Graetz: A Major Simplification Of The OECD’s Pillar 1 Proposal

Michael J. Graetz (Columbia), A Major Simplification of the OECD’s Pillar 1 Proposal, 170 Tax Notes Fed. 213 (Jan. 11, 2021):

In this report, Graetz suggests major modifications to the OECD’s pillar 1 blueprint proposal to create a new taxing right for multinational digital income and some product sales that would greatly simplify the proposal. The modifications rely on readily available existing financial information and would achieve certainty in the application of pillar 1, while adhering to its fundamental structure and policies.

Continue reading

Kamin: How Far To Go In Reforming Taxation Of Wealth

David Kamin (NYU), How Far to Go in Reforming Taxation of Wealth: Revenue and Tax Avoidance, 168 Tax Notes Fed. 1225 (Aug. 17, 2020):

The article describes the revenue estimates of incremental versus fundamental reform options for taxation of individual wealth, and explains how tax avoidance assumptions underlie the larger estimates for fundamental reform. 

Continue reading

Avi-Yonah & Mazzoni: Coca-Cola: A Decisive IRS Transfer Pricing Victory

Reuven S. Avi-Yonah (Michigan) & Gianluca Mazzoni (S.J.D. (International Tax) 2020, Michigan), Coca-Cola: A Decisive IRS Transfer Pricing Victory, At Last, 169 Tax Notes Fed. 1739 (Dec. 14, 2020):

Coca-Cola [Coca-Cola Co. v. Commissioner, 155 T.C. No. 10 (Nov. 18, 2020)] is the first decisive IRS victory in a major transfer pricing case since 1979. If not reversed on appeal, the outcome will mark an important shift in U.S. transfer pricing litigation and perhaps indicate that the IRS could win other major pending cases, such as the one against Facebook.

Continue reading

Facebook, The IRS, And The Commensurate With Income Standard

Stephen L. Curtis (Cross Border Analytics), Facebook, the IRS, and the Commensurate With Income Standard, 169 Tax Notes Fed. 1921 (Dec. 21, 2020):

In ongoing transfer pricing litigation, Facebook is challenging the IRS’s adjustment of a buy-in payment under a cost-sharing arrangement (CSA) with an Irish affiliate. The IRS stated that the adjustment was necessary to ensure compliance with the commensurate with income (CWI) standard added to section 482 by the Tax Reform Act of 1986. It is unclear, however, whether the IRS has performed a reg. section 1.482-7(i)(6) periodic adjustment calculation in this case — either before issuing its initial proposed adjustment in 2016 or before its more recently revised adjustment in October 2019.

Continue reading

Why States Should Consider Expanding Sales Taxes To Services, Part 2

Gladriel Shobe (BYU), Grace Stephenson Nielsen (J.D. 2021, BYU), Darien Shanske (UC-Davis) & David Gamage (Indiana), Why States Should Consider Expanding Sales Taxes to Services, Part 2, 99 Tax Notes State 4 (Jan. 4, 2021):

As we explained in our prior essay, state governments are experiencing severe revenue needs because of COVID-19, and expanding state sales tax bases to include services is a promising option for state governments to manage their budget shortfalls. In this, the second essay in this series — a contribution to Project SAFE: State Action in Fiscal Emergencies — we explain some of the implementation details and options for how states might go about expanding their sales tax bases to include services. In particular, we argue that there are some incremental steps that seem to be technically and politically feasible as responses to the current crisis. In particular, we argue the states should start by expanding their sales taxes to include services that are least problematic as a matter of policy and politics.

Continue reading

A Simple Regulatory Fix For U.S. Citizenship Taxation

John Richardson, Laura Snyder & Karen Alpert (University of Queensland), A Simple Regulatory Fix for Citizenship Taxation, 169 Tax Notes Fed. 275 (Oct. 12, 2020):

This article explains the simple regulatory actions that United States Department of the Treasury can take that would, in the absence of legislative change, improve the lives of Americans living overseas and permit the IRS to better focus its limited resources to more effectively administer the U.S. tax system.

