Paul L. Caron

Tuesday, June 22, 2021

NY Times: U.S. May Lift The Veil On Art Sales

Update:  New York Times, Quotation of the Day:

“The only ones who know are you, the art gallery and God.”
KHRISTA McCARDEN, a professor at Tulane Law School who specializes in the tax code, on the secretive finances of art sales.

New York Times, As Money Launderers Buy Dalís, U.S. Looks at Lifting the Veil on Art Sales:

Billions of dollars of art changes hands every year with little or no public scrutiny. Buyers typically have no idea where the work they are purchasing is coming from. Sellers are similarly in the dark about where a work is going. And none of the purchasing requires the filing of paperwork that would allow regulators to easily track art sales or profits, a distinct difference from the way the government can review the transfer of other substantial assets, like stocks or real estate. ...

In January, Congress extended federal anti-money laundering regulations, designed to govern the banking industry, to antiquities dealers. The legislation required the Department of the Treasury to join with other agencies to study whether the stricter regulations should be imposed on the wider art market as well. The U.S. effort follows laws recently adopted in Europe, where dealers and auction houses must now determine the identity of their clients and check the source of their wealth. ...

To art world veterans, who associate anonymity with discretion, tradition and class, not duplicity, this siege on secrecy is an overreaction that will damage the market. They worry about alienating customers with probing questions when they say there is scant evidence of abuse. ...

[T]here is no question the art market has exploded in value and scope from the sleepy days when its customs were created. Paintings routinely sell for $10 million, $20 million, often as much as the penthouses in which they hang. Though the profits from art sales are subject to the robust capital gains tax on luxury goods of 28 percent, the I.R.S.’s ability to track who is accurately reporting windfalls is something of a struggle. Even figuring out who sold what is a hurdle. Half the purchases are in private, not at public auction, so many prices never become public.

Recent studies have projected substantial tax evasion by the richest Americans, which led to President Biden’s plan to boost audits. While there is no evidence of widespread cheating involving art, experts say it’s clear the secrecy of the market creates vulnerabilities for an enforcement system that rarely conducts audits and relies heavily on the willingness of collectors to make plain their profits.

“The only ones who know,” said Khrista McCarden, a professor at Tulane Law School who specializes in the tax code, “are you, the art gallery and God.” ...

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June 22, 2021 in Tax, Tax News | Permalink

Tuesday, June 15, 2021

Why The Apple-Led Stock Buyback Boom May Get Caught In Biden's Tax-Hike Net

Investor's Business Daily, Why The Apple-Led Stock Buyback Boom May Get Caught In Biden's Tax-Hike Net:

IBDHours before President Joe Biden's April 28 primetime pitch for $4.5 trillion in infrastructure and social spending, Apple (AAPL) wowed Wall Street with its own big-spending plan — $90 billion in Apple stock buybacks.

But Apple was hardly the first big company to use fat recent profits to repurchase shares from investors. Just a day before Apple's news, Google parent Alphabet (GOOGL) teed up a $50 billion buyback. Among others, JPMorgan Chase (JPM) set plans to buy back $30 billion in shares. ...

Yet a possible pitfall lies ahead. An under-the-radar proposal to tax stock buybacks as if they were dividends could reel in huge sums from investors, providing needed cash for Biden's government expansion. That might quiet the stock buyback boom and weigh on foreign demand for U.S. equities. The approach to taxation also may stir controversy. It's already taking flack for taxing "phantom income" and micromanaging corporate finances. ...

Corporate cash spent on buybacks buoys earnings per share by reducing share counts, contributing to higher stock prices. Stockholders who sell their shares back to the company may pay capital gains on the proceeds. For those who don't redeem their shares, buybacks will result in a bigger capital-gains tax bill, but only when they sell their stock — if they sell.

That ability to defer taxes is likely the biggest reason that buybacks have become the preferred way of distributing capital to shareholders for many of America's biggest and most successful companies.

Apple spent more than five times as much on Apple stock buybacks ($72.5 billion) in fiscal 2020 as it paid out in dividends ($14.1 billion). ...

Up until the late 1990s, S&P 500 companies spent more on dividends than on buybacks. But in 2019, buybacks totaled $729 billion, 50% more than the $485 billion distributed as dividends. 

Now all that buyback cash is getting attention as a potential avenue to fund Biden's spending plans.

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June 15, 2021 in Scholarship, Tax, Tax News, Tax Scholarship | Permalink

Death Of Richard Bird (University Of Toronto)

Richard M. Bird, Professor Emeritus of Economic Analysis and Policy at the University of Toronto, died suddenly on Wednesday June 9, 2021, at the age of 82:

BirdHe will be deeply missed by his loving wife Marcia, his family (Paul, Sandra, Marta, Abbey) and his grandchildren (Austin, Spenser, Jack, James, Rose). At his request, a private family service will be held. In lieu of flowers, donations to Doctors without Borders would be greatly appreciated. Sign the Guestbook.

From his Toronto faculty webpage:

Richard Bird is Professor Emeritus at Rotman; Senior Fellow of the Institute for Municipal Governance and Finance, Munk School of Global Affairs; Distinguished Visiting Professor, Andrew Young School of Public Policy in Atlanta; and Adjunct Professor, Australian School of Taxation and Business Law in Sydney. He has lectured and published extensively on tax and public finance issues in many countries. He currently chairs the Advisory Group of the International Centre for Tax and Development at the Institute for Development Studies (UK). 

Current research interests include tax policy, tax administration, local finance and intergovernmental fiscal relations particularly in developing countries.

His Google Scholar numbers are extraordinary:

Bird Citation Stats

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June 15, 2021 in Legal Ed News, Legal Education, Obituaries, Tax, Tax News | Permalink

Monday, June 14, 2021

Brown: What ProPublica Missed About Taxing Rich White Men

Dorothy A. Brown (Emory), What ProPublica Missed about Taxing Rich White Men:

On June 8, 2021 Pro Publica published a piece about the taxes paid — or rather not paid — by the richest men in America. All the people discussed were men — and all of them white, yet no mention of race (or gender) was to be found in the story. Policies supporting wealth building in America have always been designed by rich white men for their benefit. Never is that more true than when it comes to tax policy as I show in my book, The Whiteness of Wealth: How The Tax System Impoverishes Black Americans — And How We Can Fix It. Rich white men fight for tax loopholes that they then benefit from. ...

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June 14, 2021 in Tax, Tax News | Permalink

The ProPublica Tax Report: Return Of The IRS Scandal

Following up my previous post, ProPublica: America's Richest People Pay Little To Nothing In Federal Income Taxes:

Wall Street Journal editorial, Return of the IRS Scandal:

That didn’t take long. Less than half a year into the Biden Presidency, the Internal Revenue Service is already at the center of an abuse-of-power scandal. That news broke Tuesday when ProPublica, a website whose journalism promotes progressive causes, published information from what it said are 15 years of the tax returns of Jeff Bezos, Warren Buffett and other rich Americans.

Leaking such information is a crime, since under federal law tax returns are confidential. ProPublica says it received the files from “an anonymous source” and doesn’t know who provided them, how they were obtained, or what the source’s motives are.

Allow us to fill in that last blank. The story arrives amid the Biden Administration’s effort to pass the largest tax increase as a share of the economy since 1968. The main Democratic argument for a tax hike is that the rich should pay their “fair share.” The ProPublica story is a long argument that somehow the rich don’t pay enough. The timing here is no coincidence, comrade.

