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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TaxProf Blog Weekend Roundup

Saturday:

• This Week's Ten Most Popular TaxProf Blog Posts
• WSJ: Economists Question The Benefits Of $30 Billion/Year Spent By State & Local Governments On Targeted Tax Breaks
• Death Of Martin Dickinson (Kansas)
• Law Schools With The Worst Debt-to-Income Ratios Among Recent Graduates

Sunday:

• Five Lessons From The New England Patriots For Long Term Law School Success
• Nina Olson: We Need A Permanent National Taxpayer Advocate, Now.
• Shaping The Next Generation Of Lawyers: A Call To The Christian Legal Community
• The Top Five New Tax Papers

Nina Olson: We Need A Permanent National Taxpayer Advocate, Now.

Nina Olson (Former National Taxpayer Advocate), We need a permanent National Taxpayer Advocate, now.:

This week, the acting National Taxpayer Advocate released the 2019 Annual Report to Congress, on the heels of the IRS’s release of its own “annual report” about its performance. Reading the two documents together, one wonders whether they are reporting on the same agency. The NTA’s report focuses on the challenges the agency faces and makes concrete recommendations about how to address them; the IRS’s report celebrates the agency’s performance over the last year and how it is on track to fulfill the goals of its 2018 to 2022 strategic plan. One report is forward looking; the other is a status update.

I’ll be scouring the contents of both reports over the next month or so, but their arrival reminds me of the important and unique role the National Taxpayer Advocate (NTA) plays in U.S. tax administration today. The NTA is the protector of taxpayer rights and, according to the National Commission on Restructuring the IRS, serves as the “voice of the taxpayer” inside the agency. Each of the Most Serious Problems, Most Litigated Issues, and Legislative Recommendations in the NTA’s 2019 Annual Report to Congress is prefaced with the relevant rights enunciated in the Taxpayer Bill of Rights; they form the framework for analysis. On the other hand, the IRS annual report doesn’t get around to mentioning “taxpayer rights” until page 12. Tellingly, the words “taxpayer rights” do not appear in any of the strategic goals listed in the annual report, nor are they listed among the “core values” of the agency.

This contrast highlights why it is so important to have a permanent National Taxpayer Advocate in place, to hold the IRS’s feet to the fire about promotion and protection of taxpayer rights, especially as it hires more audit and collection employees and launches new compliance and enforcement initiatives.

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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)

This Week's Ten Most Popular TaxProf Blog Posts

1. Wall Street Journal, Making It As A Young Lawyer In Boston On $50,000/Year
2. Paul Caron (Dean, Pepperdine), The Top 10 Legal Education Posts Of The Decade
3. Karen Sloan (Law.com), Changes To U.S. News Law School Rankings Met With Skepticism
4. Ben Barton (Tennessee), The Law School Crash
5. Mike Spivey, ABA 509 Report Data: 73% Of Law Students Receive Scholarships (Up From 49% In 2012)
6. Paul Caron (Dean, Pepperdine), The Top 10 Tax Posts Of The Decade
7. Wall Street Journal, Upending Bankruptcy ‘Myths,’ Judge Erases $220,000 Student Loan Debt
8. Kimberly Clausing (Reed College; moving to UCLA), How Big is Profit Shifting?
9. Mike Spivey, ABA 509 Report Data: Acceptance Rates Fall (To 45%), Yields Increase (To 32%)
10. Bryan Camp (Texas Tech), Lesson From The Tax Court: Taxpayer Who Got $1.6m Assessment Reduced To $170k Not Entitled To Costs

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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Death Of Martin Dickinson (Kansas)

KU Law Community Mourns Passing of Former Dean:

The University of Kansas School of Law community is mourning the passing of former dean and longtime professor Martin Dickinson, who died Jan. 5 in Estes Park, Colorado. He was 81.

Dickinson was KU Law’s longest-serving faculty member. He gave 48 years to the law school, from when he started teaching in 1967 until his retirement in 2015. He served as dean from 1971 to 1980, overseeing a time period that included the dedication of the law school’s current home at Green Hall.

