Paul L. Caron

Tuesday, March 31, 2015

Hayashi Presents Phantom Income and the Simple Economics of Paying In Kind Today at Georgetown

HayashiAndrew T. Hayashi (Virginia) presents Taxing Committed Consumption and the Simple Economics of Paying in Kind at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John BrooksItai Grinberg, and David Schizer:

This article explores the effects of taxing committed consumption, that is, consumption which can only be adjusted at a cost. Two examples of committed consumption, housing services from homeownership and future consumption from savings, make up a significant share of many households’ consumption profile. In the presence of adjustment costs, the form in which a tax is remitted—whether the tax is paid “in kind” or not—affects both behavioral responses to and welfare effects of the tax. My analysis quantifies and evaluates these effects, which have been introduced in many tax policy contexts under the heading of taxpayer liquidity concerns. These concerns have shaped tax law and loom large in current debates about wealth taxation, tax accounting, and mark-to-market reforms, but have not been analyzed for their welfare effects.

March 31, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Oei Presents Can Sharing Be Taxed? Today at NYU

OeiShu-Yi Oei (Tulane) presents Can Sharing Be Taxed?, 93 Wash. U. L. Rev. ___ (2016) (with Diane M. Ring (Boston College)), at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Alan Viard:

The past few years have seen the rise of a new model of production and consumption of goods and services, often referred to as the “sharing economy.” Fueled by startups such as Uber and Airbnb, sharing enables individuals to obtain rides, accommodations, and other goods and services from peers via the Internet or mobile application in exchange for payment. The rise of sharing has raised questions about how it should be regulated, including whether existing laws and regulations can and should be enforced in this new sector or whether new ones are needed.

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March 31, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The Growth in Lawyer Employment

Michael Simkovic (Seton Hall), The Absence of Evidence for Structural Change: Growth in Lawyer Employment and Earnings:

There have been a lot of doom-and-gloom reports about layoffs and collapsing job opportunities for lawyers.  As we’ve noted before, the relevant question for valuing legal education is the boost to earnings from the law degree across occupations, not the more specific question of what is happening to lawyers, or even more specifically, big law firms. 

But for the sake of argument, focusing more narrowly on the under-inclusive category of lawyers only, what does the data actually show about lawyer employment?  ... Lawyer employment is growing.  This is true both in absolute numbers, and also relative to overall employment.  In other words, lawyers are becoming a larger share of the U.S. workforce. 

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The practice of law is also becoming more lucrative, at least over the long term.

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March 31, 2015 in Legal Education | Permalink | Comments (5)

The Bipartisan Push For Consumption Taxes As Path For Tax Reform

Wall Street Journal, Tax Proposals Would Move U.S. Closer to Global Norm; Proposals For a Consumption Tax Gain Traction in Both Parties:

U.S. lawmakers on both sides of the aisle increasingly are finding appeal in an ambitious concept for overhauling the nation’s income-tax system: a tax based on consumption, a tool long used around the world.

The tax-writing Senate Finance Committee is giving new consideration to the consumption-tax idea with the hope that its promised boost to economic growth would ease the way to a revamp.

As lawmakers have examined a tax overhaul, “it becomes extremely difficult to see a political path to accomplish it” within the confines of the current income-tax system, said Sen. Ben Cardin (D., Md.), co-chairman of a Finance Committee working group negotiating a possible overhaul of business taxes. As a result, the idea of a consumption tax “is getting a great deal more respect, and it is in the discussions,” he said.

Mr. Cardin introduced legislation last year to create a type of consumption tax known as a value-added tax and at the same time lower business taxes and scrap income taxes completely for lower-income Americans.

Republicans on the working group also are interested in the concept, including a proposal put forward recently by GOP Sens. Marco Rubio of Florida and Mike Lee of Utah. That plan would make several changes to the tax code that would move the nation closer to a consumption-based system. ...

The talks open up a possible new direction in slow-moving discussions about rewriting the U.S. tax system. Enactment of a broad-based federal consumption tax would align the U.S. with a global trend. In the U.S., most of those taxes now are in the form of state and local sales taxes.


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March 31, 2015 in Congressional News, Tax | Permalink | Comments (3)

Andrew Sullivan: Blogging Nearly Killed Me

SullivanCNN, Andrew Sullivan: Blogging Nearly Killed Me:

For years, Andrew Sullivan blogged at a prolific rate. ... "The truth is, I had to stop primarily because it was killing me," Sullivan said Sunday night at the 92nd Street Y in Manhattan. "I used to joke that if blogging does kill someone, I would be the first to find out."

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March 31, 2015 in Legal Education, Tax | Permalink | Comments (0)

Robin Williams Left Publicity Rights (Restricted For 25 Years) to Charity, Avoiding IRS Dispute Embroiling Michael Jackson's Estate

WilliamsHollywood Reporter, Robin Williams Restricted Exploitation of His Image for 25 Years After Death:

[O]ne of the more innovative aspects of Robin Williams' estate planning ... might just might become a model for other celebrities preparing for their demise. ... According to a review of the Robin Williams Trust — filed as an exhibit last Wednesday — Williams bequeathed rights to his name, signature, photograph and likeness to the Windfall Foundation, a charitable organization set up by Williams' legal reps at the law firm of Manatt, Phelps.

There are two important facets of this provision.

First, the Trust restricts exploitation of Robin Williams' right of publicity for 25 years after his death. ...

