome its current defects. The analysis also opens new lines of research at the neglected intersection of public choice theory and scholarship on legal reform.

August 28, 2013 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Charleston Law School Agrees to Buyout by InfiLaw, but Solicits Other Offers

Charleston LogoFollowing up on last month's post, Charleston Law School Signs Management Agreement With InfiLaw. Is Sale Next?  The answer is yes:

The founders and directors of the Charleston School of Law announced today that they have signed an agreement expressing their intent to transfer ownership of the law school to The InfiLaw System (“InfiLaw”), which would become effective if approved by the South Carolina Commission on Higher Education (CHE) and the American Bar Association. Such approval is expected to take months to complete. ...

In an announcement to students, faculty, staff and alumni, the directors also indicated that they are willing to consider well thought-out and financially-viable alternative offers. They further established a process by which offers could be submitted to their lawyer.

August 28, 2013 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Law Students Do NOT Have Buyer's Remorse

Ronit Dinovitzer (Toronto), Bryant Garth (UC-Irvine) & Joyce Sterling (Denver), Buyers' Remorse? An Empirical Assessment of the Desirability of a Legal Career, 63 J. Legal Educ. ___ (2013):

The literature attacking the value of legal education relies as a rule on the idea that individuals attend non-elite law schools because of optimism bias -- thinking they will get the lucrative corporate jobs deemed necessary to pay off educational debt. They presumably would then get buyers' remorse when their optimism proves unjustified. Drawing on the first two waves of the only longitudinal data on lawyer careers, the After the J.D. Study, the authors examine whether those who began their careers in the year 2000 -- with substantial debt even if not as high as today's graduates -- showed evidence of buyers' remorse about their decision to get a law degree. The evidence indicates that law graduates beyond the most elite were able to pay down their debt at the same rate or better than most elite law graduates. In addition, after seven years of practice the great majority of these lawyers were still satisfied with their decision to become lawyers. In fact, there is no statistically significant difference in reported satisfaction with the decision to become a lawyer when we compare graduates from the higher and lower ranked law schools. And while there is some suggestion that lawyers who reported still owing more than $100,000 after seven years of practice were either ambivalent or dissatisfied with their decision to invest in a legal career, multivariate models show that percent of debt remaining seven-eight years into one's career has no significant relationship with career satisfaction. Thus, in contrast to the dominant story, most respondents irrespective of debt are extremely or moderately satisfied with their decision to become a lawyer. There is no indication in our data that these law graduates feel they made a mistake by choosing to go to law school. The data also show that those most likely to favor eliminating the third year of law school were elite law graduates and attorneys in large corporate law firms -- again a contrast to the dominant story.

August 28, 2013 in Legal Education | Permalink | Comments (6) | TrackBack (0)

Roche: Taxation of Medical Marijuana Businesses

Medical Marijuana (2013)Edward J. Roche, Jr. (University of Denver, Sturm College of Law), Federal Income Taxation of Medical Marijuana Businesses, 66 Tax Law. 429 (2013):

Eighteen states and the District of Columbia have "legalized" the use of medical marijuana. Medical marijuana, however, remains a "controlled substance" under federal law. This puts medical marijuana businesses in a "Catch 22" situation, where their operations are legal under state law but violate federal law. Additionally, because medical marijuana remains illegal under federal law, section 280E denies medical marijuana businesses the ability to deduct their ordinary and necessary business expenses.

Section 280E represents a departure from the longstanding practice of generally taxing illegal businesses in the same manner as legal businesses and effectively causes medical marijuana businesses to be taxed on their gross income rather than their net income. Medical marijuana businesses are, however, allowed to reduce their gross revenue by cost of goods sold in arriving at gross income. This puts medical marijuana businesses in the unusual position of wanting to capitalize as many of their otherwise deductible expenses to inventory as possible, unlike most businesses, which would prefer a current deduction.