Someone at the IRS—or someone who hacked the IRS—leaked the documents to influence the debate in Congress. And right on time, Ron Wyden, the Senate’s chief tax writer, opened a Finance Committee hearing Tuesday by mentioning the ProPublica data dump.

“What this data reveals is that the country’s wealthiest—who profited immensely during the pandemic—have not been paying their fair share,” Mr. Wyden said. “I’ll have a proposal to change that.” You can bet he will.

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June 14, 2021 in Tax, Tax News | Permalink

NY Times: Private Inequity — How A Powerful Industry Conquered The Tax System

New York Times, Private Inequity: How a Powerful Industry Conquered the Tax System:

There were two weeks left in the Trump administration when the Treasury Department handed down a set of rules governing an obscure corner of the tax code.

Overseen by a senior Treasury official whose previous job involved helping the wealthy avoid taxes, the new regulations represented a major victory for private equity firms. They ensured that executives in the $4.5 trillion industry, whose leaders often measure their yearly pay in eight or nine figures, could avoid paying hundreds of millions in taxes.

The rules were approved on Jan. 5, the day before the riot at the U.S. Capitol. Hardly anyone noticed.

The Trump administration’s farewell gift to the buyout industry was part of a pattern that has spanned Republican and Democratic presidencies and Congresses: Private equity has conquered the American tax system. ...

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June 14, 2021 in Tax, Tax News | Permalink

Sunday, June 13, 2021

Dorothy Brown On The ProPublica Tax Report, Racial Justice, And The Gig Economy

Saturday, June 12, 2021

NY Times: How Long Should It Take To Give Away Millions?

New York Times, How Long Should It Take to Give Away Millions?:

Immorality 3The billionaires, former government officials and academics gathered in a Manhattan conference room to brainstorm solutions to a problem they had all been working on from various angles: how best to update the laws governing philanthropy, most of which were half a century old.

Over sandwiches, sketching their ideas out on whiteboards, they discussed donor-advised funds, a kind of financial way station that allows givers to claim all the tax benefits of donations upfront while leaving the money parked with large firms like Fidelity Charitable or Schwab Charitable or with large community foundations like the Silicon Valley Community Foundation. Today, one out of every eight dollars bound for charities in the United States is channeled into a donor-advised fund.

The participants wanted, among other reforms, to ensure that money stashed in donor-advised funds, which had already earned those donors significant tax savings, ended up in the hands of working charities more quickly. But there was a general recognition in the room that movement would be slow and incremental, if it happened at all.

That was January 2020.

On Wednesday, the effort will make its way to Congress, where Senators Angus King of Maine and Charles E. Grassley of Iowa are introducing legislation to attempt a version of what the group outlined in that first brainstorming session: a way of ensuring that money promised to charity more quickly gets to the people who need it.

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June 12, 2021 in Book Club, Tax, Tax News | Permalink

Cravath 'On Tax' Podcast: Kiran Sheffrin

The latest Cravath 'On Tax' Podcast features senior tax attorney Kiran Sheffrin:

Cravath on TaxKiran Sheffrin is a senior attorney in Cravath’s Tax Department. In this episode of On Tax, she talks to Cravath partner and colleague Len Teti about how she has always wanted to be a lawyer; the opportunities she pursued while a student at Brooklyn Law School (and how Rebecca Kysar mentored her); and how she has embraced her role as a mentor, guiding junior associates much in the same way that she was brought up at the Firm.

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June 12, 2021 in Legal Ed News, Legal Education, Tax, Tax News | Permalink

Thursday, June 10, 2021

We Ran The Treasury Department. This Is How To Fix Tax Evasion.

New York Times op-ed:  We Ran the Treasury Department. This Is How to Fix Tax Evasion., by Timothy Geithner, Jacob Lew, Henry Paulson, Robert Rubin & Lawrence Summers:

The five of us served as Treasury secretary under three presidents, both Republican and Democrat, representing 17 years of experience at the helm of the department. While we are not in agreement on many areas of tax policy, we believe in the importance of strengthening the tax system to do more to collect legally owed but uncollected taxes — which, left unaddressed, could total $7 trillion over the next decade. We are convinced by the strength of our experiences that more can be done to pursue evasion in the ways outlined by President Biden’s recent proposal to increase the resources and information available to the I.R.S.

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June 10, 2021 in Tax, Tax News | Permalink

Iowa Seeks To Hire Entry-Level Or Lateral Tax Prof

The University of Iowa College of Law Associate Professor or Professor:

Iowa (2021)Position Description:  The University of Iowa College of Law anticipates hiring multiple entry-level or lateral faculty members in areas including tax, constitutional law, and a variety of other specialties. Iowa Law provides the ideal setting for professional growth as a law teacher and legal scholar. As a small school within a Big Ten university, we offer an environment that values community and civility, maximizes collaboration, and encourages exploration across legal fields. As a result, Iowa Law produces graduates who are grounded, collegial, and effective leaders. Iowa Law students learn how to work together and communicate clearly with one another—crucial skills in the legal profession. And as part of a world-class research university, our students and faculty can partner with experts across campus in fields as varied as engineering, the liberal arts, health care, and more—a significant advantage in preparing for legal issues that cross fields of expertise and global borders. For questions, please contact Faculty Appointments Committee.

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June 10, 2021 in Legal Ed News, Legal Education, Tax, Tax News | Permalink

House Holds Hearing Today On Minding The Tax Gap: Improving Tax Administration For The 21st Century

The House Ways and Means Committee is holding a hearing today at 12:00 ET on Minding The Tax Gap: Improving Tax Administration For The 21st Century (livestream):

  • House LogoSteven Dean (Brooklyn) (testimony:  "In my testimony today, I will explain why a race-blind approach to tax enforcement produces bad tax policy. I will use three very different examples to show why leaving race out of the equation fails to prevent bias and how destructive that bias can be for everyone. Ignoring race doesn’t solve problems, it creates them. You have already heard from ProPublica that the ten most heavily audited counties in the United States are Black and poor. I will tell you how we can do better.")
  • Janet Holtzblatt (Tax Policy Center) (testimony)
  • Mark Mazur (Deputy Assistant Secretary for Tax Policy, U.S. Treasury Department) (testimony)

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June 10, 2021 in Congressional News, IRS News, Tax, Tax News | Permalink

Wednesday, June 9, 2021

Dorothy Brown And David Cay Johnston Discuss Yesterday's ProPublica's Report On The Tax Secrets Of The .001%

Tuesday, June 8, 2021

ProPublica: America's Richest People Pay Little To Nothing In Federal Income Taxes

ProPublica, The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax:

ProPublica has obtained a vast cache of IRS information showing how billionaires like Jeff Bezos, Elon Musk and Warren Buffett pay little in income tax compared to their massive wealth — sometimes, even nothing.

In 2007, Jeff Bezos, then a multibillionaire and now the world’s richest man, did not pay a penny in federal income taxes. He achieved the feat again in 2011. In 2018, Tesla founder Elon Musk, the second-richest person in the world, also paid no federal income taxes.

Michael Bloomberg managed to do the same in recent years. Billionaire investor Carl Icahn did it twice. George Soros paid no federal income tax three years in a row.