He was a visionary leader, advocating for the advancement of diverse and female law students and faculty well before the legal profession as a whole began to do so, said Stephen Mazza, dean and professor of law. “He was also a fantastic classroom teacher who truly cared about his students,” Mazza said. “KU Law alumni across the nation frequently recognize him as one of their favorite professors.”

By Dickinson’s own estimate, 4,000 law students passed through his classes during his nearly five decades as a professor. In a recollection of his tenure for the fall 2015 edition of KU Law Magazine, Dickinson described his time as “a fascinating ride that included revolutionary changes.” ...

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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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Tax Policy In The Trump Administration

• Bloomberg, Base Erosion and Anti-Abuse Tax Final Regulations Roadmap
• Bloomberg, Consumers Increasingly See Tax-the-Rich Plans Hurting Economy
• Bloomberg, The Tax Decade: How the 2010s Led to Where We Are Now (Podcast)
• Bloomberg, Wealthy Investors Steer Billions Toward New Trump Tax Break
• Bloomberg, Trump Tax Breaks Seen Doing ‘Zero’ for Home Prices in Poor Areas

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Trump Rape Accuser May Seek President’s Taxes In Lawsuit

Bloomberg, Trump Rape Accuser May Seek President’s Taxes in Lawsuit:

Donald Trump can face a lawsuit in New York because his residency at the White House “is not permanent” and his tax returns would prove it, according to an advice columnist suing the president for denying he raped her two decades ago.

E. Jean Carroll, who filed a defamation suit against Trump in November, made the argument in a Monday court filing responding to the president’s request to have the case dismissed on the grounds that New York courts lack jurisdiction. Carroll’s lawyers said Trump hadn’t met the standard under New York law for formally changing his residence to Washington.

Carroll went public with her rape claim in a June magazine article, alleging Trump assaulted her in a dressing room in a Manhattan department store in the mid-1990s. Trump has repeatedly denied the allegation and called her a liar seeking to promote her career.

The filing raised the prospect Carroll would seek Trump’s taxes to prove New York was his primary home during the relevant time period. The president has aggressively fought against any effort, including by Congress, to gain access to his taxes.

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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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Google To End Use Of ‘Double Irish’ As Tax Loophole Set To Close

Following up on my previous posts:

• Google Lowered 2015 Taxes by $3.6 Billion Using 'Double Irish With A Dutch Sandwich' Tax Structure
• Google Reduced its Tax Rate to 2.4% With Aggressive Tax Strategies

Los Angeles Times, Google to End Use of ‘Double Irish’ as Tax Loophole Set to Close:

Google has overhauled its global tax structure and consolidated all of its intellectual property holdings back to the U.S., signaling the winding down of a tax loophole estimated to have saved American companies hundreds of billions of dollars.

The internet search company said on Tuesday the move was designed to simplify its corporate tax arrangements and was in line with OECD efforts to limit international tax avoidance, as well as recent changes to U.S. and Irish laws.

Google’s actions came ahead of the close of the so-called double Irish tax loophole, which has been used by U.S. companies to channel international profits through Ireland and on to tax havens like Bermuda — putting them outside the U.S. tax net. That led American companies to amass more than $1 trillion offshore as of the end of 2017, when President Trump’s tax overhaul changed the treatment of overseas profits.

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UC-Hastings Seeks To Hire A Tax Clinic Director

Clinic Director and Visiting Assistant Professor, UC Hastings Low-Income Taxpayer Clinic:

The University of California, Hastings College of the Law (“UC Hastings Law”), located in downtown San Francisco, seeks applicants for the position of Visiting Assistant Professor to serve as Clinic Director for the newly-formed, UC Hastings Low-Income Taxpayer Clinic (“the “Clinic”). This is a full-time, non-tenure track faculty position (lecturer) intended to support those interested in law school academic careers. Assuming successful renewal of the IRS grant, the Clinic Director position will be a two-year appointment, with possible extensions for subsequent years.

The Clinic will give free legal assistance to low-income taxpayers with active tax controversies with the Internal Revenue Service and provide education and outreach to taxpayers who speak English as a second language. Clients will be represented by students earning course credit for their enrollment in the Clinic, volunteer pro bono attorneys, and the Clinic Director. The Clinic Director will manage all aspects of the Clinic’s operations, including (but not limited to) conducting client intake, teaching students the relevant law and lawyering skills necessary for effective representation, placing clients with pro bono attorneys, and ensuring compliance with IRS grant requirements.

