Paul L. Caron
Dean


Friday, August 23, 2019

Don’t Ban Assault Weapons—Tax Them

Saul Cornell (Fordham), Don’t Ban Assault Weapons—Tax Them:

AtlanticA solution from the founding era might work again today.

The nation is debating what to do about assault-style weapons, what gun-rights advocates like to call modern sporting rifles. Gun-rights champions argue that these weapons are in common use, and hence protected by the Second Amendment. Gun-control supporters respond that these weapons have no place on our streets and ought to be banned. But there’s a better solution, and one that avoids the constitutional objections typically raised by gun-rights advocates. Rather than banning these weapons, the time has come to tax them.

Taxation offers one of the most promising and underutilized tools to change the calculus of gun violence in America. Few Americans realize that guns and ammunition are already taxed to pay for conservation efforts. Gun owners have happily tolerated federal taxes for years to support this worthwhile public-policy goal. Surely even the most die-hard gun-rights supporter could not argue that, although it is constitutional to tax weapons and ammo to protect animals, it is not constitutional to tax them to protect people.

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August 23, 2019 in Tax, Tax News | Permalink | Comments (0)

Thursday, August 22, 2019

Field: An Introduction To Tax Careers for JDs

Heather M. Field (UC-Hastings), An Introduction to Tax Careers for J.D.s, ABA Tax Times, Vol. 38, No. 3, p. 30 (Spring 2019):

To many people, the tax field seems like a very narrow niche. The tax profession does require specialized expertise, but tax professionals know that there is actually great diversity in the career paths available to law school graduates. Yet for law students and junior lawyers interested in the tax field, it can be difficult to appreciate the range of possible tax careers and to distinguish between what different tax practitioners do. Thus, to help aspiring tax professionals easily understand the range of tax careers they might pursue, this article offers a 3-pronged framework for describing tax careers available to J.D.s.

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August 22, 2019 in Legal Ed News, Legal Education, Tax, Tax News | Permalink | Comments (0)

Analyst In IRS Criminal Investigation Division Pleads Guilty To Leaking Michael Cohen's Confidential Financial Information To Michael Avenatti, Stormy Daniels' Ex-Lawyer

NBC News, IRS Staffer Pleads Guilty to Giving Michael Cohen Data to Stormy Daniels' Lawyer:

IRS Logo 2An IRS staffer who leaked confidential details about former Trump lawyer Michael Cohen's finances to Michael Avenatti, ex-lawyer for adult film star Stormy Daniels, pleaded guilty Wednesday to illegally accessing and distributing that information.

John C. Fry was an investigative analyst with the IRS Criminal Investigation Division, the law enforcement arm of the agency, in May 2018 when he twice logged on to the Financial Crimes Enforcement Network (FinCEN) database and downloaded five Suspicious Activity Reports (SARs) — reports filed by banks when they note potentially suspicious transactions — related to Cohen and his company Essential Consultants.

In court Wednesday, Fry admitted giving Avenatti the information via cellphone and emailing him screenshots of the SARs. He pleaded guilty to one county of unauthorized disclosure of SARs. ...

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August 22, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Wednesday, August 21, 2019

University Of Florida Seeks To Hire A Tax Prof

Florida Logo (2017)University of Florida Levin College of Law seeks to hire multiple professors, across an array of fields, over the next several years as part of the university’s quest to become a top five public research institution. The University of Florida, located in Gainesville, FL, is currently the eighth best public research institution in the nation and the flagship university of the third largest state. In addition to seeking candidates for tenured and non-tenure-track positions, advertised separately, the Levin College of Law seeks highly qualified candidates for tenure-track positions.

The Appointments Committee welcomes applications from tenure-track candidates in all areas of law. Successful candidates will have a publication record, strong scholarly potential, a commitment to excellence in teaching, and enthusiasm for creating an inclusive environment for all students. Candidates must also have a JD, PhD, or equivalent degree in a related field. In reviewing applications, the Appointments Committee will consider long-term teaching needs in large enrollment classes, environmental law, health law, tax, and law and technology.

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August 21, 2019 in Legal Education, Tax, Tax News, Tax Prof Jobs | Permalink | Comments (0)

The 25 Wealthiest Dynasties On The Planet Are Worth $1.4 Trillion, Up 24% From Last Year

Walton

Bloomberg, The World’s Wealthiest Family Gets $4 Million Richer Every Hour:

The Walton fortune has swelled by $39 billion, to $191 billion, since topping the June 2018 ranking of the world’s richest families.

Other American dynasties are close behind in terms of the assets they’ve accrued. The Mars family, of candy fame, added $37 billion, bringing its fortune to $127 billion. The Kochs, the industrialists-cum-political-power-players, tacked on $26 billion, to $125 billion.

So it goes around the globe. America’s richest 0.1% today control more wealth than at any time since 1929, but their counterparts in Asia and Europe are gaining too. Worldwide, the 25 richest families now control almost $1.4 trillion in wealth, up 24% from last year.