ProPublica has obtained a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation’s wealthiest people, covering more than 15 years. The data provides an unprecedented look inside the financial lives of America’s titans, including Warren Buffett, Bill Gates, Rupert Murdoch and Mark Zuckerberg. It shows not just their income and taxes, but also their investments, stock trades, gambling winnings and even the results of audits.

Taken together, it demolishes the cornerstone myth of the American tax system: that everyone pays their fair share and the richest Americans pay the most. The IRS records show that the wealthiest can — perfectly legally — pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year. ...

To capture the financial reality of the richest Americans, ProPublica undertook an analysis that has never been done before. We compared how much in taxes the 25 richest Americans paid each year to how much Forbes estimated their wealth grew in that same time period.

We’re going to call this their true tax rate.

The results are stark. According to Forbes, those 25 people saw their worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, the IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%.

ProPublica 2

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June 8, 2021 in Tax, Tax News | Permalink

Friday, June 4, 2021

Blank And Osofsky Selected By Administrative Conference Of The U.S. To Study Use Of Automated Legal Guidance By Federal Agencies

Blank OsofskyJoshua Blank (UC-Irvine) and Leigh Osofsky (North Carolina) have been selected by the Administrative Conference of the United States (ACUS) to conduct a study of U.S. federal government agencies’ use of automated tools -- such as chatbots, virtual assistants, and artificial intelligence -- to explain the law to the public. 

“I am grateful to ACUS for the opportunity to study, along with my co-author, Professor Leigh Osofsky, how technology is changing the way federal agencies are communicating the law and to offer policy recommendations to federal government officials,” said Blank. 

“I am excited to have the opportunity to build on my prior work with my colleague, Josh Blank, to explore the government’s automation of legal guidance,” says Osofsky. “This is a fast-growing area with potential to fundamentally change how the public interacts with the government, and I believe this project will give us a great opportunity to set a good foundation for government practice.” 

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June 4, 2021 in Legal Ed News, Legal Education, Tax, Tax News | Permalink

Wednesday, June 2, 2021

‘SpongeBob’ And ‘Transformers’ Cost U.S. Taxpayers $4 Billion

New York Times, ‘SpongeBob’ and ‘Transformers’ Cost U.S. Taxpayers $4 Billion, Study Says:

CBSA new report details ViacomCBS’s use of a labyrinthine tax shelter to sell rights to its shows and films overseas.

Dismissed by critics and devoured by fans, “Transformers: Age of Extinction” was the top box office film in 2014, bringing in $1.1 billion, with more than three-quarters of those dollars coming from overseas.

ViacomCBS’s Paramount Pictures, which distributed the computer-animated action-fest, saved much of that money by licensing the international rights through a complex strategy designed to avoid paying U.S. taxes, according to a study published on Tuesday by the Centre for Research on Multinational Corporations, a nonprofit group funded in part by the Dutch Ministry of Foreign Affairs [Keep watching: The Tax Avoidance Structures of ViacomCBS].

It is common practice for multinational corporations to take advantage of tax shelters. The report offers a rare look at how one company has pulled it off.

ViacomCBS, a media giant that came into being after the 2019 merger of the sibling companies, has used the same strategy for all its entertainment properties, according to the report.

Since 2002, ViacomCBS and its predecessor companies, Viacom and CBS, together avoided paying $3.96 billion in U.S. corporate income tax through a system that involved subsidiaries in Barbados, the Bahamas, Luxembourg, the Netherlands and Britain, according to the report.

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June 2, 2021 in Tax, Tax News | Permalink

Tuesday, June 1, 2021

Alice Abreu Named Inaugural Honorable Nelson A. Diaz Professor Of Law At Temple

AL DÍA, Introducing the new “Nelson Diaz Professorship” at Temple University Law School:

Abreu (2019)As it celebrates its 125th year, Temple University’s James E. Beasley School of Law has created a new esteemed honor, the Nelson Diaz Professorship.

The title is named after the Honorable Judge Nelson A. Diaz, the first Latino to pass the Pennsylvania bar exam, the first Latino judge in the state, as well as an alumnus who earned his Doctor of Law Degree at Temple Law School.

“He is a trailblazer in many regards,” said Gregory Mandel, Dean and Peter J. Liacouras Professor of Law at Temple Law School. “Given his role in helping organize students at the Law school and then the tremendous career he went on to have, we wanted to find a way to honor his legacy.”

The title will go to faculty that exemplifies those efforts in the present day.

Temple Law Professor Alice Abreu is the first person to be appointed the newly-established Nelson A. Diaz Professor of Law.

“Being the inaugural holder of the Honorable Nelson A. Diaz Professorship in Law is the highest honor of my career,” Abreu told AL DÍA. ...

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June 1, 2021 in Legal Ed News, Legal Education, Tax, Tax News | Permalink

Monday, May 31, 2021

Treasury Releases Explanation Of Tax Proposals In President Biden's FY22 Budget

Green Book FY22

Presidents from George H.W. Bush through Barack Obama released General Explanations of the Administration’s Revenue Proposals — commonly known as the "Green Book" — an explanation of the Administration's revenue proposals for that fiscal year. President Trump did not follow this tradition in FY18 - FY21. President Biden has returned to that tradition and released General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals:

In the Fiscal Year 2022 Budget, the President proposes a number of reforms to the Internal Revenue Code (Code) that would modernize our tax system to respond to today’s challenges. These changes would raise revenue, improve tax administration, and make the tax system more equitable and efficient.

The American Jobs Plan includes revenue proposals that reform corporate taxation, support housing and infrastructure, and prioritize clean energy. Reforms to the corporate income tax aim to collect sufficient revenue, build a fairer tax system, and reduce tax incentives that encourage profit shifting and offshoring. Housing and infrastructure tax credits would support low-income housing, economic development, and public school and transportation infrastructure. The American Jobs Plan would eliminate all fossil fuel subsidies that linger in the Code, while substantially expanding tax incentives that encourage clean energy sources, energy efficiency, carbon sequestration, and electric vehicle adoption.

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May 31, 2021 in IRS News, Tax, Tax News | Permalink

Saturday, May 15, 2021

The Biden Tax Mirage: Higher Rates Produce Less Revenue From The Rich

Wall Street Journal op-ed:  The Biden Tax Mirage, by Phil Gramm & Mike Solon:

With deficits at levels not seen since World War II, the March $1.9 trillion stimulus only beginning to spend out, and President Biden calling for significantly higher marginal tax rates to help fund another $4 trillion of spending, maybe it’s time for a reality check on how high marginal tax rates, and the actual tax rates paid by Americans, can be raised without crushing economic growth. Proponents of massive tax increases will argue that economic growth and prosperity are compatible with high tax rates by pointing to the 35 years of postwar prosperity in America, when the top federal tax rate was 70% or higher.

But before accepting this as proof by example, it’s worth examining how many taxpayers actually paid those top rates and what percentage of their income high earners actually paid in taxes. Economists Gerald Auten of the Treasury Department and David Splinter of the Joint Committee on Taxation have compiled an extraordinary new database using Internal Revenue Service data on taxes actually collected since 1962. The top marginal income-tax rates and the taxes actually paid, including payroll taxes, as a percentage of income for the top 1%, top 10% and bottom 50% of income earners are shown in the nearby chart. 


