Paul L. Caron
Dean





Monday, March 22, 2021

Lesson From The Tax Court: S Corp Payments To Sole Shareholder Were Wages

I think of corporations as a type of vessel that sails the seas of commerce.  Like real ships, corporations are commanded by officers.  All crew, including officers, are compensated for their services.  At the end of the commercial voyage, however, an end marked either by time or transaction, profits earned are distributed to the owners of the ship.  When the officers are also the owners it becomes difficult to distinguish payments that represent wages for their services in commanding the ship from payments that represent distribution of profits.  Yet for both employment and income tax reasons, such distinction must be made.

In Lateesa Ward and Ward & Ward Company v. Commissioner, T.C. Memo. 2021-32 (Mar. 15, 2021) (Judge Holmes), we learn why payments from the taxpayer’s S corporation to the taxpayer were wages and not distributions of profit.  The case teaches a basic employment tax lesson for S Corps and a basic income tax lesson for sole shareholders.  Details below the fold.

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March 22, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (6)

Sunday, March 21, 2021

Lord: Religious Legitimacy

Phil Lord (McGill; Google Scholar), Religious Legitimacy, 90 UMKC L. Rev. ___ (2021):

This article seeks to demonstrate both the importance of expertise and scholarship in framing a religion’s claim of legitimacy in law, and how expertise can be harnessed by a religious group to gain this legitimacy. From a broad overview of the consequences of religious status, the article analyses the tests used to attribute the status, to show the crucial role that they afford to experts and scholarship. It then argues that new religious movements, and Scientology, are ideal case studies to illustrate the importance of scholars and scholarship. Scientology is indeed the only major religion to have emerged in the twentieth century and is unique in that it has, over this period, gained, lost, re-gained, and grappled with ongoing challenges to its status in law. The article then illustrates these issues with an analysis of two key periods from Scientology’s history: its ultimately successful fight to gain tax-exempt status in the United States in the 1980s, and its response to modern-day challenges to its tax-exempt status.

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March 21, 2021 in Legal Education, Scholarship, Tax, Tax Scholarship | Permalink

The Top Five New Tax Papers

There is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #5. The #1 paper is #267 among 15,819 tax papers in all-time downloads:

  1. SSRN Logo (2018) [1,318 Downloads]  The Impact of Public Perceptions on General Consumption Taxes, by Rita de la Feria (University of Leeds; Google Scholar) & Michael Walpole (University of New South Wales; Google Scholar)
  2. [521 Downloads]  Tax Complexity and Transfer Pricing Blueprints, Guidelines, and Manuals, by Jean-Edouard Colliard (HEC Paris; Google Scholar), Lorraine Eden (Texas A&M; Google Scholar) & Co-Pierre Georg (University of Cape Town; Google Scholar)
  3. [507 Downloads]  A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s, by Nicholas Parrillo (Yale)
  4. [324 Downloads]  Inter-Nation Equity Revisited, by Ivan Ozai (McGill; Google Scholar) (reviewed by David Elkins (Netanya) here)
  5. [266 Downloads]  A Wealth of Sovereign Choices: Tax Implications of McGirt v. Oklahoma and the Promise of Tribal Economic Development, by Stacy Leeds (Arizona State; Google Scholar) & Lonnie Beard (Arkansas)

March 21, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Friday, March 19, 2021

Weekly SSRN Tax Article Review And Roundup: Holderness Reviews Saito's Tax Coordination

This week, Hayes Holderness (Richmond) reviews Blaine G. Saito (Northeastern), Tax Coordination, 38 Ga. St. U. L. Rev. ___ (2022):

Holderness (2017)The idea of tax expenditures—those provisions of the tax law not in line with the normative base—has intuitive appeal. Of course the tax law is imperfect, but if we pinpoint the offending provisions, we can approach a more perfect code. Now where did we put that normative baseline? Harsh and compelling critiques of the tax expenditure concept essentially accuse it of masking personal preferences regarding the desirability of tax provisions, yet the concept apparently cannot be so easily killed off.

Though I may be stretching the article too far in this claim, Blaine Saito’s forthcoming article, Tax Coordination, offers an alternative way to think about tax expenditures. They are those provisions of the tax law with effects on social policy. Further, they are those provisions of the tax law that could benefit from interagency coordination. The thrust of Saito’s argument is that the Internal Revenue Service and Treasury should be encouraged to play nicer with others, but in this argument lies a lesson about tax expenditures: they are those provisions of the tax law that the tax authorities are not well-suited to administer alone.

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March 19, 2021 in Hayes Holderness, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

Next Week's Virtual Tax Workshops

Tuesday, March 23: Young Ran (Christine) Kim (Utah; Google Scholar) will present Taxing Teleworkers virtually at Florida State as part of its Tax Workshop Speaker Series. If you would like to attend, please contact Jeffrey Kahn.

Thursday, March 25: Kristin Hickman (Minnesota; Google Scholar) will present OIRA Review of Tax Regulatory Activities virtually at Duke as part of its Tax Policy Workshop Series. If you would like to attend, please contact  Richard Schmalbeck or Lawrence Zelenak.

Friday, March 26: Jinyan Li (Osgoode) will present Legal Challenges in Creating a Global Tax Regime with OECD Pillar One Blueprint virtually at British Columbia as part of its Tax Law and Policy Workshop Speaker Series. If you would like to attend, please contact  Wei Cui.

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March 19, 2021 in Colloquia, Legal Education, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Pistor Presents The Code of Capital  Virtually Today At Oxford-Virginia

Katharina Pistor (Columbia) presents Chapter 6 (A Code for the Globe) of The Code of Capital: How the Law Creates Wealth and Inequality (Princeton University Press 2019) virtually at the Oxford-Virginia Legal Dialogs: Tax Meets Non-Tax Series today hosted by Tsilly Dagan and Ruth Mason:

Code of Capital 3Capital is the defining feature of modern economies, yet most people have no idea where it actually comes from. What is it, exactly, that transforms mere wealth into an asset that automatically creates more wealth? The Code of Capital explains how capital is created behind closed doors in the offices of private attorneys, and why this little-known fact is one of the biggest reasons for the widening wealth gap between the holders of capital and everybody else.

In this revealing book, Katharina Pistor argues that the law selectively “codes” certain assets, endowing them with the capacity to protect and produce private wealth. With the right legal coding, any object, claim, or idea can be turned into capital—and lawyers are the keepers of the code. Pistor describes how they pick and choose among different legal systems and legal devices for the ones that best serve their clients’ needs, and how techniques that were first perfected centuries ago to code landholdings as capital are being used today to code stocks, bonds, ideas, and even expectations—assets that exist only in law.