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August 21, 2019 in Tax, Tax News | Permalink | Comments (0)

Hemel: Bullock v. IRS And The Future Of Tax Administrative Law (Part II)

TaxProf Blog op-ed:  Bullock v. IRS and the Future of Tax Administrative Law (Part II), by Daniel Hemel (Chicago):

Hemel (2018)In Bullock v. IRS, a federal district court in Montana held that states have standing to challenge the IRS’s rollback of information reporting requirements and that those requirements can only be amended through notice and comment. As my last post explained, the immediate significance of the decision is that noncharitable tax-exempt entities—including but not limited to politically active section 501(c)(4) groups—will have to disclose their large-dollar donors to the IRS (though not to the public). But the potential implications are much broader than that. The decision in Bullock suggests a possible new path for states to exert influence over federal tax policy through administrative law litigation. This post explores that possibility.

Bullock is the latest in a series of cases that might be seen as auguring the end of “tax exceptionalism.” By “tax exceptionalism,” I refer to the long-held view that general principles of administrative law—such as Chevron deference for agency statutory interpretations and the notice-and-comment requirement for agency rules—do not apply in the tax domain. Paul Caron put forward an early and influential critique of that view in his unforgettably titled 1994 article “Tax Myopia, or Mamas Don’t Let Your Babies Grow Up to Be Tax Lawyers.” Kristin Hickman advanced the attack on tax exceptionalism in a series of significant articles starting in the mid-2000s. The effort to end tax exceptionalism scored a major victory in January 2011 when Chief Justice John Roberts, in the case of Mayo Foundation for Medical Education and Research v. United States, said that the court was “not inclined to carve out an approach to administrative review good for tax law only.” Declarations of the “death of tax exceptionalism” soon followed.

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August 21, 2019 in New Cases, Tax, Tax News, Tax Scholarship | Permalink | Comments (0)

University of Calgary Seeks To Hire A Tax Prof

Position Description:

Calgary (2019)The University of Calgary’s Faculty of Law is in the midst of a sustained period of growth and renewal. In its Strategic plan – Energy.Innovation.Impact. – UCalgary Law set itself the dual goals of enhancing its international eminence in the areas of energy, environmental and natural resources law and continuing its position of national leadership in the area of experiential learning. Since 2011, we have made twenty three new Faculty appointments, and we are looking to make further appointments to begin in 2019 and in years to follow.

The Faculty of Law at the University of Calgary invites applications for a tenure-track appointment at the rank of Assistant Professor in the area of tax law. The anticipated start date is July 1, 2020.

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August 21, 2019 in Legal Ed News, Legal Education, Tax, Tax News, Tax Prof Jobs | Permalink | Comments (0)

Tuesday, August 20, 2019

WSJ: The IRS Is Coming For Your Bitcoin

Wall Street Journal Tax Report, The IRS Is Coming For Your Bitcoin:

Bitcoin IRSThe Internal Revenue Service is on the war path against Americans who haven’t reported income from cryptocurrencies like bitcoin.

In late July, the IRS said it had started to send warning letters to more than 10,000 people who may not have complied with tax rules on virtual currencies. Agency officials have said criminal tax indictments involving cryptocurrencies are expected soon, and other enforcement letters are going out.

Tax specialists are urging crypto users who aren’t in compliance to act quickly. While coming clean involves a maze of tricky decisions, ignoring the agency could cost a crypto holder dearly. ...

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August 20, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Hemel: Bullock v. IRS And The Future Of Tax Administrative Law (Part I)

Following up on my previous post, Federal Judge Overturns IRS Rule To Shield Political Donor Identities:  TaxProf Blog op-ed:  Bullock v. IRS and the Future of Tax Administrative Law (Part I), by Daniel Hemel (Chicago):

Hemel (2018)The world of “dark money” became a bit less opaque at the end of last month when a federal district court in Montana struck down an IRS revenue procedure that had shielded section 501(c)(4) organizations from having to disclose large-dollar donors to tax authorities. The decision in the case—captioned Bullock v. IRS—is significant both because of its immediate implications for the oversight of section 501(c)(4) groups and other exempt organizations as well as its broader ramifications for judicial review of IRS actions. Tax law practitioners and professors—whether or not they focus on exempt organizations in their work, study, and teaching—should take note.

This is the first of two posts on Bullock v. IRS and its implications. Here, I’ll lay out the facts of the case and some thoughts on discrete legal issues that it raises. In the next post, I’ll try to situate Bullock within the wider debate over tax exceptionalism (and its alternative, which we might call “tax ordinaryism”). I’ll argue there that Bullock represents both a continuation of the trend toward tax ordinaryism and a novel twist.

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August 20, 2019 in New Cases, Tax, Tax News, Tax Scholarship | Permalink | Comments (0)

Sons Of BOSS Rocks Out UC-Irvine

Sons of BossLast Friday, the UC-Irvine Graduate Tax Program hosted a welcome reception for its inaugural class of LL.M. students. The reception featured a special performance by “Sons of BOSS.” (Tax cognoscenti know that the Son of BOSS is a successor to BOSS (Bond and Option Sales Strategy) tax shelter.)