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May 15, 2021 in Tax, Tax News | Permalink

Wednesday, May 12, 2021

OECD Calls For Increased Inheritance, Estate And Gift Taxes To Curb Inequality And Raise Revenue

OECD, Inheritance, Estate and Gift Taxes Could Play a Stronger Role in Addressing Inequality and Improving Public Finances:

Inheritance taxation can be an important instrument to address inequality, particularly in the current context of persistently high wealth inequality and new pressures on public finances linked to the COVID-19 pandemic, according to a new OECD report.

Inheritance Taxation in OECD Countries provides a comparative assessment of inheritance, estate and gift taxes across the 37-member OECD, and explores the potential role these taxes could play in raising revenues, addressing inequalities and improving the efficiency of tax systems in the future.

The report highlights the high degree of wealth concentration in OECD countries as well as the unequal distribution of wealth transfers, which further reinforces inequality. On average, the inheritances and gifts reported by the wealthiest households (top 20%) are close to 50 times higher than those reported by the poorest households (bottom 20%).

The report points out that inheritance taxes — particularly those that target relatively high levels of wealth transfers — can reduce wealth concentration and enhance equality of opportunity. It also notes that inheritance taxes have generally been found to generate lower efficiency costs than other taxes on the wealthy, and to be easier to assess and collect than other forms of wealth taxation.

A majority of OECD countries currently levy inheritance or estate taxes — 24 in total. However, these taxes typically raise very little revenue. Today, only 0.5% of total tax revenues are sourced from inheritance, estate and gift taxes on average across the countries that levy them.


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May 12, 2021 in Tax, Tax News | Permalink

Tuesday, May 11, 2021

Tax Practitioners Scoff At Janet Yellen's Comment That 'The IRS Has Put On A Masterclass In How The Machinery Of Government Should Work'

Forbes, Treasury Secretary’s IRS Praise Sparks Backlash From Those Who Must Deal With The Tax Agency:

IRS Logo 2Is the IRS broken? It depends on whom you ask. Yesterday Treasury Secretary Janet Yellen tweeted “It’s a stunning achievement. In the midst of a crisis, the IRS has put on a masterclass in implementation and how the machinery of government should work.” The pushback from tax industry professionals was immediate and vehement.

Brian Streig, CPA and Tax Director at Calhoun, Thomson & Matza, LLP in Austin, Texas, responded “Yes, the IRS did a great job at implementing CARES Act and other Covid tax law changes. But, the IRS has completely failed American taxpayers in their primary function of processing tax returns, issuing refunds, and handling notices.” ...

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May 11, 2021 in IRS News, Tax, Tax News | Permalink

Thursday, May 6, 2021

Death Of Jack McNulty (UC-Berkeley)

SFGATE obituary, John McNulty:

Mcnulty_john_210x270-210x270John Kent McNulty, professor emeritus at Berkeley Law and a man of letters, music, and the arts, died Saturday, Sept. 26, at his home in Berkeley of an apparent heart attack. He was 85.

Jack, as he was known by many since childhood, was an accomplished legal scholar who specialized in federal income taxation and international tax. He joined the faculty at Berkeley Law (then Boalt Hall School of Law) in 1964 and taught full-time until his retirement in 2002. The law was his true north, and his community of scholars sustained him; he continued to visit his campus office every weekday until the COVID-19 pandemic precluded it.

An invitation to join the Berkeley Law faculty prompted Jack, his wife Linda, and their three young children, Martha, Jennifer, and John Jr., to pack up and head west, arriving just in time for the Free Speech Movement and all the social, political, and personal change that would ensue. Jack and Linda, both born and raised in Buffalo, N.Y., welcomed the waves of change, eager for their children to grow up in a more just and democratic society.

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May 6, 2021 in Legal Ed News, Legal Education, Obituaries, Tax, Tax News | Permalink

Five Former IRS Commissioners (3 GOP, 2 Dem) Back Biden's Tax Plan

Washington Post, Five Former IRS Commissioners: Biden’s Proposal Would Create a Fairer Tax System:

The writers are former commissioners of the Internal Revenue Service: Lawrence B. Gibbs, 1986 to 1989; Fred T. Goldberg, 1989 to 1992; Margaret M. Richardson, 1993 to 1997; Charles O. Rossotti, 1997 to 2002; John Koskinen, 2013 to 2017.

President Biden’s proposal would restore our tax administration system to make it far fairer and more effective. This would benefit everyone who pays their taxes. It would produce a great deal of revenue by reducing the enormous gap between taxes legally owed and taxes actually paid — much of it through increased voluntary compliance. And it would improve taxpayers’ interactions with the IRS.

Achieving these goals will take time, persistence and sound management, but the investment is likely to pay for itself many times over, for decades to come.

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May 6, 2021 in Tax, Tax News | Permalink

Thursday, April 29, 2021

Which Is More Difficult: The CPA Exam Or The Bar Exam?

Accounting Today, Which Is More Difficult: The CPA Exam or the Bar?:

You might not believe this, but some accountants and attorneys compete for who had the tougher journey to pass their credentialing exam. I sat for the Bar Exam a few years ago and passed on my first try after finishing law school at the age of 58. However, my master’s degree is in accounting, so two years after passing the bar, I decided I might as well try to obtain my CPA license by sitting for the CPA Exam as well. Of course, everyone thought I was a bit crazy, and that is something I expected. What I did not expect was the debate surrounding which exam is harder. ...

It had not occurred to me that sitting for both exams would create a competition among my highly educated colleagues as to who had it worse in their path toward licensure. But it did. So, here is my honest assessment of the two exams. ...

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April 29, 2021 in Legal Ed News, Legal Education, Tax, Tax News | Permalink

Wednesday, April 28, 2021

Corporate Taxes: Rates Down, Revenues Up

Chris Edwards (Cato Institute), Corporate Taxes: Rates Down, Revenues Up:

U.S. Treasury Secretary Janet Yellen recently complained about a “30-year race to the bottom on corporate tax rates,” and is pushing for a higher U.S. rate and a global minimum rate. Yellen wants to make sure that corporate taxes “raise sufficient revenue to invest in essential public goods and respond to crises.” Economist Gabriel Zucman approved of the proposed tax hike, saying corporations should “pay more in taxes, instead of them paying less and less."

Zucman’s claim about “less and less” is incorrect when looking across the major economies in recent decades. ... The chart below shows the average corporate tax rate and average corporate tax revenues as a percent of GDP for 22 countries. The average rate fell from 47 percent in 1980 to 25 percent in 2019. As a consequence, Yellen or Zucman might think that corporate tax revenues would have fallen. But corporate tax revenues are up substantially since the 1980s. Corporate tax revenues for the 22 countries rose from 2.2 percent in 1980 to 3.0 percent in 2019.