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March 19, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Tedds Presents Reforms For A More Just Society  Virtually Today At British Columbia

Lindsay Tedds (Calgary; Google Scholar) presents Covering All the Basics: Reforms for a More Just Society (with David A. Green (British Columbia; Google Scholar) & Jonathan Rhys Kesselman (Simon Fraser)) virtually at British Columbia today as part of its Tax Law and Policy Workshop Speaker Series hosted by Wei Cui:

Lindsaytedds2016On July 3, 2018, the Government of British Columbia announced the creation of an expert committee to “test the feasibility of a basic income in BC and help find ways to make life better for British Columbians.” The expert committee followed a two year consultation process on poverty reduction in BC, legislative poverty reduction targets, and a poverty reduction strategy. Our approach to our task was two-pronged: to undertake a public outreach process, and to co-ordinate a comprehensive research agenda related to basic income in the context of the B.C. income and social support system. Our research program consists of over 40 research papers commissioned from over 40 Canadian researchers located at universities and institutes across Canada plus a few located abroad. On January 28, 2021 our final report and all input material was made public. Dr. Tedds will join us to walk through the work of the panel, its findings, and its main recommendations.

Executive Summary

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March 19, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Thursday, March 18, 2021

Wilking Presents Who Bears The Cost Of A Change In Remittance Policy?: Evidence From Amazon's Voluntary Collection Agreements Virtually Today At Indiana

Eleanor Wilking (Cornell) presents Who Bears the Cost of a Change in Remittance Policy?: Evidence from Amazon's Voluntary Collection Agreements virtually at Indiana today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

Eleanor Wilking 450x515 reduced (1)The South Dakota vs. Wayfair (2019) Supreme Court decision changed a long-standing difference in the way U.S. sales tax administrations treated online and brick-and-mortar commerce. Online retailers now have to remit sales taxes in most states. Despite the attention this decision received, we know little about how shifting the responsibility to remit from the consumer to the retailer will affect the tax system. Using states’ staggered adoption of Voluntary Collection Agreements (VCAs) which committed large online retailers to remit taxes prior to the Wayfair decision, we find that the increase in compliance resulting from these arrangements was almost fully passed-through to consumers via higher tax-inclusive prices. Consumers also reduced their online expenditures. However, we do not find strong evidence of an impact on the elasticity of the tax base. 

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March 18, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Repetti Presents Equity And Efficiency In A Progressive Income Tax Virtually Today At Duke

Jim Repetti (Boston College; Google Scholar) presents Appropriate Roles for Equity and Efficiency in a Progressive Individual Income Tax, 23 Fla. Tax Rev. 522 (2020), virtually at Duke today as part of its Tax Policy Workshop Series hosted by Richard Schmalbeck & Lawrence Zelenak:

ProfileImage.img (1)Increased focus on economic efficiency in formulating tax policy, at the expense of achieving equity, has resulted in decreased rate progressivity in our individual income tax. This decrease has exacerbated inequality.

There are several explanations for the intense focus on efficiency and reduced emphasis on equity. Predictions of efficiency gains from low individual income tax rates appear more certain than equity gains from progressive tax rates. Efficiency gains seem measurable, while equity gains appear intangible and unquantifiable. In addition, distributive justice, which underlies and shapes tax equity, exists in many abstract forms, some of which may not require progressive tax rates.

This Article argues, however, that the emphasis on efficiency is misplaced. Inequality imposes measurable costs on the health, social well-being, and intergenerational mobility of our citizens, as well as on our democratic process. This is corroborated by significant empirical analysis.

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March 18, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Bearer-Friend: Tax Without Cash

Jeremy Bearer-Friend (George Washington), Tax Without Cash, 106 Minn. L. Rev. ___ (2021):

This Article documents and evaluates tax obligations paid without cash, referred to as “in-kind tax paying.” Such forms of tax paying include paying federal income taxes by remitting a used, flatbed truck to the IRS, paying local property taxes by working a few hours a month answering phones at city hall, and paying state excise taxes by conveying a proportion of all seashells farmed within a state to that state. These are not just hypotheticals, but forms of in-kind tax paying that occur in the United States throughout periods when many taxes are also paid in cash. Nevertheless, despite its long history and prevalence, in-kind tax paying has been underexplored as a viable, and potentially appealing, form of tax remittance.

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March 18, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Burke: The Spurious Allure Of Passthrough Parity

Karen C. Burke (Florida), The Spurious Allure of Passthrough Parity, 52 Loy. U. Chi. L.J. 351 (2020):

In 2017, Congress reduced tax rates on both corporate and noncorporate income. The drafters invoked the concept of pass-through parity to justify lower rates on noncorporate business income, resulting in a new and highly controversial deduction for pass-through owners under § 199A. The concept of pass-through parity conflates equitable treatment of different entity forms with equitable distribution of the ultimate tax burden among labor and capital. The flawed rationale for § 199A may be viewed as an attempt to preserve the pre-2017 preference for pass-through income; conceptually, the advantage of lower corporate rates is limited to the availability of a higher after-tax rate of return on reinvested corporate earnings, obviating concerns about mass conversions. Despite the stated goal of distinguishing labor income from capital income in noncorporate businesses, the purported guardrails under § 199A provide a substantial subsidy for active passthrough owners by offering a lower tax rate on commingled labor and capital returns.

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March 18, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Saito: Tax Coordination

Blaine G. Saito (Northeastern), Tax Coordination, 38 Ga. St. U. L. Rev. ___ (2022):

The United States implements much of its social policy through the income tax laws. The Code is rife with tax expenditures for education, housing, community economic development, retirement savings, and health care to name a few. But the IRS is not an agency with expertise in any of these areas and developing such expertise would draw resources away from its core tax administration mission. Commentators have thus called for a series of changes from turning these tax expenditures into outlays for these programs or to divest the IRS/Treasury of most of the administration of social policy tax expenditures. Yet, given American politics and the institutional structure of the federal government, these moves are both unlikely to occur and unwise.

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March 18, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Wednesday, March 17, 2021

Liscow Presents The Psychology Of Taxing Capital Income Virtually Today In California

Zachary Liscow (Yale; Google Scholar) presents The Psychology of Taxing Capital Income: Evidence from a Survey Experiment on the Realization Rule (with Edward Fox (Michigan; Google Scholar)) virtually in California today as part of the San Diego-Davis-Hastings Tax Law Speaker Series:

Liscow_zachary-webThe realization rule is central to income tax law, but often decreases the efficiency, equity, and simplicity of the system. Given these problems, it is surprising that we do not have a good explanation for why the rule exists for liquid assets. Scholars have long speculated about the role of the public’s views here, but little is known empirically about them. We conduct the first survey experiment to understand the psychology of taxing gains on unsold assets.

