Should The U.S. Adopt The Common Reporting Standard?

Noam Noked (Chinese University of Hong Kong, Faculty of Law), Should the United States Adopt CRS?, 118 Mich. L. Rev. Online 118 (2019):

The United States’ one-sided approach to tax transparency might lead to an unprecedented clash with the European Union (EU) in the near future. In light of the EU’s deadline for the United States, the U.S. Treasury and Congress should urgently engage in a discussion on whether the United States should adopt the Common Reporting Standard (CRS) for automatic exchange of financial account information. A recent report from the U.S. Government Accountability Office considered this issue and did not recommend adopting CRS.

Continue reading

Analyzing Gun-Violence-Prevention Taxes Under Emerging Firearm Fee Jurisprudence

Hannah Shearer & Allison Anderman (Giffords Law Center to Prevent Gun Violence), Analyzing Gun-Violence-Prevention Taxes Under Emerging Firearm Fee Jurisprudence, 43 S. Ill. U. L.J. 157 (2018):

Gun and ammunition taxes and fees have long been used to fund wildlife conservation programs and regulatory schemes that ensure guns are being purchased and possessed lawfully. In recent years, taxes have been proposed as a policy tool to help mitigate the staggering social and economic costs of gun violence by providing a reliable source of funding for gun safety and violence prevention programs. These proposed “gun-violence-prevention taxes” have been met with opposition, including from Second Amendment litigants who argue that courts should strike down gun and ammunition taxes under the Supreme Court’s First Amendment fee jurisprudence — a body of cases examining taxes on protected expressive or religious activity. This Article aims to evaluate that argument under accepted principles of both First and Second Amendment law. Although just ten years have passed since Heller recognized an individual right to possess handguns in the home for self-defense, this Article argues that enough is known about the history of gun and ammunition taxes, the differences between the First and Second Amendments, and the decade of post-Heller lower-court jurisprudence to conclude that most proposed gun-violence-prevention taxes are constitutional.

Pratt Presents The Curious State Of Tax Deductions For Fertility Treatment Costs Today At NYU

Katherine Pratt (Loyola-L.A.) presents The Curious State of Tax Deductions for Fertility Treatment Costs, 28 S. Cal. Rev. L. & Soc. Just. 261 (2019) (reviewed by Sloan Speck (Colorado) here), at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

The federal tax treatment of assisted reproductive technology (ART) expenses incurred by intended parents is unclear. This lack of clarity in the tax law is curious because millions of intended parents have incurred ART expenses, which typically are quite large, over the past 40 years. ARTs include in vitro fertilization (IVF), intracytoplasmic sperm injection (ICSI), egg donation, and surrogacy. This Article addresses the question of whether various categories of taxpayers can classify the costs of specific types of ART expenses as tax deductible “medical care,” taking into account new developments in the law, including the 2017 federal appellate court decision in Morrissey v. United States.

Part I of this Article outlines the contours of the income tax deduction (and related tax benefits) for “medical care,” incorporating the statutory definition of “medical care” and the interpretation of that definition by the Internal Revenue Service (IRS) and courts. Part II applies the “medical care” definition to expenses incurred by different-sex married couples for specific types of reproductive medical care and ancillary payments. We begin our analysis with this cohort of intended parents because the IRS seems to have had such taxpayers in mind when it initially provided informal advice to taxpayers who incurred fertility treatment costs. Part II then extends the analysis to same-sex couples and unmarried individuals, focusing primarily on the U.S. Tax Court decision in Magdalin v. Commissioner, and briefly summarizing Longino v. Commissioner. In both cases, the court denied fertile unmarried men a medical expense deduction for ART expenses. Part II considers the implications of Magdalin for medically infertile men, married and unmarried women, and married different-sex couples. Part II also articulates a novel argument men could make for deducting some ART costs, notwithstanding Magdalin and Longino.

Continue reading

NY Times: The Rich Really Do Pay Lower Taxes Than You

New York Times op-ed:  The Rich Really Do Pay Lower Taxes Than You, by David Leonhardt:

Almost a decade ago, Warren Buffett made a claim that would become famous. He said that he paid a lower tax rate than his secretary, thanks to the many loopholes and deductions that benefit the wealthy.

His claim sparked a debate about the fairness of the tax system. In the end, the expert consensus was that, whatever Buffett’s specific situation, most wealthy Americans did not actually pay a lower tax rate than the middle class. “Is it the norm?” the fact-checking outfit Politifact asked. “No.”

Time for an update: It’s the norm now.

For the first time on record, the 400 wealthiest Americans last year paid a lower total tax rate — spanning federal, state and local taxes — than any other income group, according to newly released data.

Continue reading

Viswanathan: Hyperlocal Responses To The SALT Deduction Limitation

Manoj Viswanathan (UC-Hastings), Hyperlocal Responses to the SALT Deduction Limitation, 71 Stan. L. Rev. Online 294 (2019):

The Tax Cuts and Jobs Act, enacted in December 2017, places a $10,000 limit on the federal deduction for payments of state and local taxes (“SALT”). Several states with high numbers of adversely affected taxpayers have proposed or enacted legislative workarounds to this new cap. Much has been said about these state-level responses, but there has been little analysis of local-level effects or of how local governments could similarly respond. This essay addresses that gap by (1) statistically modeling the number of taxpayers affected by the SALT deduction limitation at a ZIP-code-by-ZIP-code (rather than state-by-state) level, and (2) proposing locality-based strategies relevant to taxpayers throughout the U.S., and not just those living in highly affected states.

Continue reading

Colinvaux & Madoff: Charitable Tax Reform For The 21st Century

Roger Colinvaux (Catholic) & Ray D. Madoff (Boston College), Charitable Tax Reform For the 21st Century, 164 Tax Notes 1867 (Sept. 16, 2019):

The article identifies two goals of the charitable giving tax incentives: promoting actual charitable work and fostering a strong culture of charitable giving with broad participation. The recent increase to the standard deduction and the rise of donor-advised funds compromise both goals. The article outlines reform proposals to bolster the charitable sector, including expanding the giving incentive to all taxpayers in the form of a credit (subject to a giving floor), allowing some tax benefits to DAF donors upon contribution but delaying the income tax deduction until DAF funds are released from advisory privileges, closing loopholes that enable foundations and donors to skirt long-standing legal requirement, and modifying incentives to foundations to foster more spending.