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March 31, 2015 in Celebrity Tax Lore, IRS News, Tax | Permalink | Comments (0)

NY Times: Income Inequality Is Also Bad for Your Health

New York Times, Income Inequality: It’s Also Bad for Your Health:

We know that living in a poor community makes you less likely to live a long life. New evidence suggests that living in a community with high income inequality also seems to be bad for your health.

A study from researchers at the University of Wisconsin Population Health Institute examined a series of risk factors that help explain the health (or sickness) of counties in the United States. In addition to the suspects you might expect — a high smoking rate, a lot of violent crime — the researchers found that people in unequal communities were more likely to die before the age of 75 than people in more equal communities, even if the average incomes were the same.

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March 31, 2015 in Tax | Permalink | Comments (1)

Sign Up For An Account At Before Crooks Do It For You (And Steal Your Refund)

RefundKrebs on Security, Sign Up at Before Crooks Do It For You:

If you’re an American and haven’t yet created an account at, you may want to take care of that before tax fraudsters create an account in your name and steal your personal and tax data in the process. ...

The IRS’s process for verifying people requesting transcripts is vulnerable to exploitation by fraudsters because it relies on static identifiers and so-called “knowledge-based authentication” (KBA)  — i.e., challenge questions that can be easily defeated with information widely available for sale in the cybercrime underground and/or with a small amount of searching online.

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March 31, 2015 in IRS News | Permalink | Comments (3)

Joint Tax Committee: Overview Of The Federal Tax System

The Joint Committee on Taxation yesterday released Overview Of The Federal Tax System As In Effect For 2015 (JCX-70-15):

The current Federal tax system has four main elements: (1) an income tax on individuals and corporations (which consists of both a “regular” income tax and an alternative minimum tax); (2) payroll taxes on wages (and corresponding taxes on self-employment income) to finance certain social insurance programs; (3) estate, gift, and generation-skipping taxes, and (4) excise taxes on selected goods and services. This document provides a broad overview of each of these elements. 


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March 31, 2015 in Congressional News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 691

IRS Logo 2Forbes, How Obama's IRS And Justice Department Killed The Targeting Scandal, by Robert W. Wood:

The IRS applied extra scrutiny because Mr. Obama’s IRS and Justice Department didn’t like the Supreme Court’s decision, presumably fearing that organizations could exercise free speech rights the Supreme Court said they had. Five years later, and two years after the planted bar association question, we remain partly in the dark. Ms. Lerner won’t testify, and we are still told, including by the President of the United States, that there was not a smidgen of corruption at the IRS.

We are told that the IRS is fixed, the targeting will never happen again, and this was not audit targeting anyhow. Some say these organizations shouldn’t be exempt in any event. Now, though, a comprehensive and disturbing report from Politico enumerates the results the IRS has actually achieved despite platitudes from the Obama administration that the system is fixed.

Far from fixed and never happening again, Politico has exposed the seemingly well designed IRS action of death by delay. It is just one more nail in the coffin Professor Paul Caron catalogs in the IRS scandal, now in day 689. Politico painstakingly describes the tale of woe by at least a half-dozen conservative applicants who, amazingly, are still waiting for an answer. The extent of their hardship varies, and some may still receive relief.

Yet we have by now so often been told by IRS Commissioner John Koskinen that the good works of un-targeting the targeted is done. Maybe, but some people are waiting still five years on.  ... Many conservative groups withdrew their applications and gave up. Others changed their names and focus. Some went belly-up while waiting. Of course, in all this recent history, it is worth recalling that in March 2012, former IRS Commissioner Doug Shulman testified there was “absolutely no targeting” by the IRS of conservative and/or Tea Party organizations. On November 9, 2012, Mr. Shulman stepped down as Commissioner, replaced by Steven Miller.

On May 14, 2013, four days after Ms. Lerner’s planted question and feigned lament about it, the Inspector General issued a report confirming targeting. On May 22, 2013, Ms. Lerner professed her innocence, then took the Fifth. Next day, she was placed on administrative leave. On June 20, 2013, the IRS paid $70 million in bonuses. Ms. Lerner received $42,000, and former Commissioner Miller received $100,000.

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March 31, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, March 30, 2015

Thomas Presents User-Friendly Taxpaying Today at Indiana

Thomas (2015)Kathleen DeLaney Thomas (North Carolina) presents User-Friendly Taxpaying at Indiana today as part of its Tax Policy Colloquium hosted by Leandra Lederman:

Our income tax system is notoriously complex. The sheer volume of the tax code, along with the technical nature of its provisions, means that many individuals don’t fully understand the tax rules that apply to them. This Article refers to this type of tax complexity as “substantive complexity.” Although many commentators have argued for reforms that would simplify the substance of our tax laws, others have argued that substantive complexity is necessary if we want to tax each person according to his or her individual circumstances.

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March 30, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Mehrotra Presents Corporate Taxation and the Regulation of Early 20th Century American Business Today at Indiana

MehrotraAjay K. Mehrotra (Indiana) presents Corporate Taxation and the Regulation of Early Twentieth-Century American Business (with Steven A. Bank (UCLA)) at Indiana today as part of its Ostrom Political Theory and Policy Analysis Workshop Series:

In the early twentieth century, the taxation of modern business corporations became increasingly important to the development of American democracy. During that time, governments at all levels began to view business corporations not only as sources of badly needed public revenue, but also as potentially dangerous wielders of concentrated economic power. To combat the growing dominance of corporations, many fiscal reformers sought to use corporate taxation as a mode of regulatory governance. This paper explores the motives and intentions of fiscal reformers during critical junctures in the development of early twentieth-century U.S. corporate taxation. It seeks to explain how changing historical conditions shaped corporate tax law and policy. More specifically, this paper investigates why activists at certain times turned to taxation as a mode of corporate control, and why at other times they used tax policy to promote corporate growth. By focusing on the pivotal ideas and actions of key political economists, social commentators, and lawmakers, this paper attempts to answer the question: why did reformers see taxation as a viable form of public control over corporate power?