Medical marijuana businesses should comply willingly with the full absorption and UNICAP inventory rules, where they are required by law to do so, but most medical marijuana businesses will not be subject to these rules. Nevertheless, a medical marijuana business should voluntarily comply with these rules if not required to do so. Medical marijuana businesses should also take advantage of the provisions under full absorption and UNICAP inventory rules that permit a taxpayer to elect to include certain costs in inventory, including special allocation rules that permit the capitalization of all of an expense if a portion of the expense is subject to capitalization. Further, medical marijuana businesses should capitalize expenses entirely excepted from the full absorption and UNICAP inventory rules, such as on-site storage expenses, as properly allocable to inventory, based on the argument that the exceptions are provided to reduce the burden of these rules but that capitalization nevertheless represents a better reflection of income.

The Article also addresses the dilemma that lawyers and accountants face in providing services to medical marijuana businesses — practitioners could be considered to be "aiding and abetting" a criminal enterprise, subjecting them to federal criminal sanctions. The only two state rulings on whether an attorney can ethically provide advice to medical marijuana businesses under the Model Rules are divided on the subject. Although not free from doubt, practitioners should not run into trouble for preparing the tax return of a medical marijuana business.

Legislative or administrative solutions to the problems section 280E causes medical marijuana businesses appear unlikely given the unwillingness of elected and government officials to openly support the legalization of medical marijuana.

August 28, 2013 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

Survey of Faculty Attitudes on Technology

IHE CoverInside Higher Education, Survey of Faculty Attitudes on Technology:

Faculty members, by and large, still aren't buying -- and they are particularly skeptical about the value of MOOCs, Inside Higher Ed's new Survey of Faculty Attitudes on Technology suggests.

The survey of 2,251 professors, which, like Inside Higher Ed's other surveys, was conducted by Gallup, finds significant skepticism among faculty members about the quality of online learning, with only one in five of them agreeing that online courses can achieve learning outcomes equivalent to those of in-person courses, and majorities considering online learning to be of lower quality than in-person courses on several key measures (but not in terms of delivering content to meet learning objectives). ...

Most faculty members are skeptical of MOOCs -- and want to be sure that campus faculties control decision-making over how the courses are used and that accreditors review their quality. ...

Response to: MOOCs make me excited about the future of academe

  Faculty Technology Staff
Strongly agree 4% 7%
Agree 9% 20%
Neutral 20% 30%
Disagree 20% 22%
Strongly disagree 46% 22%

August 28, 2013 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Fleischer: More on Repatriation Tax Holidays and Stock Buybacks

NY Times DealBookNew York Times DealBook:  A Holiday From Taxes, and Often From the Strings Attached, by Vic Fleischer (San Diego):

Large multinationals based in the United States – among them General Electric, Pfizer, Apple and Citigroup – have been hoarding record amounts of cash overseas, mainly because of the 35 percent tax they would have to pay if they brought it back to the United States.

The American Jobs Creation Act of 2004 offered a temporary tax holiday that allowed firms to repatriate cash at about a 5 percent tax rate, but there were strings attached. The repatriated money was to be used only on permissible activities like research and development, capital expenditures and pension funding. It was not to be used for shareholder dividends or share repurchases.

The purported goal of the legislation was to create jobs, not simply to enrich shareholders at the expense of federal tax revenue. In recent years, companies have lobbied for another tax holiday.

Tax policy experts are suspicious of tax holidays, and most experts question the effectiveness of attaching strings to such legislation. Because cash is fungible, companies might be expected to use the repatriated money for permitted domestic activities that they would have conducted anyway, freeing up other cash to be used for dividends and stock buybacks. If companies merely reshuffle the use of cash without changing behavior, then the tax holiday amounts to a windfall to shareholders, not an effective economic stimulus.

