Lesson From The Tax Court: §6672 Trust Fund Recovery Penalty Is Really A Penalty ... Sort Of

Sometimes we get so used to norms of practice that we forget the legal text governing that practice.  Last week the Tax Court taught that text is still important.  In David J. Chadwick v. Commissioner, 154 T.C. No 5. (Jan. 21, 2020) (Judge Lauber), the Court held that the IRS must comply with §6751(b)’s supervisory approval requirements before assessing the §6672 Trust Fund Recovery Penalty.  That is because the text of §6751(b) says those requirements apply to any “penalty” and the text of §6672 permits the IRS to assess a “penalty.”

Some may laugh!  Some may snort “It’s so simple!”  But, truly I tell you, nothing is simple when you combine the Tax Code and lawyers.  While the lesson may seem simple, it’s more nuanced than you may realize.  And even though this is a reviewed opinion, it may be of surprisingly limited reach.  Details below the fold.

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The Top Five New Tax Papers

This week's list of the Top 5 Recent Tax Paper Downloads us the same as last week's list, with some minor reshuffling within the Top 5:

1. [724 Downloads]  Double Counting Accounting: How Much Profit of Multinational Enterprises Is Really in Tax Havens?, by Jennifer Blouin (Penn) & Leslie Robinson (Dartmouth)
2. [321 Downloads]  EU General Anti-(Tax) Avoidance Mechanisms: From GAAP to GAAR, by Rita de la Feria (University of Leeds)
3. [222 Downloads]  How Big is Profit Shifting?, by Kimberly Clausing (Reed College; moving to UCLA)
4. [221 Downloads]  Commentary on the 'OECD Secretariat Proposal for a 'Unified Approach' Under Pillar One, by Lorraine Eden (Texas A&M) & Oliver Treidler
5. [167 Downloads]  Why a Wealth Tax is Definitely Constitutional, by John Brooks (Georgetown) & David Gamage (Indiana)

Weekly SSRN Tax Article Review And Roundup: Kim Reviews Chason's Cryptocurrency Hard Forks And Rev. Rul. 2019-24

This week, Young Ran (Christine) Kim (Utah) reviews a new work by Eric D. Chason (William & Mary), Cryptocurrency Hard Forks and Revenue Ruling 2019-24, 39 Va. Tax Rev. 277 (2019).

When the IRS issued Revenue Ruling 2019-24 (the "Ruling") on the tax treatment of hard forks and airdrops of cryptocurrencies, many people believed that the Ruling would offer guidance on the tax issues of both hard forks and airdrops that the community of cryptocurrency users generally understand. Is that so? Many commentators and investors in cryptocurrencies say no (see e.g., Mathew Beedham, The IRS' Latest Cryptocurrency Tax Guidance Shows It Still Doesn't Get It). Eric Chason's new work, Cryptocurrency Hard Forks and Revenue Ruling 2019-24, 39 Va. Tax Rev. 277 (2019), is soundly in line with such criticism.

As an introduction, the Ruling is understood as the IRS’s response to tax issues arising from the hard fork of the Bitcoin blockchain that resulted in the creation of Bitcoin Cash, a new cryptocurrency. The hard fork resulted in a windfall to owners of Bitcoin, who, at the time of the hard fork, received one unit of Bitcoin Cash for each unit of Bitcoin owned. This hard fork resulted in many unanswered tax issues relating to such newly created cryptocurrency.

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10th Annual Tax Policy Lecture On Taxing Wealth Today At Florida

The University of Florida Law Graduate Tax Program hosts the 10th Annual Ellen Bellet Gelberg Tax Policy Lecture today on Taxing Wealth (webcast):

• William G. Gale (Brookings Institution)
• Janet Holtzblatt (Tax Policy Center)
• David Kamin (NYU)
• Alan D. Viard (American Enterprise Institute)

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Ring Presents Falling Short In The Data Age Today At Duke

Diane Ring (Boston College) presents Falling Short in the Data Age (with Shu-Yi Oei (Boston College)) at Duke today as part of its Tax Policy Workshop Series hosted by Richard Schmalbeck and Lawrence Zelenak:

Humans are imperfect and do not always comply with the law, but the reality is that we are sometimes permitted to fall short of law’s requirements without consequences. This informal space to fall short and not be held accountable—which may arise from a confluence of information imperfections, resource constraints, politics, or luck—exists in addition to formal legal provisions that allow flexibility and discretion (such as tiered penalties or equitable provisions allowing leniency under specified circumstances). Fall-short spaces often pass unnoticed, but are in fact quite significant in intermediating the relationship between humans and the law.

This Article examines how the increasing access to data and information will change the availability and shape of law’s fall-short spaces. We introduce a taxonomy of how leeway arises, outlining the reasons it exists and the different ways it is deployed. Applying this taxonomy, we show how increasingly ubiquitous data and information have caused and will continue to cause the availability of leeway to contract, and we highlight the risk that we will see disparate contraction for different populations.

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Peroni Presents Expanded Worldwide Versus Territorial Taxation After The TCJA Today At Northwestern

Robert Peroni (Texas) presents An Updated Look at Expanded Worldwide Versus Territorial Taxation After the TCJA (with J. Clifton Fleming (BYU) & Stephen Shay (Harvard)) at Northwestern today as part of its Advanced Topics in Taxation Colloquium Series hosted by Herbert Beller, David Cameron, Charlotte Crane, Sarah Lawsky, Ajay Mehrotra, Philip Postlewaite, and Jeffrey Sheffield:

This paper is a spinoff from J. Clifton Fleming (BYU), Robert J. Peroni (Texas) & Stephen E. Shay (Harvard), Expanded Worldwide Versus Territorial Taxation after the TCJA, 161 Tax Notes 1178 (Dec. 3, 2018): In the run up to enactment of the 2017 Tax Cuts and Jobs Act (TCJA) one of the principal U.S. tax policy issues was how foreign-source, active-business income of U.S. multinational enterprises (MNEs) should be taxed by the United States if the system of deferring U.S. tax on active income of a foreign subsidiary was ended. Should active foreign income be taxed under a territorial or exemption system—i.e. bear no residual U.S. tax—or should it be subjected to expanded worldwide taxation—i.e. current taxation at regular U.S. rates coupled with a credit for foreign income taxes paid or accrued, but limited to the U.S. tax on the foreign-source income as measured for U.S. tax purposes.