The leader of the band is Omri Marian (UC-Irvine). The other band members are: Frank Rork (Senior Director, Tax, Edwards Lifesciences), Michael Strasser (Senior Manger, Global Supply Chain Strategy, Edwards Lifesciences), Neil Richmond (International Tax Services, EY) and Joseph Cruz (EY). The band played numerous songs for UCI students and faculty, including, of course,  Taxman by the Beatles.

For video of the band's performance, see below the fold:

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August 20, 2019 in Legal Ed News, Legal Education, Tax, Tax News | Permalink | Comments (0)

Monday, August 19, 2019

Law Degree Held Against Defendant In Tax Scam

Peter J. Reilly (Forbes), Law Degree Held Against Defendant In Tax Scam:

Anthony Charles Dwight Box was at what I consider the end of the line in tax litigation — appealing his sentence from prison — when he heard from the Eleventh Circuit last month. It was not good news. The Circuit Court approved the 36 month sentence handed down by Judge Federico Moreno of the Southern District of Florida.

Judge Moreno had made an upward adjustment from the 24 to 30-month sentence called for by the guidelines because Mr. Box's legal education should have made him know better, a conviction in 1989 and failure to make any restitution.

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August 19, 2019 in Legal Ed News, Legal Education, New Cases, Tax, Tax News | Permalink | Comments (0)

Amazon Wins $1.5 Billion Ninth Circuit Tax Dispute Over Intangible Assets Shifted To Europe

Amazon.com v. Commissioner, No. 17-72922 (9th Cir. Aug. 16, 2019):

Amazon logo (2018)The panel affirmed the Tax Court’s decision [148 T.C. 108 (2017)] on a petition for redetermination of federal income tax deficiencies, in an appeal involving the regulatory definition of intangible assets and the method of their valuation in a cost-sharing arrangement.

In the course of restructuring its European businesses in a way that would shift a substantial amount of income from U.S.-based entities to the European subsidiaries, appellee Amazon.com, Inc. entered into a cost sharing arrangement in which a holding company for the European subsidiaries made a “buy-in” payment for Amazon’s assets that met the regulatory definition of an “intangible.” See 26 U.S.C. § 482. Tax regulations required that the buy-in payment reflect the fair market value of Amazon’s pre-existing intangibles. After the Commissioner of Internal Revenue concluded that the buy-in payment had not been determined at arm’s length in accordance with the transfer pricing regulations, the Internal Revenue Service performed its own calculation, and Amazon filed a petition in the Tax Court challenging that valuation.

At issue is the correct method for valuing the preexisting intangibles under the then-applicable transfer pricing regulations. The Commissioner sought to include all intangible assets of value, including “residual-business assets” such as Amazon’s culture of innovcation, the value of workforce in place, going concern value, goodwill, and growth options. The panel concluded that the definition of “intangible” does not include residual-business assets, and that the definition is limited to independently transferrable assets.

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August 19, 2019 in New Cases, Tax, Tax News | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Friday, August 16, 2019

Tax Policy In The Trump Administration

Trump's Taxes And Tax Returns

UConn Seeks To Hire A Clinical Tax Prof

UConn Law Logo (2015)The University of Connecticut School of Law seeks candidates for the position of Assistant Clinical Professor of Law to serve as the Director of the Tax Clinic beginning July 1, 2020. This is a full-time, non-tenure-track position subject to the Law School’s Policy on Long-Term Contracts for Non-Tenure Track Clinical Faculty, which complies with ABA Standard 405(c).

The Tax Clinic is one of 18 clinics and field placement programs operated by the Law School. Students in the clinic, under faculty supervision, provide free legal assistance to low-income taxpayers in disputes with the Internal Revenue Service and/or the Connecticut Department of Revenue Services. The Director is responsible for training students in the relevant law and lawyering skills and supervising them in their clinical fieldwork. The Director also manages and oversees all aspects of clinic operations, including but not limited to: client selection, intake, and representation; case-flow; quality control; supervision of clinic staff; and relationships with external University, state, and private stakeholders. The clinic is partially funded by a federal grant through the IRS Low-Income Taxpayer Clinic (LITC) program, and the Director’s duties include working with the University’s grant office to periodically renew the grant and provide required reports and documentation to ensure compliance. The Director also provides academic and career counseling to students; participates in public service activities; and may teach additional courses if mutually agreed upon with the Associate Dean for Clinical and Experiential Education.

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August 16, 2019 in Tax, Tax News, Tax Prof Jobs | Permalink | Comments (0)

Jim Maule's Reflections On 40 Years Of Teaching Tax Law

Shanske: State Tax Administrators In An Age of Statutes

Darien Shanske (UC-Davis), State Tax Administrators: Please Do Your Part in Sending PL 86–272 Off Into the Sunset:

This is the story of an arbitrary and destructive interstate tax shelter, one created by the federal government. No, this is not about collecting the sales and use tax. That tax shelter is largely on its way out; it was created by the Supreme Court in 1967, embraced anew in 1992 and finally ended, by the Court, in 2018, in a case called Wayfair. The tax shelter I am talking about in this post was created in 1959, by Congress. It was meant to be temporary, but is still with us and it shields certain large multistate taxpayers from the state corporate income tax.