The 2004 tax holiday brought back $312 billion in extraordinary cash dividends from foreign subsidiaries. How much of that cash was used for permitted activities, and how much for impermissible dividends and stock buybacks? A 2011 paper [Watch What I Do, Not What I Say: The Unintended Consequences of the Homeland Investment Act] by Dhammika Dharmapala, C. Fritz Foley and Kristen J. Forbes, published in The Journal of Finance, estimated that 60 cents to 92 cents of every repatriated dollar was spent on shareholder payouts in 2005. The paper is Exhibit A in the case against future tax holidays.

A new paper [Where the Money Really Went: A New Understanding of the AJCA Tax Holiday] by Thomas J. Brennan of the Northwestern University School of Law challenges that study and finds that, for the 20 companies that repatriated the most cash, 78 cents of every dollar was spent on permissible uses, and just 22 cents on impermissible shareholder payouts. Extending the analysis to 341 companies outside the top 20, Mr. Brennan estimates that about 40 cents of every dollar was spent on impermissible shareholder payouts, still much lower than the earlier estimate

August 28, 2013 in Tax | Permalink | Comments (1) | TrackBack (0)

Law School Rankings: Externships

Top 25preLaw (Back to School 2013), Top Schools for Externships:

Externship programs continue to expand each year as law schools strive to teach more real life skills and students seek the experi­ence employers desire. Legal educators have been calling for more experiential opportu­nities since the early 1990s. Now, fueled by the need to better prepare graduates, law schools are responding.

This year, 29 law schools reported a reported the percentage of externship opportunities to full-time students at high­er than 40 percent. That is up from only ten schools in 2011. We pulled the data from the ABA-LSAC Official Guide to ABA­ Approved Law Schools, 2013 Edition, and ranked the top law schools.

Once again, the University of St. Thomas School of Law-Minneapolis had the best ratio of field placement opportunities per student with 712 placements to a full·time study body of 445. ... Northeastern University School of Law was a close second with 891 positions for 604 students. No other law school offered more externships than full-time enrollment. But other schools in the top 10 still reported impressive numbers compared to prior years. Ten other schools reported 50 percent or higher, with 17 more between 40 and 50 percent.

August 28, 2013 in Law School Rankings, Legal Education | Permalink | Comments (2) | TrackBack (0)

Bartlett: The Charitable Deduction, Continued

New York Times:  The Charitable Deduction, Continued, by Bruce Bartlett:

Last week, I discussed certain aspects of the federal tax deduction for charitable contributions. I return to this topic to review a few more points. ... [I]n short, a number of issues related to charitable giving and charitable organizations ought to be examined if Congress pursues fundamental tax reform. There is much more to be considered than the simple question of whether the charitable deduction should be kept as is or reduced in some way to raise revenue to pay for rate reductions.

August 28, 2013 in Tax | Permalink | Comments (0) | TrackBack (0)

More on President Obama's Support for Eliminating the Third Year of Law School

Following up on my prior posts on President Obama's support for making law school two years (here, here, here, and here):

August 28, 2013 in Legal Education | Permalink | Comments (1) | TrackBack (0)

The IRS Scandal, Day 111

Tuesday, August 27, 2013

Roe: Did Taxes Cause the Financial Crisis?

Mark Roe (Harvard), Did Taxes Cause the Financial Crisis?:

After the financial crisis erupted in 2008, many observers blamed the crisis in large part on the fact that too many financial firms had loaded up on debt while relying on only a thin layer of equity. The reason is straightforward: whereas equity can absorb a business downturn – profits fall, but the firm does not immediately fail – debt is less forgiving, because creditors do not wait around to be paid. Short-term creditors cash out or refuse to roll over their loans, denying credit to financially weakened firms. Long-term creditors demand to be “made whole” and sue. Without cash, the firm fails.

Financial firms in the United States pay about 34% of their profits in taxes, and, while they can deduct interest payments to creditors from taxable income, equity is not taxed as favorably. Most countries have similar tax preferences for debt over equity, thereby encouraging financial and other corporations to use more debt, as financial analysts have long known.