Continue reading

Why States Should Consider Expanding Sales Taxes To Services, Part 1

Gladriel Shobe (BYU), Grace Stephenson Nielsen (J.D. 2021, BYU), Darien Shanske (UC-Davis) & David Gamage (Indiana), Why States Should Consider Expanding Sales Taxes to Services, Part 1, 98 Tax Notes State 1349 (Dec. 21, 2020):

States are facing a severe budget crisis as a result of the coronavirus pandemic. And with the federal government unlikely to pass a relief bill to address those state budget issues, states will need to play a significant role in making up revenue shortfalls.

This is the first in a three-part series, which is a contribution to Project SAFE: State Action in Fiscal Emergencies. This essay will lay out the general case for why states should consider expanding their sales tax bases to more services as a response to the COVID-19 crisis. The follow-ups will discuss further mechanics and details of how best to accomplish this goal.

Continue reading

Yin: Repairing The Tax Privacy Rules

George K. Yin (Virginia), Repairing the Tax Privacy Rules, 169 Tax Notes Fed. 1485 (Nov. 30, 2020):

For almost four years, the nation has experienced numerous governmental deviations from rules and norms that have exposed gaps or weaknesses in many areas of law. This article describes needed changes in three tax privacy areas: access and disclosure of presidential tax information; civil enforcement of congressional subpoenas; and confidentiality protections for tax return information obtained by subpoena.

Continue reading

Hellerstein & Appleby: State Estate Taxes And The Due Process Clause

Walter Hellerstein (Georgia) & Andrew Appleby (Stetson), State Estate Taxes and the Due Process Clause, 98 Tax Notes State 771 (Nov. 23, 2020):

After two decades of relative dormancy, we are witnessing a resurgence in state estate tax controversies. Federal estate tax amendments beginning in 2001, which eliminated the federal credit for state estate taxes, greatly diminished the general significance of state estate taxes, as most states repealed their preexisting “pickup” or “sponge” taxes designed to absorb the maximum federal estate tax credit. Indeed, as of 2020, of the 50 states that had some form of federally based “death tax” in 2001, had no death tax at all and only 18 states had some form of death tax. Recently, however, five state courts have addressed the due process clause implications of state estate taxes. Each court considered the question of whether the due process clause permitted the state to impose estate tax on qualified terminable interest property. The U.S. Supreme Court has thus far declined to consider this question, having denied petitions for certiorari from two of the state court decisions that raised it (most recently just two weeks ago). In 2019, however, the Court did address a related state trust tax issue in Kaestner, which informs the QTIP due process analysis. ...

Continue reading

Tax Analysts Hosts Webinar Today On Artificial Intelligence And The Future Of Tax

Tax Analysts hosts a webinar today (2:00 p.m. ET) on Artificial Intelligence and the Future of Tax (registration):

AI systems process massive amounts of data, identify patterns, spot anomalies, and even generate predictions to guide action. This enables all aspects of businesses – including tax planning and preparation — to improve efficiency, identify critical information, and innovate faster than ever. But does it also bring risks?

• Benjamin Alarie (Professor & Osler Chair in Business Law, University of Toronto Faculty of Law; Co-founder & CEO, Blue J Legal)
• Cara Griffith (President & CEO, Tax Analysts) (moderator)
• Sarah Lawsky (Professor of Law, Northwestern Pritzker School of Law; author, Teaching Algorithms and Algorithms for Teaching, 25 Fla. Tax Rev. ___ (2021))

Continue reading

Thimmesch: States, The PPP, And Planning For Fiscal Shocks

Adam Thimmesch (Nebraska), States, the PPP, and Planning for Fiscal Shocks, 98 Tax Notes State 1029 (Dec. 7, 2020):

This article is one in a series evaluating potential state responses to the COVID-19 pandemic. Prior articles in this series have focused on changes that the author and others recommend states make to both their personal and corporate income taxes, with a focus on provisions of the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) that make little sense for states to adopt in the midst of a global pandemic. This article focuses on the Paycheck Protection Program and the federal and state tax treatment of funds received by taxpayers under that program. The article is a part of Project SAFE (State Action in Fiscal Emergencies), an academic effort to help states weather the fiscal crisis by providing policy recommendations backed by research.