The law in question, PL 86–272, shields taxpayers from paying the corporate income tax if certain conditions are satisfied. In particular, the taxpayer must be engaged in selling only tangible personal property in the state and the only activity in the state must be “solicitation.” Leaving aside the wisdom and propriety of Congress creating a tax shelter at all, these requirements indicate how dated the statute is now — and how poorly thought through it always was. Why are only sellers of tangible person property given the benefit of this special rule? Why only solicitation? How is solicitation a proxy for whether it would be fair and reasonable to ask a taxpayer to pay the income tax? If one remember the statute’s vintage, then one can understand the focus on tangible personal property because that was a more important part of the economy. This also explains the emphasis on solicitation as this refers to a then much more common business model of relying on an in-state sales force, though it never made a lot of sense to give a break to taxpayers large enough to engage in only solicitation. ...

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August 16, 2019 in Scholarship, Tax, Tax News | Permalink | Comments (0)

Thursday, August 15, 2019

Dayton Seeks To Hire A Tax Prof

DaytonThe University of Dayton School of Law invites applications for a tenure-track Assistant Professor position and a Full Professor with tenure position to begin in August 2020.

Applicants for the Assistant Professor position must have a J.D. or the equivalent international law degree. We welcome applications from candidates across all areas of law. Areas of particular interest include secured transactions, business organizations, constitutional law, family law, wills and trusts, tax, conflicts of law, contracts, and property. Applications must be received by January 1, 2020. Applications should include a cover letter and CV and must be submitted through the University of Dayton's electronic employment site.

Applicants for the Full Professor position must have tenure at a United States or International law school, a J.D. or the equivalent international law degree, a record of outstanding scholarship and publication in the fields of commercial or constitutional law, and excellent teaching evaluations. Applications must be received by September 12, 2019. Applications should include a cover letter, CV, and a sample of recent teaching evaluations. Applications must be submitted through the University of Dayton’s electronic employment site.

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August 15, 2019 in Legal Ed News, Legal Education, Tax, Tax News, Tax Prof Jobs | Permalink | Comments (0)

Wednesday, August 14, 2019

Cincinnati Seeks To Hire A Tax Prof

Cincinnati Logo (2019)The University of Cincinnati College of Law invites applications from entry-level candidates for the tenure-track position of Assistant Professor of Law. We welcome candidates across all areas of law, although subject areas of particular interest include business law, health law, intellectual property, property, and tax. Applicants must possess a J.D. or equivalent degree and outstanding academic credentials and have demonstrated potential for outstanding teaching and scholarship. Relevant experience in private practice, government service, or a judicial clerkship is strongly preferred. We welcome applications from persons who would add to the diversity of our academic community and engage with the broader community. Questions about the hiring process should be directed to Professor Felix Chang, Chair of the Faculty Appointments Committee. Candidates must also apply online via the UC recruitment system to be considered an applicant.

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August 14, 2019 in Legal Ed News, Legal Education, Tax, Tax News, Tax Prof Jobs | Permalink | Comments (0)

Tuesday, August 13, 2019

Southwestern Law School Seeks To Hire A Tax Prof

Southwestern Law SchoolSouthwestern Law School invites applications for entry-level and experienced faculty positions for the 2020-21 academic year. Curricular needs are most pressing in the areas of Torts, Corporate Law/Entrepreneurship, Tax, and Criminal Law. Applications from members of underrepresented groups are particularly encouraged. Interested persons should send resume, references, subject area and scholarship agenda via email to Senior Associate Dean Doreen Heyer, Chair, Faculty Recruitment Committee, Southwestern Law School, 3050 Wilshire Blvd., Los Angeles, CA 90010.

August 13, 2019 in Legal Education, Tax, Tax News, Tax Prof Jobs | Permalink | Comments (0)

Monday, August 12, 2019

TaxProf Blog Weekend Roundup

Saturday, August 10, 2019

This Week's Ten Most Popular TaxProf Blog Posts

Uber Created A $6.1 Billion Dutch Weapon To Avoid Paying Taxes

Bloomberg, Uber Created a $6.1 Billion Dutch Weapon to Avoid Paying Taxes:

UberUber, responding to a European crackdown on offshore tax havens, created a $6.1 billion Dutch tax deduction that will help the company reduce a chunk of its global tax bill for years to come.

San Francisco-based Uber generated the outsized deduction before its initial public offering in May because it moved some of its offshore subsidiaries to different countries as a result of new European Union rules governing multinational companies.

The $6.1 billion deduction came through an increase in the value of intellectual property that Uber transferred between its offshore subsidiaries, according to the company’s first quarterly filing. When an intangible asset increases in value, so do the tax deductions that come with its use over time.