Continue reading

Kim Presents The Digital Services Tax: A Cross-Border Variation Of The Consumption Tax Debate? Today At Loyola-L.A.

Young Ran (Christine) Kim (Utah) presents The Digital Services Tax: A Crossborder Variation of Consumption Tax Debate at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Ted Seto: 

As highly digitalized business models, such as Google, Amazon, and Facebook, have been mainstreamed in the economy, the traditional profit allocation and nexus rules of taxation are further strained. Traditionally, profit is allocated to market countries when the business has physical presence there. However, highly digitalized business models can generate profits in market countries without physical presence. Thus, market countries, especially the EU, have started imposing a digital services tax (“DST”) on the gross revenue generated in jurisdictions with highly digital business models, which has ignited heated debate across the globe.

DST is criticized as “ring-fencing,” or segregating, certain digital business models, because it arguably imposes a disguised corporate income tax on the profits of only certain digital firms, which discriminates against American tech giants. However, while DST is politically driven, the criticism is largely based on practical concerns and focused on the imminent impact, such as who is the winner and loser in the short term, rather than considering DST theoretically. More importantly, there is little discussion of the consumption tax aspect of the DST. DST is a turnover tax, which is a subcategory of consumption tax levied on the gross revenue of a firm. However, strangely, there is little discussion of the theoretical value of DST as a consumption tax.

Continue reading

Call For Tax Papers And Panels: Law & Society Annual Meeting On Rule And Resistance

Neil Buchanan (Florida) has issued his annual call for tax papers and panels for next year's annual meeting of the Law & Society Association in Denver (May 28 - 31, 2020):

For the sixteenth year in a row, I will organize sessions for the Law, Society, and Taxation group (Collaborative Research Network 31).  For the fourth year in a row, I am pleased to be joined (or, more accurately, carried) in these organizational efforts by Professors Jennifer Bird-Pollan and Mirit Eyal-Cohen.

Although there is an official call for papers, please remember that you are not bound by the official theme of the conference ("Rule and Resistance"). We will give full consideration to proposals in any area of tax law, tax policy, distributive justice, interdisciplinary scholarship, and so on.

The deadline for submissions is before midnight (Eastern Time) Wednesday, November 13, 2019.

Continue reading

Lesson From The Tax Court: Payments v. Deposits

The only thing worse than overpaying ones tax liabilities is not realizing one has overpaid until it is too late to get the overpayment refunded.  Section 6511 requires taxpayers to ask the IRS for refunds of overpayments within the later of: (1) three years after the relevant return was filed; or (2) two years after the relevant payment was made.  If no return was filed, then the two year period applies.

Section 6511, however, only applies when there has been a payment in the first place.  Not every remittance to the IRS constitutes a payment.  Sometimes taxpayers send in money without intending it to be a payment.  For example, a taxpayer might send money to simply stop the running of interest while the taxpayer pursues a protest of the amount of tax owed.  The IRS and courts call those remittances “deposits.”  The good news is that returns of deposits are not subject to the limitation periods in 6511.  The better news is that if a taxpayer is entitled to their return, the government might have to pay interest. §6603.

Thus, it is useful to learn the difference between a payment and a deposit.  In Michael C. Worsham v. Commissioner, T.C. Memo. 2019-132 (Oct. 1, 2019) (Judge Colvin) the taxpayer thought that his remittances to the IRS were not payments because he made them long before the IRS assessed the relevant taxes.  Judge Colvin makes quick work of that argument.  Perhaps too quick.  There is more to the difference between payments and deposits than the timing of the remittance.  I still think the taxpayer’s remittances in this case still might have been deposits, depending on facts not contained in the opinion.  Details below the fold.

Continue reading

House GOP Pushes Back Against Renewed Dem Efforts To Diminish Obama’s IRS Targeting Scandal

Conservative Review, House Republicans Push Back Against Renewed Dem Efforts to Diminish Obama’s IRS Targeting Scandal:

It appears that the House Oversight Committee may soon find itself in a renewed fight over the Obama-era IRS targeting scandal, according to a letter from a key House Republican.

In a Tuesday letter sent to U.S. Treasury Inspector General for Tax Administration (TIGTA), obtained by Blaze Media, House Oversight Committee ranking member Jim Jordan, R-Ohio, criticized a pair of House Democrats for renewing a years-old effort to second-guess findings of wrongdoing in the scandal. ...

Continue reading

TaxProf Blog Weekend Roundup

Saturday:

• Federal Judge: University Of Iowa Administrators May Be Personally Liable For Again Violating A Christian Student Group's Constitutional Rights
• Fleischer: How A Democratic President Can Bypass Congress And Implement A More Progressive Tax Policy
• My Last Visit Home
• The Top Five New Tax Papers

Sunday:

• This Week's Ten Most Popular TaxProf Blog Posts
• AALS 'Meat Market' (Faculty Recruitment Conference) Concludes Today
• In The Salary Race, STEM Majors Sprint Ahead But Liberal Arts Grads Eventually Catch Up
• Tax Court Can’t Order IRS To Not Jerk People Around

Fleischer: How A Democratic President Can Bypass Congress And Implement A More Progressive Tax Policy

The American Prospect:  Create a More Progressive Tax Policy, by Victor Fleischer (San Diego):

Congress writes the laws, but the IRS interprets them, and they can do so in ways that make the system more fair.

The next president can and should use executive authority to make our tax system more equitable. The Tax Cuts and Jobs Act, which passed in December 2017, had been drafted in secret and then rushed to a vote, leaving the Treasury Department and the IRS with many gaps to fill. And there are still plenty of old loopholes that need fixing, some of which can be addressed, or at least mitigated, without legislation.

The scope of executive authority is wide-ranging. ... The Treasury Department’s authority derives from its role in filling gaps in statutes. When a statutory term is unclear or ambiguous, the Treasury Department can interpret the term in order to provide guidance to taxpayers. The purpose of this authority is to allow Treasury to interpret the tax code, not to let the executive branch achieve by regulatory fiat that which could not be achieved through legislation. ...

[A] determined president can reshape tax policy without any help from Congress. I tend to take an expansive view of Treasury’s authority to interpret the tax code, which is rarely crystal clear. Here are a few ways a Democratic president might do so. ...