Continue reading

Rossotti, Sarin & Summers: A Comprehensive Approach To Shrinking The Tax Gap

Charles O. Rossotti, Natasha Sarin (Pennsylvania) & Lawrence H. Summers (Harvard), Shrinking the Tax Gap: A Comprehensive Approach, 169 Tax Notes Fed. 1467 (Nov. 30, 2020):

Over the course of the past year, we have written independently about the substantial revenue potential of a significant investment in tax compliance. In several articles, we have estimated that overhauling the IRS — by increasing effectively allocated examination resources, filling the holes in information reporting of income that cannot now be cross-checked against third-party reports, and investing in technology so the IRS is better able to leverage the information it collects — can raise well over $1 trillion.

Continue reading

Mazur & Thimmesch: Closing The State Tax Digital Divide — A Consumption Tax Agenda

Orly Mazur (SMU) & Adam Thimmesch (Nebraska), Closing the Digital Divide in State Taxation: A Consumption Tax Agenda, 98 State Tax Notes ___ (Nov. 30, 2020):

In this installment of Academic Perspectives on SALT, Mazur and Thimmesch argue that while taxing digital goods and services presents practical and legal challenges for states, it is still a worthwhile measure to address the pandemic and related budget problems.

Conclusion
Expanding the consumption tax base to digital consumption is a relatively easy way for states to raise essential tax revenue as they cope with the pandemic and its accompanying economic downturn. Although a digital tax is an imperfect solution and requires overcoming some practical and legal issues, implementing one on consumption is better than the alternative of maintaining the status quo. Under the current patchwork of state laws, digital activities either escape taxation or are only partially and inconsistently taxed. This complex system can place onerous burdens on suppliers, results in governments losing out on a growing revenue stream, contributes to discriminatory and multiple taxation, and does not reflect the economic realities of the digital era. Given the current situation and the tough times ahead, it is worthwhile for states to implement digital taxes on consumption now.

The digital tax debate is far from over, and expanding the consumption tax base is just the first step. The wide range of attention being paid to DSTs and their various forms should not detract from this basic point: A broad, neutral, and strong state tax base is one that includes digital transactions.

Tax Notes Issues Call For Papers

Tax Notes Editors' Wish List:

In the past year, our quarterly call for entries has been answered by academics, lawyers, researchers, policymakers, and analysts from all over the world. We will always review any tax-related article, but we recognize this call can be daunting with so many areas of tax to explore. While each of our magazines, Tax Notes Federal, State, and International share contributor guidelines, the content can vary greatly. ...

Tax Notes Federal: Editor in Chief, Ariel Greenblum
A good length for Tax Notes Federal articles is between 4,000 and 14,000 words. The Tax Notes Federal team is looking for articles on the following topics: ...

Tax Notes State: Editor in Chief, Jéanne Rauch-Zender
A good length for Tax Notes State articles is anything that meets the 1,500-word minimum. The Tax Notes State team is looking for articles on the following topics: ...

Continue reading

2019 Tax Journal Rankings: Tax Notes #1, Florida Tax Review #2

Here are the Washington & Lee tax law review rankings of the six major tax journals:

• Columbia Journal of Tax Law ("Columbia")
• Florida Tax Review ("Florida")
• Tax Law Review ("NYU")
• Tax Lawyer ("ABA")
• Tax Notes
• Virginia Tax Review ("Virginia")

The rankings are based on citations to articles published in 2015-2019 (methodology):

• Impact Factor (citations/number of articles published)
• Citations in Law Reviews
• Citations in Cases (federal and state courts)
• Combined (weighted combination of the above rankings)
• Currency (how rapidly articles are cited)

	Combined	Impact	Journals	Cases	Currency
1. Tax Notes	15.16	0.02	406	5	0.03
2. Florida	14.30	0.75	188	1	1.45
3. NYU	12.29	0.65	161	0	1.16
4. Virginia	8.52	0.46	108	2	0.61
5. Columbia	6.98	0.45	69	0	0.53
6. ABA	5.82	0.16	115	4	0.23

As I have previously noted, Tax Notes fares poorly in the Impact Factor category (citations/number of articles published) because W&L apparently counts as "articles" all of the advance sheet material in Tax Notes. Tax Notes is #1 by a wide margin in the number of citations in law reviews, with more than double the citations of its nearest competitor.