We have three main findings. First, respondents strongly prefer to wait to tax gains until sale: 75% to 25%. This lack of support persists and seems strengthened when looking across a variety of other policy framings. But the flip side is that there is surprisingly strong support for taxing assets at sale or transfer, including death, in places where current law excludes gains. Second, views barely change when participants are randomly given videos explaining the pros and cons of taxing before sale, though the pro and con treatments have large effects individually.

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March 17, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Singer Presents The Due Diligence Defence For Director’s Liability In Tax Law Virtually Today At Toronto

Samuel Singer (Ottawa; Google Scholar) presents Critically Analyzing the “Reasonably Prudent Person”: The Due Diligence Defence for Director’s Liability in Tax Law (with Morena Cheng (Blake, Cassels & Graydon, Calgary)) virtually at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Samuel_singer_photo_for_websiteIn Canadian tax law, directors who face liability for corporate debts may invoke the due diligence defence. A successful defence must demonstrate that the director exercised the degree of care, diligence, and skill that a reasonably prudent person would have exercised in comparable circumstances. Following the Supreme Court of Canada decision in Peoples Department Stores Inc. (Trustee of) v Peoples, the Federal Court of Appeal in Buckingham v The Queen held that the due diligence defence is an objective standard. This article critically analyzes the reasonably prudent person test in tax law after Buckingham. It argues that while the objective standard is presented as a neutral test, the degree of care, diligence, and skill that corporate directors can exercise is significantly influenced by their socioeconomic conditions and personal circumstances. The article draws on a case law review to demonstrate the ongoing and sometimes inconsistent consideration of the personal and socioeconomic circumstances of a director. Directors may experience differential treatment depending on which comparable circumstances the courts consider when applying the reasonably prudent standard. 

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March 17, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Pittsburgh Tax Review Symposium: Tribute To Nina Olson

Pittsburgh Tax Review (2017)Symposium, Tribute to National Taxpayer Advocate Nina Olson, 18 Pitt. Tax Rev. 1-189 (2020):

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March 17, 2021 in Conferences, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink

Avi-Yonah, Gamage, Shanske & Stark: Is New York's Mark-to-Market Act Unconstitutionally Retroactive?

Following up on my previous post, New York's Proposed Mark-to-Market Wealth Tax Would Raise $23 Billion From <200 Billionaires:  Reuven S. Avi-Yonah (Michigan), David Gamage (Indiana), Darien Shanske (UC-Davis) & Kirk J. Stark (UCLA), Is New York's Mark-to-Market Act Unconstitutionally Retroactive?, 99 Tax Notes State 541 (Feb. 8, 2021):

AGSSIt is well known in tax literature that rudimentary tax planning strategies enable wealthy individuals to avoid state and federal income tax on much of their true economic income. Indeed, the existing income tax has been described as being effectively optional for those who derive their income chiefly from the ownership of assets rather than the provision of services. The reason is — except for a few relatively narrowly tailored deemed-realization rules — both state and federal income taxes rely on the realization principle. Under realization accounting, taxpayers generally do not owe tax on economic gains until they sell their appreciated assets. Moreover, this is so even when taxpayers fund lavish lifestyles by borrowing against their appreciated assets.

Legislation under consideration in New York would limit the ability of the state’s wealthiest taxpayers to escape tax in this manner. The Billionaire Mark-to-Market (MTM) Tax Act (S. 8277B/A. 10414) would require these taxpayers to reports gains and losses as they accrue, rather than upon sale or exchange as under current law.

Opponents claim that the MTM Act is unconstitutional. In a separate essay, we will explain why and how the New York Constitution authorizes accrual taxation through deemed realizations as in the MTM Act (and also as in a number of existing provisions of state income tax law). Here, we evaluate the retroactivity concerns that the legislation’s opponents have raised.

On its face, the MTM Act is not retroactive.

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March 17, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Tuesday, March 16, 2021

Field Presents Itemization After The TCJA: How State Election Uniformity Laws Undermined Tax Simplification Virtually Today At Florida State

Heather Field (UC-Hastings; Google Scholar) presents Itemization After the TCJA: How State Election Uniformity Laws Undermined the Goal of Simplifying the Individual Income Tax virtually at Florida State today as part of its Tax Workshop Speaker Series hosted by Jeffrey Kahn:

FieldAlmost 30 million fewer federal income tax returns with itemized deductions were filed for the 2018 tax year than were filed for 2017.  On the surface, that suggests that the TCJA’s itemization-related changes—specifically, the increase to the standard deduction and limits on itemized deductions—simplified the individual income tax system.  A closer look at the data, however, tells a more complex story.  Specifically, this Article uses federal and state individual income tax filing data from the 2017 and 2018 tax years to demonstrate that the TCJA’s impact on itemization rates varied from state to state depending, among other things, on whether the state obligated its taxpayers to make the same tax election (i.e., to itemize or take the standard deduction) for state purposes as the taxpayer made for federal purposes. 

Drawing on insights from the data analysis, this Article argues that (1) the TCJA’s itemization-related changes did not result in nearly as much simplification for individual taxpayers as the federal itemization data alone would suggest, (2) state income tax laws complicated federal tax administration by causing some taxpayers to continue to itemize for federal purposes post-TCJA even though their federal itemized deductions were less than the federal standard deduction, and (3) the TCJA’s itemization-related changes (to federal tax law) complicated tax administration for some state tax authorities, even in states with income tax laws that largely conform to federal income tax laws.

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March 16, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Brown Reviews Bearer-Friend's The Challenge Of Colorblind Tax Data

Jotwell (Tax) (2016)Dorothy Brown (Emory), Colorblind No More (JOTWELL) (reviewing Jeremy Bearer-Friend (George Washington), Should the IRS Know Your Race? The Challenge of Colorblind Tax Data, 79 Tax L. Rev. 1 (2019)):

The summer of 2020 opened the eyes of many to the concept of systemic racism, and some even started looking in unlikely places – like tax law. Senator Sherrod Brown (D-Ohio) acknowledged in a June 2020 hearing that “Congress writes the tax laws. If there are ways that our current tax code exacerbates racial inequity, then it’s our job to fix it.”

Senator Brown’s articulated vision will be difficult to achieve because the Internal Revenue Service (“IRS”) does not collect or publish statistics by race. I confirmed this fact in a telephone interview with an IRS employee when I was writing one of my first pieces about systemic racism and tax policy over two decades ago. I was most interested in the distribution question – whether or not taxpayers were treated differently by race. (The answer is yes — they are treated differently. I write about this in a forthcoming book, The Whiteness of Wealth: How the Tax System Impoverishes Black Americans—And How We Can Fix It.) But equally important questions were asked and answered by George Washington University Associate Professor of Law Jeremy Bearer-Friend, in his article: Should the IRS Know Your Race? The Challenge of Colorblind Tax Data. ...