Continue reading

My Last Visit Home

My wife and I returned to my boyhood home of Salem, Massachusetts for the funeral on Friday of Claire Dionne, who was my late father's companion for 14 years after my mother's death until his death in 2007.  We stayed in touch with Claire over these twelve years, and she often visited us (with my Aunt Carol) in California (at first during my summers teaching in San Diego, and later in Malibu). 

It struck me that this was likely my last trip to Salem, as there is nothing there to draw me back.  As we drove past my childhood haunts, I couldn't help but think about my 3,309-mile, 62-year journey from Salem to Malibu and the enormous role luck and providence have played in my life.  I would not change a thing: the gut-wrenching lows and the thankfully more frequent euphoric highs, and everything in between, have molded me into the person I am today.  But I wish my parents could have lived to see the man I have become — still deeply flawed, but much different than the person they last saw at age 34 and age 49.

Continue reading

The Top Five New Tax Papers

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

1. [1,807 Downloads]  Taxing the Rich: Issues and Options, by Lily Batchelder (NYU) & David Kamin (NYU)
2. [395 Downloads]  An Introduction to Tax Careers for J.D.s, by Heather Field (UC-Hastings)
3. [155 Downloads]  The Qualified Small Business Stock Exclusion: How Startup Shareholders Get $10 Million (Or More) Tax-Free, by Manoj Viswanathan (UC-Hastings)
4. [141 Downloads]  Intergenerational Equity, Student Loan Debt, and Taxing Rich Dead People, by Victoria Haneman (Creighton)
5. [115 Downloads]  Cannabis Businesses and Passthrough Deduction Availability, by Daniel Rowe (Green Hasson & Janks, Los Angeles)

This Week's Ten Most Popular TaxProf Blog Posts

1. New York Times, Open Offices Distract Us From Deep Work
2. Bryan Camp (Texas Tech), Lesson From The Tax Court: The Proper Role Of Delay In CDP
3. Paul Caron (Dean, Pepperdine), Week 1 Highlights Of The Dan Markel Murder Trial
4. Wall Street Journal, Is An MBA Still Worth It?
5. Paul Caron (Dean, Pepperdine), University Of Florida Law School Continues Its Rise In Student Quality And Rankings
6. Jonathan Choi (NYU), An Empirical Study of Statutory Interpretation in Tax Law
7. Inside Higher Ed, Speaking Out Against Student Evaluations Of Teaching
8. Peter Arcidiacono (Duke), Josh Kinsler (Georgia) & Tyler Ransom (Oklahoma), Harvard's Preferences For Athletes, Legacies, Dean's Interest, And Children Of Faculty/Staff Overwhelmingly Benefit Whites At Expense Of African-American, Asian-American, And Hispanic Applicants
9. Los Angeles Times, California To Require Mandatory Implicit Bias Training For All Attorneys By 2022
10. Wall Street Journal, U.S. Tax Gap Holds Flat At 14%

Tax Court Can’t Order IRS To Not Jerk People Around

Forbes:  Tax Court Can’t Order IRS To Not Jerk People Around, by Peter J. Reilly:

Jeffrey Davis is my new hero. From the record in Judge Ruwe’s Tax Court opinion, it appears that he got the IRS to back down on their notice of deficiency, but he didn’t stop there. He went on to recover $154.98 in costs.

But that is not the heroic part. He also sought to have the Tax Court order the IRS to not jerk other people around in the way that he was jerked around. In that quixotic quest he failed, because as the mantra goes the Tax Court is a court of “limited jurisdiction. Here is the story. ...

Mr. Davis contacted Senator Cory Booker’s office. They got the Taxpayer Advocate Service involved. Since the ninety day clock was ticking, there was also a Tax Court petition filed.

Continue reading

Weekly SSRN Tax Article Review And Roundup: Kleiman Reviews Kornhauser’s Conservative Women’s Groups And Tax Lobbying

This week, Ariel Jurow Kleiman (San Diego) reviews Conservative Women’s Groups & Tax Lobbying, Part 5 in Marjorie E. Kornhauser’s (Tulane) forthcoming book, American Voices in a Changing Democracy: Women, Lobbying, and Tax 1924–1936.

“Women Start Meat Strike,” the 1935 Danville Morning News headline read.  Outraged over the rising price of meat, Detroit housewives boycotted butcher shops and ignited shared outrage among homemakers across the nation. Mary Zuk, whom the newspaper (gratuitously) describes as the “five-foot Polish American originator” of the strike and a “fiery, dark complexioned” woman, blamed the high prices in part on processing taxes levied under the Agricultural Adjustment Act (AAA). As Kornhauser explains in the fourth chapter of her forthcoming book, American Voices in a Changing Democracy, Zuk and her fellow protestors believed that butchers used these taxes as an excuse to gouge consumers. Zuk took her protest to Washington to demand repeal of the tax. Although Congress demurred, the Supreme Court later declared the tax unconstitutional.  What started as a local news headline gained national momentum, offering a colorful example of how women’s voices contributed to the burgeoning national conversation about taxes and government spending.

Continue reading

Tax Policy In The Trump Administration

• American Prospect, How a Wealth Tax Would Increase—Not Decrease—Investment
• Bloomberg News, Here’s How Much More Democrat Candidates Would Pay Under Their Own Tax Plans
• Center for American Progress, Trump’s Corporate Tax Cut Is Not Trickling Down
• Center on Budget and Policy Priorities, State “Mansion Taxes” on Very Expensive Homes
• Common Dreams, 'Off by $1 Trillion,' Say Progressives on Two-Year Anniversary of Mnuchin Claim Trump Tax Cuts Would Slash Deficit

Continue reading

Trump's Taxes And Tax Returns

• Bloomberg News, Democrat Weighs Releasing Complaint About IRS Trump Tax Audit
• Bloomberg Tax, Here’s What You Should Know as Trump Tax Return Battles Brew
• Business Insider: Another Whistleblower Has Come Forward Alleging That 'Inappropriate' Steps Were Taking to Influence an Audit of Trump's Taxes
• Common Dreams, Progressives Say Democrats Have Duty to Inform Public About 'Potentially Explosive' Whistleblower Alleging Trump Effort to Corrupt IRS
• Forbes, These Are All The Ways Democrats Are Trying To Get Trump’s Tax Returns Released

Continue reading

Brauner Presents The True Nature Of Tax Treaties Today In Vienna

Yariv Brauner (Florida) delivers the 2019 Klaus Vogel Lecture at Vienna University today on The True Nature of Tax Treaties:

Tax treaties are the building blocks of the international tax regime. Much scholarship has been devoted to them, peaking with Professor Klaus Vogel’s Magnum Opus on Double Tax Conventions. Yet, almost a century after modern tax treaties were formalized into a model, and the derivatives of that model, now over 3000 of them, dominate the tax consequences of cross-border trade and investment, there are still many unanswered fundamental questions, which roots are in the lack of a clear understanding of the true nature of tax treaties. The purpose of this article is to begin filling that void. ...