Clausing: 5 Lessons On Profit Shifting From U.S. Country-By-Country Data

Kimberly A. Clausing (UCLA), 5 Lessons on Profit Shifting From U.S. Country-by-Country Data, 169 Tax Notes Fed. 925 (Nov. 9, 2020):

One of the signature achievements of the base erosion and profit-shifting project is the collection of multinational enterprises’ country-by-country reporting data for government use in tax enforcement efforts. In late 2019 the United States became the first country to release a complete set of those data, in aggregate form, for 2017.

This article analyzes those data, demonstrating five important lessons for scholars investigating international corporate tax avoidance.

Continue reading

Thompson: Congress And Treasury's Federal Income Tax COVID-19 Initiatives

Samuel C. Thompson, Jr. (Penn State), Congress and Treasury's Federal Income Tax COVID-19 Initiatives, 167 Tax Notes Fed. 2067 (June 22, 2020):

In this article, Thompson principally focuses on the business tax provisions of the CARES Act.

The article is based on a chapter in a published special supplement (titled The Deal Lawyer’s Weapons in the War on COVID- 19) to Thompson’s Mergers, Acquisitions and Tender Offers: Law and Strategies — Corporate, Securities, Taxation, Antitrust, Cross Border (updated semi-annually).

Shanske & Gamage: The Case For State Borrowing As A Response To The Pandemic

Darien Shanske (UC-Davis) & David Gamage (Indiana), The Case for State Borrowing as a Response to the Current Crises, 97 Tax Notes State 1137 (Sept. 14, 2020): 

This essay explains how and why U.S. state governments can and should borrow funds in the absence of sufficient federal aid during the COVID-19 pandemic. ...

Introduction
The coronavirus pandemic is a national emergency that requires a national response. Asking states to absorb the budgetary losses caused by the pandemic while they are tasked with providing essential frontline services is comparable to asking states during World War II to pay for the landing in Normandy.

Continue reading

Lipman: Rep. John Lewis Making 'Good Trouble' In Georgia

Francine J. Lipman (UNLV), Rep. John Lewis Making 'Good Trouble' in Georgia, 168 Tax Notes Fed. 681 (July 27, 2020):

“Get in good trouble, necessary trouble, and help redeem the soul of America.” Rep. John Robert Lewis (1940-2020)

It seems fitting that the civil rights movement was born in the district that John Robert Lewis represented in Congress for 34 years until his death on July 17. In the 1960s, Atlanta boasted a vibrant Black professional middle-class that became a cultural catalyst for civil rights activities. Reverend Dr. Martin Luther King Jr.’s Ebenezer Baptist Church, the headquarters of Southern Christian Leadership Conference (SCLC), the Student Nonviolent Coordinating Committee (SNCC), and several historically Black colleges and universities were located there. Dr. King, who inspired, motivated, and mentored Rep. Lewis from an early age was also Atlanta-born.

Continue reading

Johnson: Repeal Opportunity Zones

Calvin H. Johnson (Texas), Repeal Opportunity Zones, 169 Tax Notes Fed. 625 (Oct. 26, 2020):

In this article, Johnson argues that Opportunity Zone incentives do the poor more harm than good because they destroy affordable housing and increase tenant rents. Even if Congress is unwilling to enact negative income tax or housing vouchers, which would do the most to help tackle poverty, it needs to stop Opportunity Zones now. The first rule of the medical profession is “first, do no harm.” That rule can be generalized and applied to everything. Simple repeal of the Opportunity Zones would at least stop the harm they do.

Continue reading

Avi-Yonah & Mazzoni: Biden’s International Tax Plan

Reuven S. Avi-Yonah (Michigan) & Gianluca Mazzoni (S.J.D. 2020, Michigan), Biden’s International Tax Plan, 169 Tax Notes Fed. 593 (Oct. 26, 2020):

In this article, Avi-Yonah and Mazzoni review the tax plan of Democratic presidential candidate Joe Biden and vice presidential candidate Kamala Harris, focusing on proposed changes to the U.S. international tax system.