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March 30, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Barnhizer: Jobs, Law Schools and the ‘Body Count’ Mentality

David Barnhizer (Cleveland State), Jobs, Law Schools and the ‘Body Count’ Mentality:

[I]n far too many instances analyses of what is or is going to happen in relation to “law jobs” and law schools in the US are similar to the “body count” data that characterized America’s reporting on the Vietnam War. ... I don’t care about the almost daily litany of specific short-term numbers or “body counts” about what is going on in the legal profession, in law school applications and enrollments and in the quality of graduates and bar exam takers. Even if accurate—they are only a small part of the system’s dynamics. ... Rather than focusing on the inner workings of hapless law schools and surprisingly unsophisticated legal academics and administrators, it is wiser to identify the external conditions and forces that are going to dictate the system’s outcomes and “rules of operation” over the next five, ten and fifteen years.

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March 30, 2015 in Legal Education | Permalink | Comments (1)

Hayashi: The Legal Salience of Taxation

Andrew T. Hayashi (Virginia), The Legal Salience of Taxation, 81 U. Chi. L. Rev. 1443 (2014):

Before an injury becomes a legal dispute, the injury must be named, a party must be blamed, and a right against that injury must be claimed. What motivates people to do these things and use legal institutions to seek redress? I provide a partial answer to this question, using a unique dataset to identify the effect that the salience of a tax—that is, its psychological prominence—has on whether a taxpayer will use legal means to lighten the tax’s burden. I term this effect its “legal salience.” I find that reducing property tax salience makes homeowners less likely to appeal their property-value assessments, making it more likely that homeowners will remain overassessed and overtaxed. These overtaxed homeowners never perceive—are never able to “name”—their injury and consequently never obtain the relief to which they might be entitled. Moreover, I show that the selective use of appeals caused by legal salience shifts the tax burden to racial minorities, immigrants, and working families with children. Scholars and lawmakers operate as if only substantive law drives the distribution of a tax burden. But I show that legal salience is one of a number of factors that also affects the tax distribution by motivating only certain individuals to seek tax relief, and I argue that tax laws should be evaluated after taking into account the effects of legal salience.

March 30, 2015 in Scholarship, Tax | Permalink | Comments (0)

Bird & Zolt: Fiscal Contracting in Latin America

Richard M. Bird (Toronto) & Eric M. Zolt (UCLA), Fiscal Contracting in Latin America, 67 World Dev. 323 (2015):

Latin America has long been characterized as a region of high income inequality. In recent years, however, many countries have seen a decrease in income inequality and poverty levels and an increase in economic mobility. Fiscal policies have played a role in achieving these results. One important explanation for changing fiscal policies is the increasing economic and political role played by the growing middle class in shaping the level and quality of collective goods and services and the types of taxes and relative tax burdens to fund these expenditures. Through a process we call “fiscal contracting,” less unequal societies may be willing to pay more in taxes for expanded, relatively universal public services.

March 30, 2015 in Scholarship, Tax | Permalink | Comments (0)

Schenk: The Role for Subchapter S in Entity Tax Reform

Deborah Schenk (NYU), Reforming Entity Taxation: A Role for Subchapter S?, 146 Tax Notes 1237 (Mar. 9, 2015):

The article asks whether a role remains for subchapter S in reforming the taxation of corporations. It considers whether all three approaches to taxing entities — subchapters C, K, and S — remain necessary and whether as part of reform, some simplification is possible or desirable. The conclusions are summarized as follows: (1) Corporate tax reform for large publicly held corporations cannot be divorced from individual tax reform — the relationship of rates matters. (2) In the absence of corporate integration (that is, two levels of tax are retained), conduit taxation for some business entities is desirable. (3) While ideally, one uniform system of conduit taxation for entities not subject to subchapter C might be highly attractive, any uniform system complex enough to deal with complicated business arrangements is too complex for simple arrangements. Thus, a two-track conduit system is appropriate. (4) While subchapter S might not have been the design choice ex ante, it has become a coherent and administrable version of a simpler conduit system. (5) Subchapter S should not be turned into subchapter K. 

March 30, 2015 in Scholarship, Tax | Permalink | Comments (2)

Widener Splits Into Two Law Schools, Names New Deans

WidenerWidener University on Friday announced that the ABA has approved its application to split its School of Law, which has campuses in Harrisburg, Pennsylvania, and Wilmington, Delaware, into separate law schools that will operate independently of each other, but remain part of the university:

Each school also announced new deans:

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March 30, 2015 in Legal Education | Permalink | Comments (1)

Pew: Federal Tax System Seen in Need of Overhaul

Pew Research Center, Federal Tax System Seen in Need of Overhaul:

Chart 1The public sees the nation’s tax system as deeply flawed: 59% say “there is so much wrong with the federal tax system that Congress should completely change it.” Just 38% think the system “works pretty well” and requires “only minor changes.” These opinions have changed little since 2011.

With the April 15 filing deadline approaching, Americans’ top complaint about the tax system is not the amount that they pay in taxes. Rather, it is the feeling that some corporations and wealthy people do not pay their fair share of taxes.

Just 27% are bothered “a lot” by the amount they pay in taxes. By contrast, 64% say they are bothered a lot by the feeling that some corporations do not pay their fair share of taxes, and 61% say the same about some wealthy people failing to pay their fair share. In views of other aspects of the tax system, 44% say they are bothered a lot by the complexity of the system, while just 20% are bothered a great deal by the feeling that some poor people are not paying their fair share of taxes.