The article examines tax treaties from four different perspectives: tax treaties as creatures of international law, Tax exceptionalism as reflected in tax treaties, Tax treaties as a consequence of international negotiations, and multilateralism in a world of bilateral tax treaties.

Continue reading

U.S. Tax Gap Holds Flat At 14%

Wall Street Journal, U.S. Tax Compliance Holds Flat at 86%:

Americans pay about 86% of their federal taxes, leaving a $381 billion annual gap between taxes owed and taxes collected, according to an Internal Revenue Service study released Thursday.

The government’s first report on the “tax gap” since 2016 shows tax compliance holding steady as the IRS shrinks. However, the study covers tax years 2011 through 2013, and the IRS has reduced audits and staffing considerably since then.

In those years, taxpayers paid 83.6% of the taxes they owed voluntarily and a total of 85.8% after IRS enforcement efforts. Those are about equal to the previous study, which covered tax years 2008 through 2010 and was updated with the same methodology used for the new analysis.

Continue reading

Hickman Reviews Choi's Substantive Canons Of Tax Law

Kristin Hickman (Minnesota), Refashioning Anti-Abuse Doctrines As Substantive Canons  (JOTWELL) (reviewing Jonathan H. Choi (NYU), The Substantive Canons of Tax Law, 72 Stan. L. Rev. ___ (2020)):

Jurists and legal scholars who think about methods and approaches for resolving questions of statutory meaning like to talk about traditional tools of statutory interpretation and the metaphorical toolbox in which those tools are kept. Textualism versus purposivism; the relative merits of text, history, and purpose; and the meaning and utility of both semantic and substantive canons are all common fodder for discussion and debate. Adding to the literature at the intersection of statutory interpretation and tax, Jonathan Choi offers an interesting and thorough treatment of why we ought to think of tax anti-abuse doctrines like the economic substance doctrine, the step transaction doctrine, and the assignment-of-income doctrine as substantive canons of statutory interpretation. (Helpfully, Choi provides a nice appendix, including footnotes, in which he catalogues substantive tax canons, including a couple of “not a canon” entries.) ...

Continue reading

Northern Illinois Seeks To Hire A Tax Prof

Northern Illinois University College of Law invites applications for anticipated openings for two entry-level tenure-track faculty positions beginning August 2020. Duties include engaging in high quality research and teaching, as well as being an active participant in law school and university service. Requirements include a J.D. degree from an ABA accredited law school, an ability to engage in high quality research and teaching, and a willingness to actively participate in law school and university service.

We are particularly interested in candidates specializing in contracts, business associations, tax, torts, trusts and estates, and skills courses in the areas of pre-trial skills and/or business related skills.

Continue reading

Viswanathan: Lower-Income Tax Planning

Manoj Viswanathan (UC-Hastings), Lower Income Tax Planning, 2020 U. Ill. L. Rev. ___:

Tax planning is generally criticized by scholars as inefficient; that is, imposing welfare-reducing costs by incentivizing transactions with few non-tax economic benefits. This Article argues that this view is unacceptably narrow, and makes the original claim that tax planning by lower-income taxpayers is often welfare-enhancing and should, as a normative matter, be encouraged. As such, various parties, including the IRS, law school clinics, legal academics, and tax practitioners should actively strategize to reduce the transaction costs currently hindering lower-income tax planning. This Article then applies that mandate to a specific cohort of lower-income taxpayers — drivers working in the sharing economy — and proposes a strategy through which these taxpayers can take advantage of both existing tax laws and the §199A qualified business income deduction of the recently enacted Tax Cuts and Jobs Act.

Continue reading

Case Western Tax Prof Is Still Teaching At 92 Years Old

Cleveland.com, Case Western Reserve University Law Professor Still Teaching at 92 Years Old:

You know that saying, “when you love what you do, you’ll never work a day in your life?”

Well, at 92 years old and still teaching four days a week, Professor Leon Gabinet is the true embodiment of that.

“I think at 92, I must be the oldest living professor,” Gabinet said, laughing.

News 5 checked with the American Association of University Professors, and while we're told the data around professor's ages isn't maintained, a spokesperson couldn't immediately think of professor above that age still teaching.

Gabinet teaches federal income tax law at the Case Western Reserve University School of Law — a place he has been a fixture since 1968. ...

“You would think going into a federal income tax class that it was going to be really dry and boring,” said law student Jess Ice. “But I laugh every class. I just have a great time. He has forgotten more about tax than I’ll ever learn in my life.”

It’s true — Professor Gabinet, at 92, has much of the tax code memorized by heart. And still, he spends hours before each of his classes every week reviewing materials and getting prepared. ...

Continue reading

ABA Tax Section Fall Meeting

The ABA Tax Section kicks off its three-day joint fall meeting with the ABA Real Property, Trust and Estate Law Section today in San Francisco. The full program is here. The highlight is:

Teaching Taxation: Technology-Driven Trends in Tax Law Training
This panel explores the changing ways in which lawyers can, and are expected to, train themselves to excel in tax practice in an age of pervasive technology. Formal law firm training of associates is less common than before the Great Recession. Clients no longer are willing to subsidize the training of new associates. Tax associates must arrange to train themselves, outside their full-time, billable work obligations. The panel will discuss various training options (including residential and online LLM programs, online courses, webinars, podcasts, and mixed programs) by which tax lawyers can create a solid foundation for their tax practice and expand their knowledge into new tax subspecialties. These training options employ a range of pedagogical approaches, reflecting ongoing study and experimentation in online learning. The panel will highlight educational best practices, based on learning theory. In addition, the Panel will explore parameters by which lawyer-consumers of such training and employer-firms can assess the success of various training options.