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March 16, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Bryan: The Dearth Of U.S. Tax Treaties With Latin America

Patricia A. Bryan (Miami), How Hard Can This Be? The Dearth of U.S. Tax Treaties with Latin America, 74 U. Miami L. Rev. 359 (2020):

The United States has fewer tax treaties with countries in Latin America and the Caribbean than the United Kingdom, France, Germany, Spain and even China have with such countries. After first describing ways in which tax treaties reduce barriers to cross-border trade and investment, this Article considers in turn various possible explanations for this situation.

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March 16, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Monday, March 15, 2021

COVID-19: The Year Of The Great Tax Migration

Timothy P. Noonan & Emma M. Savino (Hodgson Russ, New York), COVID-19: The Year of the Great Migration, 99 Tax Notes State 897 (Mar. 1, 2021):

Tax Notes StateWe have seen all sorts of changes in behavior over the past 12 months as a result of the COVID-19 pandemic. Remote working. No live music. Limited (or no) family gatherings. And, for some, an extra 15 pounds. But in the state and local tax world, we’ve seen another striking change in people’s behavior.

People. Are. Moving.

They are moving to Florida. They are moving to the Hamptons. They are moving home to live with their parents. They are moving in with their kids. They are leaving California, Illinois, New Jersey, and New York, and they are landing in places with lower taxes and, usually, better weather. And many need tax advice!

Here at Noonan’s Notes World Headquarters, we’ve generated more residency-change checklists and playbooks in the past 12 months than we’ve probably sent out in the last 10 years. And the types of situations we’ve seen are so much more varied and different from the typical retirees shuffling off to their shuffleboards in Florida. Hedge-fund millennials are moving. Parents with young kids are moving. Taxpayers in their working prime are moving. And with these moves come a whole host of interesting tax issues.

So this month, we thought we’d dive into these residency issues a bit more and give you a glimpse into the world of a tax residency practitioner during 2020 and 2021. ...

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March 15, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Lesson From The Tax Court: The Presumption Of Regularity For NODs

Tax protestors are the cowbirds of the tax ecosystem, forcing the employment of resources that could be put to more productive use.  Nonetheless, tax protestors sometimes provide a service: they help us revisit basic lessons about tax and tax administration.  Today’s lesson is one such basic lesson: about the presumption of regularity.

The presumption of regularity is a broad doctrine that courts use when faced with disputes about the legitimacy of federal agency actions. In Brian E. Harriss v. Commissioner, T.C. Memo. 2021-31 (Mar. 11, 2021) (Judge Thornton), the taxpayer argued that a Notice of Deficiency (NOD) issued to him was invalid because the IRS employee who signed it was not authorized to sign it.  In rejecting the argument, Judge Thornton teaches a useful basic lesson in how the presumption of regularity applies to NODs.  Details below the fold.

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March 15, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (2)

Sunday, March 14, 2021

The Top Five New Tax Papers

This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list. The #1 paper is #281 among 15,798 tax papers in all-time downloads:

  1. SSRN Logo (2018) [1,287 Downloads]  The Impact of Public Perceptions on General Consumption Taxes, by Rita de la Feria (University of Leeds; Google Scholar) & Michael Walpole (University of New South Wales; Google Scholar)
  2. [507 Downloads]  Tax Complexity and Transfer Pricing Blueprints, Guidelines, and Manuals, by Jean-Edouard Colliard (HEC Paris; Google Scholar), Lorraine Eden (Texas A&M; Google Scholar) & Co-Pierre Georg (University of Cape Town; Google Scholar)
  3. [489 Downloads]  A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s, by Nicholas Parrillo (Yale)
  4. [384 Downloads]  Estate Planning for Retirement Benefits after the SECURE Act, by Richard Kaplan (Illinois; Google Scholar)
  5. [323 Downloads]  Inter-Nation Equity Revisited, by Ivan Ozai (McGill; Google Scholar) (reviewed by David Elkins (Netanya) here)

March 14, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Friday, March 12, 2021

Weekly SSRN Tax Article Review And Roundup: Layser Reviews Joondeph's The States’ Multiple Taxation Of Personal Income

This week, Michelle Layser (Illinois; Google Scholar) reviews Bradley W. Joondeph (Santa Clara), The States’ Multiple Taxation of Personal Income, 71 Case Western Res. Law. Rev. 121 (2020).

Layser (2018)The COVID-19 pandemic has drawn renewed attention to the possibility that state tax regimes may result in multiple taxation of personal income. In a new article, Bradley Joondeph explores the constitutional significance of multiple taxation of personal income, and he concludes that multiple taxation isn’t actually that problematic. To prove his point, Joondeph begins with an overview of contexts in which courts have blessed state tax laws that result in multiple taxation. Joondeph describes two major sources of multiple taxation: conflicting apportionment methods and conflicting jurisdictional bases.

When taxing nonresidents, states may only tax income sourced to their state, but it is not always obvious where income should be sourced. The problem is especially pronounced in the context of multi-state corporations, and states have adopted different apportionment formulas for sourcing corporations’ income. These formulas often conflict in ways that result in multiple taxation, but the Supreme Court has long held that this is fine.

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March 12, 2021 in Michelle Layser, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

Next Week's Virtual Tax Workshops

Tuesday, March 16: Heather Field (UC-Hastings; Google Scholar) will present Itemization After the TCJA: How State Election Uniformity Laws Undermined the Goal of Simplifying the Individual Income Tax virtually at Florida State as part of its Tax Workshop Speaker Series. If you would like to attend, please contact Jeffrey Kahn.

Wednesday, March 17: Zachary Liscow (Yale; Google Scholar) will present The Psychology of Taxing Capital Income: Evidence from a Survey Experiment on the Realization Rule (with Edward Fox (Michigan; Google Scholar)) virtually in California as part of the San Diego-Davis-Hastings Tax Law Speaker Series. If you would like to attend, please contact San Diego Law Events.

Wednesday, March 17: Samuel Singer (Ottawa; Google Scholar) will present Critically Analyzing the “Reasonably Prudent Person”: The Due Diligence Defence for Director’s Liability in Tax Law (with Morena Cheng (Blake, Cassels & Graydon, Calgary)) virtually at Toronto as part of its James Hausman Tax Law and Policy Workshop Series. If you would like to attend, please contact Angeliki Zacharakis.

Thursday, March 18: Jim Repetti (Boston College; Google Scholar) will present Appropriate Roles for Equity and Efficiency in a Progressive Individual Income Tax virtually at Duke as part of its Tax Policy Workshop Series. If you would like to attend, please contact  Richard Schmalbeck or Lawrence Zelenak.