Continue reading

Shay: Turning To The Government (For PPP Money) In Time Of Need

Stephen E. Shay (Boston College), Turning to the Government (for PPP Money) in Time of Need, 168 Tax Notes Fed. 841 (Aug. 3, 2020):

This article examines the financial relationship between Americans for Tax Reform (ATR) and Paycheck Protection Program (PPP) borrower Americans for Tax Reform Foundation (ATRF). ATRF is an apparently insolvent “zombie” foundation heavily indebted to ATR. ATR indirectly benefits from the ATRF PPP loan through the support for ATR employees who simultaneously are ATRF employees, though ATR was itself ineligible for a PPP loan under the CARES Act.

Continue reading

Aprill & Brunson: The University, Ideology, And Tax Exemption

Ellen P. Aprill (Loyola-L.A.) & Samuel D. Brunson (Loyola-Chicago), The University, Ideology, and Tax Exemption, 168 Tax Notes Fed. 1037 (Aug. 10, 2020):

In this article, Brunson and Aprill argue that the tax law and other considerations undermine President Trump’s position that academic institutions can lose their tax-exempt status as a consequence of indoctrinating their students with liberal values.

Continue reading

The Supreme Court’s 2019 Term In Tax

Jasper L. Cummings, Jr. (Alston & Bird, Raleigh, NC), The Supreme Court’s 2019 Term in Tax, 168 Tax Notes Fed. 2175 (Sept. 21, 2020):

In this ninth annual review of Supreme Court opinions involving tax matters, Cummings notes that the Court has mostly abandoned standard legal decisions to focus on political themes, which he identifies in several decisions. ...

Continue reading

Zelenak: Examining The Internal Revenue Code For Disparate Racial Impacts

Lawrence Zelenak (Duke), Examining the Internal Revenue Code for Disparate Racial Impacts, 168 Tax Notes Fed. 1807 (Sept. 7, 2020):

In this article, Zelenak considers how a legislature committed to racial justice should respond to a convincing statistical demonstration that a particular provision of the Internal Revenue Code has disparate racial impacts. He says there are several steps between a demonstration that a provision (for example, the charitable deduction) disproportionately benefits white taxpayers in nominal terms, and the conclusion that it should be repealed or reformed to eliminate the disparate impact. He argues it is necessary (1) to establish a normative baseline from which the current provision departs, (2) to determine the race-based distribution of the ultimate benefits and burdens of the provision (as contrasted with the provision’s nominal impacts), and (3) to determine that a focus on the provision (rather than a broader or narrower focus) is at an appropriate level of analytical granularity. He concludes that the most important use of evidence of disparate racial impacts of tax provisions will almost certainly be as an argument for repealing or reforming a provision that constitutes bad tax policy even apart from its racial effects.

Continue reading

Tax Reform Is Hard (#TRIH)

With the looming deadline on both the debt ceiling and the tax reconciliation bill (not to be confused with the ACHA reconciliation instructions), taxes and, hopefully, tax reform are moving to the top of the legislative agenda.   The rhetoric of tax reform is heating up.  Yesterday Paul Ryan tweeted:

Speaker Ryan is not the only member of GOP leadership discussing tax reform.  News last week broke that Steve Bannon wants to raise the top bracket rate to a number that has ”a 4 in front of it”. So, the GOP continues to a least float the idea of substantive tax reform measures.  

I don't want to get too carried away about tax reform. Despite my optimism for "reform season," others does not seem to have the same zeal. First there is no "plan" to discuss.  Second, the House Appropriations Bill (which I wrote about at Surly) does not seem to be too keen on the chances of real reform measures.  For example, the Appropriations Bill addresses estate tax regulations and ACA penalties.  If the estate tax and the ACA are on the chopping block, then why worry about the measures in the Appropriations Bill?

Continue reading

Woman Sues Howard Stern For Airing Her Phone Call With IRS Agent Discussing Her Taxes

Radio Ink, “Hello Howard, This Is the IRS …”:

In a fact pattern worthy of a law school exam question, an IRS employee calls the Howard Stern Show and is put on hold. The IRS employee on a different line, apparently either using fat fingers on a conference call feature, or on a speakerphone, takes a call from a taxpayer while on hold with Stern. The Howard Stern Show then picks up, hears the IRS employee talking with the taxpayer and puts the nearly hour-long conversation on the air live. The law school question is … in how many ways might the Howard Stern Show be civilly and criminally liable?