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Goldburn Maynard Leaves Louisville Law School For Indiana Business School

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NY Times: The Tax Break for Children, Except The Ones Who Need It Most

New York Times, The Tax Break for Children, Except the Ones Who Need It Most:

The child tax credit, begun in 1997 as a tax cut, has become an anti-poverty program. But more than a third of children don’t receive it because their parents earn too little.

The 2017 tax bill, President Trump’s main domestic achievement, doubled the maximum credit in the two-decade-old program and extended it to families earning as much as $400,000 a year (up from $110,000). The credit now costs the federal government $127 billion a year — far more than better-known programs like the earned-income tax credit ($65 billion) and food stamps ($60 billion).

But children with the greatest economic needs are least likely to benefit.

While Republicans say the increase shows concern for ordinary families, 35 percent of children fail to receive the full $2,000 because their parents earn too little, researchers at Columbia University found [Left Behind: The One-Third of Children in Families Who Earn Too Little to Get the Full Child Tax Credit]. A quarter get a partial sum and 10 percent get nothing. Among those excluded from the full credit are half of Latinos, 53 percent of blacks and 70 percent of children with single mothers. ...

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WSJ: ‘Aloha’ Increasingly Means Goodbye Thanks To High Taxes

Wall Street Journal op-ed:  ‘Aloha’ Increasingly Means Goodbye Thanks to High Taxes, by Keli‘i Akina (Grassroot Institute of Hawaii):

With an 11% top tax rate, many Hawaii residents are looking for two tickets out of paradise.

“Why would anyone leave Hawaii?” Former Hawaii residents hear the question a lot, often from someone eager to relay the details of an incredible vacation in Maui or Kauai. But when you’re living paycheck to paycheck and working two jobs, you don’t get many chances to enjoy the island archipelago’s crystal blue waters and soft white sand. People leave Hawaii for the same reasons they leave Illinois and California: high costs and lack of opportunity.

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Tax Reform Has Delivered For Workers

Wall Street Journal op-ed:  Tax Reform Has Delivered for Workers, by Gary D. Cohn & Kevin Hassett:

It’s been two years since President Trump signed the Tax Cuts and Jobs Act into law. To the delight of supply-siders, the law contained significant marginal tax rate reductions for individuals and corporations. At the time there was lively debate concerning the likely economic impact of the bill, with opponents pointing to analyses that found little effect from the rate reductions. At the White House, where we worked at the time, we produced analyses that suggested economic growth would surge. On the second anniversary of the TCJA, the numbers are in, and our projections have been vindicated.

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The Top 10 Tax Posts Of 2019

1. Bryan Camp (Texas Tech), Lesson From The Tax Court: Taxpayer’s Shell Game Defeats IRS
2. Bryan Camp (Texas Tech), Lesson From The Tax Court: Know The Difference Between IRAs And 401(k)s
3. Bryan Camp (Texas Tech), Lesson From The Tax Court: Murphy’s Law Of Mailing
4. Bryan Camp (Texas Tech), Lesson From The Tax Court: When Does A Business Start?
5. Bryan Camp (Texas Tech), Lesson From The Tax Court: The Pain of Disappointment
6. Bryan Camp (Texas Tech), Lesson From The Tax Court: Distinguishing Investment From Business Activity
7. Bryan Camp (Texas Tech), Lesson From The Tax Court: Form 2848 Does Not Change Your Address
8. Bryan Camp (Texas Tech), Lesson For Tax Day: When Tax Prep Software Gets It Wrong
9. Bryan Camp (Texas Tech), Lesson From The Tax Court: Payments v. Deposits
10. Bryan Camp (Texas Tech), Lesson From The Tax Court: Yachts Are Pigs

The Top 10 Tax Posts Of 2018

Bill Gates Pushes For Higher Taxes On Rich As His Wealth Soars

Bloomberg, Bill Gates Pushes for Higher Taxes on Rich as Wealth Soars:

Microsoft Corp. co-founder Bill Gates started the last decade worth more than $50 billion and a pledge to donate a big chunk of his fortune to charity.