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August 10, 2019 in Tax, Tax News | Permalink | Comments (0)

Friday, August 9, 2019

Tax Policy In The Trump Administration

Trump's Taxes And Tax Returns

Thursday, August 8, 2019

My Taxes (And Donald Trump's) Are None of Your Business

Alan B. Morrison (George Washington), My Taxes Are None of Your Business:

One of the underlying principles of our income tax laws is that our tax returns are kept secret and only those who have a legitimate need to know can see them. However, some of the efforts to enable Congress, and perhaps everyone else, to see the tax returns of private citizen Donald J. Trump, may threaten that principle, not just for him, but for everyone else.

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August 8, 2019 in Tax, Tax News | Permalink | Comments (3)

Wednesday, August 7, 2019

NY Times: As Mortgage-Interest Deduction Vanishes, Home Buyers And The Housing Market Merely Shrug

New York Times, As Mortgage-Interest Deduction Vanishes, Housing Market Offers a Shrug:

The mortgage-interest deduction, a beloved tax break bound tightly to the American dream of homeownership, once seemed politically invincible. Then it nearly vanished in middle-class neighborhoods across the country, and it appears that hardly anyone noticed. ...

The 2017 law nearly doubled the standard deduction — to $24,000 for a couple filing jointly — on federal income taxes, giving millions of households an incentive to stop claiming itemized deductions.

As a result, far fewer families — and, in particular, far fewer middle-class families — are claiming the itemized deduction for mortgage interest. In 2018, about one in five taxpayers claimed the deduction, Internal Revenue Service statistics show. This year, that number fell to less than one in 10. For families earning less than $100,000, the decline was even more stark.

NYT Mortgage

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August 7, 2019 in Tax, Tax News | Permalink | Comments (0)

Tuesday, August 6, 2019

Joint Tax Committee Releases IRS Disclosures Of Tax Return Information, 2018

Joint Tax CommitteeThe Joint Committee on Taxation has released Disclosure Report For Public Inspection Pursuant to Internal Revenue Code Section 6103(p)(3)(C) For Calendar Year 2018:

Section 6103(p)(3)(C) of the Internal Revenue Code provides that the Secretary of the Treasury shall, within 90 days after the close of each calendar year, furnish to the Joint Committee on Taxation for disclosure to the public a report which provides, with respect to each Federal agency and certain other entities, the number of: (1) requests for disclosure of returns and return information (as such terms are defined in section 6103(b)); (2) instances in which returns and return information were disclosed pursuant to such requests or otherwise; and (3) taxpayers whose returns, or return information with respect to whom, were disclosed pursuant to such requests. In addition, the report must describe the general purposes for which such requests were made.

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August 6, 2019 in Congressional News, Gov't Reports, Tax, Tax News | Permalink | Comments (0)

Monday, August 5, 2019

Krugman: Why Was Trumponomics A Flop? — Neither Tax Cuts Nor Tariffs Are Working

New York Times op-ed:  Why Was Trumponomics a Flop?: Neither Tax Cuts Nor Tariffs Are Working, by Paul Krugman:

Donald Trump has pursued two main economic policies. On taxes, he has been an orthodox Republican, pushing through big tax cuts for corporations and the wealthy, which his administration promised would lead to a huge surge in business investment. On trade, he has broken with his party’s free(ish) trade policies, imposing large tariffs that he promised would lead to a revival of U.S. manufacturing. ...

why has Trumponomics failed to deliver much besides trillion-dollar budget deficits? The answer is that both the tax cuts and the trade war were based on false views about how the world works.

Republican faith in the magic of tax cuts — and, correspondingly, belief that tax increases will doom the economy — is the ultimate policy zombie, a view that should have been killed by evidence decades ago but keeps shambling along, eating G.O.P. brains. ... There was never any reason to believe that cutting corporate taxes here would lead to a surge in capital spending and jobs, and sure enough, it didn’t.

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August 5, 2019 in Tax, Tax News | Permalink | Comments (3)

Senate Confirms Courtney Dunbar Jones And Emin Toro As Tax Court Judges

Bloomberg Tax, Senate Confirms Two Tax Court Nominees:

The Senate confirmed two U.S. Tax Court nominees in a voice vote before leaving for August recess. Courtney Dunbar Jones and Emin Toro will now each serve a 15-year term.

White House Nomination Of Courtney Dunbar Jones:
Courtney 2Courtney Dunbar Jones serves as a senior attorney in the Tax-Exempt and Government Entities division in the Office of Chief Counsel of the Internal Revenue Service. Prior to joining the Chief Counsel’s office six years ago, Mrs. Jones practiced for three years in the exempt organizations and intellectual property practice groups of the Washington, D.C.-based firm Caplin & Drysdale. Before relocating to the Washington area, she practiced for four years at Bird, Loechl, Brittain & McCants, a boutique law firm in Atlanta. Since 2015, Mrs. Jones has served on the Board of Trustees of Hampton University, where she earned her B.S., magna cum laude and was the recipient of the President’s Award for Exceptional Achievement. Mrs. Jones then earned her J.D. from Harvard Law School, where she served for two years as the editor in chief of the Harvard BlackLetter Law Journal, (which has since been renamed the Harvard Journal on Racial & Ethnic Justice). During law school, Mrs. Jones was recognized for a variety of achievements; she was named a scholar in the Earl Warren Legal Training Program sponsored by the NAACP Legal Defense and Education Fund, and received the National Bar Institute African American Law Student Fellowship.