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March 30, 2015 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 690

Scientology 2Wall Street Journal, Some Things to Fear in ‘Going Clear’:

Watching Going Clear: Scientology and the Prison of Belief can be a depressing experience, and not just for the two hours in which the HBO documentary runs. The haunting archival imagery—a powerful element here—fades after a few days, and much of what is said has been said before. Yet whether you come away seeing Scientology as a cult that ensnares vulnerable people or as a faith of self-empowerment, the film leaves a terrible taste of too much information. This must be its point, but take heed just the same.

The documentary is based on the 2013 book, Going Clear: Scientology, Hollywood and the Prison of Belief, by Lawrence Wright, who provides on-screen commentary here. It was directed by Alex Gibney, who also made the 2012 HBO documentary Mea Maxima Culpa: Silence in the House of God, about sexual abuse in the Catholic church. ...

As grim and creepy as much of “Going Clear” is, nothing is more disturbing than the account of how Scientology heavies bullied the IRS—using some 2,400 lawsuits and personal investigations of agency officials—into granting Scientology tax-exempt status as a church in 1993. What does it tell you that even back then, some unelected folks in California had more power than members of the U.S. Congress do today as they attempt to investigate the IRS—for using targeting tactics to intimidate people.

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March 30, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, March 29, 2015

North Carolina Dean Finalists

North Carolina LogoUniversity of North Carolina, Law School Dean Candidates Announced:

March 29, 2015 in Legal Education | Permalink | Comments (1)

L.A. Times: Pepperdine's Surf Chapel

SurfCool front page story in the L.A. Times:  At Pepperdine's Surf Chapel, Prayers Come in Waves:

On such a gray, nippy morning, most self-respecting college students would pull the covers over their heads and languish for a couple of extra hours in the sack.

But Asa Miller drove 30 miles from Simi Valley to greet the dawn at Zuma Beach.

After spending six years in the Navy, Miller sometimes feels at sea as a 24-year-old freshman at Pepperdine University in Malibu. That's why he heads to Surf Chapel, a weekly convocation on the sand, to help him get his bearings — by combining a little bit of God and a little bit of wave action.

"Surf Chapel is a chance to refocus the soul and mind," Miller said. "Being by the beach in the morning gives me perspective, reminding me of my place." ...

Surf Chapel is spearheaded by Rob Shearer, an assistant professor who teaches undergraduate students the decidedly secular topics of business statistics and quantitative decision-making.

Each Wednesday morning, he carries his surfboard and his New American Standard Bible and wades into the sacred realm of the outdoors, where he expounds the merits of religious belief and community building. ...

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March 29, 2015 in Legal Ed News, Legal Education, Pepperdine Legal Ed | Permalink | Comments (1)

The Top 5 Tax Paper Downloads

The IRS Scandal, Day 689

IRS Logo 2Politico, From IRS: 'Death by Delay':

Nearly two years after the IRS was exposed for improperly sidetracking requests for tax exemptions from tea party groups, POLITICO has learned that at least a half-dozen conservative applicants are still waiting for an answer.

This challenges repeated assertions by IRS Commissioner John Koskinen that his embattled agency has “completed” a set of recommendations to fix the problem and address a backlog of nearly 300 applications, some of which had been pending already for three years.

The groups that are still waiting include Karl Rove’s giant Crossroads GPS, which spent at least $26 million against Democrats in the last election cycle. But most of the half dozen are mom-and-pop outfits from New Mexico to New Jersey, run by volunteers out of their own houses and operating at a fraction of Crossroads’ budget.

The years-long delay has gutted these groups’ membership, choked their ability to raise funds, forced them to reserve pots of money for possible back taxes and driven them into debt to pay legal bills. ...

The agency said it cannot comment on specific cases, but it deflected blame, in part, to the Justice Department. When an applicant is suing the IRS, Justice also has a say in whether to issue a final ruling during litigation. Almost all the groups in limbo have taken the IRS to court.

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March 29, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Saturday, March 28, 2015

Low Income Taxpayer Clinic Grant Recipients For 2015

LITC LogoThe IRS announced yesterday (IR-2015-61) that it has awarded $10.25 million in matching grants to 132 Low Income Taxpayer Clinics (LITCs) for the 2015 grant cycle (Jan. 1, 2015 through Dec. 31, 2015). Through the LITC program, the IRS awards matching grants of up to $100,000 a year to qualifying organizations. For the 2015 grant cycle, the IRS awarded LITC grants to 132 organizations. For the full list of grant recipients, see here. For a list of the 39 law school tax clinic grant recipients, and the amount of their grants, see below the fold:

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March 28, 2015 in IRS News, Tax | Permalink | Comments (0)

Johnston: No, The Estate Tax Isn’t Destroying Family Farms

Al Jazeera, No, The Estate Tax Isn’t Destroying Family Farms, by David Cay Johnston:

Congress is voting this week on whether to repeal the estate tax. The step would be a huge boon to billionaires and others whose fortunes would forever escape taxation, creating an even larger dynastic class of inheritors who owe their riches to their skill at picking their parents.

But that’s not what was heard at a House Ways and Means Committee hearing last week. Instead the theme was how the tax was eviscerating American farmers.

This plan has no chance of becoming law while President Barack Obama is in office, but it has some Democrats running scared instead of standing on their principles. Some of them are talking about exempting farmers from the estate tax.