The question will likely be answered by the courts. The taxpayer has sued both the IRS for violations of the Federal Tort Claims Act and unlawful disclosure of tax returns and personal information, the Howard Stern Production Company, and Stern individually, for negligence, invasion of privacy, and the intentional infliction of emotional distress.

Continue reading

2016 Outstanding Women In Tax

Tax Notes, 2016 Outstanding Women in Tax:

Several months ago, we decided to honor some of today's outstanding women in tax. We asked Tax Notes readers and other Tax Analysts stakeholders to nominate women from the public and private sectors who have had a significant impact on tax practice and policy.

We expected dozens of nominations; we received more than 300.

We should have expected such a large response. There are many noteworthy women in the tax world. We're fortunate to be working closely with some of them, including Tax Notes contributing editor Lee A. Sheppard and Tax Analysts board members Pamela Olson and Deborah Schenck (all of whom were nominated multiple times but who were ineligible because of their affiliation with Tax Analysts).

Selecting only 10 out of such a distinguished list was a daunting task. So we assembled a committee of editors, reporters, and executives who reviewed and carefully examined each of the more than 300 nominees before coming to the difficult decision.

This year's honorees include government trailblazers, rising stars, and women who have been the distinguished standard-bearers in the tax field for years. Those being recognized include the leader of a key congressional tax committee, a distinguished jurist, an IRS official, scholars from around the world, and accomplished partners in major accounting and law firms.

Individually and collectively they influence tax administration and policy globally every day. They inspire, educate, and empower people in their areas of tax.

Continue reading

Tax Analysts Annual Student Writing Competition

Tax Analysts Annual Student Writing Competition:

Tax Analysts is pleased to announce the opening of its annual student writing competition for 2016. This global competition enables students who win to publish a paper in Tax Notes, State Tax Notes, or Tax Notes International and receive a 12-month online subscription to all these weekly magazines after graduation.

Continue reading

Yin: Goodbye to Tax Notes?

TaxProf Blog op-ed:  Goodbye to Tax Notes?, by George K. Yin (Virginia):    

In Goodbye to Tax Notes, Michael Graetz bids adieu to one of my favorite sources of tax information because of dramatic changes in their subscription practices. He states that “there are many alternative sources of information and new outlets to publish the kinds of short articles that Tax Notes contains.” He mentions SSRN, ITPF, Paul Caron’s blog, and other possibilities. While I and my school are not happy with the subscription changes, I am not sure there are good alternatives available and would be happy to learn otherwise.

Continue reading

Graetz: Goodbye to Tax Notes

TaxProf Blog op-ed:  Goodbye to Tax Notes, by Michael J. Graetz (Columbia):

Today, I received the following email from the Columbia Law librarian announcing a new policy of Tax Analysts:

Tax Analysts is in the process of eliminating their complementary professorial accounts. They have presented us with the following terms, and they will maintain your access for the rest of this work week.

In this case, the alternatives are the library paying $8,500 a year for an broad account shared by the library with individual direct access limited to three professors, or you paying $780 a year for your individual access to Tax Notes and Tax Notes International .... They will not sell access to the “Lawref” e-dress because that is a shared account.....

When Tom Field started a nonprofit publisher and public interest law firm in 1969, he could not have imagined the success Tax Analysts would enjoy. It has for nearly a half century provided a unique and invaluable service to the tax community. I have long relied on it myself for timely information and have had many students use its resources for their papers and publications, even though much of its most useful content is in the public domain. And I have frequently published there and speak often with its correspondents. But with this latest turn, Tax Analysts may be losing sight of its mission. According to its Form 990 for the fiscal year ending June 30, 2013 (which is the most recent readily available) Tax Analysts had over $23 million in revenues from its publications, cash and securities on hand exceeding $40 million and more than $60 million in total assets. Its revenue exceeded its expenses by nearly $4 million. It is difficult to believe that this change in policy is prompted by financial necessity. And the timing is especially unfortunate for many law schools around the country.