White House Nomination Of Emin Toro:

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August 5, 2019 in Tax, Tax News | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, August 4, 2019

Hemel: Why California’s Plan To Get Trump’s Tax Returns Won’t Work

Washington Post op-ed:  Why California’s Plan to Get Trump’s Tax Returns Won’t Work, by Daniel Hemel (Chicago):

California’s governor signed a law this week requiringpresidential candidates to disclose their federal income tax returns as a condition for getting on the state’s primary ballot. It’s a bold and creative move aimed at forcing President Trump to release his tax filings — one that a handful of other blue states are considering.

It’s also highly unlikely to work as intended.

The obstacles to the law’s effectiveness are both legal and practical. Courts may well strike down the law on constitutional grounds. But even if the law passes constitutional muster (a big “if”), it lacks the teeth to make Trump comply.

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August 4, 2019 in Tax, Tax News | Permalink | Comments (0)

Saturday, August 3, 2019

Inversion Reversion: Deals to Move Corporate HQs Outside U.S. Lose Favor Due to Smaller Tax Benefits

Wall Street Journal, Inversion Reversion: Deals to Move Corporate HQs Outside U.S. Lose Favor Due to Smaller Tax Benefits:

Inversions are starting to revert.

When Mylan moved its corporate address to the Netherlands in 2015, the pharmaceutical company joined a wave of corporate inversion deals aided by tax advantages of a non-U.S. address. Now, Mylan’s address is coming back to the U.S. through a merger deal this week with part of Pfizer, a sign that the 2017 tax law is rendering these moves less attractive than they once were.

The deal comes a month after Allergan PLC—another inverted pharmaceutical company, based in Dublin—announced its return to a U.S. parent through a sale to AbbVie.

On balance, say tax lawyers and analysts, foreign addresses still confer a slight tax advantage.

But after the U.S. corporate tax cuts in the 2017 law, the edge is small enough that it might not be worth reputational and political costs.

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August 3, 2019 in Tax, Tax News | Permalink | Comments (0)

Friday, August 2, 2019

Tax Policy In The Trump Administration

Trump's Taxes And Tax Returns

Boeing's $5 Billion Charge For Grounding 737 Max Planes Will Generate Max NOL Due To 2017 Tax Law Change

Bloomberg Tax, Boeing to Reap Tax Benefits for Years With $5 Billion Max Charge:

Boeing 737 maxBoeing took an almost $5 billion hit to its bottom line in the second quarter over the grounding and delayed deliveries of its 737 Max planes—but tax benefits created by the charge will help the company for years to come. Thanks to a revision to the tax code made by the 2017 tax overhaul, Boeing can carry losses from the 737 Max debacle forward to offset future taxes indefinitely, tax professionals said. Before the law’s changes to tax code Section 172, it would have faced a 20-year deadline.

While it reported the charge on its financial statements, the company won’t recognize the projected expenses for tax purposes until they have actually been incurred, according to tax professionals. ...

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August 2, 2019 in Tax, Tax News | Permalink | Comments (2)

Thursday, August 1, 2019

Federal Judge Overturns IRS Rule To Shield Political Donor Identities

Bloomberg, Judge Overturns IRS Rule to Shield Political Donor Identities

A federal judge in Montana overturned an Internal Revenue Service rule that would allow many political non-profit groups to keep their donor lists private [Bullock v. Rettig, No. CV-18-103-GF-BMM (D. MT July 30, 2019).

The ruling upends a change the IRS made last year that permitted so-called Section 501(c)4 groups, known as “social-welfare” organizations, to keep their donor lists private. A federal judge said the IRS didn’t follow proper procedure in writing the rule and needs to allow the public to weigh in on the change before altering the tax code.

“Then, and only then, may the IRS act on a fully informed basis when making potentially significant changes to federal tax law,” U.S. federal Judge Brian Morris said in the opinion published Tuesday evening. ...

The ruling is a blow to Treasury Secretary Steven Mnuchin who touted the rule, saying it protected donor privacy because the IRS didn’t need the information to enforce tax laws. Democrats had criticized the agency’s move, saying it opened up the possibility for foreign interests to influence elections.

Update:  Bloomberg Tax, IRS Could Face More Court Battles After Nonprofit Donor Ruling:

The IRS may be vulnerable to more court challenges after a federal judge struck down agency guidance that rolled back nonprofit donor disclosure requirements, according to tax professionals.

The ruling upends a position that the Internal Revenue Service and Treasury Department have taken for a long time that guidance falling short of a regulation doesn’t have to go through a full notice-and-comment period, said Kristin Hickman. ...

“The fact that the judge declared a revenue procedure to be a legislative rule is a big deal,” said Hickman, a professor at the University of Minnesota Law School who specializes in tax administration and administrative law.