On the basis of the hearing, it’s hard to imagine why any people would want to farm or run their own business — that is, if you assume the hearing was grounded in reality.

The fact is that any claim that the estate tax is killing family farms is a lie.

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March 28, 2015 in Legal Education | Permalink | Comments (0)

WSJ: Last-Minute Tax Moves

Wall Street Journal, Last-Minute Tax Moves: As April 15 Nears, Here’s How to Maximize Savings and Avoid Pitfalls:

[D]on’t overpay Uncle Sam by forgoing a tax break to which you are entitled. Here are tips for coping with new and recurring issues this year.

  • Understand the new health-care provisions
  • Beware of new rules on employee stock options
  • Double-check W-2s, 1099s and other income reports
  • Got charitable donations? Get proof.
  • Maximize medical deductions
  • Take the right education break
  • Disclose foreign accounts and payments
  • Update logs and records
  • Gauge the year ahead

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March 28, 2015 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 688

IRS Logo 2Forbes, House Considers Bill To Stop IRS Targeting, Fire IRS Employees Who Do, by Robert W. Wood:

The House Committee on Ways and Means is busy with a bill that could change the IRS. H.R. 709, the Prevent Targeting at the IRS Act, calls for firing IRS employees who take certain official actions for political purposes. The fact that such a bill has been introduced makes you wonder. Isn’t that the law already? Not really.

Everyone wants to feel secure that they will be dealt with fairly by the IRS. The tax system is full of special rules, and no one can master them all. Thus, one taxpayer may be treated very differently from another who is seemingly in the same position. That probably isn’t fair, but don’t confuse this with fundamental procedural fairness and non-discrimination. That is at the heart of the IRS targeting debate, and why the issue is so terribly important to the tax system as a whole. ...

The proposed law would expand the scope of the violation concerning an IRS employee threatening to audit a taxpayer for the purpose of extracting personal gain or benefit. It would also cover an IRS employee who threatens to audit someone for political purposes.

The proposal requires the IRS to terminate an employee who, for political purposes or personal gain, undertakes official action with respect to a taxpayer or, depending on the circumstances, fails to do so, delays action or threatens to perform, delay or omit such official action. An ‘official action’ here would include an audit or examination.

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March 28, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, March 27, 2015

Brooklyn Law School Dean Calls For Audit of MBE

NCBENational Law Journal op-ed:  Too Much Power Rests with the National Conference of Bar Examiners, Nicholas W. Allard (Dean, Brooklyn):

Trying to improve the broken bar-exam system for licensing lawyers has been for too long like tilting at windmills while singing “The Impossible Dream.”

There is a disconnection between what the bar exam tests and what the American Bar Association and law schools require students to learn. Graduates must enroll in costly cram courses, forgo gainful employment for almost three months and incur collectively hundreds of millions of dollars in costs and lost income to survive the semiannual culling of the herd. Nor does the bar exam, which relies heavily on questions developed and scored by the National Conference of Bar Examiners, measure what one needs to know to be an effective lawyer.

Last July’s historic nationwide drop in the bar passage rate brought into sharp focus the urgent need to overhaul a system that ill serves the public, the profession and certainly the graduates of our law schools. Over the past several months, fellow deans across the country have asked for a complete, credible and accurate explanation of the July 2014 results. We still are waiting.

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March 27, 2015 in Legal Education | Permalink | Comments (11)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

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March 27, 2015 | Permalink | Comments (0)

Weekly Student Tax Note Roundup

Minnesota Hosts Symposium Today on Reforming the IRS

Minnesota LogoMinnesota hosts a Tax Policy Symposium today on Reforming the IRS:

Congress asks the IRS to handle a variety of government functions—not just collecting taxes, but also implementing the Affordable Care Act, monitoring the activities of tax-exempt organizations, and administering refundable tax credits designed to accomplish various social welfare goals, among other myriad tasks. Even beyond the controversy over its scrutiny of conservative political organizations, the IRS faces criticism for its handling of many of its congressionally-assigned functions, from its declining ability to handle routine taxpayer phone calls to its efforts to address fraud in the Earned Income Tax Credit program. Meanwhile, Congress has reduced the IRS’s budget, making it difficult for the IRS to accomplish all of its myriad tasks successfully. But even if Congress gave the IRS better funding, could the IRS accomplish all that Congress asks of it effectively? Or has the IRS reached a point institutionally at which it simply cannot do its many jobs well, irrespective of the funding that Congress provides? If it cannot, then what might IRS reform look like? [The symposium papers will be published in the Spring 2016 issue of the Columbia Journal of Tax Law.]

Keynote Address:   Nina Olson (National Taxpayer Advocate), The IRS and Taxpayer Trust: Recent Research on Promoting Compliance

Panel #1:

  • Steve Johnson (Florida State), Law From the Sublime to the Ridiculous and Most Things in Between: Options for Tax Administration in an Era of Growing Responsibilities for Shrinking Budgets
  • Leandra Lederman (Indiana), Does the IRS Need Further Reform? 
  • Commenters:  Andy Grewal (Iowa), Joe Thorndike (Tax Analysts)
  • Moderator:  Morgan Holcomb (Hamline)

Panel #2:

  • Lloyd Mayer (Notre Dame), The Better Part of Valour is Discretion: Should the IRS Surrender Its Oversight of Tax-Exempt Organizations?
  • Amy Monahan (Minnesota), The IRS as Health Care Agency
  • Commenters:  Paul Caron (Pepperdine), Chris Walker (Ohio State)
  • Moderator:  Claire Hill (Minnesota)

Panel #3:

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March 27, 2015 in Scholarship, Tax, Tax Conferences | Permalink | Comments (0)

Virginia Tax Study Group Meets Today

Virginia Tax Review (2015)The Virginia Tax Study Group meets today:

Panel #1:  D.C. Panel

  • Cameron Arterton (Deputy Tax Legislative Counsel, U.S. Treasury Department)
  • Tony Coughlin (Tax Counsel, Senate Finance Committee)
  • Rohit Kumar (Principal, PricewaterhouseCoopers)
  • Cecily Rock (Senior Legislation Counsel, Joint Committee on Taxation)
  • Jon Traub (Principal, Deloitte)

Panel #2:  The Significance of Recent Inversion Activity for Business Tax Reform, and Administrative Response

  • Ed Kleinbard (USC), Competitiveness’ Has Nothing to Do With It, 144 Tax Notes 1055 (Sept. 1, 2014)
  • Commentators:  Steve Shay (Harvard), Brenda Zent (Attorney-Advisor, Office of International Tax Counsel, U.S. Treasury Department)
  • Moderator:  Ruth Mason (Virginia)

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March 27, 2015 in Tax, Tax Conferences | Permalink | Comments (0)

UK to Kill Private Equity Management Fee Waivers

The UK has proposed legislation that would kill private equity management fee waivers ("disguised fees" in UK parlance), effective  April 6, 2015.  In this country, private equity management fee waivers are listed (on page 21) of the 2014– 2015 Priority Guidance Plan, with guidance supposedly "imminent."

Prior TaxProf Blog coverage:

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March 27, 2015 in Tax | Permalink | Comments (0)

Tributes to Leon Gabinet

GabinetTax Prof Leon Gabinet retired last Spring at age 87 after 46 years on the Case Western Law School faculty:

Born in Poland, Gabinet moved with his family to Chicago as a boy. After serving in the U.S. Navy during World War II, he received his bachelor's and law degrees from the University of Chicago, where he was an editor of the law review. His law school classmates included Robert Bork (who became a leading scholar of antitrust law but, we hear, used Gabinet's outline to get through their law school Antitrust course) and Marvin Chirelstein (another prominent tax professor). Between college and law school, Gabinet spent two years in medical school. Along the way he also found time to play Junior A hockey, where his defense partner was future Hall of Famer Harry Howell. Although he returned to school to complete his education, Gabinet continued to play recreational hockey for many years (including games with and against some of his students). ...

Although Gabinet will be retiring, he intends to continue teaching one course annually. In fact, at the age of 87, he has decided to take up a new one, Insurance Law, which we have not been able to offer since Professor Wilbur Leatherberry ADL '65, LAW '68 retired two years ago

Tribute to Professor Leon Gabinet, 65 Case W. Res. L. Rev. 1-23 (2014):

March 27, 2015 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (0)

The IRS Scandal, Day 687

IRS Logo 2Town Hall, Congress Should Protect the Fair Treatment for All Donations:

Beginning in 2010, the Internal Revenue Service (IRS) systematically targeted taxpayers based on their political beliefs. Unaccountable, unelected bureaucrats at the IRS deliberately slowed and denied applications for tax-exempt status because the applicants did not share their politics. Although it’s deeply concerning that unelected, unaccountable bureaucrats at the IRS were using the tax code to restrict free speech, what’s more unfathomable is that Congress has done very little to date to protect individuals from future IRS targeting.

Congress should act to protect citizens of all political persuasions from similar politically-motivated targeting in the future. Thankfully the House Ways and Means Committee is currently working on legislation that would help. The bill prohibits the IRS from applying the federal gift tax to contributions to tax-exempt organizations.

The original intent of the federal gift tax was to stop taxpayers from sidestepping the federal death tax—i.e., transferring gifts of money while an aging taxpayer is still alive instead of paying a 40 percent tax on the entire estate after death. Congress did not enact the gift tax to apply to contributions made to tax-exempt organizations.

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March 27, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, March 26, 2015

The Economist: Lawyers Beware: The Accountants Are Coming After Your Business

Economist Logo (2015)The Economist, Attack of the Bean-counters. Lawyers Beware: The Accountants Are Coming After Your Business:

Consulting has its Big Three; accounting the Big Four; and executive search a Big Five. But there is no corresponding clutch of dominant law firms. None has amassed as much as 0.5% of an industry with global revenues of around $650 billion a year. Even the biggest law firms may be anachronistically inefficient. They are run by lawyers, not professional managers, insist on charging by the “billable hour” rather than by results and use little technology more advanced than e-mail. Nonetheless, most big law firms have continued to be highly profitable.  

In recent years, clients have begun to rebel against the billable hour, and at being charged senior lawyers’ rates for work done by juniors. Some have started sending basic legal paperwork to cheap, offshore processing centres. But only now is a serious threat to the law firms’ cosy existence emerging.

It comes from none other than the Big Four accounting networks (Deloitte, EY, KPMG and PwC), whose combined annual revenues of $120 billion exceed the $89 billion generated by the 100 largest law firms combined (see charts).


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March 26, 2015 in Tax | Permalink | Comments (7)

Gender Disparities in Law School Participation Remain

Harvard Law Record, Gender Disparities in Law School Participation Remain:

Gender disparities in law school performance remain pervasive at even the most elite schools. Studies evaluating grades from the past two decades at both Stanford (2001-2012) and Yale (1995-96, 1997) Law Schools found that women receive lower grades and, at Yale, a lower percentage of clerkships. Research suggests that grades and participation may be correlated. Yale law students in 2011 collected classroom data from 21 classes of different sizes, which included how often men and women answered cold-calls, volunteered comments, and interrupted other students.  When adjusted for attendance, only 42.8% of “participation events” came from women.