The opposing sides were not without common ground. Both agreed that the existing U.S. system for taxing the foreign-source, active-business income of U.S. MNEs needed to be changed because it generally did not impose U.S. tax until the active income of foreign subsidiaries was repatriated, either through dividends or by sale of subsidiary stock at a price reflecting accumulated foreign-source income. 

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Layser Presents Designing Community-Oriented Place-Based Tax Incentives Today At Indiana

Michelle D. Layser (Illinois) presents When, Where, and How to Design Community-Oriented Place-Based Tax Incentives at Indiana today as part of its Tax Policy Colloquium Series hosted by David Gamage and Leandra Lederman:

Place-based tax incentives are frequently used by federal, state, and local governments to encourage investment in low-income areas. The newest federal incentive, the Opportunity Zones tax law, has been criticized for lacking safeguards for low-income communities. However, Opportunity Zones are just the latest chapter in a long history of place-based tax incentives that lack any clear objective to benefit residents of targeted communities. Meanwhile, no standard exists to describe the ideal community-oriented place-based tax incentive. This Article provides that baseline by explaining when, where, and how to design community-oriented place-based tax incentives. It argues that place-based tax incentives should be designed to reduce the underlying, geographic causes of neighborhood inequality.

Accordingly, this Article presents a two-step approach to tax incentive design. The first step draws on geography, sociology, and communication theories to determine when place-based tax incentives can be used to reduce spatial inequities. Using Geospatial Information System (GIS) mapping methods, it demonstrates how lawmakers can use public data to determine where people are likely to experience spatial disadvantage. The second step draws on tax theory to show how place-based tax incentives can maximize programmatic benefits and achieve the desired distributive outcomes.

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International Tax Symposium In Honor Of Tim Edgar

Symposium, Re-Imagining Tax for the 21st Century: Inspired by the Scholarship of Tim Edgar (York University, Osgoode Hall Law School):

• Brian J. Arnold (Canadian Tax Foundation), The Relationship Between Restrictions on the Deduction of Interest Under Canadian Law and Canadian Tax Treaties, 67 Canadian Tax J. 1051 (2019)
• Michael Kobetsky (University of Melbourne), The Transfer-Pricing Profit-Split Method After BEPS: Back to the Future, 67 Canadian Tax J. 1077 (2019)
• Jinyan Li, Jin Bao & Huaning (Christina) Li (York University), Value Creation: A Constant Principle in a Changing World of International Taxation, 67 Canadian Tax J. 1107 (2019)
• Wei Cui (University of British Columbia), The Digital Services Tax on the Verge of Implementation, 67 Canadian Tax J. 1135 (2019)
• Allison Christians & Tarcisio Diniz Magalhaes (McGill University), A New Global Tax Deal for the Digital Age, 67 Canadian Tax J. 1153 (2019)

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Infanti Delivers Lecture On Our Taxing Selves Today At Pittsburgh

Anthony Infanti delivers a lecture on Our Taxing Selves at Pittsburgh today :

In this inaugural lecture for the Christopher C. Walthour, Sr. Professorship of Law, I reflect on my two decades of work at the University of Pittsburgh School of Law in the fields of comparative tax law and critical tax theory. I connect my personal “outsider” story to these two fields, both of which themselves embrace “outsider” perspectives on the law, albeit in somewhat different senses of the word. In doing so, I draw on my most recent book, Our Selfish Tax Laws: Toward Tax Reform That Mirrors Our Better Selves (The MIT Press, 2018).

Our Selfish Tax Laws builds on my past comparative tax work by providing case studies that demonstrate the expressive function of tax law, showing how the choices made by different countries in constructing their tax laws send messages about what and whom they value that are woven into their cultural fabrics.

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Hoffer: Tax Theory And Feral AI

Stephanie R. Hoffer (Ohio State), Tax Theory and Feral AI:

This essay is a sci-fi thought experiment about the significance of personhood in income taxation, meant to explore the validity of currently prevailing justifications for the tax. Assume that the year is 2050. Developers, human or otherwise, have created non-sentient artificial intelligences (AIs) capable of transacting in digital currency. Assume, perhaps improbably, that some of these AIs are “feral.” A nonsentient AI might be feral in the future because it was never the property of a human, because it was abandoned by a human, or because it “escaped” into the wild. Imagine that non-sentient feral AIs create new value in the economy by doing things like writing, designing, securities and currency trading, planning, and 3D printing. They monetize that new economic value as active participants in the economy who sell goods or services to consumers. Intuition suggests that the value newly created by these independent economic actors should be included in the tax base and, in particular, the income tax base. Under current law, it is not.

The federal income tax law, and the theories that underpin it, have yet to fully address the status of non-human earners. Scholarship on AI and taxation primarily has focused on the taxation of AI’s owners, on whether AI itself should be taxed despite being owned by someone else, or on the philosophical question of taxing sentient AI.

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Brooks & Gamage: Why A Wealth Tax Is Definitely Constitutional

John R. Brooks (Georgetown) & David Gamage (Indiana), Why a Wealth Tax is Definitely Constitutional:

Wealth tax reform proposals are playing a major role in the 2020 presidential campaign. However, some opponents of these wealth tax reform proposals have claimed that a wealth tax would be unconstitutional. Other prominent critics have argued that wealth tax reforms are probably unconstitutional, so that, after review by the courts, the “likeliest outcome is that a wealth tax will raise exactly zero dollars.”

These claims are wrong. More precisely, these claims are wrong conditioned on wealth tax legislation being carefully drafted so as to ensure its constitutionality. As we will explain in this essay, properly drafted, wealth tax reform legislation is definitely constitutional and thus capable of raising substantial revenues to fund new spending programs.