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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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Pepperdine Welcomes Visiting Professors Mike Paulsen And Bobby Dexter

Pepperdine Caruso School of Law is thrilled to have Mike Paulsen (St. Thomas) and Bobby Dexter (Chapman) with us this semester as visiting professors.

Mike is our Straus Distinguished Visiting Professor this semester (following Dorothy Brown (Emory), who was our Straus Distinguished Visiting Professor last Spring). Mike will be teaching Constitutional Structure and a Constitutional Law Seminar. His most recent publication is To End a (Republican) Presidency, 132 Harv. L. Rev. 689 (2018).

Bobby will be teaching Federal Income Taxation of Individuals and Federal Income Taxation of Business Entities. His most recent publication is Federal Income Taxation In Focus (Aspen/Wolters Kluwer Law & Business) (2018).

Lesson From The Tax Court: Taxpayer Who Got $1.6m Assessment Reduced To $170k Not Entitled To Costs

Section 7430(a) permits a court to award “reasonable administrative costs” and “reasonable litigation costs” (the largest being attorneys fees) to a taxpayer who is a “prevailing party” in a dispute with the IRS.  In Mark C. Klopfenstein v. Commissioner, T.C. Memo 2019-156 (Dec. 9, 2019) (Judge Lauber), Exam assessed a $1.6 million §6707 penalty against the taxpayer.  Mr. Klopfenstein eventually secured a closing agreement from Appeals that reduced the penalty to just under $170,000.  The IRS abated the assessment to that amount.  Mr. Klopfenstein then asked for “reasonable administrative costs” under §7430.  The Tax Court said no, because Mr. Klopfenstein was not a “prevailing party.”  You will find out why below the fold.

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The Top 10 Tax Posts Of The Decade

1. Bryan Camp (Texas Tech), Lesson From The Tax Court: Taxpayer’s Shell Game Defeats IRS (2019)
2. Bryan Camp (Texas Tech), Lesson From The Tax Court: Know The Difference Between IRAs And 401(k)s (2019)
3. Bryan Camp (Texas Tech), Lesson From The Tax Court: Murphy’s Law Of Mailing (2019)
4. Journal of Accountancy, How The Government Shutdown Affects The IRS (2018)
5. Bryan Camp (Texas Tech), Lesson From The Tax Court: When Does A Business Start? (2019)
6. New York Times, California Supreme Court Deals Major Blow To Gig Economy Business Model, Treats Workers As Employees Rather Than Independent Contractors (2018)
7. Bryan Camp (Texas Tech), Lesson From The Tax Court: The Pain of Disappointment (2019)
8. Bryan Camp (Texas Tech), Lesson From The Tax Court: The Turbo-Tax Defense (2018)
9. Bryan Camp (Texas Tech), Lesson From The Tax Court: The Substantial Substantiation Rules In §170 (2018)
10. Washington Post, IRS Ignored Recommended Security Upgrades That Would Have Prevented Last Week's Hack Of 100,000 Taxpayer Accounts (2015)

TaxProf Blog Weekend Roundup

Saturday:

• This Week's Ten Most Popular TaxProf Blog Posts
• ABA 509 Report Data: Acceptance Rates Fall (To 45%), Yields Increase (To 32%)
• IRS Reforms Free File Program, Drops Agreement Not To Compete With TurboTax
• More Than Half Of Harvard Law Students Experience Mild To Severe Depression And Anxiety; Over One-Third Are Problem Drinkers

Sunday:

• Forgiveness And Mercy: Our Most God-Like Power
• Weekly Legal Education Roundup
• Tax Programs Today At AALS
• The Top Five New Tax Papers

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)