Thursday, March 18: Eleanor Wilking (Cornell) will present Who Bears the Cost of a Change in Remittance Policy?: Evidence from Amazon's Voluntary Collection Agreements virtually at Indiana as part of its Tax Policy Colloquium Series. If you would like to attend, please contact Leandra Lederman.

Friday, March 19: Katharina Pistor (Columbia) will present Chapter 6 of The Code of Capital virtually at the Oxford-Virginia Legal Dialogs: Tax Meets Non-Tax Series. If you would like to attend, please contact Tsilly Dagan or Ruth Mason.

Friday, March 19: Lindsay Tedds (Calgary; Google Scholar) will present Covering All the Basics; Reforms for a More Just Society (with David A. Green (British Columbia; Google Scholar) & Jonathan Rhys Kesselman (Simon Fraser)) virtually at British Columbia as part of its Tax Law and Policy Workshop Speaker Series. If you would like to attend, please contact  Wei Cui.

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March 12, 2021 in Colloquia, Legal Education, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Lennard Presents The Role Of The United Nations In Tax Norm Shaping Virtually Today At British Columbia

Michael Lennard (Chief, International Tax Cooperation and Trade, Financing for Development Office, United Nations) presents The Role of the United Nations in Tax Norm Shaping virtually at British Columbia today as part of its Tax Law and Policy Workshop Speaker Series hosted by Wei Cui:

LennardMr. Lennard will speak on the United Nations’ support for developing countries in their engagement with international tax policy issues. The talk will specifically address the topic of digital taxation, including the pros and cons and multilateral treaties, bilateral treaties (including the proposed UN Model Convention Article 12B), and unilateral actions, and ways for the international community to move forward. Mr. Lennard will also comment on other developments at the UN, including the recent Financial Accountability, Transparency and Integrity (FACTI) Panel Report.

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March 12, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Thursday, March 11, 2021

Simkovic Presents Work Hours And Income Tax Cuts Virtually Today At Duke

Michael Simkovic (USC; Google Scholar) presents Work Hours and Income Tax Cuts: Evidence From Federal-State Tax Interactions (with Eric Allen (UC-Riverside; Google Scholar)) virtually at Duke today as part of its Tax Policy Workshop Series hosted by Richard Schmalbeck & Lawrence Zelenak:

Michael-simkovic-2020We investigate how income tax reductions affect work hours. Our empirical strategy relies on the fact that, in states where taxpayers can deduct federal tax payments from state taxable income, federal tax changes are dampened. We study 2003 tax reforms (JGTRRA) that dramatically reduced federal tax rates on dividends and capital gains, and moderately reduced rates on ordinary income. Diff-in-Diff analysis indicates that work hours decreased most among high income and wealthy taxpayers who were most directly affected by the tax reductions. The decrease in hours was larger for residents of states in which the effective tax reductions were larger. Conversely, we find possible evidence that larger ordinary income tax rate reductions in the 1980s, accompanied by effective tax increases on capital gains, had the opposite effect and induced an increase in work hours. These results suggest that the effect of tax reductions may depend on the type of income targeted.

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March 11, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

UVA Podcast With Michael Graetz: The Wolf At The Door — The Menace Of Economic Insecurity And How To Fight It

University of Virginia School of Law News, ‘Common Law’ Explores How To Reduce Economic Insecurity:

Wolf at the Door 3Focusing on employment policies can help reduce the threat of economic insecurity in the United States, Columbia Law School professor Michael Graetz ’69 says on the latest episode of “Common Law,” a podcast sponsored by the University of Virginia School of Law.

Americans today can expect to change jobs 12 or 15 jobs in their lifetime, says Graetz, a UVA Law alumnus and former professor. That may be a welcome challenge for the college educated, he says.

“But when you take a middle-aged man or woman who has only a high school education, who's been working for a number of years, becoming unemployed is really devastating, not only to their way of life economically, but also psychologically,” he says on the show. “We just don’t have a good safety net in the United States.”

Graetz recently co-authored The Wolf at the Door: The Menace of Economic Insecurity and How to Fight It with political scientist Ian Shapiro, the latest in a string of books he has written on the economy and on tax law.

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March 11, 2021 in Book Club, Scholarship, Tax, Tax Scholarship | Permalink

Virginia Tax Review Publishes New Issue

Virginia Tax Review (2016)The Virginia Tax Review has published Vol. 39, No. 2 (Winter 2019):

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March 11, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Wednesday, March 10, 2021

Li Presents Creating A Global Tax Regime With The OECD Pillar One Blueprint Virtually Today At Toronto

Jinyan Li (Osgoode Hall) presents The Legal Challenges of Creating a Global Tax Regime with the OECD Pillar One Blueprint virtually at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Jinyan-LI_NEWSROOMLike the Internet connecting the computers of the world, a global tax regime created with the OECD Pillar One Blueprint seeks to integrate and standardize national corporate taxes in respect of automated digital services and consumer facing businesses of large corporations. In this article, the author considers the various legal challenges of creating such a regime.

Conclusion
The Pillar One Blueprint offers tremendous insights on the political aspirations and technical innovations of those involved. In this article, the author seeks to contribute to the debates about Pillar One by highlighting some general legal challenges that are animated from underlying political, fiscal and economic concerns at a national level. Since Pillar One requires a legal basis for implementation because the Inclusive Framework has no legal authority to address tax base creation or allocation matters, legal obstacles at national levels will likely determine the fate of reaching a global consensus.

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March 10, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Bloomberg Businessweek Cover Story: Is The Tax Code Racist? Dorothy Brown On the Secrets Of White Wealth

BloombergBusinessweek, Is The Tax Code Racist? Dorothy Brown on the Secrets of White Wealth:

BloombergBusinessweekA Tax Code Optimized for White Wealth Leaves Black Americans Behind:

Dorothy Brown has spent her career as a law professor documenting racism in a tax system that’s supposedly colorblind.

Growing up in the Bronx during the 1960s and ’70s, Dorothy Brown couldn’t escape racism. It was all around. Her father, James, a plumber, being barred from joining the local union. Her mother, Dottie, having to battle prejudiced teachers, including one who marked down Dorothy’s sister’s grades so the precocious child wouldn’t upstage her White classmates. Or the White cop beating a handcuffed Black man in the backseat of a cruiser, something she once observed while waiting to cross a street.

As a teenager, Brown thought she’d found a way out—a loophole in American racism. Taking an accounting class, the self-described math geek discovered the U.S. tax code, a universe governed by intricate rules where race wouldn’t matter. In tax law, she thought, “the only color that mattered was green.” The assumption carried her through an early career as a tax attorney, an investment banker, and then a political appointee in President George H.W. Bush’s administration.