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April 28, 2021 in Tax, Tax News, Think Tank Reports | Permalink

Tuesday, April 27, 2021

Senate Holds Hearing Today On Creating Opportunity Through A Fairer Tax System

The Senate Finance Committee's Subcommittee on Fiscal Responsibility and Economic Growth holds a hearing today on Creating Opportunity Through a Fairer Tax System at 2:30 PM ET (live video here):

  • Senate (2021)Abigail E. Disney (CEO & Co-founder, Fork Films, New York), Testimony:
    I will go to bat for the wealth tax with any and all businessmen who want to tell you that it impinges on the American dream. If you have $50 million and do not know how to invest it for more than 2% growth, you have bigger problems than a wealth tax. If you have a billion dollars and don’t know how to live on $999 million, you don’t need a better tax system, you need a psychiatrist.
  • Cheryl Straughter (Owner, Soleil, Boston), Testimony:
    Asking ultra-millionaires and billionaires to pay a small percent of their massive wealth is a no-brainer. If you have a huge fortune, and you benefit from all that this country has provided, you ought to be paying your fair share. It’s more than fair that they be asked to pay a small percent of their wealth – and I just can’t understand why the wealthiest and luckiest people in the world would be complaining about it being such a hardship.
  • David Gamage (Professor, Indiana University, Maurer School of Law), Testimony:
    I am primarily devoting this written testimony to discussing the Ultra-Millionaire Tax Act of 2021 and the broader case for levying a federal tax on extreme wealth holdings. As is well known, both wealth and income inequality have exploded over recent decades, with the gains from economic growth disproportionately going to the richest Americans. Meanwhile, as I will explain, our tax system is broken as applied to the ultra-wealthy, with many harmful consequences. A new federal tax on extreme wealth holdings, like the Ultra-Millionaire Tax Act, should be a central component of reforms for fixing this disgraceful state of affairs.
    Secondarily, I will more briefly write in support of both the Real Corporate Profits Tax Act of 2021 and proposals for improving IRS funding and for making it and other tax enforcement funding less dependent on the annual appropriations process. All of these proposals go together as reforms for raising revenues needed for public investment while helping to fix some of the ways in which our tax system is currently broken and easily exploited by tax gaming by ultra-wealthy individuals and families and by large corporations. For the reasons I will explain, I strongly support all of these reform proposals.

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April 27, 2021 in Congressional News, Tax, Tax News | Permalink

Saturday, April 24, 2021

Tax Prof Baby: Marty Herschel Kleiman

Marty Herschel Kleiman
Congratulations to Ariel and Benji Kleiman

April 24, 2021 in Legal Ed News, Legal Education, Tax, Tax News | Permalink

Lederman & Christians: Last-Minute Exam Prep

Quick tips from Professors Lederman & Christians on how to prepare for and study for a law school exam! 

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April 24, 2021 in Legal Ed News, Legal Education, Tax, Tax News | Permalink

Friday, April 23, 2021

U.S. Tax Court's Tax Trailblazers: Glenn Carrington

U.S. Tax Court's Diversity & Inclusion Series, Tax Trailblazers: Mentoring the Next Generation:

CarringtonPlease join the United States Tax Court for the third in its series of monthly programs celebrating diversity and inclusion in tax law. Moderated by Chief Judge Maurice B. Foley, April’s webinar will focus on Glenn Carrington, Dean of the School of Business at Norfolk State University. Today at 7:00-8:15 PM EST (register here).

Glenn Carrington is the Dean of the School of Business at Norfolk State University. He holds a B.S. degree in Business from Norfolk State and a J.D. from the University of Virginia. Prior to academia, he spent many years advising Fortune 500 clients on financial and international transaction tax issues at major accounting firms, including EY (where he served on the executive board), Deloitte, and Arthur Andersen & Co. (where he served as the managing partner of the National Tax Office). He also served at the IRS as Assistant Chief Counsel (Income Tax & Accounting), Office of Chief Counsel, and as a Branch Chief in the Office of the Assistant Chief Counsel (Corporate).

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April 23, 2021 in Legal Ed News, Legal Education, Tax, Tax News | Permalink

Wednesday, April 21, 2021

CIA Seeks To Hire A Tax Lawyer

The CIA's Office of General Counsel seeks to hire a Tax Attorney:

CIA (2021)Tax Attorneys provide legal advice to the Agency on the full range of tax matters.
$72,030 -$170,800*
*Higher starting salary possible depending on experience level

About the Job
The Office of General Counsel (OGC) of the Central Intelligence Agency (CIA) provides legal advice and policy counsel to the Director of the CIA (DCIA) and other CIA officers on a variety of legal issues, to include intelligence and national security law; procurement and acquisition law; employment and personnel law; government ethics; fiscal law; general administrative law; privacy and civil liberties, and legislative affairs.

As the Tax Attorney for the CIA’s Office of General Counsel, you will be responsible for providing legal advice to the Agency on the full range of tax matters.  You will handle the unique and challenging tax-related issues attendant to the Agency conducting its national security mission.

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April 21, 2021 in Legal Ed News, Legal Education, Tax, Tax News | Permalink

Tuesday, April 20, 2021

Senate Holds Hearing Today On Combatting Inequality: The Tax Code And Racial, Ethnic, And Gender Disparities

The Senate Finance Committee holds a hearing today on Combatting Inequality: The Tax Code and Racial, Ethnic, and Gender Disparities at 10:00 AM ET (live video here):

  • Senate (2021)Dorothy Brown (Emory)
    TestimonyIn my testimony today, I will discuss three ways that tax policies are more likely to provide tax breaks for white Americans than black Americans. The first looks at the tax breaks for marriage. The second looks at tax breaks for sales of homes. The third looks at tax breaks for employer provided retirement accounts. But if there is one thing that I hope you remember from what I will be sharing with you today it is that racial inequality is baked into how our tax laws operate.
  • Mihir A. Desai (Harvard)
    TestimonyWhile equity is commonly understood as a guiding principle of tax policy (along with efficiency and administrability), the specific issues raised in this hearing – the role of race, ethnicity, and gender — are important considerations that have not received the attention that they deserve. I applaud your willingness to engage these questions and, in particular, I’m delighted to share this opportunity with Professor Dorothy A. Brown, who has done so much to advance the agenda around race, in particular

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April 20, 2021 in Congressional News, Tax, Tax News | Permalink

Monday, April 19, 2021

Stanford Law Profs' Son Is A 'Vegan Crypto Billionaire'

Interesting articles about Sam Bankman-Fried, the son of Stanford Law professors Joe Bankman and Barbara Fried:

SamVox Recode, How a Crypto Billionaire Decided to Become One of Biden’s Biggest Donors:

An interview with Sam Bankman-Fried, who uses math for ... everything.

One of the people who Joe Biden should thank for becoming president is a 28-year-old cryptocurrency zealot who sleeps on an office beanbag chair most nights, believes businesses focus too much on social responsibility, and has, seemingly out of nowhere, become worth $10 billion.

This is Sam Bankman-Fried, who represents a new breed of entrepreneurs who think obsessively — and, at times, counterintuitively — about the value of becoming rich. Their civic-mindedness doesn’t lead them into do-gooder careers, but into earn-earn-earn careers where they can maximize their fortunes. And Bankman-Fried has ridden the crypto boom to more or less check off part one of his two-part plan, which goes like this:

Make a tremendous amount of money by any means necessary. Then give it all away by the best means possible. 

Wall Street Journal, This Vegan Billionaire Disrupted the Crypto Markets. Stocks May Be Next.:

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April 19, 2021 in Legal Ed News, Legal Education, Tax, Tax News | Permalink

Saturday, April 17, 2021

Houston Tax Attorney Faces 14 Years In Prison For Allegedly Helping Billionaire Robert Smith Hide $225 Million In Capital Gains

Forbes, Tax Attorney Facing Prison For Allegedly Helping Billionaires Robert Smith And Bob Brockman Dodge The IRS:

DOJ Logo (2021)It’s a new legal development for private equity billionaire Robert F. Smith and his onetime mentor Bob Brockman, already accused of the biggest tax evasion in U.S. history.