And yet the argument that this tax preference for debt played a role in the financial crisis – and that it remains an ongoing risk to financial stability – was quickly rejected. After all, the tax preference for debt has existed for a long time, and nothing heightened it before the crisis hit. On the contrary, if anything, the tax preference has decreased somewhat over time. And the crisis was quite clearly tied to the explosion in risky mortgage-backed securities in the US; when the market abruptly realized that these securities could not be paid off in full, many systemically important financial firms were seen to be much weaker than they had seemed. Catastrophic economic consequences followed.

All of this is true, but, given the possibility of a major overhaul of US corporate taxation, which President Barack Obama has proposed, we should revisit the conventional wisdom concerning the supposedly weak connection between corporate taxation and the financial crisis. Indeed, in my view, policymakers, academics, and the media have rejected too resolutely the idea that corporate taxation played no more than a minor role.

(Hat Tip: Tom Smith.)

August 27, 2013 in Scholarship, Tax | Permalink | Comments (0) | TrackBack (0)

George Washington Fires Dean for Overspending Budget by $13 Million

GW LogoGeorge Washington Hatchet, Business Dean Doug Guthrie Fired Over $13 million Budget Gap:

The University's top brass fired Doug Guthrie after the GW School of Business overspent by about $13 million last year – an abrupt move that shocked faculty and likely puts the brakes on the college's ambitious agenda.

Guthrie, who led the business school for three years and penned GW's strategy in China, oversaw a spending spree that rocketed online and executive education program costs past the college's budget by nearly 25 percent.

In a 30-minute interview Friday, Provost Steven Lerman said he and University President Knapp asked Guthrie to step down because of a "profound disagreement" on the school budget's for next year.  ...

Guthrie's departure marks the third time in two years a dean has left a top role after faculty discontent or management issues. Peg Barratt stepped down as the Columbian College of Arts and Sciences' top leader this summer after facing issues with professors in spring 2012. Paul Schiff Berman left his post as dean of the GW Law School last year to assume a role in the provost's office after faculty tried to vote him out. 

August 27, 2013 in Legal Education | Permalink | Comments (2) | TrackBack (0)

Law Review Circulation and Efficiency Continue to Plummet (2012)

Ross E. Davies (George Mason), The Increasingly Lengthy Long Run of the Law Reviews: Law Review Business 2012 – Circulation and Production, 3 J. of Law 245 (2013):

This article is the latest in a series of simple annual studies of the sales of some leading law reviews, undertaken with an eye to getting an admittedly rough and partial sense of the state of publishing in the legal academy. Over the years, the data itself has turned out to be a little bit interesting in spots. More interesting (perhaps), and more amusing and worrisome (certainly), have been the continuing small discoveries that some law reviews report relatively low paid circulation numbers to the U.S. Postal Service (which appear only in tiny-type government forms buried in the rarely read front- or back-matter of the reporting law review), but then tout higher sales numbers in promotional sections of their websites. It is reminiscent of the way some law schools have number-fudged their presentation of other kinds of data to, for example, U.S. News & World Report. The law review-school comparison might prompt the reader to wonder light-heartedly how many law school deans were once law review editors. But answering that question would be too easy, and too far afield from the focus here on publishing in the legal academy. There is, however, another question whose answer might be more interesting, and more likely to lead to intriguing comparisons. The question: How have the size and composition of law review editorial staffs changed over time, in absolute terms and in terms of their relationship to the product they put out? Possible comparisons will probably suggest themselves. This year’s report covers the usual ground relating to paid circulation and associated editorial behavior. It also offers a limited and tentative first take on the production question.