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SSRN Tax Professor Rankings

SSRN has updated its monthly ranking of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through January 5, 2020) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

		All-Time		Recent
1	Reuven Avi-Yonah (Michigan)	187,671	Reuven Avi-Yonah (Michigan)	7,341
2	Dan Shaviro (NYU)	119,866	David Kamin (NYU)	5,518
3	David Gamage (Indiana-Bloom.)	115,750	Lily Batchelder (NYU)	5,438
4	Lily Batchelder (NYU)	115,511	Daniel Hemel (Chicago)	4,860
5	Daniel Hemel (Chicago)	114,566	David Gamage (Indiana-Bloom.)	3,524
6	Darien Shanske (UC-Davis)	109,283	Dan Shaviro (NYU)	3,263
7	Cliff Fleming (BYU)	104,201	Bridget Crawford (Pace)	3,136
8	David Kamin (NYU)	104,115	Darien Shanske (UC-Davis)	2,978
9	Manoj Viswanathan (UC-Hastings)	101,471	Ari Glogower (Ohio State)	2,968
10	Rebecca Kysar (Fordham)	100,364	Manoj Viswanathan (UC-Hastings)	2,846
11	Ari Glogower (Ohio State)	99,126	Rebecca Kysar (Fordham)	2,454
12	Michael Simkovic (USC)	43,817	Cliff Fleming (BYU)	2,448
13	D. Dharmapala (Chicago)	38,004	Richard Ainsworth (BU)	2,418
14	Paul Caron (Pepperdine)	36,287	Brad Borden (Brooklyn)	2,397
15	Louis Kaplow (Harvard)	32,642	D. Dharmapala (Chicago)	2,091
16	Richard Ainsworth (BU)	28,873	Ruth Mason (Virginia)	2,034
17	Ed Kleinbard (USC)	26,310	Robert Sitkoff (Harvard)	1,996
18	Vic Fleischer (UC-Irvine)	25,879	Michael Simkovic (USC)	1,957
19	Jim Hines (Michigan)	24,837	Louis Kaplow (Harvard)	1,925
20	Gladriel Shobe (BYU)	24,098	Hugh Ault (Boston College)	1,811
21	Ted Seto (Loyola-L.A.)	23,921	Kyle Rozema (Washington U.)	1,790
22	Brad Borden (Brooklyn)	23,828	Yariv Brauner (Florida)	1,712
23	Richard Kaplan (Illinois)	23,585	Margaret Ryznar (Indiana-Indy)	1,440
24	Robert Sitkoff (Harvard)	23,524	Paul Caron (Pepperdine)	1,357
25	Katie Pratt (Loyola-L.A.)	22,849	Leandra Lederman (Indiana Bloom.)	1,214

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Using Tax Credits To Reverse The Fortunes Of Active Funds

Adi Libson (Bar-Ilan University) & Gideon Parchomovsky (University of Pennsylvania), Reversing the Fortunes of Active Funds:

Recent years have witnessed a considerable growth of passive fund at the expense of active funds. This trend picked in 2019, a year that saw passive funds surpass active funds in terms of assets under management. The continuous decline of active funds is a cause for concern. Active funds engage in monitoring of firms and partake of decision-making in companies in their portfolio. The cost of these activities are born exclusively by active funds; the benefits, by contrast, are spread over all shareholders, including passive funds that freeride on the efforts of active funds. The contraction of active funds threatens to set back the quality of corporate governance in U.S. firms.

This Essay proposes a way to reverse this trend. To preserve the benefits presented by active funds, we explore the possibility of employing tax mechanisms to help defray the extra-cost born by active funds. In particular, we establish a prima facie case for using tax credits to support active funds and enhance their market share. We discuss two types of tax credits: effort based tax credits and result-based tax credits.

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Lesson From The Tax Court: Employee Cannot Deduct Expense That Could Have Been Reimbursed

I teach my students this rule: “always take the reimbursement.”  Last week’s case of Daniel Alan Near and Denise Frances Mayhugh v. Commissioner, T.C. Memo. 2020-10 (Jan. 14, 2020) (Judge Kerrigan) reinforces the soundness of that rule.  There, the Tax Court held that Mr. Near’s travel expenses were not deductible because he did not take the reimbursement his employer offered for those expenses.  Details below the fold.

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The Top Five New Tax Papers

There is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new papers debuting on the list at #5:

1. [689 Downloads]  Double Counting Accounting: How Much Profit of Multinational Enterprises Is Really in Tax Havens?, by Jennifer Blouin (Penn) & Leslie Robinson (Dartmouth)
2. [283 Downloads]  EU General Anti-(Tax) Avoidance Mechanisms: From GAAP to GAAR, by Rita de la Feria (University of Leeds)
3. [194 Downloads]  Commentary on the 'OECD Secretariat Proposal for a 'Unified Approach' Under Pillar One, by Lorraine Eden (Texas A&M) & Oliver Treidler
4. [185 Downloads]  How Big is Profit Shifting?, by Kimberly Clausing (Reed College; moving to UCLA)
5. [175 Downloads]  Why a Wealth Tax is Definitely Constitutional, by John Brooks (Georgetown) & David Gamage (Indiana)

Certified Professional Employer Organizations And Tax Liability Shifting: Assessing The First Two Years Of The IRS Certification Program

Katherine Sanford Goodner (Lewis Thomason, Knoxville, TN) & Ursula Ramsey (North Carolina, Cameron School of Business), Certified Professional Employer Organizations and Tax Liability Shifting: Assessing the First Two Years of the IRS Certification Program, 16 Berkeley Bus. L.J. 571 (2019):

The growing popularity of Professional Employer Organizations ("PEOs") over the past several decades has led to an increasing number of small businesses using third-party organizations to provide everything from payroll services to benefits management to human resource services. Recent data suggests that between 780 to 980 PEOs exist industry-wide and provide services for 156,000 to 180,000 clients. Even more staggering is the $136 billion to $156 billion in client payroll and PEO fees that make up the gross revenues of these PEOs. These PEOs, often referred to as "co-employers," are generally responsible for the remittance of the taxpayer's employment taxes as a part of the PEO's payroll services.

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Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews Klein's Contemptuous Tax Reporting

This week, Mirit Eyal-Cohen (Alabama) reviews Israel Klein (Ariel University), Contemptuous Tax Reporting, 2019 Wis. L. Rev. ___ : 

This interesting article is right down my alley, namely R&D tax incentives. Recently, legal scholars (including yours truly here and here) have questioned the justifications for the current R&D tax incentives regime and their effectiveness in inducing additional research expenditures. Every year, about 25 billion dollars of research incentives are claimed by companies. Likewise, the current R&D credit allows companies to reduce tax bills by an amount equal to 14 or 20 percent of their current year Qualified Research Expenditures. The article points out that this tax benefit combined with the U.S. self-assessment principle that encompasses only occasional ex-post audits create an incentive for managers to participate in contemptuous self-reporting, that is reporting their companies’ tax while intentionally miscategorized R&D expenditures. Moreover, the recent repeal of the corporate Alternative Minimum Tax (AMT) in the Tax Cuts and Job Act removed the limits on the extent to which taxpayers can utilize credits and deductions to lower their overall tax liability, thus created a bigger tax break for R&D while perpetuating the incentive to overstate R&D spending.