Yesterday, the U.S. Department of Justice announced the indictment of Carlos E. Kepke, a Houston tax attorney who prosecutors say conspired with Smith to hide $225 million in untaxed capital gains from the IRS between 1999 and 2014 — during the years when Smith was rapidly growing Vista Equity Partners.

Prosecutors say that Smith paid Kepke $1 million since 2007 for his services, which included assisting in the preparation of Smith’s false 2012-2014 tax returns and setting up offshore entities to aid in tax evasion.

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April 17, 2021 in Tax, Tax News | Permalink

Tuesday, April 13, 2021

Dean: A Plea To President Biden To Stop Perpetuating Racist Tax Policy

Steven Dean (Brooklyn), A Plea to President Biden to Stop Perpetuating Racist Tax Policy:

Dear President Biden,
You have pledged to fight to rid our nation of systemic racism. I believe you mean that. But it seems that many in your administration do not. Or perhaps they simply underestimate your resolve.

When you announced your plan last week to rebuild our nation’s infrastructure, you showed a way to pay much of the cost with tax increases on corporations. You did not dwell on the complex details, yet you did take time to single out the Cayman Islands and Bermuda to blame for the failures of our corporate income tax. For reasons that I understand all too well, you identified the wrong culprits.

In your remarks, you explained that corporations had hidden profits in the Caymans and Bermuda. That may be true, in a sense. But it also encapsulated the racism and xenophobia you promised to purge from our political discourse. ...

I blame your extraordinary team of tax specialists. When Paul Krugman joked that there were no tax experts that had not already joined your administration, I immediately thought of one whom they had not even had a conversation with until a few days ago.

With her acclaimed book The Whiteness of WealthDorothy Brown showed the world what we tax nerds long suspected.

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April 13, 2021 in Legal Education, Tax, Tax News | Permalink

Congress — And Biden — Can Raise Taxes Retroactively

Washington Post op-ed:  Congress — and Biden — Can Raise Taxes Retroactively If They Want To, by David Herzig (E&Y):

Tax increases seem to appear on the horizon. Recently, the Biden administration proposed raising the corporate income tax to 28 percent, among other tax increases, to pay for a $2 trillion infrastructure plan. Depending on where the economy is in the fall, President Biden and the Democratic-controlled House and Senate may advance an agenda heavy on other policy initiatives, such as addressing climate change and reforming the Affordable Care Act. These plans are also likely to be paid for with increased taxes. In recent interviews, Treasury Secretary Janet Yellen and Mark Mazur, a tax policy official, said that Treasury should be thinking broadly about revenue-raising policies to pay for Biden’s campaign proposals.

As lawmakers consider the magnitude of tax increases, taxpayers may wonder whether those increases will be retroactive not only to the date of the bill’s introduction, but to the beginning of 2021. This is an important and interesting question: Can tax legislative increases be retroactive?

Under conventional wisdom, the answer is no. Taxpayers should be able to rely on the existing rules; otherwise, the government’s pursuit of short-term revenue could create a sense of unfairness and animosity toward the system.

In reality, however, the answer is yes. Tax increases can be retroactive, and not just to the current year.

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April 13, 2021 in Tax, Tax News | Permalink

Saturday, April 10, 2021

Dorothy Brown: College Exacerbates The Racial Wealth Gap

Washington Post op-ed:  College Isn’t the Solution for the Racial Wealth Gap. It’s Part of the Problem, by Dorothy Brown (Emory):

Higher education is supposedly the ticket to a better future, and it usually translates to a larger salary regardless of race, according to a 2011 study from the Georgetown University Center on Education and the Workforce. But college does not pay off for Black students the way it does for White students. At virtually every step — from taking out loans to facing a racist job market to dealing with repayment plans — Black students and their families have disadvantages. As a result, the Black-White wealth gap widens.

Black college graduates have higher debt loads, on average, than White college graduates. Black debt rises over time, White debt diminishes. Upon graduation, the average Black graduate owes $23,400 vs. the White graduate’s $16,000, according to the Brookings Institution. Four years later, the gap triples. Even at the top end of the income spec­trum, Black students have higher student loans ($4,643, on average) than White students ($3,835), and Black parents take out larger loans to help pay for college ($3,303 vs. $1,903).

What accounts for that difference? First, it’s the schools students attend. Wealthier colleges, which can afford to award financial aid and scholarships, disproportionately admit White students: White students are almost five times as likely to go to a selective university than Black students, even when controlling for income. Meanwhile, a higher share (12 percent) of Black students attend for-profit colleges than very selective universities (9 percent), because online and part-time features allow them to work while getting their degrees. These schools usually do not award any financial aid and are in effect extremely expensive, given their low graduation rates

Another factor is the wealth disparity between Black and White families. Black college students are less likely than their White peers to receive tax-free gifts from their parents and grandparents. ...

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April 10, 2021 in Tax, Tax News | Permalink

Thursday, April 8, 2021

Dorothy Brown: ‘The System For Wealth Building Is Designed To Build White Wealth’

New York Magazine, Dorothy Brown: ‘The System for Wealth Building Is Designed to Build White Wealth’:

Whiteness of WealthHow often do you think about your taxes? Once a year, maybe, when it’s time to file, or when you got married, or when you bought a home? If you’re white, taxes are often an inconvenience at worst. The tax code may even benefit you when you get married and start filing a joint return. If you’re Black, says Emory University law professor Dorothy Brown, your story is likely different: The joint return is less likely to reward a marriage with a tax cut when two spouses of equal income work outside the home, something that’s more likely to be true of Black couples. That’s not an accident, she argues in her new book, The Whiteness of Wealth. Well-off, mostly white Americans litigated and lobbied their way into making sure the tax code protects their wealth. Black Americans, who typically lack family wealth, were left out and deliberately held back. They can’t catch up, and that’s the point. The system is working as designed for whom it was designed: white Americans.

In The Whiteness of Wealth, Brown brings the American tax code to life. Hands shape it and wield it like a shield in the defense of the most powerful among us. The tax code tells a story about American priorities. The news isn’t good, Brown writes, but there’s still time to change the future.

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April 8, 2021 in Book Club, Legal Education, Scholarship, Tax, Tax News, Tax Scholarship | Permalink

Saturday, April 3, 2021

NY Times: An Accidental Disclosure Exposes A $1 Billion IRS Tax Fight With Bristol Myers

New York Times, An Accidental Disclosure Exposes a $1 Billion Tax Fight With Bristol Myers:

BMSThe I.R.S. believes the American drugmaker used an abusive offshore scheme to avoid federal taxes.

Almost nine years ago, Bristol Myers Squibb filed paperwork in Ireland to create a new offshore subsidiary. By moving Bristol Myers’s profits through the subsidiary, the American drugmaker could substantially reduce its U.S. tax bill.

Years later, the Internal Revenue Service got wind of the arrangement, which it condemned as an “abusive” tax shelter. The move by Bristol Myers, the I.R.S. concluded, would cheat the United States out of about $1.4 billion in taxes.

That is a lot of money, even for a large company like Bristol Myers. But the dispute remained secret. The company, which denies wrongdoing, didn’t tell its investors that the U.S. government was claiming more than $1 billion in unpaid taxes. The I.R.S. didn’t make any public filings about it.