Continue reading

Watson: SFRs and Problems in Tax Administration and Enforcement

Camilla E. Watson (Georgia), SFRs and Problems in Tax Administration and Enforcement, 146 Tax Notes 363 (Jan. 20, 2015):

When the IRS prepares substitutes for returns (SFRs) for a married couple, it prepares separate returns for each of the parties and considers them married filing separately. It will then send separate notices of deficiency to the parties. If only one of the spouses petitions the Tax Court, this could be problematic for both, even if the court’s decision is favorable to the petitioner. The problems identified in this report, while narrow in scope, highlight broader issues in the administration of the tax system. This report proposes reforms to correct the problems in the SFR process, but these proposals apply more broadly to address general problems in the administration of the tax system.

Johnson: The Circular 230 Regulations May Be Invalid

Steve Johnson (Florida State), How Far Does Circular 230 Exceed Treasury's Statutory Authority?, 146 Tax Notes 221 (Jan. 12, 2015):

In this report, Johnson discusses the future of Circular 230 and argues that if the approach of recent cases is confirmed by litigation and if Congress chooses not to act, significant portions of the circular may be at risk of invalidation.

Kamin: How to Tax the Rich

David Kamin (NYU),  How to Tax the Rich, 146 Tax Notes 119 (Jan. 5, 2015):

In this article, Kamin reviews options for increasing tax liabilities for the richest Americans. He concludes that several options that have received considerable attention and support are not viable as a practical matter -- taking into account amounts of revenue raised and administrative considerations. Those options include taxing capital gains as ordinary income, annual wealth taxes, and broad mark-to-market accounting. Kamin identifies more viable options, including substantially expanding transfer taxes, increasing the tax rate on ordinary income, and taxing -- at least partially -- unrealized gains at death or gift, which may be the most promising.

Continue reading

The Top 10 Tax Presidents

Joseph J. Thorndike (Tax Analysts), The Top 10 Tax Presidents, 145 Tax Notes 1303 (Dec. 22, 2014):

[I]n the service of inspiration -- and perhaps consternation -- I've compiled a list of influential tax presidents. It bears repeating: This is not a roster of good tax presidents. It's an assessment of presidential influence on the development of the federal tax system, whether for good or bad. Indeed, given the politicization of tax policy, it's likely that several of these presidents will be judged as both heroes and villains, depending on who's doing the judging.

1. Ronald Reagan
2. Franklin Roosevelt
3. Woodrow Wilson
4. George Washington
5. Thomans Jefferson
6. George W. Bush
7. Calvin Coolidge
8. William Howard Taft
9. John F. Kennedy
10. George H.W. Bush

Continue reading

Shaviro: The Case for 1986-Style Corporate Tax Reform

Daniel N. Shaviro (NYU), Evaluating the Case for 1986-Style Corporate Tax Reform, 145 Tax Notes 1267 (Dec. 15, 2014):

Shaviro explores the relationship between taxing corporate income at the entity level and the difficulties in evaluating whether a corporate rate cut would be desirable without significant structural changes.

Driessen: Corporate Tax Fate May Hinge on Modeling Omission

Patrick Driessen (former revenue estimator, Joint Committee on Taxation and Treasury Department), Corporate Tax Fate May Hinge on Modeling Omission, 145 Tax Notes 1043 (Dec. 1, 2014):

By omitting corporate income, traditional distribution models overstate the U.S. corporate tax rate and overall tax progressivity. The prevailing capital gains realization approach could be replaced by an inclusive corporate income method that would correctly show corporate equity owners as more lightly taxed than capital gains realization models indicate. That replacement would accord with how the individual tax is modeled for distribution as well as with results from corporate tax studies conducted outside the distribution context. Augmenting corporate income in distribution models would also enable proper reflection of proposals, such as corporate integration, and provide a better perspective on how much corporate tax is borne by labor.

(Hat Tip: David Cay Johnston.)

Hoenig: What's Wrong With Trafficking in NOLs?