• Leslie Book (Villanova)
• Steven Dean (NYU)
• Mirit Eyal-Cohen (Alabama)
• Heather Field (UC-Hastings) (moderator)
• Samuel Greenberg (EY, Los Angeles)
• Michael Hunter Schwartz (McGeorge)
• Ryan Montgomery (Morgan Lewis, Boston)
• Annette Nellen (San José)
• Katherine Pratt (Loyola-L.A.)

Other Tax Profs with speaking roles include:

Continue reading

Hemel Presents Phaseouts Today At Pennsylvania

Daniel Hemel (Chicago, visiting at Harvard) presents Phaseouts at Pennsylvania today as part of its Tax Law and Policy Workshop Series hosted by Michael Knoll, Chris Sanchirico, and Reed Shuldiner:

The Internal Revenue Code is replete with tax benefits that phase out with income. While phaseout provisions are widespread, their effects are little understood. Some commentators have suggested that phaseouts reduce the revenue costs and increase the progressivity of tax benefits. Other leading tax law scholars have assailed these provisions for adding complexity to the Code and for confusing taxpayers about the rates that apply to them. This article presents a comprehensive evaluation of phaseouts and arrives at a more nuanced view. The notions that phaseouts reduce cost and increase progressivity turn out largely to be accounting illusions. At the same time, the implications of phaseouts for tax system complexity and taxpayer comprehension are more ambiguous than their critics charge. Phaseouts are appropriate when the externalities or internalities generated by an activity depend on the actor’s income. Most—though not all—of the phaseouts in the Internal Revenue Code are plausibly justified on these grounds.

Continue reading

Roberts: Greenbacks For The Green New Deal

Tracey M. Roberts (Cumberland), Greenbacks for the Green New Deal, 17 Pitt. Tax Rev. ___ (2019):

The Green New Deal calls for the overhaul of our nation’s energy, transportation and manufacturing infrastructure to support the transition to a green economy, the adaptation of the built environment to climate change, the remediation of polluted areas, the conservation of fragile and threatened ecosystems, and the encouragement of sustainable farming practices. While Green New Deal proposals have been criticized as an example of “big government spending,” the U.S. has a history of huge investments when economic transformation has been required for national security and long-term prosperity. This article makes four contributions.

Continue reading

Pittsburgh Tax Review Publishes New Issue

The Pittsburgh Tax Review has published Vol. 16, No. 1 (2018):

• Stephen J. Pieklik, Nathan S. Catanese & Cory C. Omasta (all of Williams Coulson Johnson Lloyd Parker & Tedesco, Pittsburgh), Deducting Success: Congressional Policy Goals and the Tax Cuts and Jobs Act of 2017, 16 Pitt. Tax Rev. 1 (2018)
• Melissa L. Dougherty (Cohen & Grigsby, Pittsburgh), Better Late than Never: Allocating to Partially GST-Exempt Trusts After the Tax Cuts and Jobs Act of 2017, 16 Pitt. Tax Rev. 37 (2018)
• Leo N. Hitt (Reed Smith, Pittsburgh), Rethinking the Obvious: Choice of Entity After the Tax Cuts and Jobs Act, 16 Pitt. Tax Rev. 67 (2018)

Continue reading

Colinvaux & Madoff: A Donor-Advised Fund Proposal That Would Work For Everyone

Chronicle of Philanthropy op-ed:  A Donor-Advised Fund Proposal That Would Work for Everyone, by Roger Colinvaux (Catholic) & Ray D. Madoff (Boston College):

More than $110 billion that Americans have earmarked for charity are now housed in donor-advised funds. DAFs are a fundraising phenomenon that make it easy to set aside dollars for good causes and get significant tax benefits right away.

But while the dollars are flooding into DAFs, too few dollars are coming out. That is because the legal framework governing these funds is out of sync with the way tax incentives are supposed to work. The reason for tax incentives is to get people to take an action deemed good for society, in this case, to make funds available so that charities can use them in support of their mission. But with donor-advised funds, the system is backwards: the federal government provides donors huge tax subsidies upfront, handing them out when the donor sets up a fund or augments it, but there is  no incentive to actually give the money away.

As legal scholars focused on public policy, we have long been concerned that the tax rules are not working as they should to get money to charities. When it comes to DAFs, we have advocated for the imposition of a payout term to ensure that DAF funds are distributed within a reasonable amount of time — say, a decade.

While a payout is one solution, as we have been studying the issue and hearing objections from sponsors of donor-advised funds, we have realized there is an even better approach that could maximize contributions, help donors save on taxes, and avoid abuses that lose money for the Treasury.

Continue reading

Shaviro Presents Digital Service Taxes Today At NYU

Daniel Shaviro (NYU) presents Digital Service Taxes and the Broader Shift from Determining the Source of Income to Taxing Location-Specific Rents at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder:

In recent decades, a number of fantastically successful, mainly American, multinational entities (MNEs) — led and epitomized by the “Four Horsemen,” Apple, Amazon, Facebook, and Google — have risen to global economic hyper-prominence. While their market capitalizations and profits are high, reflecting that they earn substantial rents or quasi-rents, their aggregate global taxes are generally quite low, reflecting their ability to create stateless income.

Often, these MNEs are technology companies, like the Four Horsemen – but not always. Starbucks, for example, enjoys high global profits and low taxes despite its following a classic brick-and-mortar retail business model. This reflects that, like its more obviously high-tech peers, it relies on valuable intellectual property that helps it in creating both global pretax profitability and stateless income.

Continue reading

NY Times: Tax Law’s Cap On State And Local Deductions Is Upheld By Court

New York Times, Tax Law’s Cap on State and Local Deductions Is Upheld by Court:

Congress didn’t unconstitutionally penalize Democratic-leaning states when it imposed a cap on federal deductions for state and local taxes, a federal judge ruled Monday.

The 2017 federal tax law, which President Trump signed after a party-line vote in Congress, limited to $10,000 the state and local tax payments that families can write off on their federal income taxes if they itemize deductions. The provision, known as the SALT cap, disproportionately affected residents of wealthy, high-tax states, where residents are more likely to have state tax bills that exceed the $10,000 limit.

Four states, including New York, sued the federal government last year, arguing that the cap is an “unconstitutional assault” on their sovereignty.