And then, ever so briefly last spring, the dispute became public. It was an accident, and almost no one noticed. The episode provided a fleeting glimpse into something that is common but rarely seen up close and that the Biden administration hopes to discourage: multinational companies, with the help of elite law and accounting firms and with only belated scrutiny from the I.R.S., dodging billions of dollars in taxes. 

Then, in an instant, all traces of the fight — and of Bristol Myers’s allegedly abusive arrangement — vanished from public view.

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April 3, 2021 in Tax, Tax News | Permalink

Thursday, April 1, 2021

Christians & Lederman: An Important Tax Tip & #WhyTakeTax?

Professors Leandra Lederman (Indiana-Maurer) and Allison Christians (McGill) released 2 new videos today on their Break Into Tax YouTube channel.

The first of today’s videos, One Weird Tip To Save a Bundle in Taxes, shares a breakthrough of universal interest. That video will likely be widely shared, so be among the first to see it!

The second Break Into Tax video, Why Take Tax? The Top Ten Reasons, counts down reasons why students should consider taking a tax class. It includes cameo appearances by many tax professors and other experts, sharing insights gained over many decades. Don’t miss the debut of the “Christians & Lederman Top 10 List”!

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April 1, 2021 in Tax, Tax News | Permalink

Income Inequality In America Is Lower Than It Was 50 Years Ago

Wall Street Journal op-ed:  Incredible Shrinking Income Inequality, by Phil Gramm & John Early:

Its rise is an illusion created by the Census Bureau’s failure to account for taxes and welfare.

The refrain is all too familiar: Widening income inequality is a fatal flaw in capitalism and an “existential” threat to democracy. From 1967 to 2017, income inequality in the U.S. spiked 21.4%, and everyone from U.S. senators to the pope says it’s an urgent problem. Yet the data upon which claims about income inequality are based are profoundly flawed.

We have shown on these pages that Census Bureau income data fail to count two-thirds of all government transfer payments—including Medicare, Medicaid, food stamps and some 100 other government transfer payments—as income to the recipients. Furthermore, census data fail to count taxes paid as income lost to the taxpayer. When official government data are used to correct these deficiencies—when income is defined the way people actually define it—“income inequality” is reduced dramatically.

We can now show that if you count all government transfers (minus administrative costs) as income to the recipient household, reduce household income by taxes paid, and correct for two major discontinuities in the time-series data on income inequality that were caused solely by changes in Census Bureau data-collection methods, the claim that income inequality is growing on a secular basis collapses. Not only is income inequality in America not growing, it is lower today than it was 50 years ago. ...


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April 1, 2021 in Tax, Tax News | Permalink

Wednesday, March 31, 2021

Conservatives Should Applaud — Not Fight — Efforts To Change Philanthropic Giving Rules

Following up on my previous post, The Left Wants A Philanthropy Of The Few:  Chronicle of Philanthropy op-ed:  Conservatives Should Applaud — Not Fight — Efforts to Change Philanthropic Giving Rules, by Craig Kennedy & William Schambra:

Initiative To Accelerate A new proposal to pull more money out of private foundations and donor-advised funds and hand it to charities drew the immediate ire of conservatives, inside and outside of philanthropy. Elise Westhoff, CEO of the conservative Philanthropy Roundtable, called the tax-code changes proposed by philanthropist John Arnold and Boston College law professor Ray Madoff a “solution in search of a problem” that “would stifle charitable giving when it is most needed.”

As veterans of conservative and centrist philanthropy, we believe that this opposition is wrong-headed and shortsighted. Rather than resist the modest changes to the tax code proposed by Arnold and Madoff, conservatives should see them as the first step toward retooling a philanthropic world that has become too politicized and self-interested. ...

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March 31, 2021 in Tax, Tax News | Permalink

U.S. Tax Court's Tax Trailblazers: Sam Thompson

U.S. Tax Court's Diversity & Inclusion Series, Tax Trailblazers: Mentoring the Next Generation:

Thompson 2021Please join the United States Tax Court for the second in a series of monthly programs celebrating diversity and inclusion in tax law. Moderated by Chief Judge Maurice B. Foley, March’s webinar will focus on Samuel C. Thompson, Jr., Director of the Center for the Study of Mergers and Acquisitions at Penn State Law. Today at 7:00-8:15 PM EST (register here).

Samuel C. Thompson, Jr. directs Penn State’s Center for the Study of Mergers and Acquisitions. He is also a Professor of Law and the Arthur Weiss Distinguished Faculty Scholar. He teaches mergers and acquisitions, focusing on corporate, securities, tax, accounting, and antitrust aspects of these very complex transactions. He also teaches several tax courses. Beginning with the Spring semester 2021, he is teaching a course entitled: The Lawyer’s Role in Helping Close the Minority-White Gap in Business Ownership.

Professor Thompson has served in two governmental tax policy positions, one in the U.S. Treasury’s Tax Legislative Counsel’s Office and one as the tax policy advisor, on behalf of the U.S. Treasury Department’s Tax Assistance Office, to the South African Ministry of Finance in Pretoria, South Africa. In that second role he assisted with the revision of South Africa’s income tax system.

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March 31, 2021 in Legal Ed News, Legal Education, Tax, Tax News | Permalink

Friday, March 19, 2021

Tax Prof Diane Ring Named Interim Dean At Boston College

BC Law, Diane Ring Named Interim Dean:

Ring (2021)Diane Ring, the Associate Dean of Faculty at BC Law, will step into the role of Interim Dean of Boston College Law School on July 1, upon the departure of Vincent Rougeau, who is leaving after ten years at the helm of the Law School to assume the presidency of the College of the Holy Cross.

“Diane has been a valued member of our community for over fifteen years, as well as a member of my associate dean leadership team for the past three years,” said Dean Rougeau. “She also served as Associate Dean for Academic Affairs from 2010-2012, and in that role she was invaluable to me in my own transition when I was hired as dean in 2011.”

Ring will work closely with BC Law’s senior leadership over the next few months to ensure a smooth transition. “She is talented and accomplished,” Rougeau continued, “and I know this school will be in extremely capable hands as the Provost proceeds with the search process for a permanent replacement.”

In addition to her academic administration skills, Ring is a respected leader and scholar in the field of international taxation, corporate taxation, and ethical issues in tax practice at BC Law. Her recent work addresses issues including information exchange, tax leaks, international tax relations, sharing economy and human equity transactions, and ethics in international tax.

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March 19, 2021 in Legal Ed News, Legal Education, Tax, Tax News, Tax Prof Moves | Permalink

Tuesday, March 16, 2021

D.C. Circuit: Law Prof May Be Entitled To Attorney's Fees Due To Her 'Serious Scholarly Interest' After Beating IRS In FOIA Litigation

Kwoka v. IRS, No. 19-5310 (D.C. Cir. Mar. 9, 2021):

Denver Logo (2015)This case presents a recurring question in our court: under what circumstances is a prevailing plaintiff in a Freedom of Information Act (FOIA) case—here a law professor [Margaret Kwoka (Denver)] seeking information from the Internal Revenue Service—entitled to an award of attorney’s fees? The district court denied the professor’s request for fees. For the reasons set forth below, we vacate and remand for further proceedings consistent with this opinion. ...