Chart 1 PNG

Chart 3

Prior TaxProf Blog coverage:

August 27, 2013 in Law Review Rankings, Legal Education | Permalink | Comments (2) | TrackBack (0)

Bloomberg BNA: State Taxation of Trusts

Bloomberg BNA Special Report, 2013 Trust Nexus Survey: Analysis of Key Factors Driving State Taxation of Trusts:

States look to the same basic set of factors, such as the location of the trustee or trust administration, to determine if a trust is subject to their jurisdiction’s income tax. But the states vary dramatically in the factors considered and the weight given to each factor, according to a recent survey conducted by Bloomberg BNA. For those administering trusts or filing tax returns, perhaps just as difficult as ascertaining these different state standards is the continual monitoring of new filing obligations and opportunities to legally avoid paying income tax to a jurisdiction, experts caution. Accomplishing this requires regular review and communication between the administrator, the trustee, and beneficiaries.



August 27, 2013 in Tax | Permalink | Comments (0) | TrackBack (0)

TIGTA: Implementation of IRS Fraud Prevention System Is Lagging

TIGTA The Treasury Inspector General for Tax Administration yesterday released Improvements Are Needed to Ensure Successful Development and System Integration for the Return Review Program (2013-20-063):

The IRS’s current system to detect fraud is the Electronic Fraud Detection System (EFDS). The IRS determined that the EFDS, which was implemented in 1994, is outdated and would be inefficient to maintain, upgrade, or operate beyond Calendar Year 2015. Successful implementation of the new RRP system would increase the dollar amount of fraudulent tax refunds identified annually. TIGTA’s overall audit objective was to determine whether the IRS’s Information Technology Applications Development organization was adequately managing RRP Transition State 1 systems development risks to achieve stated business and information technology requirements.

Roles for program-level governance were not yet established for the RRP and the key role of system integrator was not documented or clearly communicated. From January to December 2012, prototype activities were conducted to validate that technology product solutions integrated successfully. However, RRP Prototype Management Plans, critical systems development products, were not completed or approved by major stakeholders before significant resources were committed. Uncertainty about the systems development path for the RRP and the absence of Enterprise Life Cycle guidance for prototypes hindered initial systems development efforts. Further, alternative commercial software products were not fully considered prior to selecting technology solutions for the RRP system.

August 27, 2013 in IRS News, Tax | Permalink | Comments (0) | TrackBack (0)

Dolan: The Foreign Tax Credit Diaries -- Litigation Run Amok

Tax Analysys Logo (2013)Kevin Dolan (Shearman & Sterling, Washington, D.C.; Former Associate Chief Counsel (International), IRS), The Foreign Tax Credit Diaries -- Litigation Run Amok, 71 Tax Notes Int'l 831 (Aug. 26, 2013):

In a pretend brief, Kevin Dolan explains to a pretend judge why the government's arguments regarding whether foreign taxes must be deducted in determining profit motive in Compaq Computer Corp. [277 F.3d 778 (5th Cir. 2001)] and IES Industries Inc. [253 F.3d 350 (8th Cir. 2001)] are incorrect.

All Tax Analysts content is available through the LexisNexis® services.

August 27, 2013 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0) | TrackBack (0)

More on President Obama's Support for Eliminating the Third Year of Law School

Following up on my prior posts on President Obama's support for eliminating the third year of law school (here, here, and here):

August 27, 2013 in Legal Education | Permalink | Comments (2) | TrackBack (0)

John Dalrymple Named IRS Deputy Commissioner for Services and Enforcement

IRS Logo 2


IRS Acting Commissioner Danny Werfel today announced former long-time IRS executive John M. Dalrymple has been named Deputy Commissioner for Services and Enforcement. ...

Dalrymple will start his new role on Sept. 16. He previously served as IRS Deputy Commissioner for Operations Support from 2003 to 2006. ... Dalrymple has 31 years experience working at the IRS, including 13 years in the Senior Executive Service. Following his retirement from the IRS in 2006, he became a Director at Deloitte Consulting.