The decision could subject other revenue procedures—or revenue rulings—to challenges from taxpayers if Morris’s ruling stands, said Lloyd Hitoshi Mayer, a professor at University of Notre Dame Law School. This, however, may not work in every case. The fact that the donor disclosure change amended a nearly 50-year-old rule seemed to play a large role in the judge’s decision, Mayer said.

For background of the case, see:

August 1, 2019 in IRS News, New Cases, Tax, Tax News | Permalink | Comments (3)

Wednesday, July 31, 2019

Nina Olson Retires Today After 18 Years As National Taxpayer Advocate (Update From Nina)

Bloomberg Tax, ‘Advocate Zealously’ for Taxpayers, IRS's Olson Urges Successor:

Olson (2018)“Not a team player.” “A thorn in the government’s side.” “The voice of the taxpayer.”

Outgoing National Taxpayer Advocate Nina E. Olson has been called many things, and she bears those titles—both the good and the bad—proudly.

Olson, who retires as head of the Taxpayer Advocate Service July 31 after 18 years, is no stranger to controversy. Her role—part of an independent arm of the Internal Revenue Service where taxpayers can turn for help if they have a dispute with the agency—has naturally pitted her against senior IRS leadership occasionally.

But looking back at her time in the government, Olson wouldn’t change her approach. And Congress, which created the role to act as an independent voice for the American taxpayer, might have something to say about it if her successor feels otherwise.

“The next person may have a different style,” she told Bloomberg Tax in a sitdown interview. “But they will still need to advocate zealously.”

Olson spoke about the sometimes-contentious relationship in her last public speaking engagement as the national advocate. ...

Olson said her biggest regret as advocate is that she didn’t notice the IRS’s targeting of certain political groups sooner.

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July 31, 2019 in IRS News, Tax, Tax News | Permalink | Comments (1)

Kleinbard: 'Indexing Capital Gains For Inflation By Administrative Fiat Is An Insult To The American Tax System'

Los Angeles Times, Incredibly, GOP Senators Are Demanding Billions More in Tax Cuts For the Rich:

The adage “Give ’em an inch and they’ll take a mile” doesn’t apply anymore in our modern age. Today, it’s better to say, “Give the rich trillions of dollars in tax cuts, and they’ll demand hundreds of billions more.”

That’s the message conveyed by a letter that went out Monday from 21 Republican senators, led by Ted Cruz of Texas, to Treasury Secretary Steven T. Mnuchin. They’re demanding that Mnuchin deliver a new tax cut via executive fiat.

The GOP complains that the capital gains tax isn’t indexed to inflation. As a result, the argument goes, taxpayers including “everyday Americans” are charged taxes on gains that are due purely to inflation, not to the real appreciation of their stocks or bonds. ...

[C]hanging the capital gains tax structure by fiat would circumvent the Democratic-controlled House Ways and Means Committee, where all fiscal legislation must originate. “Indexing capital gains for inflation by administrative fiat is plainly an unlawful overreach of regulatory authority and will be struck down” in court, says tax expert Edward Kleinbard of USC, a former chief of staff to the Congressional Joint Committee on Taxation. ...

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July 31, 2019 in Tax, Tax News | Permalink | Comments (1)

Tuesday, July 30, 2019

#TaxFlix: 56 Tax Films

Allison Christians (McGill), 55 Documentaries and One Drama: A List of Films About Tax #TaxFlix:

A discussion about tax documentaries unfolded on twitter over the past few days, dubbed #taxflix, HT @alvinmosioma.

I threaded a list that I had been keeping for some time, and the twitter discussion resulted in some key additions so I decided to upload the contents of my spreadsheet to this public google sheet, where anyone can view or add to the list, but for those who simply want the current list (arranged by year), it is below.

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July 30, 2019 in Tax, Tax News | Permalink | Comments (0)

Saturday, July 27, 2019

This Week's Ten Most Popular TaxProf Blog Posts

IRS Cracks Down On 10,000 Cryptocurrency Owners

Wall Street Journal, IRS Sending Warning Letters to More Than 10,000 Cryptocurrency Holders:

Bitcoin IRSThe Internal Revenue Service has begun sending letters to more than 10,000 cryptocurrency holders, warning they may have broken federal tax laws.

The agency wasn’t specific about the possible violations it was reviewing, but those who hold digital currencies could be subject to a variety of taxes, especially on capital gains.

“Taxpayers should take these letters very seriously. The IRS is expanding efforts involving virtual currency,” IRS Commissioner Chuck Rettig said. ...

The IRS letters come as bitcoin, the world’s most popular cryptocurrency, has ridden a new wave of optimism in recent months. In mid-July, bitcoin topped $12,000, more than three times its value at the end of 2018. Investors, speculators and Facebook have extolled the potential of digital currencies.

At the same time, use by drug dealers and other nefarious actors has marred its reputation. The IRS has expressed worries about the ability of digital currencies to promote tax evasion. ...