This Week's Ten Most Popular TaxProf Blog Posts

1. Bloomberg, A Third Of America’s Economy Is Concentrated In Just 31 Counties
2. Christian Science Monitor, Ivy League Level Jealousy: How Penn Law Professor David Skeel Views The Tenth Commandment
3. The Guardian, The Great American Tax Haven: Why The Super-Rich Love South Dakota
4. Inside Higher Ed, Has The Master’s Degree Bubble Burst?
5. Washington Post, Tax Profs Say IRS Is Unlikely To Pursue Whistleblower's Claim That Mormon Church Stockpiled $100 Billion In Charitable Donations And Dodged Taxes
6. Stanford Daily, Professor’s Repeated Use Of N-Bomb In Torts Class Sparks Backlash At Stanford
7. Los Angeles Times, Trump's Tax Cut Has Failed Most Of Us
8. NPR, Illinois Law Prof Will Not Teach Scheduled Spring Classes And Instead Will Go On 'University-Sanctioned Leave' In Continuing Fallout From Sexual Misconduct
9. Inside Higher Ed, SMU Sued For Severing Ties With United Methodist Church Following Decision To Strengthen Ban On Gay Marriage And LGBTQ Clergy
10. Stephen Bainbridge (UCLA), I Submit Herewith My "Diversity, Equity, and Inclusion" Statement For My Merit Raise at UCLA

IRS Reforms Free File Program, Drops Agreement Not To Compete With TurboTax

Following up on my previous posts (links below):  ProPublica, IRS Reforms Free File Program, Drops Agreement Not to Compete With TurboTax:

Finding free online tax filing should be easier this year for millions of Americans.

The IRS announced significant changes Monday to its deal with the tax prep software industry. Now companies are barred from hiding their free products from search engines such as Google, and a years-old prohibition on the IRS creating its own online filing system has been scrapped.

The addendum to the deal, known as Free File, comes after ProPublica’s reporting this year on how the industry, led by TurboTax maker Intuit, has long misled taxpayers who are eligible to file for free into paying.

Under the nearly two-decade-old Free File deal, the industry agreed to make free versions of tax filing software available to lower- and middle-income Americans. In exchange, the IRS promised not to compete with the industry by creating its own online filing system. Many developed countries have such systems, allowing most citizens to file their taxes for free. The prohibition on the IRS creating its own system was the focus of years of lobbying by Intuit. The industry has seen such a system as an existential threat. Now, with the changes to the deal, the prohibition has been dropped.

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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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NY Times: Why The Impact Of The Trump Taxes Remains Partly Hidden — The GILTI Silence

New York Times, Why the Impact of the Trump Taxes Remains Partly Hidden:

New taxes should be a big expense for many companies. But they have found a way around disclosing it in annual reports.

Armed with legions of lobbyists, companies have been pushing hard — and successfully — to weaken new federal taxes that take aim at overseas tax havens.

Many of them have managed to avoid publicly disclosing how much they owe under the new taxes. Without such figures, it becomes virtually impossible for outsiders to work out how much companies are saving from the watered down tax rules.

In theory, this opacity should not exist. United States securities regulations have long required public companies to disclose even relatively minor tax expenses. Over the past year, this requirement has led to a small number of companies revealing the effect of the new taxes on overseas income.

Yet many others — including some longtime users of tax havens — appear to have found ways around disclosing how the overseas taxes will affect them. ...

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TaxProf Blog 2019 Data

2019 was TaxProf Blog's biggest year to-date, with 19.4 million pages views:

My top demographic is ages 25-34:

10% of my readers come from outside the United States — the top 3 foreign countries are Canada, United Kingdom, and Australia:

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Trump's Tax Cut Has Failed Most Of Us

Los Angeles Times op-ed:  Trump's Tax Cut Has Failed Most Of Us, by Frank Clemente & William Rice (Americans for Tax Fairness):

President Trump’s radical Tax Cuts and Jobs Act, which took effect Jan. 1, 2018, has now been around long enough for a fair assessment. The verdict’s not good. The second anniversary is an apt time to review some of the law’s biggest failures — especially since the president is inviting more trouble by considering another tax-cut boondoggle as an election-year ploy.

Rushed through Congress by a Republican majority, the Trump-GOP tax cuts were promoted as a boon for the middle class. Yet in 2020, according to the Institute on Taxation and Economic Policy, the richest 1% of taxpayers will get an average tax cut of around $50,000, 75 times more than the average cut for the bottom 80%. ...

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NY Times: How Big Companies Won New Tax Breaks From The Trump Administration

New York Times, How Big Companies Won New Tax Breaks From the Trump Administration:

As the Treasury Department prepared to enact the 2017 Republican tax overhaul, corporate lobbyists swarmed — and won big.