But on Monday, a Federal District Court judge in Manhattan rejected that argument. “The court recognizes that the SALT cap is in many ways a novelty,” the judge, J. Paul Oetken, wrote in his decision. “But the states have failed to persuade the court that this novelty alone establishes that the SALT cap exceeds Congress’s broad tax power.”

Continue reading

The Financial Transaction Tax: A Progressive Tax With Beneficial Effects

Public Citizen, A Progressive Tax With Beneficial Effects:

A Small Levy on Financial Transactions Would Steer Clear of Struggling Americans, Raise Meaningful Revenue, and Possibly Retire An Abusive Wall Street Industry

A small tax on financial transactions, such as a one-tenth of 1 percent levy on the purchase of stocks and bonds, would likely end the viability of high-frequency trading while raising consequential sums for the U.S. Treasury. Opponents of this proposal have claimed it would hinder the ability of middle-class families to save for retirement. In contrast, we conclude that the costs of a modest financial transaction tax (FTT) would be little to nothing for middle-income families and would be easily manageable for average families in top income bracket.

Continue reading

Subscribing To TaxProf Blog

We offer three ways to have TaxProf Blog content automatically delivered to your computer, tablet, or smart phone:

Follow @SoCalTaxProf

RSS Feeds:  You can subscribe to one of three different feeds to receive TaxProf Blog posts via your RSS reader:

• All Posts will send you all blog posts
• Tax Posts will send you only tax-related blog posts
• Legal Education will send you only law school-related blog posts

Email:  You can subscribe to receive TaxProf Blog posts via email through one of three approaches:

• FeedBlitz:  Enter your email address here to receive TaxProf Blog posts via email, delivered to you either daily, every 12 hours, every 8 hours, every 4 hours, or hourly (at your option).
• TaxProf Blog Tax Email Service:  Email me to be added to my twice daily (during the week) and once daily (on the weekend) emails to the TaxProf Discussion Group with titles and links to recent TaxProf Blog posts on tax topics.
• TaxProf Blog Legal Education Email Service:  Email me to be added to my email distribution list with titles and links to recent TaxProf Blog posts on legal education topics.

Support TaxProf Blog By Shopping On Amazon

TaxProf Blog participates in the amazon.com affiliate program. You can help support TaxProf Blog at no cost to you by making purchases through Amazon links on the blog and through the "Shop Amazon" tab on the header at the top of the blog:

and the search box in the right column of the blog:

The Allure Of State VATs: The Business Value Tax

Jeremy Pilaar (Yale), Making the Most of a BVT: Lessons From New Hampshire and Michigan, 92 State Tax Notes 703 (Aug. 19, 2019):

States' corporate income taxes (CITs) have become increasingly unreliable in the past 40 years. Scholars have traced this decline to three legal shifts. First, in an effort to channel profits to individual owners, such that they are only subject to personal income taxes, many businesses have abandoned C corporation status to operate as S corporations or limited liability companies. Second, in a rush to foster “entrepreneurial climates,” states have increased their business tax breaks and lowered their real CIT rates by more than 30 percent. Third, Public Law 86-272 has prevented any state from imposing net income taxes on out-of-state businesses that solicit in-state orders for delivery from out of state.

This article argues that a form of VAT called a business value tax (BVT) can help remedy these problems. A BVT is a low-rate tax on all business activity conducted in a state over a specified period. By taxing all business endeavors rather than just profits, and sharply limiting exemptions, a BVT would address the revenue gaps the CIT leaves open. A BVT would thereby increase both revenue levels and stability. It would also escape P.L. 86-272’s restrictions. Policymakers should hence strongly consider enacting a BVT alongside their state’s CIT.

Continue reading

Roin: The Case For (And Against) Surrogate Taxation

Julie Roin (Chicago), The Case For (And Against) Surrogate Taxation:

The 2017 Tax Cut and Jobs Act significantly revised long-standing rules regarding the tax treatment of many employer provided in-kind benefits. Instead of including the value of these benefits in the recipients’ taxable income, for the most part the new rules disallow employers a deduction for the cost of providing the affected benefits. This article argues that the two components of this legislative scheme – relying on cost of provision as the measure of taxable income and on imposing the nominal tax obligation on providers rather than recipients – are distinct policy decisions.

Continue reading

Hemel & Porter: Aligning Taxes And Spending — Theory And Experimental Evidence

Daniel Hemel (Chicago) & Ethan Porter (George Washington), Aligning Taxes and Spending: Theory and Experimental Evidence:

Under what circumstances will members of the public hold positive attitudes toward new or higher taxes? While some scholars have posited that the practice of “earmarking” — designating tax revenues for a particular purpose — can increase support for taxes, the existing literature has not identified the conditions under which earmarking will prove effective in this regard. Here, we draw upon previous research on consumer behavior to hypothesize that support for earmarked taxes will be stronger when such taxes satisfy the criterion of “source–use alignment” (i.e., when the connection between the revenue source and the use for which those revenues are earmarked accords with familiar consumer fairness norms). Evidence in support of this hypothesis comes from two experiments on a sample of US residents matched to Census data, in which subjects were randomly assigned to read descriptions of hypothetical earmarked taxes with varying levels of alignment. Individuals consistently expressed stronger support for earmarked taxes that achieved source — use alignment as compared to earmarked taxes that did not satisfy the source — use alignment criterion.

Continue reading

Lesson From The Tax Court: The Proper Role Of Delay In CDP

I often call CDP “Collection Delay Process.”  That is not pure snark.  Part of the purpose of CDP is to pause collection long enough to give taxpayers adequate time to present information to a human IRS employee and explain why the IRS should not be collecting from them.  What constitutes adequate time turns on the plausibility of the taxpayer’s story.  That is today’s lesson.  

The problem with CDP is that many, if not most, of the taxpayers who press the pause button do so simply for the purpose of delay and not for the purpose of explanation.  Time and again one finds taxpayers who invoke their CDP rights and then do nothing else.  They do not present a collection alternative, do not submit forms showing their assets and liabilities, do not respond to Appeals employee’s requests for information.  More importantly, they do not give a plausible story on why the IRS should stop collection.  Instead they give only excuses as to why they need more and more delay.

IRS employees in Appeals become jaundiced.  When so many requests lack substance, it is all too easy to start thinking that all requests lack substance.  The resulting temptation is to discount taxpayer excuses for delay and move ahead with collection. 