After that, though, Brown spent a quarter century trying to prove the opposite: that although tax laws may appear to be colorblind, they still discriminate against Black Americans. Now the Asa Griggs Candler professor of law at Emory University, Brown is preparing to publish a book that’s the culmination of years of research, titled The Whiteness of Wealth: How the Tax System Impoverishes Black Americans—and How We Can Fix It.

It arrives at an opportune time. After decades during which the 61-year-old Brown says mainstream tax and policy experts “either dismissed, attacked, or ignored” her, her ideas appear to be finding an audience. “People are starting to pay more attention to her work and what she’s been telling us for a while,” says Chye-Ching Huang, executive director of New York University’s Tax Law Center.

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March 10, 2021 in Book Club, Legal Education, Scholarship, Tax, Tax Scholarship | Permalink

Thimmesch: States And The PPP — The Tax Policy Case For State Nondeductibility

Adam B. Thimmesch (Nebraska), States and the PPP: The Tax Policy Case for State Nondeductibility, 99 Tax Notes State 129 (Jan. 11, 2021):

Tax Notes StateThis article is the second in a series evaluating the state tax aspects of the federal Paycheck Protection Program. The first article introduced the program and explained the potential effect on states if Congress were to change the law to allow taxpayers to deduct their PPP-funded expenses. This article continues that analysis and explores the tax policy reasons why states should prepare to deviate from federal law now that Congress has provided for PPP deductibility in its year-end COVID relief bill.

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March 10, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Tuesday, March 9, 2021

Johnson Presents Federal Tax Ethics Rules And State Malpractice Litigation Virtually Today At Florida State

Steve Johnson (Florida State) presents Federal Tax Ethics Rules and State Malpractice Litigation virtually at Florida State today as part of its Tax Workshop Speaker Series hosted by Jeffrey Kahn:

JohnsonIn addition to rules of professional responsibility applicable to the practice of law generally, some legal specialties have complementary ethical rules or guidelines tailored to the area’s unique aspects. In tax law, important additional rules include regulations promulgated by the Department of the Treasury to govern practice before the Internal Revenue Service.

Tax malpractice suits against tax advisors have multiplied in recent decades. As a result, incompetent or dishonest tax advisors risk incurring liability for malpractice damages as well as being disciplined under bar or government rules.

This raises the question whether the Treasury/IRS professional responsibility regulations should be doctrinally connected to the governing standard of care in tax malpractice litigation. That is, should proof that one of the regulations has been violated be considered evidence – whether rebuttable or irrebuttable – that the malpractice standard of care was not satisfied?

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March 9, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Tahk: Spillover Tax Precedent

Susannah Camic Tahk (Wisconsin; Google Scholar), Spillover Tax Precedent:

We know that pro se litigants often lose. However, we know almost nothing about the circumstances in which they win. One such circumstance, this Article finds, is when they can take advantage of favorable precedent. This Article calls those favorable precedents for pro se litigants “spillover precedents.” Spillover precedents are cases with redistributive downward ripple effects that subsequently benefit pro se litigants. This Article is the first to examine the potential redistributive effects of precedent.

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March 9, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

The Tax Lawyer Publishes New Issue

The Tax Lawyer has published Vol. 74, No. 2 (Winter 2021):

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March 9, 2021 in ABA Tax Section, Scholarship, Tax, Tax Scholarship | Permalink

Monday, March 8, 2021

Marian: Taxing Data

Omri Y. Marian (UC-Irvine), Taxing Data:

The Article offers a new theory of tax on data collection and transmission, as a primary source of government revenue. This tax does not depend on the monetary value of data. This “data tax” can supplement, and in some instances replace, income taxes. The data tax can: (1) mitigate some of the failures of income taxes in a globalized data-based economy; and, (2) serve to alleviate some of the externalities of a data-based economy.

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March 8, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Lesson From The Tax Court: New 'Consequential Moment' Rule For §6751 Supervisory Approval

Section 6751(b)(1) causes no end of interpretive trouble for the Tax Court, no end of administrative difficulties for the IRS, and no end of windfalls for those lucky taxpayers who get to avoid penalties because the Tax Court later decides the IRS committed procedural errors.

In Brian D. Beland and Denae A. Beland v. Commissioner, 156 T.C. No. 5 (Mar. 1, 2021) (Judge Greaves), the Court has once again changed how it interprets §6751(b)(1).  It now says written supervisory approval must be made before an ill-defined “consequential moment.”  Here, that moment came when the Revenue Agent (RA) and her immediate supervisor met in person with the taxpayers to discuss a proposed Revenue Agent Report (RAR).  Contained in the RAR was a proposed fraud penalty.  But the supervisor—sitting next to the RA—had not given written approval for the fraud penalty before the meeting.  Too late!  The lucky taxpayer was thus able to avoid contesting the merits of a fraud penalty.  There is also a lesson here about administrative summonses, but may be more a lesson for the Tax Court than from the Tax Court because this opinion appears to rest, in part, on a misunderstanding of summons law.  Details below the fold.

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March 8, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

Sunday, March 7, 2021

The Top Five New Tax Papers

This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list, with some reshuffling of the order within the Top 5. The #1 paper is #299 among 15,783 tax papers in all-time downloads:

  1. SSRN Logo (2018) [1,244 Downloads]  The Impact of Public Perceptions on General Consumption Taxes, by Rita de la Feria (University of Leeds; Google Scholar) & Michael Walpole (University of New South Wales; Google Scholar)
  2. [484 Downloads]  Tax Complexity and Transfer Pricing Blueprints, Guidelines, and Manuals, by Jean-Edouard Colliard (HEC Paris; Google Scholar), Lorraine Eden (Texas A&M; Google Scholar) & Co-Pierre Georg (University of Cape Town; Google Scholar)
  3. [478 Downloads]  A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s, by Nicholas Parrillo (Yale)
  4. [375 Downloads]  Estate Planning for Retirement Benefits after the SECURE Act, by Richard Kaplan (Illinois; Google Scholar)
  5. [241 Downloads]  Inter-Nation Equity Revisited, by Ivan Ozai (McGill; Google Scholar) (reviewed by David Elkins (Netanya) here)

March 7, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Saturday, March 6, 2021

A Call To 'Detach' From The Strict Interpretation Of The Duberstein Standard

Harlee Havens (J.D. 2022, Kentucky), A Call to “Detach” from the Strict Interpretation of the Duberstein Standard, 109 Ky. L. J. Online (2021):

In order to try to aid in the determination of whether or not something is a gift for tax purposes, Kahn and Kahn suggest that the transferee’s role or actions should be considered as well because it acknowledges that certain circumstances depend more on the actions of the transferee than the intention of the donor [Douglas A. Kahn (Michigan) & Jeffrey H. Kahn (Florida State), “Gifts, Gafts, and Gefts” – The Income Tax Definition and Treatment of Private and Charitable “Gifts” and a Principled Policy Justification for the Exclusion of Gifts from Income, 78 Notre Dame L. Rev. 441, 478 (2003)].  By also looking to the acts of the transferee, courts would no longer have to rely solely on the donor’s intention, which as suggested, can be understood in a way that renders the exclusion useless.