August 27, 2013 in IRS News, Tax | Permalink | Comments (3) | TrackBack (0)

A Brief History of Tax Expenditures

Tax Foundation logoThe Tax Foundation:  A Brief History of Tax Expenditures, by William McBride:

The concept of “tax expenditures” began in the 1960s when Assistant Secretary of the Treasury Stanley Surrey noted that many tax preferences resemble spending. Congress mandated in 1974 that these tax expenditures be recorded annually as part of the federal budget. Since the birth of the concept, tax expenditures have been defined as the deductions, credits, exclusions, exemptions, and other tax preferences that represent departures from a “normal” tax code. As we will see, “normal” is in the eye of the beholder, and the two government agencies responsible for tracking tax expenditures, Treasury and the Joint Committee on Taxation (JCT), often provide different answers when asked what is “normal.” However, the two agencies’ methods are largely consistent with each other from year to year. Thus, the annual tax expenditure reports produced during the budgeting process reveal something about how the tax code has changed over the years and provide some guidance for tax reform.[3]

Attempts to reduce tax expenditures have not been met with great success. The Tax Reform Act of 1986 did not significantly reduce the number of tax expenditures, though it did reduce their real dollar value by about one-third. However, beginning in the mid- to late 1990s, numerous tax expenditures were added, expanded, or otherwise allowed to grow. Today, the tax expenditure budget is $1.2 trillion, which represents real dollar growth of 44 percent since 1986 and 96 percent growth since 1991 when tax expenditures were at their lowest. All of the growth has been in the individual tax code, with about two-thirds of real dollar growth coming from just three provisions: the earned income tax credit, the child credit, and the exclusion for employer-provided healthcare. Corporate tax expenditures have actually declined since 1986 in real dollar terms such that their share of the tax expenditure budget is now about 9 percent, half of what it was in 1986.


August 27, 2013 in Tax, Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

The IRS Scandal, Day 110

Monday, August 26, 2013

Faulhaber Named Advisor to the OECD

FaulhaberLilian Faulhaber will take a two year leave of absence from Boston University School of Law to serve as an Advisor to the Organisation for Economic Co-operation and Development (OECD). From the BU press release:

Faulhaber will serve as an Advisor to the OECD’s Base Erosion and Profit Shifting Programme, which has been tasked by the G20 with addressing the growing problem of multinational companies avoiding taxation in their home countries by pushing activities to other jurisdictions. ...

Faulhaber, who won the Michael W. Melton Award for Teaching Excllence in 2013, has taught Introduction to Federal Income Taxation, International Taxation and International Business Transactions at BU Law since 2010. An expert on federal income taxation and international taxation, she has published articles on international taxation, tax avoidance, and charitable giving. Her recent work includes an op-ed in the New York Times about the tax treatment of childcare costs, and her next article on international charitable giving is forthcoming in the Yale Journal of International Law.

(Hat Tip: Ben Leff.)

August 26, 2013 in Tax, Tax Prof Moves, Tax Profs | Permalink | Comments (0) | TrackBack (0)

Kahng: Path Dependence in Tax Subsidies for Home Sales

Lily Kahng (Seattle), Path Dependence in Tax Subsidies for Home Sales, 65 Ala. L. Rev. ___ (2013):

At a time of looming fiscal crisis and virtual unanimity that tax expenditures must be curtailed, tax subsidies for homeownership stand out as among the most costly and unfair of these expenditures. As a result of tax subsidies for homeownership, the government foregoes billions of dollars in revenue each year, most of which benefits wealthy taxpayers. Moreover, subsidies for homeownership encourage overinvestment in housing and underinvestment in other business sectors, which impedes economic productivity, jobs creation and the ability of U.S. businesses to compete in the global marketplace.

Scholars and commentators have analyzed extensively the tax subsidy for home mortgage indebtedness but have paid little attention to tax subsidies for home sales. This Article is the first to undertake a comprehensive examination of tax subsidies relating to home sales. The central thesis of this Article is that these subsidies rest upon questionable policy justifications, flawed logical reasoning, and poor design choices. To support this thesis, the Article traces the evolution of tax subsidies for home sales from their surprising origins in a World War I-era tax preference for requisitioned ships to their present incarnation as a practically unlimited tax exemption. This narrative account leads to several important findings. First, it shows how path dependence and bounded rationality have led lawmakers and policymakers to make questionable decisions and support problematic laws. Second, it demonstrates the power of the real estate lobby to shape the story — and the resultant legal rules ― from both tax and social policy perspectives. Finally, it illuminates the political and rhetorical forces that have shaped tax subsidies for home sales. The Article argues that only by understanding where we were before and how we got to where we are now, can we properly assess where we should go from here.