Harvard is no better. HLS alum Adam Neufeld evaluated student performance from 1997-2003.  He found that men received higher grades in 1L classes and were more likely to graduate with latin honors.  Moreover, in a study monitoring 32 1L courses for 190 total class meetings in Spring 2003,  Neufeld found that men were 50% more likely to volunteer at least once during class and 142% more likely to volunteer three or more times.  Although women comprised 45% of students, they only made 39% of all comments.

Has the gender gap narrowed over the past decade? To investigate this question, the WLA monitored the number of comments made by men and women throughout 1L sections.

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March 26, 2015 in Legal Education | Permalink | Comments (4)

Taxation of Entertainers, Athletes, and Artists

ABALionel Sobel, Taxation of Entertainers, Athletes, and Artists (ABA Press, 2015):

As entertainers, athletes, and artists are often treated differently by the public, tax law also distinguishes between them and people who earn their living in more traditional ways. Their unique forms and sources of income; where the income is earned; and the sometimes uncertain ways that it is compensated require careful understanding and special handling

Taxation of Entertainers, Athletes, and Artists discusses the complex issues affecting the income taxation of these professionals. In this clearly written book, author Lionel S. Sobel provides numerous examples, calculations, charts and graphs to illustrate the material. He explains how taxation affects them in two sections:

Part I: U.S. domestic taxation policies and procedures, addressing how the United States taxes income earned in the United States by entertainers, athletes and artists who are United States citizens and resident aliens.

Part II: International taxation, covering the way that the United States taxes income earned in the U.S. by entertainers, athletes, and artists who are nonresident aliens, and how other countries tax income in those countries when these performers and artists are U.S. citizens and U.S.-resident aliens. This part also considers how the U.S. has provided some tax relief for those of its citizens and resident aliens who pay tax in other countries.

March 26, 2015 in ABA Tax Section, Book Club, Scholarship, Tax | Permalink | Comments (0)

Kahn & Kahn: The Agency Exception to the Anticipatory Assignment of Income Doctrine

Douglas A. Kahn (Michigan) & Jeffrey H. Kahn (Florida State), The Agency Exception to the Anticipatory Assignment of Income Doctrine:

One consequence of having graduated income tax rates is that it becomes advantageous to shift income from a high bracket taxpayer to a person in a lower tax bracket. A number of different vehicles have been tried to shift the incidence of the income tax to another person, and the courts and Congress have adopted a number of rules to prevent that from occurring. As early as 1930, the Supreme Court adopted the anticipatory assignment of income doctrine to prevent a person who anticipates earning income from his services from shifting that income to another person in a lower tax bracket. Income is taxed to the person whose services produced it rather than to the person who has the beneficial right to possess the income once it is earned.

This article discusses the tax treatment of an employee whose services create income for his employer. The anticipatory assignment of income doctrine does not apply in these circumstances under the so-called agency exception. This article explains the policy justification of the agency exception and uses examples to help illustrate when and when not the agency exception should apply.

March 26, 2015 in Scholarship, Tax | Permalink | Comments (1)

California Law School Job Placement Rankings

Sac BeeSacramento Bee, How California Law School Job Placement Rates Compare:

Though the economy is improving, job placement rates for California law schools dipped in the latest figures.

Look through the slideshow to see California's 21 American Bar Association-approved law schools, ranked by the percentage of 2013 graduates holding full-time, long-term jobs that require a juris doctor degree.

The median rate was 43 percent, down about a point from 2012.

1 Stanford 87.6%
2 UC-Berkeley 86.7%
3 UCLA 75.9%
4 UC-Davis 70.4%
5 USC 65.0%
6 UC-Irvine 64.3%
7 San Diego 53.1%
8 Pepperdine 53.1%
9 Loyola-L.A. 50.6%
10 Santa Clara 44.1%
11 UC-Hastings 42.9%
12 Southwestern 40.0%
13 Chapman 38.2%
14 Western State 37.4%
15 McGeorge 36.8%
16 San Francisco 36.0%
17 Cal-Western 35.2%
18 La Verne 34.9%
19 T. Jefferson 29.0%
20 Whittier 26.7%
21 Golden Gate 22.8%

March 26, 2015 in Law School Rankings, Legal Education | Permalink | Comments (3)

Galle: In Praise of Ex Ante Regulation

Brian D. Galle (Boston College; moving to Georgetown), In Praise of Ex Ante Regulation, 68 Vand. L. Rev. ___ (2015):

Timing is an important consideration in regulatory design. Corrective taxes are usually imposed before or contemporaneously with the harmful activity they are aimed at preventing, while tort awards are assessed ex post, in its aftermath. Patents and research grants both can encourage innovation, but patents pay off only after the invention is marketed. In a world of perfect information, fully rational actors, and complete credit or insurance markets, time would not matter. In the real world, though, the failure of one or more of these assumptions can change dramatically the impact of a regulatory option. For example, prior commentators have largely favored ex post incentives on the ground that government has much better information after the regulated activity is complete.

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March 26, 2015 in Scholarship, Tax | Permalink | Comments (0)

April 1 Call for Papers Deadline: IFA International Tax Symposium

IFAThe International Fiscal Association has issued a Call for Papers for the Second International Tax Research Symposium in Basel, Switzerland:

We are pleased to announce the call for papers for the Second International Tax Research Symposium held in conjunction with the 69th Congress of the International Fiscal Association in Basel, Switzerland (August 30 to September 3, 2015). After the success of the first International Tax Research Symposium held during the IFA Congress in Boston in 2012 we are delighted to invite you for the Second International Tax Research Symposium in Basel. The International Tax Research Symposium aims to provide a platform for international scholars in international taxation. The Second IFA International Tax Symposium will be held on Sunday, August 30, 2015 (afternoon) in Basel and is supported by the International Fiscal Association. 