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March 6, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Friday, March 5, 2021

Weekly SSRN Tax Article Review And Roundup: Kleiman Reviews Sarkar's Capital Controls As Migrant Controls

This week, Ariel Jurow Kleiman (San Diego; moving to Loyola-L.A.; Google Scholar) reviews a new article by Shayak Sarkar (UC-Davis), Capital Controls as Migrant Controls, 109 Cal. L. Rev. ___ (2020).

Stevenson

Governments regulate migration in myriad ways. Via border policies, economic (dis)incentives, and inclusionary or exclusionary social and legal systems, governments seek to draw or repel migration into a domestic economy. As Shayak Sarkar argues in his most recent article, Capital Controls as Migrant Controls, they can also do so by regulating migrants’ financial activities. Building on his past scholarship on migrants’ financial habits and the legal infrastructure governing them (e.g., here and here), Sarkar describes and analyzes legal systems that constrain migrants’ financial activities in the U.S. He argues that this financial regulation not only controls migrants’ capital, but that it controls migrants as well.

Sarkar focuses on three examples of what he calls “capital controls”—although he notes that his use of the term is somewhat broader than its traditional meaning of restrictions on foreign capital inflows and outflows. He first discusses taxation of migrants’ remittances back to home countries (more on this momentarily). Second, he explores rules that restrict undocumented workers’ access to Social Security benefits and that require eligible noncitizens to leave the U.S. in order to collect payments. Third, he describes consumer-banking identification requirements, which often work to exclude undocumented workers from U.S. banking services. The article’s scope is broad, canvassing laws on immigration, taxation, financial regulation, and the social safety net. To make the current discussion more tractable, I will focus here on his analysis of remittance taxation.

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March 5, 2021 in Ariel Stevenson, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

Taite Presents Making Tax Policy Great Again Virtually Today At Florida

Phyllis Taite (Florida A&M) presents Making Tax Policy Great Again: America You’ve Been Trumped virtually at Florida today as part of its Tax Colloquium Series:

Screen Shot 2021-03-03 at 7.32.19 AMIn December 2017, President Donald Trump signed the Tax Cuts and Jobs Act (TCJA) claiming it as the largest tax cuts in history. While the proponents of the TCJA claim this legislation provides tax breaks that benefit everyone, there are economic consequences that disproportionately benefit the wealthy to the detriment of the masses. Tax policy should benefit the majority of Americans, not just the elite. If we truly want to make tax policy great again, then we should go back to the very beginning when the tax base was primarily the responsibility of the wealthiest Americans.

An effective way to facilitate this shift in tax responsibility is to eliminate the mortgage interest deduction for taxpayers with household incomes above $100,000 for a single household and $200,000 for a married household, indexed for inflation. Further, the estate system should eliminate I.R.C. § 1014 stepped-up basis provisions, reduce both estate and gift tax exemptions amounts and separate the estate and gift exemption amounts.

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March 5, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

McLaughlin: Amendment Clauses In Easements — Ensuring Protection In Perpetuity

Nancy A. McLaughlin (Utah), Amendment Clauses in Easements: Ensuring Protection in Perpetuity, 168 Tax Notes Fed. 819 (Aug. 3, 2020):

Tax Notes Federal (2020)Internal Revenue Code § 170(h)(5)(A) requires that the conservation purpose of a deductible conservation easement be “protected in perpetuity.” This article explains how the protected-in-perpetuity requirement should limit the parties’ ability to reserve the right to make post-donation changes to the terms of a deductible easement.

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March 5, 2021 in Scholarship, Tax, Tax Analysts | Permalink

Thursday, March 4, 2021

Wilking Presents Does It Matter Who Remits? Evidence From U.S. States’ Voluntary Collection Agreements Virtually Today At Duke

Eleanor Wilking (Cornell) presents Does It Matter Who Remits? Evidence from U.S. States’ Voluntary Collection Agreements (with Yeliz Kacamak (Boğaziçi University; Google Scholar) & Tejaswi Velayudhan (Ohio State; Google Scholar)) virtually at Duke today as part of its Tax Policy Workshop Series hosted by Richard Schmalbeck & Lawrence Zelenak:

Eleanor Wilking 450x515 reducedThe South Dakota vs. Wayfair (2018) Supreme Court decision changed a long-standing difference in the way U.S. sales tax administrations treated online and brick-and-mortar commerce. Online retailers now have to remit sales taxes just like their brick-and-mortar counterparts in most states. Despite the attention this decision received, we know little about how shifting the responsibility to remit will affect the tax system.

Using states’ staggered adoption of Voluntary Collection Agreements (VCAs) which committed large online retailers to remit taxes prior to the Wayfair decision, we find that the increase in compliance resulting from these arrangements was almost fully passed-through to consumers via higher tax-inclusive prices. Consumers also reduced their online expenditures. However, we do not find strong evidence of an impact on the elasticity of the tax base.

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March 4, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Avi-Yonah Presents A New Corporate Tax Virtually Today At Indiana

Reuven Avi-Yonah (Michigan; Google Scholar) presents A New Corporate Tax, 168 Tax Notes Fed. 653 (July 27, 2020), virtually at Indiana today as part of its Tax Policy Colloquium Series hosted by Leandra Lederman:

Avi-Yonah (2021)This article will argue that we should tax corporations for the same reason we originally adopted the corporate tax in 1909: to limit the power and regulate the behavior of our largest corporations, which are monopolies or quasi-monopolies that dominate their respective fields and drive their competitors out of business (the best example being Big Tech — that is, Amazon, Apple, Facebook, Google, and Microsoft). But if that is the reason to have a corporate tax, it should have a different structure from the current flat corporate tax of 21 percent. Instead, the tax should be set at zero for normal returns by allowing the expensing of physical capital, but at a sharply progressive rate for supernormal returns (rents).

Conclusion
This article has sought to develop a new corporate tax that is appropriate for targeting rents earned by large, monopolistic, or quasimonopolistic enterprises like Big Tech. Its main recommendations are that normal corporate returns be functionally exempt by allowing permanent expensing for capital expenditures, but that supernormal returns be taxable progressively (up to 80 percent above $10 billion in profit) and on a broad base that (a) includes foreign subsidiaries, (b) disallows current R&D and interest deductions, and (c) limits deductions for stock-based compensation to value on date of grant.