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Blank And Osofsky Present Automated Legal Guidance Today At Florida

Joshua Blank (UC-Irvine) and Leigh Osofsky (North Carolina) present Automated Legal Guidance at Florida today as part of its Tax Colloquium Series hosted by Yariv Brauner:

The use of artificial intelligence as an aid to law enforcement has received significant attention from legal scholars.  For instance, the introduction of machine learning to identify likely crime hot spots has caused scholars to consider questions such as how to apply Fourth Amendment standards, how to prevent racial discrimination and how to preserve transparency and accountability.  On the other hand, scholars have not addressed the government’s increasing use of artificial intelligence for another purpose—providing guidance to the public regarding legal entitlements and obligations.  For example, the Internal Revenue Service encourages taxpayers to seek answers regarding various tax credits and deductions not from human IRS representatives, but rather from its online “Interactive Tax Assistant.”  Likewise, the U.S. Army directs individuals with questions about enlistment to its virtual guide, “Sgt. Star,” and the U.S. Citizenship and Immigration Services suggests that potential green card holders and citizens speak with its interactive chatbot, “Emma.”

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Should The Tax System Be Used To Reduce Wealth Inequality In The United States?

Tax Policy Center, Should the Tax System Be Used to Reduce Wealth Inequality in the United States?:

Wealth is highly concentrated in the United States, with the top 0.1 percent of households holding an estimated 10 to 20 percent of all assets. Concerns about the effects of wealth inequality have spurred some presidential hopefuls to propose new taxes on wealth and unrealized capital gains and increases to the existing estate tax.

This policy debate raises broader issues about wealth inequality and how the tax code could reduce it. The causes, impacts on different groups, and effects of substantial wealth inequality are complex. Would higher taxes on the wealthy help fix the problems caused by wealth inequality?

Jason Furman, former chairman of the Council of Economic Advisers in the Obama administration, and panels of experts will consider the following questions:

• What has been the impact of wealth inequality on different groups in the United States?
• How does wealth concentration affect politics and public policy?
• Would reducing after-tax wealth affect the political power of the wealthy and social and economic divisions across groups?
• What are the pros and cons of using the tax system, instead of other government interventions, to reduce wealth inequality?

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Conference Announcement And Call For Contributions: Taxation And Gender Equality

Announcement of Conference and Call for Contributions:
Taxation and Gender Equality Conference: Research Roundtable and Policy Program

As the Organizers and members of the Academic Advisory Committee we are pleased to issue this Announcement and Call for Contributions to an event that will be held on September 14 and 15, 2020, in Washington, DC, to explore the interaction between tax law and gender equality. The goal of the Conference, which is sponsored by the Tax Policy Center, the American Tax Policy Institute, the American Bar Foundation, and, subject to the final approval of their boards, the Tax Section of the American Bar Association and the American College of Tax Counsel, is to shine a spotlight on gender issues in taxation and to bring consideration of gender impacts into mainstream discussions surrounding the enactment and administration of tax laws. The intended scope of the Conference is broad, focusing not only on gender issues in U.S. tax law but also on gender issues in the tax laws of other countries; it will consider all taxes, whether income, consumption, transfer, wealth, or other national-level taxes, as well as subnational taxes.

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Aprill: The Private Foundation Excise Tax On Self-Dealing

Ellen P. Aprill (Loyola-L.A.), The Private Foundation Excise Tax on Self-Dealing: Contours, Comparisons, and Character, 17 Pitt. Tax Rev. ___ (2020):

This paper considers section 4941, the private foundation excise tax on self-dealing, on the occasion of its fiftieth anniversary. Part I gives background on section 4941. Part II compares the rules of section 4941 to the parallel ones applicable to public charities, including the special rules for supporting organizations and donor advised funds. The fiftieth anniversary of the private foundation excises taxes is also an appropriate time to confront two foundational questions, and Part III does so. It first asks whether we can view the private foundation taxes in general and section 4941 in particular as constitutional exercises of Congress’s taxing power under the tests announced in National Federation of Independent Businesses v. Sibelius. Second, it considers whether we should characterize the section 4941 excise tax as a Pigouvian tax — a hot category among economists but less familiar to lawyers. It answers “maybe not” to the first and “yes but” to the second.

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Oei & Ring: The Importance Of Qualitative Research Approaches To Gig Economy Taxation

Shu-Yi Oei (Boston College) & Diane M. Ring (Boston College), The Importance of Qualitative Research Approaches to Gig Economy Taxation:

As the United States tax system continues to grapple with how to tax workers in the gig economy, it confronts a number of questions about the nature and composition of the sector as well as the tax issues confronted by its participants. Many of these questions have proven difficult to answer due to a lack of adequate information. But the answers are important and will shape how tax and other areas of law (such as employment law, labor law, and antitrust) respond to the gig economy. Thus, the question of how to obtain the data and information necessary to formulate sound policies for gig work is vital.

This chapter discusses the limitations of quantitative empirical research on the gig economy and argues that incorporating more qualitative approaches will help generate a more comprehensive understanding of the tax policy issues involved.

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The Perils of Common Ownership: How Corporate Tax Avoidance Floods (Overwhelms) The IRS

Danielle Chaim (J.S.D. 2020, Columbia), The Perils of Common Ownership: Flooding Strategy:

The increased concentration of shares in the hands of large institutional investors has triggered a phenomenon which I term “flooding.” Under this phenomenon, institutional investors push their portfolio firms towards higher levels of noncompliance. Given limited enforcement capabilities, the simultaneous increase in the levels of noncompliance reduces the probability that such behavior will be detected and adequately penalized. Consequently, the presence of large, diversified shareholders destructs the inherent trade-off between compliance and enforcement. Misconduct becomes less risky and more rewarding, changing the way in which public firms approach legal risks.

This Article focuses on the applicability of flooding in the context of tax avoidance. Data suggests that the emerging ownership pattern in the United States increases levels of corporate tax avoidance. In this Article, I argue that this increase results in flooding, overwhelming the tax agency, now faced with new enforcement challenges.