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March 26, 2015 in Scholarship, Tax, Tax Conferences | Permalink | Comments (0)

Accountants Talk About Their Dreams

(Hat Tip:  Going Concern.)

March 26, 2015 in Tax | Permalink | Comments (1)

The IRS Scandal, Day 686

IRS Logo 2National Journal, There's an IRS Investigation That's Bipartisan and Leak-Free. Really.:

The Senate Finance Committee's investigations team is highly caffeinated.

How else could it have gotten through more than a million pages of documents in the last two years? There is an art to the kind of mind-numbing digging that these sleuths do. They set weekly goals for the number of pages reviewed, but they build in time for breaks. The Republican lead investigator tries to make sure her team spends only half its days in document-review mode and the other half doing something else. Every discovery must be fact-checked; the most important goal is to be as meticulous and thorough as possible, no matter how long it takes.

Welcome to the only bipartisan investigation of the Internal Revenue Service in town. The group consists of roughly half a dozen staffers from both Chairman Orrin Hatch's committee roster and that of ranking member Ron Wyden. They have become chummy over the last few years. Republican and Democratic aides meet regularly to share "hot docs" and observations from their individual perusals. As one aide put it, "There's no 'hide the ball' going on."

The goal of the investigation is to reach a common understanding of the facts, which is no small endeavor when it involves one of the highest-profile scandals of the Obama presidency. If IRS officials did actually subject tea-partiers' tax-exempt applications to questionable scrutiny, that is an intolerable breach of public trust, said Hatch and then-Chairman Max Baucus in a 2013 joint letter to the IRS. Hatch was the committee's ranking member at the time, and that letter launched the investigation. Wyden took over the project when Baucus stepped down last year to become the U.S. ambassador to China.

Democrats and Republicans definitely don't agree about whether there was a political conspiracy at work in the IRS before the 2012 elections. Those kinds of conclusions are matters of interpretation and ideology that have derailed other congressional investigations that attempted to include Democrats.

To keep away from such incendiary questions, investigators on the Finance Committee have pledged to focus solely on what happened. Did the IRS selectively subject certain groups based on their political orientation to additional scrutiny when they requested tax-exempt status? What words or phrases did IRS staff look for when determining which applications would be pulled for additional review? Did that strategy violate internal policy? Was the White House involved?

Since the investigators' primary goal is to keep Republicans and Democrats at the table, they work hard to keep politics out of it. ...

The Finance Committee's report will be a different animal, aides from both parties say. They are examining the same questions that others have probed, but they aim to be seen—if such a thing is even possible on Capitol Hill—as completely objective in their conclusions. Something obviously went awry at the IRS. They want to give the public specifics about what it actually was.

Hatch and Wyden plan to offer their staff's findings of IRS misconduct together and (hopefully) free of political statements. That will happen later this year, barring any unforeseen developments. Staffers say the bulk of the report will consist of the facts on which both sides have agreed and the conclusions they have jointly drawn.

But bipartisanship can only go so far. After the joint conclusions, each side will then release its own views about what those agreed-upon facts mean—separately.

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March 26, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, March 25, 2015

U.S. News Rankings: 2016 v. 2015 Changes in All Reported Categories for All Law Schools

2016 U.S. News RankingsBrian Huddleston (Senior Reference Librarian, Loyola (New Orleans)) has compiled this wonderful 29-page color-coded chart showing the changes in this year's U.S. News Law School Rankings from last year's rankings in all seventeen of the published U.S. News rankings categories for each of the 198 law schools:

  • Green:  school improved in category in this year's rankings
  • Red:  school declined in category in this year's rankings
  • Yellow:  school's performance in category in this year rankings is same as last year

(Click on chart to enlarge.)

Top 3

Here are Pepperdine's numbers (click on chart to enlarge):

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March 25, 2015 in Law School Rankings, Legal Education | Permalink | Comments (3)

Schön Presents Neutrality and Territoriality in European Tax Law Today at Penn

SchoenWolfgang Schön (Max Planck) presents Neutrality and Territoriality: Competing or Converging Concepts in European Tax Law? at Pennylvania today as part of its Tax Law and Policy Workshop Series hosted by Chris William Sanchirico and Reed Shuldiner:

This article presents an analysis of the ECJ case law on the interaction between the fundamental freedoms and national tax systems. It pleads for a strict application of a unilateral neutrality principle based on non‐discrimination and rejects those strands of the judicature which apply an overall perspective to the taxation of cross‐border events by two (or more) involved states. The article criticizes the emerging trend in the ECJ’s jurisprudence to stress the territorial demarcation of Member States’ taxing rights and supports a sophisticated application of the concept of “coherence” in order to reconcile the requirements of neutrality with the territorial limitations of taxing power.

March 25, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Kirsch, Schneider Debate Citizenship-Based Taxation v. Residence-Based Taxation

ACAThe American Citizens Abroad Global Foundation has released a new video aimed at breaking down the merits of Residence-based taxation in a clear and simple way for key decision makers and the public:  21st Century Taxation of Americans Abroad: Citizenship-based Taxation vs. Residence-based Taxation

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March 25, 2015 in Scholarship, Tax, Tax Conferences | Permalink | Comments (5)