Paul L. Caron

Monday, October 19, 2015

Crane Reviews Osofsky's The Case for Categorical Nonenforcement

JotwellCharlotte Crane (Northwestern), Nobody's Perfect, Not Even the IRS (Jotwell) (reviewing Leigh Osofsky (Miami), The Case for Categorical Nonenforcement, 69 Tax L. Rev. ___ (2015)):

We tax academics in law schools have an affinity for the logical operation of rules. We could not remain immersed in the intricacies of the income tax—and therefore remain competent as scholars and teachers—if we did not. Considerable resources have been devoted to the elaboration of rules developed through the logical application of a few basic principles. These principles, including those associated with the Haig-Simons definition of income and those governing accounting for capital, allow us to view this body of law as determinative, and thus capable of uniform application. In other words, the income tax system has long used this logic as the basis of its claim to rule-of-law legitimacy. The resulting set of rules is elaborate, indeed, it often seems as if it is among the most elaborate sets of rules ever devised.

But as specialists engaged in this elaboration, we must also understand that a legitimate tax system cannot be maintained merely by the articulation of these rules. The rules themselves will never be self-enforcing. And the mere elaboration of additional rules will never close the gap between the revenue that would be collected under a perfect application of the rules and the revenue that will actually be collected.

Leigh Osofsky’s article, The Case for Categorical Nonenforcement, soon to appear in the Tax Law Review, provides an opportunity to explore this tension between the formal elaboration of the tax law and the capacity of the Internal Revenue Service to enforce it. The tension is easily seen throughout the actual operation of the income tax law, whether one looks at the actual treatment of large partnerships, frequent flyer miles, fringe benefits claimed by non-employees, or many other provisions.

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