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Hickman & Thomson: The Chevronization of Auer

Kristin E. Hickman (Minnesota) & Mark R. Thomson (Administrative Conference of the United States), The Chevronization of Auer, 103 Minn. L. Rev. Headnotes 103 (2019):

The Supreme Court is poised in Kisor v. Wilkie to reconsider the standard of review known as Auer deference, whereby courts must defer to an agency’s reasonable interpretation of its own regulation. Auer’s defenders have long argued that the standard advances important practical goals, such as simplifying the judicial task and fostering consistency and predictability in the administrative process. During the last two decades, though, courts have engrafted an increasingly complex array of qualifications and exceptions onto Auer’s basic framework.

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Walker: The Implausibility Of Compensation As An Anticompetitive Mechanism

David I. Walker (Boston University), Common Ownership and Executive Incentives: The Implausibility Of Compensation As An Anticompetitive Mechanism, 99 B.U. L. Rev. 2373 (2019):

Mutual funds, pension funds, and other institutional investors are a growing presence in U.S. equity markets, and these investors frequently hold large stakes in shares of competing companies. Because these common owners might prefer to maximize the values of their portfolios of companies rather than the value of individual companies in isolation, this new reality has led to a concern that companies in concentrated industries with high degrees of common ownership might compete less vigorously with each other than they otherwise would. But what mechanism would link common ownership with reduced competition? Some commentators argue that one of the most plausible mechanisms is executive pay design. The idea is that executive pay at companies in concentrated industries with high common ownership may be designed to dampen the incentives of the companies’ managers to compete aggressively with peer firms.

This Article challenges both the theoretical and empirical bases for this argument and contends that executive pay design is actually an implausible mechanism for linking common ownership with reduced competition.

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Cato: Taxing Wealth And Capital Income

Chris Edwards (Cato Institute), Taxing Wealth and Capital Income:

Taxing the wealthy is a hot issue among Democratic candidates for president. Sen. Elizabeth Warren (D-MA) is proposing an annual wealth tax on the richest households, while other candidates are proposing higher taxes on incomes, estates, capital gains, and corporations.

Calls for tax increases are animated by claims about the fairness of income and wealth distributions in the economy. Warren wants to address “runaway wealth concentration,” while Sen. Bernie Sanders (I-VT) says that the wealthy are not “paying their fair share of taxes.”

The proposed tax increases run counter to the international trend of declining tax rates on capital income and wealth. The number of European countries with a Warren-style wealth tax has fallen from 12 in 1990 to just 3 today.

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Mason Presents The Transformation Of International Tax Today At Boston University

Ruth Mason (Virginia) presents The Transformation of International Tax at Boston University today as part of its Tax Policy Colloquium hosted by David Walker:

The Great Recession precipitated a political crisis that motivated an unprecedented international project to curb corporate tax dodging. Contrary to dominant scholarly views, this Article argues that this effort transformed international tax, by changing its norms, agenda, decisionmakers, and even its legal forms. Although effective at coordinating the actions of independent states, these new procedures and instruments of international tax reduce democratic legitimacy and accountability, and they increase the complexity of tax law. Perhaps the most important, but often unacknowledged impact of the project was that efforts to close corporate tax loopholes opened a rift over the resulting revenues that threatens to unravel the international tax regime.

Christians Presents Blueprint For A More Sustainable Global Tax System Today At BYU

Allison Christians (McGill) presents Blueprint For a More Sustainable Global Tax System at BYU today as part of its Tax Policy Colloquium Series hosted by Cliff Fleming and Gladriel Shobe:

The international tax system incentivizes unsustainable business practices because it ignores the private profits created by offloading social and environmental costs to the public. This paper proposes a corrective in the form a blueprint for reforming the way multinational business is taxed. The blueprint calls for applying living wage and life cycle analyses to the rules for establishing market prices for tax purposes (namely, transfer pricing and permanent establishment income attribution rules). A relatively complex but arguably more accurate method and a complementary but relatively simpler proxy method are proposed. The blueprint addresses the implications of each method in the context of the legal parameters for cross-border tax cooperation via treaty-based and domestic coordinating rules and processes. The paper concludes that the blueprint provides a viable a starting point to make the global tax system support sustainable business practices without running afoul of international standards and without necessarily driving down foreign investment.

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Lesson From The Tax Court: A Practical Interpretation Of The Penalty Approval Statute § 6751

Section 6751 is a poorly written statute that has caused no end of headaches for taxpayers, the IRS and the Tax Court.  It requires supervisory approval of tax penalties at some point before those penalties are assessed.  But that statute does not say at what point.  Last week a surprisingly divided Tax Court created a relatively bright line for taxpayers and the IRS to know by when the IRS must conform to the supervisory approval requirements.  The Tax Court did so by giving the statute a practical rather than hyper-textual construction.  The cases are: (1) Belair Woods, LLC, et al v. Commissioner, 154 T.C. No. 1 (Jan. 6, 2020) (Judge Lauber writing for a majority of nine); (2) Tribune Media Company v. Commissioner, T.C. Memo 2020-2 (Jan. 6, 2020) (Judge Buch).  Details below the fold.

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The Top Five New Tax Papers

There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with new papers debuting on the list at #2 and #5:

1. [665 Downloads]  Double Counting Accounting: How Much Profit of Multinational Enterprises Is Really in Tax Havens?, by Jennifer Blouin (Penn) & Leslie Robinson (Dartmouth)
2. [263 Downloads]  EU General Anti-(Tax) Avoidance Mechanisms: From GAAP to GAAR, by Rita de la Feria (University of Leeds)
3. [189 Downloads]  Commentary on the 'OECD Secretariat Proposal for a 'Unified Approach' Under Pillar One, by Lorraine Eden (Texas A&M) & Oliver Treidler
4. [175 Downloads]  Cryptocurrency Economics and the Taxation of Block Rewards, by Abraham Sutherland (Virginia) (reviewed by Young Ran (Christine) Kim (Utah) here)
5. [154 Downloads]  How Big is Profit Shifting?, by Kimberly Clausing (Reed College; moving to UCLA)

WSJ: Economists Question The Benefits Of $30 Billion/Year Spent By State & Local Governments On Targeted Tax Breaks

Wall Street Journal, Economists Question the Benefits of Targeted Tax Breaks:

State and local governments across the U.S. spend at least $30 billion a year to attract and keep companies, but the biggest deals generate little in the way of economic benefits.