In assessing tax subsidies for home sales, the Article evaluates the subsidies by reference to the established tax policy criteria of efficiency and fairness while remaining cognizant of the broader context of the social and economic policies regarding homeownership. Although a comprehensive assessment of federal housing policies and the role of tax subsidies in structuring the domestic housing market lie beyond its scope, the Article offers important new insights that will contribute significantly to the ongoing policy dialog about homeownership in our society. In particular, it analyzes the economic impacts of tax subsidies for home sales, including whether and to what extent the subsidies contributed to the real estate bubble. Moreover, the Article highlights the important, but underappreciated, disparate race and gender impacts of homeownership as a wealth-building vehicle. Finally, the Article calls for the repeal of tax subsidies for home sales and argues that the “exogenous shock” of the global financial crisis presents a rare and fleeting opportunity to effect this reform.

August 26, 2013 in Scholarship, Tax | Permalink | Comments (2) | TrackBack (0)

WSJ: Legal Education on Trial: Is the Third Year Necessary?

WSJWall Street Journal:  Legal Education on Trial: Is the Third Year Necessary?:

A suggestion by President Barack Obama to shrink the duration of law school could buoy the case of people who long have questioned whether law students really need a third year of academic study.

But the idea comes as law schools already are struggling with declining enrollment and could be reluctant to cut into their sources of revenue.  

The debate over whether that third year is necessary is gaining traction as law-school tuition continues to climb and law graduates, some saddled with hundreds of thousands in loans, vie for a shrinking pool of jobs. At some top schools, tuition exceeds $50,000 a year.

Yet some critics say that even at three years, law schools don't adequately equip their students with the practical skills they need. ... "It's not that the third year has no value," says Brian Tamanaha, a professor at Washington University School of Law in St. Louis, "it's whether the value is worth the additional burden."

Legal experts on both sides of Two v. Three say the president's remarks could galvanize the push by a small group of educators who since the 1970s have urged a return to two-year law schools.

"This shows that it's in the air," says Samuel Estreicher, a professor at New York University School of Law. He has proposed that New York allow students to take the state bar exam after just two years of study at an ABA-approved law school. Candidates who pass could practice without getting their law degrees.

Current requirements allow students who have finished a year of study to take the exam if they have also completed a three-year apprenticeship. Prof. Estreicher would remove that requirement for students with two years under their belts. He says his proposal would force law schools to "earn the third year." ...

"Maybe we can't afford three years of legal education anymore," says Barry Currier, the ABA's managing director of accreditation and legal education. "But there are a lot of ways to reduce cost, and just slicing off a whole year is a blunt instrument."

August 26, 2013 in Legal Education | Permalink | Comments (5) | TrackBack (0)

Does It Pay to Choose a Law School Based on its U.S. News Ranking?

US News (2014)Vigdis Boasson & Nancy J. White (both of Central Michigan University), Does It Pay to Go to Law Schools Based on Rankings?, 4 Interdisc. J. Econ & Bus. L. ___ (2013):

Abstract:  It is likely prospective law students will check the rankings of law schools before they decide which schools to apply to in pursuit of their legal studies. Prospective law firms may also check the law school rankings before they make their hiring decisions. Thus, it is important to understand and identify the key factors that might influence the ranking of a law school. Specifically, we attempt to investigate the relationships between the law school rankings and a set of potential key factors such as law school graduate employment, student faculty ratio, tuition, grants or scholarships for students, enrollment, J.D. or LL.B. degrees awarded, GPA, LSAT scores and salary of graduates from the law school in the United States. We conduct a benefit/cost analysis and construct a proxy for return on investment for each law school in our study sample. The literature on identifying the factors that might affect law school rankings and return on investment for law school graduates seems to be relatively scanty. This paper attempts to fill this literature gap and the results of this study could potentially provide guidelines for prospective law students and recruiting law firms to make more informed decisions, and for law school administrators to prioritize on the factors that matter most to law students.