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March 4, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Wednesday, March 3, 2021

Sanchirico Presents Why The Optimal Tax Rate On Capital Is Zero … Or Very High Virtually Today At Oxford

Chris Sanchirico (Pennsylvania; Google Scholar) presents Why the Optimal Long-Run Tax Rate on Capital is Zero…or Very High: The Missing Explanation virtually at Oxford's Centre for Business Taxation today:

CsanchirJudd’s (1985) finding that the optimal long-run rate of tax on capital is zero—even if equity is an important social objective—has exerted substantial influence in academic and policy circles over the last quarter century [Redistributive Taxation in a Simple Perfect Foresight Model]. Only very recently has it become clear that Judd’s zero-tax result rests on an implicitly adopted assumption about how savings responds to taxation. Working within the very same model structure, Straub and Werning (2020) demonstrate that the optimal long-term tax rate is positive and potentially large under an alternative equally plausible assumption. This paper attempts to fill a remaining gap in the literature by providing a clear explanation of what is driving results in both variants of Judd’s original model [Positive Long Run Capital Taxation: Chamley-Judd Revisited]. 

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March 3, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Hemel: Regulation And Redistribution With Lives In The Balance

Daniel J. Hemel (Chicago), Regulation and Redistribution with Lives in the Balance, 88 U. Chi. L. Rev. ___ (2021):

A central question in law and economics is whether non-tax legal rules should be designed solely to maximize efficiency or whether they also should account for concerns about the distribution of income. This question takes on particular importance in the context of cost-benefit analysis. Federal agencies apply cost-benefit analysis when writing regulations that generate multibillion dollar impacts on the US economy and profound effects on millions of Americans’ lives. In the past, agency cost-benefit analyses typically have ignored the income-distributive consequences of those regulations. That may soon change: On his first day in office, President Biden instructed his Office of Management and Budget to propose procedures for incorporating distributive considerations into cost-benefit analysis, thus bringing renewed relevance to a long-running law-and-economics debate.

This article explores what it might mean in practice for agencies to incorporate distributive considerations into cost-benefit analysis.

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March 3, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Tax Prof Presentations At Next Week's Florida Tax Institute

Tax Prof presentations at next week's Florida Tax Institute (March 10-12):

Cassady V. Brewer (Georgia State) & Bruce A. McGovern (South Texas), Recent Developments in Federal Income Taxation:

This session will review the most significant statutory enactments, judicial decisions, IRS rulings, and Treasury regulations promulgated during the last twelve months that affect general domestic income taxation, corporate taxation, partnership taxation, and tax procedure.

Samuel A. Donaldson (Georgia State), Transfer Tax Update:

Stay up to date with this informative and entertaining recap of the important cases, rulings, regulations, and legislation from the past 12 months related to federal income, estate, and gift taxes.

Charlene Luke (Florida), Proposed Partnership Regulation Projects: Where Do They Stand? How Should They Be Handled?:

This presentation will provide an overview of the current state of U.S. Treasury partnership regulation projects and consider potential future approaches in light of a new tax administration.

Nancy A. McLaughlin (Utah), Trying Times: Conservation Easements and Federal Tax Law (207 pages):

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March 3, 2021 in Conferences, Scholarship, Tax, Tax Conferences, Tax Scholarship | Permalink

Crespi: Teaching A Class On Income And Wealth Inequality

Gregory S. Crespi (SMU), Teaching a Class on Income and Wealth Inequality:

I am offering a course on “Income and Wealth Inequality” for the first time during this spring, 2021 semester at the Dedman School of Law at Southern Methodist University, and the course is going well. I am here discussing my choice of materials and providing my course syllabus and my weekly reading assignment list for use by anyone else who is considering offering such a course at the college or graduate or law school level.

March 3, 2021 in Legal Ed Scholarship, Legal Education, Scholarship, Tax, Tax Scholarship, Teaching | Permalink

Johnson: Taxing Meals And Civic Virtue

Calvin H. Johnson (Texas), Return to Civic Virtue: Tax Meals, 170 Tax Notes Fed. 1105 (Aug. 15, 2021):

Tax Notes Federal (2020)Excluding meals from taxation, when other forms of compensation are taxed, inevitably causes a loss of value — a waste — that economists call deadweight loss. The exclusion for meals causes a shift from cash to meals, until in equilibrium, the loss of value from the meals is just short of the tax avoided. In equilibrium, the loss is a tax-caused destruction of resources — not physically, but by value. The recent Consolidated Appropriations Act decreased the tax on meals by allowing a 100 percent deduction for some business meals, repealing the prior law’s 50 percent deduction, which is the wrong direction to go. The end of the limited deduction was instigated by former President Trump himself and was a high priority for the Trump Treasury in its negotiations with Congress over the appropriations bill. Trump personally takes advantage of tax-exempt meals and has interests in restaurants selling meals. Thus, the change in law was narcissistic and a betrayal of civic virtue.

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March 3, 2021 in Scholarship, Tax, Tax Analysts, Tax Scholarship | Permalink

Tuesday, March 2, 2021

Cauble Presents Questions The IRS Will Not Answer Virtually Today At Florida State

Emily Cauble (DePaul) presents Questions the IRS Will Not Answer virtually at Florida State today as part of its Tax Workshop Speaker Series hosted by Jeffrey Kahn:

CaubleWhen a taxpayer plans to undertake a transaction and its tax consequences are unclear, the taxpayer can request a letter ruling from the IRS. The IRS issues numerous letter rulings each year. In 2020, for instance, the IRS issued 777 letter rulings. The IRS refrains from issuing letter rulings on certain topics. At the beginning of each year, the IRS publishes an updated list of the topics on which it will not rule. Many of the topics on which it will not rule arise in areas of tax law governed by standards where the tax outcome depends heavily on each transaction’s specific facts. This pattern is consistent with the IRS’s stated position that it ordinarily does not rule in certain areas because of the factual nature of the matter involved.

This Article suggests that a policy against ruling on fact-specific topics sacrifices an opportunity to rule on many of the very topics for which a letter ruling could be particularly useful. Because the fact-specific nature of a topic makes it ill-suited for generally applicable guidance, such a topic is a particularly good candidate for a letter ruling.

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March 2, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Cockfield: International Tax Transparency

Arthur J. Cockfield (Queen's University Faculty of Law), International Tax Transparency:

An imbalance exists between tax authorities and taxpayers when it comes to the latter’s financial information. Taxpayers have the information they need to calculate their tax liabilities and file their returns. Tax authorities, on the other hand, tend to have little beyond what is in the tax return. Thus it can be hard for tax authorities to detect non-compliance. The solution? Pass laws to force the taxpayer (or a third party) to provide more and better information to tax authorities. In other words, increase tax transparency.

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March 2, 2021 in Scholarship, Tax, Tax Scholarship | Permalink