The research calls into question the common practice of using narrow, firm-specific tax breaks to attract businesses and boost employment. The largest deals appear to be associated with job growth in the targeted industry but don’t clearly produce the hoped-for benefits for the broader regional economy, according to the study from Columbia Business School economist Cailin Slattery and Princeton University economist Owen Zidar [Evaluating State and Local Business Tax Incentives]. ...

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Weekly SSRN Tax Article Review And Roundup: Kleiman Reviews Zhang's Fiscal Policy In Imperial China

This week, Ariel Jurow Kleiman (San Diego) reviews a new work by Taisu Zhang (Yale), Fiscal Policy and Institutions in Imperial China, forthcoming in the Oxford Research Encyclopedia of Asian History.

Not being a historian, and knowing next to nothing about Imperial China, it was with humble curiosity that I approached Taisu Zhang’s recent work, Fiscal Policy and Institutions in Imperial China.  I was rewarded with a fascinating account of Chinese fiscal history dating back to the Tang dynasty of the 7th-10th centuries.  The piece focuses on the Ming and Qing dynasties in particular, China’s last two imperial dynasties, which ended in the early 1900s.  In this brief review, rather than marching through Zhang’s expert account, I will highlight a few threads that felt of special relevance to our modern fiscal-political discourse.

Zhang starts with Confucius, who, like all good philosophers, gave some thought to taxes.  Specifically, he disliked them. (Admittedly, perhaps he did not give much thought to taxes.)  Confucius equated tax collection with the “pursuit of material gain,” which he placed in opposition to virtue, the ultimate aim.  Thus, a ruler should only levy taxes if justified by some higher virtue.  

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Chason: Cryptocurrency Hard Forks And Rev. Rul. 2019-24

Eric D. Chason (William & Mary), Cryptocurrency Hard Forks and Revenue Ruling 2019-24, 39 Va. Tax Rev. ___ (2019):

In a recent article appearing in the Virginia Tax Review, I analyzed the income tax issues that arose from hard forks of cryptocurrencies [A Tax on the Clones: The Strange Case of Bitcoin Cash, 39 Va. Tax Rev. ___ (2019) (reviewed by Mirit Eyal-Cohen (Alabama) here)]. That article focused on the August 1, 2017 hard fork of the Bitcoin blockchain that resulted in the creation of Bitcoin Cash, a new cryptocurrency. The hard fork resulted in a windfall to owners of Bitcoin, who came to own one unit of Bitcoin Cash for each unit of Bitcoin owned at the time. After considering the difficulties of taxing the new units as income immediately, I argued that the Internal Revenue Service (“IRS”) should tax new units of Bitcoin Cash as “open transactions,” deferring income tax consequences until the owner sells or exchanges the units. As that article went to press, the IRS released Revenue Ruling 2019-24 (the “Ruling”), which describes the taxation of cryptocurrency hard forks. The Ruling seems to embrace an “immediate taxation” approach that my article considered but rejected. This essay evaluates the Ruling in light of my recent article.

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Hemel: Does The Tax Code Favor Robots?

Daniel Hemel (Chicago), Does the Tax Code Favor Robots?:

In recent months, a number of scholars and commentators have articulated versions of the following argument:

• U.S. tax law favors capital over labor;
• Robots are capital;
• Therefore, U.S. tax law favors robots over labor.

Three implications tend to be drawn from this syllogism: (a) that U.S. tax law leads to inefficient investments in automation; (b) that automation — because it is capital-intensive and capital is tax-favored — will result in a reduction in tax revenues; and (c) that policymakers should respond to the automation trend either by imposing explicit taxes on robots or by raising taxes on all capital.

This short essay — an edited version of remarks at the Artificial Intelligence and the Future of Tax Law Symposium at the Ohio State University Moritz College of Law — seeks to illustrate why the line of argument above is misguided.

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Cockfield: How To End The Conflict Over Taxing Global Digital Commerce

Arthur J. Cockfield (Queen's University), Tax Wars: How to End the Conflict over Taxing Global Digital Commerce, 17 Berkeley Bus. L.J. ___ (2020):

In the last two years, dozens of governments have proposed or introduced unilateral tax measures to tax foreign-based technology companies. The new tax innovations include special withholding taxes, diverted profit taxes, minimum taxes and digital services taxes. The rise of these unilateral measures threatens an international tax ‘war’ among governments that could stifle new business models or even the spread of the global digital economy. This Article reviews how international reform efforts have failed to constrain aggressive international tax planning and how the global digital tax conflict masks a growing dissatisfaction with how to tax value associated with global transactions.

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Glogower: Taxing Inequality

Ari Glogower (Ohio State), Taxing Inequality, 93 N.Y.U. L. Rev. 1421 (2018):

Economic inequality in the United States is now approaching historic levels last seen in the years leading up to the Great Depression. Scholars have long argued that the federal income tax alone cannot curtail rising inequality and that we should look beyond the income tax to a wealth tax. Taxing wealth also faces two central and resilient objections in the literature: A wealth tax penalizes savings and overlaps with a tax on capital income.

This Article moves beyond this stalemate to redefine the role of wealth in a progressive tax system. The Article first introduces a generalized framework for justifying a wealth tax centered in the relative economic power theory which explains how inequality of economic outcomes generates social and political harm. This theory formalizes the problem of inequality and has specific implications for how economic inequality should be measured and constrained.

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Givati: Theories Of Tax Deductions — Income Measurement Versus Efficiency

Yehonatan Givati (Hebrew University of Jerusalem), Theories of Tax Deductions: Income Measurement versus Efficiency, 5 NYU J.L. Fin. & Accounting ___ (2020):

What is the purpose of tax deductions? A common view among tax law scholars is that tax deductions are required to properly measure income. I present an alternative theory of tax deductions, relying on standard economic efficiency grounds. I develop a model which highlights the fact that economic activities have costs and benefits, but an income tax system taxes only some of those benefits. The efficient deduction rule allows the deduction of a share of the cost equal to the share of the benefit that is taxed. I also show that the deadweight loss due to a departure from the efficient deduction rule increases quadratically with the departure, making larger departures from the rule much more costly than smaller ones.