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March 16, 2021 in IRS News, Legal Education, New Cases, Tax, Tax News | Permalink

Monday, March 15, 2021

How Unfair Property Taxes Keep Black Families From Gaining Wealth

Bloomberg, How Unfair Property Taxes Keep Black Families From Gaining Wealth:

Bloomberg 1Local officials have overvalued the lowest-priced homes relative to the highest across the U.S., nationwide data show. From 2006 through 2016, inaccurate valuations gave the least expensive homes in St. Louis an effective tax rate almost four times higher than the most expensive. In Baltimore it was more than two times higher. In New York City it was three times higher.

These inequities are tucked deep inside America’s system for funding its local governments, tilting property taxes in favor of wealthy homeowners even before any exemptions or abatements. And they carry a jarring implication: The residential property tax, which raises more than $500 billion annually to pay for public schools, fire departments, and other local services, is, in effect, racist.

That conclusion carries far-reaching implications of its own—not only for municipalities’ day-to-day operations but also for roughly $331 billion in general-obligation bonds that cities, counties, and school districts have guaranteed with property tax revenue, according to data compiled by Bloomberg Businessweek.

Bloomberg 2The evidence of systematic unfairness is mounting. Since at least the 1970s, piecemeal studies from Chicago, Detroit, New Orleans, and New York have concluded that property tax systems favor those who are better off. A 2020 study from the University of Chicago brings unprecedented scope to the question, covering 2,600 U.S. counties. It found that more than 9 out of every 10 reflected the same pattern of unfairness. “It’s a textbook example of institutional racism,” says Christopher Berry, a professor at the university’s Harris School of Public Policy who led the research effort.

The problem is rooted in American history. One legacy of racial discrimination, including the practice of redlining (the refusal of banks to make loans in Black communities), is that Black people own a disproportionate share of lower-valued real estate. Census data show that the median home value in predominantly Black tracts is roughly half the value in majority White and Hispanic tracts. That historical disparity has been aggravated by a flawed tax system built on incomplete data and outdated methods for estimating the value of residential properties. “There isn’t anybody making explicitly racial decisions to produce these outcomes,” Berry says. “Nevertheless, they are racially disproportionate.”

Wide variations in policies and rates among the many thousands of U.S. jurisdictions that levy property taxes make it difficult to quantify the aggregate size of the imbalances. But Berry found in 2018 that in Chicago alone, unfair assessments shifted $2.2 billion in property tax payments from those who owned the highest-valued homes to those who owned the lowest-valued homes—over only five years.

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March 15, 2021 in Tax, Tax News | Permalink

NY Times: Your Taxes 2021

Saturday, March 13, 2021

NY Times: The Tax Headaches Of Working Remotely

New York Times, The Tax Headaches of Working Remotely:

Last year, Ariele Doolittle, a tax lawyer, got a call from a client who lived and worked in New York but was considering working remotely from California temporarily after his offices were shuttered in the pandemic.

Not a good idea, Ms. Doolittle told him.

California, she said, would tax his income because he was physically working there. And New York would probably tax his earnings as well. Plus, when he filed his New York resident tax return, the state probably wouldn’t give him a credit for the taxes he paid to California.

He could be double taxed. “He ended up going to Florida,” she said, since that state doesn’t have a state income tax.

Such are the complex tax considerations for millions of people who have been telecommuting during the pandemic and working in a different state from their usual workplace.

Workers may have to file more than one state tax return, and in certain situations they could end up owing taxes in both states. The details depend on your home state and what state you worked in during 2020. ...

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March 13, 2021 in Tax, Tax News | Permalink

Friday, March 12, 2021

Biden's COVID-19 Stimulus Bill Prohibits States From Cutting Taxes

Wall Street Journal editorial, Democrats to States: No New Tax Cuts:

Democrats in Congress aren’t satisfied with spending $1.9 trillion to help blue states and union friends. They’ve also launched a sneak attack against conservative states. Read their legislation’s lips: No new state tax cuts. ...

[H]ere’s the political gut punch. The bill explicitly bars states from cutting taxes. States “shall not use the funds,” the bill says, “to either directly or indirectly [our emphasis] offset a reduction in the net tax revenue” that results “from a change in law, regulation, or administrative interpretation during the covered period that reduces any tax (by providing for a reduction in a rate, a rebate, a deduction, a credit, or otherwise) or delays the imposition of any tax or tax increase.” ...

The language is so expansive that states could be limited from making any changes to their tax codes that reduce revenue even if they don’t use federal funds as direct offsets.

Eric Boehm, Federal COVID-19 Bailout Prohibits States From Cutting Taxes:

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March 12, 2021 in Tax, Tax News | Permalink

Thursday, March 11, 2021

Germany Seeks To Tax Income Of U.S. Soldiers Stationed There

Tax Connections, German Tax Authorities Reported To Be Imposing Tax On US Military Pay:

In an ongoing story, that is certain to be of interest to Americans abroad, Germany has begun treating certain US Military Personnel as tax residents of Germany. In other words, Germany is imposing tax (and apparently penalties) on the income earned by US military personnel stationed in Germany. The starting point is that US Forces in Germany (and other countries) are governed by the SOFA (“Status Of Forces Agreement”) agreement. Among other things, the SOFA agreement exempts US service personnel from being treated as tax residents of the country where they are serving. In simple terms: As long as the individual serviceman meets the conditions in the SOFA agreement, he/she would NOT be treated as a tax resident of Germany.

The provisions of the NATO SOFA are unremarkable. What is remarkable is that Germany appears to be the first country, to determine that certain US Military Personnel, are not entitled to use SOFA as a “shield” against being treated as a tax resident and therefore subject to taxation.

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March 11, 2021 in Tax, Tax News | Permalink

Wednesday, March 10, 2021

The Billionaire Behind The Biggest U.S. Tax Fraud Case Ever Filed

Wall Street Journal, The Billionaire Behind the Biggest U.S. Tax Fraud Case Ever Filed:

WSJProsecutors accused Robert Brockman, a litigious, sometimes penny-pinching software entrepreneur, of hiding $2 billion from the Internal Revenue Service. ...

[In] the largest criminal case ever brought against a person accused of evading U.S. taxes, [f]ederal prosecutors in October charged Mr. Brockman with using a web of offshore entities to conceal about $2 billion in income from the Internal Revenue Service.

Mr. Brockman has pleaded not guilty to 39 criminal counts, including tax evasion, wire fraud, money laundering and evidence destruction. He and his attorneys didn’t respond to requests for comment.

Prosecutors allege the bulk of the tax evasion stemmed from profits Mr. Brockman made from investments with Vista Equity Partners, a private-equity firm he helped launch in 2000 and which now manages $73 billion in funds dedicated to software investments.

Vista founder Robert Smith, the wealthiest Black person in America, settled his own tax-evasion case with the government, which was made public on the day of Mr. Brockman’s indictment. Mr. Smith has agreed to testify against his former mentor, one of at least two Brockman confidants to turn on him. ...

The record-setting case pits Mr. Brockman, a billionaire with a reputation as a relentless litigant, against the immense resources of the federal government. Legal specialists say the government appears to have strong evidence, but federal prosecutors may face challenges trying the case because of the complexity of tax laws governing offshore trusts.

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March 10, 2021 in Celebrity Tax Lore, Tax, Tax News | Permalink