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July 27, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Friday, July 26, 2019

Tax Policy In The Trump Administration

Trump's Taxes And Tax Returns

Tuesday, July 23, 2019

WSJ: The Marriage Penalty Persists After The 2017 Tax Act

Wall Street Journal Tax Report, When It Comes to Taxes, Sometimes It Pays to Say ‘I Don’t’:

Marriage PenaltiesMore than two million American couples will get married this year. Many of them will pay more in taxes because they tied the knot.

The Republican tax overhaul passed in 2017 lowered the cost of being married for many couples. Even so, being married is often more expensive than being two single filers come tax time. If a couple has children and both spouses earn income, they can owe Uncle Sam thousands of dollars every year just for being married.

These marriage penalties, as they’re called, prompt some committed couples to leave the knot untied. Some even have big weddings but don’t marry legally.

While most couples choose to keep this decision private, one famous (well, famous for economists) couple has been pretty open about the decision.

Betsey Stevenson and Justin Wolfers, economists with international reputations at the Gerald R. Ford School of Public Policy at the University of Michigan, have been together for years. They are the parents of two children. But they aren’t married and say one reason is taxes. ... By being public, the couple hopes to stimulate policy discussion. ...

Here’s how marriage bonuses and penalties work in practice, based on examples computed on the Tax Policy Center’s 2019 Marriage Calculator. It’s free and useful for what-if calculations. ...

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July 23, 2019 in Tax, Tax News | Permalink | Comments (1)

WSJ: IRS Greenlights Tax Breaks For Buyers Of 23andMe Genetic Tests — Are Smartwatches Next?

Wall Street Journal, IRS Greenlights Tax Breaks for Buyers of 23andMe Genetic Tests:

23andmeBuyers of 23andMe Inc.’s genetic-testing kits will now have an easier time paying for the service with tax-advantaged health accounts after a favorable IRS ruling.

The decision offers more clarity to consumers and reduces the cost of the company’s service. It also highlights differences between the tax law’s permissive definition of medical care and health regulators’ more restrictive approach to direct-to-consumer testing products.

The Internal Revenue Service made the ruling in May and will release a redacted version next month. The Wall Street Journal reviewed the document before 23andMe disclosed it Monday.

The company sells genetic tests that provide consumers with information about a variety of things, including ancestry, wellness and traits such as food-taste preferences. The health reports provide information on whether individuals have gene variants that increase their risk for developing certain diseases.

That health portion of 23andMe’s test is medical care for tax purposes, the IRS determined. It made no ruling on ancestry testing from the same saliva sample and said taxpayers can use reasonable methods to separate the tax-advantaged piece from the bundled product.

23andMe says the decision means consumers can claim up to $117.74 of the $199 cost of a health-and-ancestry kit as medical care for tax purposes and is offering a calculator to handle taxes, shipping and discounts. Jacquie Haggarty, the company’s deputy general counsel, said any 2019 purchases should be eligible expenses.

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July 23, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

Monday, July 22, 2019

WSJ: After U.S. Tax Overhaul, Corporate Rates Fall But Unevenly

Wall Street Journal, After U.S. Tax Overhaul, Corporate Rates Fall but Unevenly:

The U.S. tax overhaul has lowered tax rates for many companies, and many others that were already toward the bottom of the scale have been able to stay there so far, a Wall Street Journal analysis shows.

The lower rates follow tax-law changes Congress passed at the end of 2017. Since then, the Journal analysis shows, the median effective global tax rate for S&P 500 companies declined to 19.8% in the first quarter of 2019 from 25.5% two years earlier.

WSJ 4

That marked the third straight quarter below 20% and is consistent with the goals and structure of the tax overhaul, which lowered the federal corporate rate to 21% from 35%. The law’s authors wanted to help U.S. multinationals compete in foreign markets and aid domestic companies with high tax burdens, while reducing the value of tax breaks and making it harder to achieve single-digit tax rates.

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July 22, 2019 in Tax, Tax News | Permalink | Comments (1)

NY Times: State And Local Taxes Are Worsening Inequality

New York Times editorial, State and Local Taxes Are Worsening Inequality:

Economic inequality is on the rise in Illinois, and the state government is part of the problem. Illinois taxes low-income families at much higher rates than high-income families, asking the most of those who have the least.

Low-income households in Illinois pay about 14 cents in state and local taxes from every dollar of income, while the state’s most affluent households pay about 7 cents per dollar.

That gap between the poor and the wealthy in Illinois is one of the largest in any state, but the poor pay taxes at higher rates in 45 of the 50 states, according to a 2018 study by the Institute on Taxation and Economic Policy.

It’s a bipartisan phenomenon. The institute’s list of the 10 states with the most regressive tax systems — the states doing the most to increase inequality through taxation — also includes conservative Tennessee and Texas, purple Nevada and Florida, and liberal Washington.

Now Illinois is trying to take its name off the list. The state plans to hold a referendum next year on a constitutional amendment that would authorize the state to tax higher incomes at progressively higher rates — the system used by the federal government and 32 states. ...

NY Times

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July 22, 2019 in Tax, Tax News | Permalink | Comments (4)

TaxProf Blog Weekend Roundup