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Clausing: How Big Is Profit Shifting?

Kimberly A. Clausing (Reed College; moving to UCLA), How Big is Profit Shifting?:

This research note describes the plausible magnitude of US revenue loss due to profit shifting, building on recent developments in the literature as well as new country-by-country data on US multinational companies in 2016. In the past, the most complete data sources have all shown large magnitudes of profit shifting, suggesting substantial revenue losses in non-haven countries. Blouin and Robinson (2019) have challenged this consensus, noting that many data sources may be flawed due to the inadvertent inclusion of double-counted profits or through an inadvertent misallocation of profit. Nonetheless, their proposed correction to the data generates its own puzzles, and experts at both the BEA and the JCT believe that the proposed correction will omit some types of profit shifting. Beyond that, Blouin and Robinson’s conclusions regarding how their adjustments affect the scale of profit shifting set aside many nuances in method that affect bottom-line findings about the scale of profit shifting. This research note uses recently released country-by-country tax data to estimate plausible benchmarks regarding the scale of profit shifting, finding that profit shifting is likely to be costing the US government about $110 billion a year in 2016 (at 2016 tax rates). While much can be done to refine these estimates and learn more about the scale of the problem, the problem remains unambiguously very large.

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Tax Programs Today At AALS

En/Countering Race, Racism, and Racial Distinctions in Tax Law (10:30 a.m. – 12:15 p.m.)
The United States today is far from the post-racial world that was thought theoretically possible with the election of Barack Obama in 2008. This panel is designed to continue a dialogue exploring the system of privilege enmeshed in the economy of the United States that creates obstacles and challenges for ethnic and racial minorities. Panelists will consider the ways in which tax laws that appear neutral are not in fact neutral in impact—often serving to exacerbate preexisting inequalities. Panelists step beyond traditional legal analysis to challenge conventional wisdom, exploring the way in which the Internal Revenue Code subordinates some while privileging others and illustrating how tax subsidies cut sharply along racial lines. Proposed tax policy reforms will also be discussed.

• Dorothy Brown (Emory)
• Victoria Haneman (Creighton) (moderator)
• Francine Lipman (UNLV)
• Nicholas Mirkay (Hawaii)

Charitable Giving and the 1969 Tax Act: 50 Years Later (10:30 a.m. - 12:15 p.m.)
Noted scholars of philanthropy will consider the impact of the 1969 Tax Reform Act on charitable institutions and donor incentives.

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The Top Five New Tax Papers

There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with new papers debuting on the list at #4 and #5:

1. [626 Downloads]  Double Counting Accounting: How Much Profit of Multinational Enterprises Is Really in Tax Havens?, by Jennifer Blouin (Penn) & Leslie Robinson (Dartmouth)
2. [369 Downloads]  The Arm's Length Standard Is Not the Problem, by Lorraine Eden (Texas A&M)
3. [180 Downloads]  Commentary on the 'OECD Secretariat Proposal for a 'Unified Approach' Under Pillar One, by Lorraine Eden (Texas A&M) & Oliver Treidler
4. [171 Downloads]  Cryptocurrency Economics and the Taxation of Block Rewards, by Abraham Sutherland (Virginia) (reviewed by Young Ran (Christine) Kim (Utah) here)
5. [86 Downloads]  Fully Funded Pensions, by Jonathan Barry Forman (Oklahoma)

Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Eden's The GloBE Proposal For A Global Minimum Tax

This week, David Elkins (Netanya, visiting Cornell Spring 2020) reviews a new article by Lorraine Eden (Texas A&M), Taxing Multinationals – The GloBE Proposal for a Global Minimum Tax, Bloomberg Tax Daily Tax Report (Dec. 6, 2019), 49 Tax Mgmt. Int'l J. ___ (2020):

One of the recent manifestations of the OECD's war against base erosion, profit shifting, and international tax competition (although the title of its BEPS project refers only to the first two, the last is also a critical element of its campaign) is the Global Anti-Base Erosion Proposal (known by its somewhat forced acronym GloBE). GloBE proposes the imposition of two new types of taxes by the countries that are members of BEPS initiative. The first is a global minimum tax — at a hitherto unspecified rate — on corporate profits. The second is a tax on base erosion payments. In her paper, Prof. Eden discusses the former, which she refers to as GMinTX.

She begins by discussing the current state of affairs. Host countries tax the domestic-source incomes of foreign corporations. The corporation's home country then has the choice of exempting the corporation from further taxation (a territorial system) or, alternatively, of taxing it on its worldwide income and granting a credit for taxes paid in the host country. Countries adopting a system of worldwide taxation effectively require their resident corporations to pay the difference between the tax rate in the source country and the tax rate in the country of residence. 

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Tax Programs Today At AALS

Administering the 2017 Tax Act: Successes, Challenges & Opportunities  (8:30-10:15 a.m.)
In late 2017, Congress passed a major piece of tax legislation. Since then, the Treasury Department and IRS worked to implement this legislation, and in 2019, individual taxpayers went through the first filing season under the new law. This program will draw on these experiences and discuss issues related to the new law’s implementation and administration. The panel will include people who played key roles in the IRS’s Tax Reform Implementation Office, IRS Office of Chief Counsel, OIRA, and Taxpayer Advocate Service. Topics discussed will include the roles of different government players; process for promulgating regulations; decisions along the way, including about prioritization of topics for guidance; questions that remain unresolved; how the administration of the new law impacted taxpayers; obstacles faced during the first filing season; opportunities for improving the new law’s administration; and what to expect moving forward. There will be a business meeting at program conclusion.

• Kristin Hickman (Minnesota)
• Philip Lindenmuth (IRS Office of Chief Counsel)
• Sunita Lough (IRS)
• Nina Olson (National Taxpayer Advocate (retired))

New Voices in Tax Law & Policy (1:30-3:15 p.m.)

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Crawford: Tax Talk And Reproductive Technology

Bridget Crawford (Pace), Tax Talk and Reproductive Technology, 99 B.U. L. Rev. 1757 (2019) (reviewed by Michelle Layser (Illinois) here):

The tax system both reacts to and helps create attitudes about the value of certain behaviors and choices. This Article makes three principal claims—one empirical, one normative, and one interpretative.