Two recent Tax Court opinions show both the frustrations felt by IRS Appeals employees and the dangers of assuming all taxpayers simply want delay.  Together they teach why delay is indeed a necessary part of the CDP process.  In Derrick Barron Tartt v. Commissioner, T.C. Memo 2019-112 (September 3, 2019)(Judge Lauber) the taxpayer sought delay for delay’s sake.  The case shows us the kind of situations that IRS Appeals employees see as a general rule.  In contrast, the case of Taryn L. Dodd v Commissioner, T.C. Memo 2019-107 (August 22, 2019)(also Judge Lauber) shows us the exception to the rule and why Appeals must sometimes give a taxpayer repeated and repeated and repeated opportunities to provide information.

Continue reading

TaxProf Blog Weekend Roundup

Saturday:

• This Week's Ten Most Popular TaxProf Blog Posts
• Florida Coastal Law School Asks ABA To Reconsider Its Request To Shed For-Profit Status
• Kornhauser: American Voices In A Changing Democracy — Women, Lobbying, And Tax
• Symposium: Law Schools In The 21st Century

Sunday:

• Choi: An Empirical Study Of Statutory Interpretation In Tax Law
• Open Offices Distract Us From Deep Work
• California To Require Mandatory Implicit Bias Training For All Attorneys By 2022
• The Top Five New Tax Papers

Choi: An Empirical Study Of Statutory Interpretation In Tax Law

Jonathan H. Choi (NYU), An Empirical Study of Statutory Interpretation in Tax Law, 95 N.Y.U. L. Rev. ___ (2020):

A substantial academic literature considers how agencies should interpret statutes. Yet few studies have considered how agencies actually do interpret statutes, and none has empirically compared the methodologies of agencies and courts in practice. This Article conducts such a comparison, using a newly created data-set of all IRS publications ever released, along with an existing data-set of court decisions. It applies natural language processing, machine learning, and regression analysis to map methodological trends and to test whether particular authorities have developed unique cultures of statutory interpretation.

It finds that, after Chevron, the IRS has increasingly made rules on normative policy grounds (like fairness and efficiency) rather than merely producing rules based on the “best reading” of the relevant statute (under any interpretive theory, like purposivism or textual-ism). Moreover, when the IRS does apply interpretive criteria, it has grown much more purposivist over time.

In contrast, the Tax Court has not grown more normative and has followed the same trend toward textualism as most other courts. But although the Tax Court has become more broadly textualist, it prioritizes different interpretive tools than other courts, like Chevron deference and holistic-textual canons. This suggests that each authority adopts its own flavor of textualism or purposivism.

Continue reading

The Top Five New Tax Papers

There is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #1:

1. [1,753 Downloads]  Taxing the Rich: Issues and Options, by Lily Batchelder (NYU) & David Kamin (NYU)
2. [513 Downloads]  Five Key Research Findings on Wealth Taxation for the Super Rich, by David Gamage (Indiana)
3. [383 Downloads]  An Introduction to Tax Careers for J.D.s, by Heather Field (UC-Hastings)
4. [171 Downloads]  The Superiority of the Digital Services Tax over Significant Digital Presence Proposals, by Wei Cui (University of British Columbia)
5. [152 Downloads]  The Qualified Small Business Stock Exclusion: How Startup Shareholders Get $10 Million (Or More) Tax-Free, by Manoj Viswanathan (UC-Hastings)

This Week's Ten Most Popular TaxProf Blog Posts

1. Bryan Camp (Texas Tech), Lesson From The Tax Court: The Functional Definition Of 'Return'
2. Enjuris, Law School Enrollment by Race & Ethnicity
3. Matthew Smith (U.S. Treasury Department), Danny Yagan (UC-Berkeley), Owen Zidar (Chicago) & Eric Zwick (Chicago), Capitalists in the Twenty-First Century, 135 Q. J. Econ ___ (2019)
4. Tallahassee Democrat, Five Years After Dan Markel's Murder, Trial Of Two Suspects Begins Today
5. Fatih Guvenen (Minnesota), Gueorgui Kambourov (Toronto), Burhanettin Kuruscu (Toronto), Sergio Ocampo-Diaz (Minnesota) & Daphne Chen (Econ One), Efficiency Gains from Wealth Taxation
6. Bryce Clayton Newell (Kentucky), 2019 Meta-Ranking of Flagship US Law Reviews
7. Washington Post, How Excel's Automatic Data Formatting Can Cause Errors In Published Research
8. Derek Muller (Pepperdine), A Few Thoughts On Free Casebooks For Law Students
9. Symposium, Mindfulness and Well-Being in Law Schools and the Legal Profession, 48 Sw. L. Rev. 199-412 (2019)
10. Sahar Aziz (Rutgers), Identity Politics Is Failing Women in Legal Academia, 69 J. Legal Educ. ___ (2019)

Kornhauser: American Voices In A Changing Democracy — Women, Lobbying, And Tax

Marjorie Kornhauser (Tulane), American Voices in a Changing Democracy: Women, Lobbying, and Tax 1924-1936:

• Part 1: Introduction
• Part 2: Lobbying & Taxation 1924 – 1936
• Part 3: Women & Lobbying 1924 – 1936 
• Part 4: Women's Tax Lobbying 1924 – 1936
• Part 5: Conservative Women’s Groups & Tax Lobbying 1924-1936
• Part 6: Cathrine Curtis and Her 1934 – 1936 Tax Campaign

Weekly SSRN Tax Article Review And Roundup: Elkins Reviews Cooper's The State Death Tax Credit And The SALT Deduction

This week, David Elkins (Netanya) reviews Jeffrey A. Cooper (Quinnipiac), Red States, Blue States: Lessons from the State Death Tax Credit and the “SALT” Deduction, 73 Tax Law. __ (2020) (forthcoming).

One of the more politically contentious provisions of the 2017 Tax Cuts and Jobs Act is the capping of the deduction for state and local taxes (SALT) at $10,000 per married couple. Opponents of the change have argued that it was designed to punish those states that voted for Hillary Clinton in the 2016 presidential elections. In an attempt to reverse the legislation, the leaders of four of these states have sued the federal government. Proponents claim that the cap is necessary to prevent high-tax states from imposing the costs of their expensive programs on the federal government and, indirectly, on residents of low-tax states.