The overhaul of the federal tax law in 2017 was the signature legislative achievement of Donald J. Trump’s presidency.

The biggest change to the tax code in three decades, the law slashed taxes for big companies, part of an effort to coax them to invest more in the United States and to discourage them from stashing profits in overseas tax havens.

Corporate executives, major investors and the wealthiest Americans hailed the tax cuts as a once-in-a-generation boon not only to their own fortunes but also to the United States economy.

But big companies wanted more — and, not long after the bill became law in December 2017, the Trump administration began transforming the tax package into a greater windfall for the world’s largest corporations and their shareholders. The tax bills of many big companies have ended up even smaller than what was anticipated when the president signed the bill.

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The Great American Tax Haven: Why The Super-Rich Love South Dakota

The Guardian, The Great American Tax Haven: Why the Super-Rich Love South Dakota:

It’s known for being the home of Mount Rushmore — and not much else. But thanks to its relish for deregulation, the state is fast becoming the most profitable place for the mega-wealthy to park their billions.

Late last year, as the Chinese government prepared to enact tough new tax rules, the billionaire Sun Hongbin quietly transferred $4.5bn worth of shares in his Chinese real estate firm to a company on a street corner in Sioux Falls, South Dakota, one of the least populated and least known states in the US. Sioux Falls is a pleasant city of 180,000 people, situated where the Big Sioux River tumbles off a red granite cliff. It has some decent bars downtown, and a charming array of sculptures dotting the streets, but there doesn’t seem to be much to attract a Chinese multi-billionaire. It’s a town that even few Americans have been to.

The money of the world’s mega-wealthy, though, is heading there in ever-larger volumes. In the past decade, hundreds of billions of dollars have poured out of traditional offshore jurisdictions such as Switzerland and Jersey, and into a small number of American states: Delaware, Nevada, Wyoming —and, above all, South Dakota. “To some, South Dakota is a ‘fly-over’ state,” the chief justice of the state’s supreme court said in a speech to the legislature in January. “While many people may find a way to ‘fly over’ South Dakota, somehow their dollars find a way to land here.”

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Death Of Robert Gordon: 'College Dropout Made Name As Tax Maven'

Wall Street Journal, College Dropout Made Name As Tax Maven:

Robert N. Gordon, a college dropout, became one of the most-quoted U.S. experts on stock-market trends and tax-efficient investing.

“To make a move solely for tax purposes is silly, but to ignore taxes when investing is equally as foolhardy,” he told The Wall Street Journal a year ago. He was quoted in the Journal more than 100 times in the past 35 years, most recently in November.

Mr. Gordon, who was founder and president of New York-based Twenty-First Securities Corp. and whose bedtime reading included the tax code, died Dec. 14 at home in Manhattan. He was 66 and had been under treatment for lung cancer.

“He would exploit inefficiencies or errors or inconsistencies in the tax code wherever he found them,” said Robert Willens, an accounting and tax adviser. “He was the best I’d ever seen at that.” His strategies survived “withering scrutiny” from tax authorities, Mr. Willens said. ...

He is survived by two children and his sister, Wendy Gordon, a law professor at Boston University.

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TaxProf Blog Weekend Roundup

Saturday:

• This Week's Ten Most Popular TaxProf Blog Posts
• Effective Corporate Tax Rate Fell From 21% to 11% Under New Trump Tax Law
• Has The Master’s Degree Bubble Burst?
• A Third Of America’s Economy Is Concentrated In Just 31 Counties

Sunday:

• Tax Profs Say IRS Is Unlikely To Pursue Whistleblower's Claim That Mormon Church Stockpiled $100 Billion In Charitable Donations And Dodged Taxes
• Ivy League Level Jealousy: How A Law Professor Views The Tenth Commandment
• SMU Sued For Severing Ties With United Methodist Church Following Decision To Strengthen Ban On Gay Marriage And LGBTQ Clergy
• Stephen Bainbridge's Diversity, Equity, And Inclusion Statement

Tax Profs Say IRS Is Unlikely To Pursue Whistleblower's Claim That Mormon Church Stockpiled $100 Billion In Charitable Donations And Dodged Taxes

Washington Post, Mormon Church Has Misled Members on $100 Billion Tax-Exempt Investment Fund, Whistleblower Alleges:

A former investment manager alleges in a whistleblower complaint to the Internal Revenue Service that the Church of Jesus Christ of Latter-day Saints has amassed about $100 billion in accounts intended for charitable purposes, according to a copy of the complaint obtained by The Washington Post.