Conclusion:  The data indicates that the higher the law school ranking, the higher the salary level after graduation. However, when we examine the relationship between the return on investment (salary to tuition ratio) and the law school ranking, the results seem to indicate a negative relationship. In other words, the higher the law school ranking, the lower the return on investment, especially for the public sector salary level where salaries are capped.

August 26, 2013 in Law School Rankings, Legal Education | Permalink | Comments (0) | TrackBack (0)

Blank & Mason Named Co-U.S. Reporters at Congress of European Association of Tax Law Professors

EATLP Logo (2013)Joshua Blank (NYU) and Ruth Mason (Virginia) have been named co-national reporters for the United States at the 2014 Congress of the European Association of Tax Law Professors (EATLP), an organization of professors teaching tax law at leading universities in Europe. From the NYU press release:

Every spring, the organization holds an annual congress where it considers important international tax law issues. This fall, [Blank and Mason] will co-author ... a national report on exchange of tax information and tax cooperation between countries. The report will address the Foreign Account Tax Compliance Act (FATCA), which targets tax noncompliance by U.S .taxpayers who hold bank accounts in jurisdictions outside the U.S., as well as other tax information exchange programs. As the U.S. national reporters, [Blank and mason] will present the U.S. report at the annual congress at Koç University in Istanbul, Turkey in May 2014. The event will feature participation by tax scholars from over 30 other jurisdictions.

(Hat Tip: Francine Lipman.)

August 26, 2013 in Tax, Tax Profs | Permalink | Comments (0) | TrackBack (0)

Yin: Let's Get the Facts of the Couzens Investigation Right!

Tax Analysys Logo (2013)George K. Yin (Virginia), Let's Get the Facts of the Couzens Investigation Right!, 140 Tax Notes 950 (Aug. 26, 2013):

I am sympathetic to Jay Starkman's criticism of the practice since 1998 of appointing persons without tax experience to be IRS Commissioner [Practitioner Sees Need for Restructuring the IRS, 140 Tax Notes 837 (Aug. 19, 2013)]. Given the principal mission of the agency, it is plausible that an outstanding tax professional would be better situated to energize the workforce, instill the importance of integrity and professionalism, and provide more meaningful scrutiny of the agency's activities. We have had many examples of past Commissioners with tax backgrounds who have had those qualities. Such a person would also likely have longstanding relationships with wise colleagues familiar with the tax system that could be drawn upon when the inevitable challenging situations arise in the Commissioner's office. Arguably, the change carried out since 1998 has been exactly backwards. Rather than filling the Commissioner's slot and Oversight Board with business/"management" experts (and others with unclear qualifications), it may have been better to place Commissioner-quality tax professionals in all of those positions. Unfortunately, as Starkman notes, it appears that the shift away from tax experience in the management of the agency is going to continue.

Starkman errs, however, in repeating stale charges that the 1924-1926 Couzens investigation showed the agency to be "corrupt" and exposed a large scandal involving "plain graft." On completion of the long investigation, the chief counsel of the investigative committee testified before the Senate Finance Committee and Senator Couzens that the investigation had not uncovered corruption at the agency. To be sure, the investigation questioned many of the agency's decisions and administrative practices. There were also isolated instances of fraud which the agency had uncovered and revealed to the investigative committee at the start of its work. But the widespread allegations of corrupt practices, including favorable treatment of companies associated with Treasury Secretary Mellon, were not established.

All Tax Analysts content is available through the LexisNexis® services.

August 26, 2013 in Tax, Tax Analysts | Permalink | Comments (1) | TrackBack (0)