The Article demonstrates through data that a representative sample of fertility clinics in the United States does not make information about the tax consequences of compensated human egg transfers—commonly called egg “donation”—publicly available. In 2015, in a case of first impression, the United States Tax Court decided in Perez v. Commissioner that a compensated egg transferor must report as income any amount she receives for her eggs. Although the Tax Court missed an opportunity to clarify further complex questions about the tax consequences of transfers of human bodily materials, the basic holding of Perez was clear. Even so, a content-based analysis of public internet forums and bulletin boards suggests that compensated egg transferors remain unclear about their tax obligations. This confusion is due in large part to the absence of what this Article calls “tax talk” on the part of the fertility clinics themselves.

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NYU Tax Policy Colloquium Celebrates 25th Anniversary

The NYU Tax Policy and Public Finance Colloquium and Seminar celebrated its 25th anniversary this year (fittingly, with a presentation by Joshua Blank (UC-Irvine), who was a tax professor and faculty director of the graduate tax program at NYU from 2010-2018):

Wharton: Elizabeth Warren’s Wealth Tax Is Too Optimistic

Following up on my previous posts (links below):  Knowledge@Wharton, Is Elizabeth Warren’s Wealth Tax Proposal Too Optimistic?:

An “ultra-millionaire tax” — or wealth tax — proposed by Democratic presidential candidate Elizabeth Warren is likely to raise between $2.3 trillion and $2.7 trillion in additional revenue in ten years from 2021 to 2030, according to a study by the Penn Wharton Budget Model, a nonpartisan research initiative that analyzes the fiscal impact of public policy programs. These revenue projections are significantly lower than Warren’s estimate that the plan can potentially generate $3.75 trillion. Moreover, the wealth tax may depress GDP in 2050 by 1% to 2%, depending on how the money is spent and the productivity boost it generates, the study adds.

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Guide To Election Year Activities Of § 501(c)(3) Organizations

Continuing a TaxProf Blog tradition, Steven H. Sholk (Gibbons, Newark, NJ) has made available to readers the annual update of his wonderful 531-page Guide to Election Year Activities of Section 501(c)(3) Organizations (PLI 2019).

Nguyen & Maine: Spurring Innovation Through Patent And Tax Law Changes

Xuan-Thao Nguyen (Indiana-Indianapolis) & Jeffrey A. Maine (Maine), Attacking Innovation, 99 B.U. L. Rev. 1687 (2019):

Economists generally agree that innovation is important to economic growth and that government support for innovation is necessary. Historically, the U.S. government has supported innovation in a variety of ways: (1) a strong legal system for patents; (2) direct support through research performed by government agencies, grants, loans, and loan guarantees; and (3) indirect support through various tax incentives for private firms. In recent years, however, we have seen a weakening of the U.S. patent system, a decline in direct funding of research, and a weakening of tax policy tools used to encourage new innovation.

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The Top Five New Tax Papers

This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list:

1. [588 Downloads]  Double Counting Accounting: How Much Profit of Multinational Enterprises Is Really in Tax Havens?, by Jennifer Blouin (Penn) & Leslie Robinson (Dartmouth)
2. [361 Downloads]  The Arm's Length Standard Is Not the Problem, by Lorraine Eden (Texas A&M)
3. [309 Downloads]  Boiling Starbucks’ Roasting Down to the Essence of its Residual, by William Byrnes (Texas A&M)
4. [194 Downloads]  2018 Developments in Connecticut Estate and Probate Law, by Jeffrey Cooper (Quinnipiac) & John Ivimey (Reid and Riege, Hartford)
5. [163 Downloads]  Commentary on the 'OECD Secretariat Proposal for a 'Unified Approach' Under Pillar One, by Lorraine Eden (Texas A&M) & Oliver Treidler

Weekly SSRN Tax Article Review And Roundup: Speck Reviews Mehrotra & Bayer's The Promise And Limits Of Fundamental Tax Reform

This week, Sloan Speck (Colorado) reviews a new work by Ajay K. Mehrotra (American Bar Foundation; Northwestern) & Dominic Bayer (J.D. 2020, Northwestern), The Promise and Limits of Fundamental Tax Reform: Contrasting the 1986 Tax Reform Act with the 2017 Tax Cuts and Jobs Act, 53 U.C. Davis L. Rev. Online 93 (2019).

In The Promise and Limits of Fundamental Tax Reform, Ajay Mehrotra and Dominic Bayer illuminate the possible future of the 2017 legislation known as the Tax Cuts and Jobs Act by comparing the law with the Tax Reform Act of 1986. Mehrotra and Bayer establish the political and policy roots of the 1986 Act, then trace the law’s piecemeal erosion over the next decade. Using this template, Mehrotra and Bayer conclude that the 2017 Act seems likely to unravel along similar lines.

Mehrotra and Bayer’s rigorous and informed discussion of the 1986 and 2017 Acts is a significant achievement. As the authors note, the press and politicians have connected these very different legislative initiatives in the popular imagination. Indeed, this juxtaposition might be the most bipartisan aspect of the more recent law: conservatives have trumpeted the 2017 Act as the spiritual successor to the 1986 Act, while liberals have condemned the 2017 Act as a betrayal of the fundamental principles embodied in the earlier legislation. Mehrotra and Bayer provide much-needed context and content to evaluate this category of claims.

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Contemptuous Tax Reporting

Israel Klein (Ariel University), Contemptuous Tax Reporting, 2019 Wis. L. Rev. ___:

The use of self-reporting and self-assessment principles in the collection of corporate income tax means that companies are not subject to administrative tax assessment and ex-ante examination of tax positions taken, but rather to infrequent ex-post examination of tax returns submitted by their managers. Thus, while acting as the government’s agents for the purpose of assessing corporate taxes, managers can engage in contemptuous self-reporting that involves knowingly reporting tax positions that do not conform to the tax code and prevailing tax doctrines.

According to estimates provided by Congress, US companies will enjoy more than 25 billion dollars of R&D incentives in 2019 & 2020. The majority thereof will come from self-reported R&D credits claimed on companies’ tax returns. While being one of the most expensive tax expenditures claimed by corporations in the federal budget, this article argues that R&D tax incentives provide a prominent example of contemptuous tax reporting in which managers knowingly take positions that contradict prevailing tax doctrines.

This article presents a novel conceptualization of contemptuous tax reporting along with empirical findings that point to the tremendous loss of tax revenues resulting from such abusive tax behavior by S&P 500 companies.

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