The confidential document, received by the IRS on Nov. 21, accuses church leaders of misleading members — and possibly breaching federal tax rules — by stockpiling their surplus donations instead of using them for charitable works. It also accuses church leaders of using the tax-exempt donations to prop up a pair of businesses. ...

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This Week's Ten Most Popular TaxProf Blog Posts

1. Wharton, Elizabeth Warren’s Wealth Tax Is Too Optimistic
2. Scott Fruehwald, The Best Legal Education Articles of 2019
3. Congressional Budget Office, Projected Changes In The Distribution Of Household Income, 2016 To 2021
4. New York Times, Why You Should Give Your Money Away Today
5. Wall Street Journal, The Beginning Of The End Of Tax Secrecy
6. American Bar Association, In Wake Of 89% Enrollment Decline, ABA Again Says Florida Coastal Law School Is Not In Compliance With Accreditation Standards, Again Rejects Conversion From For-Profit To Non-Profit Status
7. Wall Street Journal, I’m Jewish. Please Wish Me A Merry Christmas.
8. New York Times, Want To Get Into The Christmas Spirit? Face The Darkness.
9. Wall Street Journal, In Hoc Anno Domini
10. Video, A Pepperdine Christmas

Effective Corporate Tax Rate Fell From 21% to 11% Under New Trump Tax Law

Following up on my previous post, Corporate Tax Avoidance in the First Year of the Trump Tax Law:  Washington Post, Corporations Paid 11.3 Percent Tax Rate Last Year, in Steep Drop Under Trump’s Law:

About 400 of America’s largest corporations paid an average federal tax rate of about 11 percent on their profits last year, roughly half the official rate established under President Trump’s 2017 tax law. ...

The 2017 tax law lowered the U.S. corporate tax rate from 35 percent to 21 percent, but in practice large companies often pay far less than that because of deductions, tax breaks and other loopholes.

In the first year of the law, the amount corporations paid in federal taxes on their incomes — their “effective rate” — was 11.3 percent on average, possibly its lowest level in more than three decades, according to a report by the Institute on Taxation and Economic Policy, a left-leaning think tank.

From 2008 to 2015, under the previous tax code, the corporations’ effective rate was about 21 percent, according to the ITEP’s prior research.

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A Third Of America’s Economy Is Concentrated In Just 31 Counties

Bloomberg, A Third of America’s Economy Is Concentrated in Just 31 Counties:

While America’s economy has grown for over a decade, that growth is increasingly concentrated in 1% of the nation’s counties.

Just 31 counties, or the top 1% by share, made up 32.3% of U.S. gross domestic product in 2018, according to data released last week by the Bureau of Economic Analysis that included nearly 20 years of county-level GDP data. ...

The nation’s economy is becoming increasingly concentrated in large cities and by the coasts—and less so in rural counties—spurring the question of whether rural areas will be increasingly left behind. ...

Top 1% of Counties
The largest 31 county economies made up 32% of national GDP in 2018

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Tax Policy In The Trump Administration

• Bloomberg Opinion, Wealth Taxes Don’t Reduce Inequality
• Cato Institute, ITEP Study on Corporate Taxes 
• Forbes, The Big Moments Of The Crypto Tax Space In 2019 And A Look Into 2020
• Forbes, Tax Law Changes: Good, Bad and Ugly
• Forbes, The Trump Tax Cut in 2020: A Calculator

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Trump's Taxes And Tax Returns

• Breitbart, Ghost Of Christmas Future Haunts Trump at Mar-a-Lago: Supreme Court Orders Release Of His Tax Returns
• Newsweek, Supreme Court to Take on Three Cases Related to Trump's Finances in 2020: What You Need to Know
• NJ.com, How Long Can Trump’s Tax Returns Be Under Audit?
• Politico, House Democrats Appealing Court Decision in Trump State Tax Return Case
• Washington Post, Don’t Assume the Supreme Court Will Give Trump a Resounding Victory

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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