In a timely article, Professor Cooper places the issue in historical context by comparing the SALT deduction to the federal estate tax state death tax credit that was established in 1924 and repealed in 2001. He posits that viewing the 2017 legislation within the broader historical context reveals trends and patterns, providing greater insight than would a study of the SALT deduction in isolation. He considers not only the rhetoric surrounding the various legislative changes but also how states responded to the adoption and then to the repeat of the state death tax credit and examines whether such behavior might be a harbinger of state reaction to the SALT deduction cap.

Continue reading

Tax Policy In The Trump Administration

• American Enterprise Institute (William Gale), A Fixable Mistake: The Tax Cuts and Jobs Act
• American Enterprise Institute (Douglas Holtz-Eakin), Investment incentives and the Tax Cuts and Jobs Act
• Bloomberg News, Apple May Get Clues About Its Chances of Winning Tax Case of the Century
• Bloomberg Opinion, Sanders’s Wealth Tax Is Too Much of a Good Thing
• Forbes, Reviewing The Democratic Candidates' Tax Plans: Elizabeth Warren

Continue reading

Trump's Taxes And Tax Returns

• CNN, What Pelosi's Impeachment Move Means in the Legal Fight Over Trump's Records
• The Hill, House Democrats Ask Judge to Let Lawsuit For Trump's Tax Returns Proceed
• Law.com, 'Go Home, Sober Up, Decompress:' US Judge Stays Trump Tax Subpoena Another Day
• New York Times, Federal Prosecutors Join Trump to Block Tax Return Subpoena
• New York Times, Prosecutor Says Trump Wants 'Sweeping Immunity' in Tax Fight

Continue reading

Zelenak Presents Women And The Politics Of The Early Federal Income Tax Changes Today At Boston College

Larry Zelenak (Duke) presents “We Will See That You Are Troubled Right Along”: Women and the Politics of the Early Federal Income Tax at Boston College today as part of its Tax Policy Workshop Series hosted by Jim Repetti, Diane Ring, and Shu-Yi Oei:

This essay tells the stories of three women who, in the early years of the federal income tax, claimed significant roles in tax policy debates by focusing on the intersection of the income tax and policy issues in the female sphere. In chronological order of their contributions, they are: Helen M. Bent, who critiqued the treatment of married women in the bill that became the 1913 income tax; the leading suffragist Anna Howard Shaw, who shortly after enactment of the 1913 income tax urged passive resistance to the tax by unfranchised women; and attorney Martha Connole, who in 1927 explained to the Ways and Means Committee how the income tax rules were unfair to single women. Shaw was famous during her lifetime and remains well-known today, but neither Bent nor Connole was ever famous, and both are all but forgotten today.

Continue reading

Tax Presentations At Today's 20th Global Conference On Environmental Taxation

Tax presentations at today's 20th Global Conference on Environmental Taxation in Cyprus, Greece:

Mona Hymel (Arizona), Suffocation: Supported by the U.S. Federal Government:

Most of us have experienced riding an elevator with strangers. Many of us have experienced the slightly uncomfortable feeling as strangers continue entering the elevator until it is full or maybe even touching strangers as the elevator fills. People vary worldwide in the amount of private space they are accustomed to enjoying. In other words, how many people have to get onto the elevator with you before you feel physically uncomfortable? Assume that so many strangers crowd on to the elevator that, as clean air in the elevator runs out, they will all suffocate to death. The elevator story provides a simple picture of humanity’s ultimate demise. This article discusses the situation of the strangers; a growing population. The article explains the most serious contributors to the increasing number of strangers: (1) existing government pronatalist policies; (2) the ugly secrets of immigration; (3) artificial intelligence dramatically reduces the need for humans; and (4) the impacts of worldwide growth.

Like the elevator, the impact of population on Earth’s wellbeing is nothing more than a scientific equation – Carry Capacity. For an elevator, consider the size of the elevator; any life sustaining resources available; the number of people supported by the elevator; and its resources before they begin to suffocate or starve to death. Fortunately, Earth has abundant space and resources. But we know that space, resources, and the population are all in critical condition. Scientists estimate that the Earth’s carrying capacity is reaching its limits. Moreover, increasing immigration and the significant increase in sourcing jobs to AI could result in the overall carrying capacity of the earth to decline. Yet, the United States operates on a growth model that can no longer be sustained. “Growing the U.S. economy” must be replaced. As population continues to grow and resources decline (jobs taken by AI), carrying capacity must be adjusted to avoid world tragedy. The elevator is full!

By analyzing U.S. Federal tax policy, the article suggests changes and additional work to be done. For example, the U.S. tax law contains conflicting tax provisions both encouraging and discouraging population growth. This article discusses how population growth negatively impacts the environment; the U.S. policies on population as subsidized through the tax system; and alternative tax policies to mitigate U.S. population growth and repeal of existing pronatal policies.

Tracey M. Roberts, (Samford University), Stranded Assets and Competitive Pricing for Regulated Utilities: A Federal Tax Solution:

Continue reading

Cauble: Presumptions of Tax Motivation

Emily Cauble (DePaul), Presumptions of Tax Motivation, 105 Iowa L. Rev. ___ (2020):

Rebuttable presumptions are scattered throughout the Internal Revenue Code and the Treasury Regulations. In many cases, they are employed in service of determining a taxpayer’s motive or state of mind. They are not, however, always utilized when motive or state of mind must be assessed. In some contexts, courts are called upon to examine all relevant facts and circumstances in order to divine a taxpayer’s state of mind – which facts are relevant and the weight to be accorded to various facts are not specified ahead of time except to the extent set forth in judicial precedent. At the other extreme, in yet another subset of situations in which tax outcome turns on motive or state of mind, tax law provides that a given fact establishes an irrebuttable presumption of a given motive. In between the two extremes, tax law makes use of a variety of tools including rebuttable presumptions. When a rebuttable presumption is at work, the proof of a specified fact is deemed to establish the existence of a given state of mind, unless the party who is disadvantaged by that state of mind determination presents sufficient evidence to overcome it.

In response to these challenges, several localities recently enacted or proposed taxes targeted directly at large businesses, with revenues allocated explicitly for a designated purpose. Localities are gravitating toward targeted taxes for several reasons. Some assert that the success of large employers within the locality contributed to, or even directly created, these challenges. Perhaps most importantly, targeted tax laws serve a clear expressive function. Depending on the locality’s primary objective, targeted taxes may be problematic and counterproductive.

Continue reading