Mark Hoenig (Weil, Gotshal & Manges, New York), Trafficking in Net Operating Losses: What's So Bad?, 145 Tax Notes 919 (Nov. 24, 2014):

Hoenig examines the almost century-long history of Congress’s efforts to allow tax losses and limit their transfer. He explores the rationale for those efforts, assesses the system now in place, and asks whether an alternative set of rules might better serve policy and the economy.

Viard: Moving Away From the Realization Principle

Alan D. Viard (American Enterprise Institute), Moving Away From the Realization Principle, 145 Tax Notes 847 (Nov. 17, 2014):

Viard describes the realization principle’s flaws and the federal tax system’s incremental movement toward mark-to-market taxation.

Graetz & Warren: Unlocking Business Tax Reform

Michael J. Graetz (Columbia) & Alvin C. Warren Jr. (Harvard), Unlocking Business Tax Reform, 145 Tax Notes 707 (Nov. 10, 2014):

In this article, Graetz and Warren explain why integration should be on today’s tax reform agenda and discuss how that change could be structured.

In conjunction with this article, Tax Analysts is republishing as an eBook, now available on Amazon, the 1998 volume of Integration of the U.S. Corporate and Individual Income Taxes: The Treasury Department and American Law Institute Reports:

Business tax reform now seems stymied despite important proposals from prominent political leaders in both parties, including the president and the chairs of the House and Senate tax writing committees. Each represents a serious effort to reform business taxation. But those proposals have failed to advance in either the House or Senate.

Integration of corporate and shareholder taxes offers a straightforward approach that could help resolve many of the most difficult issues and provide the key to unlocking business tax reform. The general idea is to convert at least part of the corporate tax into a withholding tax that would be credited against individual shareholder taxes due on dividends.

The United States has long had what is called a classical income tax system, under which income is taxed to corporations and shareholders as distinct taxpayers. As a result, taxable income earned by a corporation and then distributed as a dividend may be taxed twice, once to the corporation and once to the shareholder on receipt of a dividend. In contrast, earnings on corporate debt are not taxed at the corporate level because, unlike dividends, interest is deductible. And businesses taxed as partnerships can benefit from lower total taxes than those taxed as corporations. This incoherent combination of results creates undesirable distortions in corporate and investor behavior.

Continue reading

Sullivan: The Tax Aspects of Immigration Reform

Martin A. Sullivan (Tax Analysts), The Tax Aspects of Immigration Reform, 145 Tax Notes 463 (Nov. 3, 2014):

Against all odds, Obama, who would love to include immigration reform as part of his legacy, and Republican leaders in Congress, who want their party to be competitive in the 2016 presidential election and to show they can get things done, are likely to make a serious attempt at putting together a bipartisan, bicameral deal on immigration in 2015. The estimates presented in this article are based on numerous assumptions about which there is considerable uncertainty, so they can hardly be taken as gospel. But the central finding, concerning the large difference in the revenue effects between legal and unauthorized immigration, is difficult to dispute given the differences in average income levels and the fact that many currently unauthorized immigrants already pay tax. As Congress struggles to fix our broken immigration system, it is likely to consider many variations of S.744 and its components. Those proposals that allow a large influx of new legal immigrants — particularly immigrants with high skills—will significantly increase tax revenue. Providing new legal status for current unauthorized immigrants will not.

Continue reading

Rosenzweig: Revisiting the Law of Moses' Rod -- The Case of Inversions

Adam Rosenzweig (Washington University), Revisiting the Law of Moses' Rod: The Case of Inversions, 145 Tax Notes 429 (Oct. 27, 2014):

This article revisits Marty Ginsburg’s law of Moses’ rod in the context of inversions, in particular how proposed revisions to the antiinversion rules could be used to justify new, or even more aggressive, expatriation strategies. While not advocating that any taxpayer or other party pursue specific strategies or that they are ‘‘good’’ from a tax policy standpoint, the goal in examining potential inversion strategies even in the face of anti-inversion rules is to help find ways to incorporate antiabuse provisions into the larger structural goals of the income tax.

Gupta: Will eBay's Spinoff of PayPal Result in an Inversion?

Ajay Gupta (Tax Analysts), Will PayPal's Spinoff End in an Inversion -- or Two?, 76 Tax Notes Int'l 188 (Oct. 20, 2014):

Ajay Gupta discusses how Treasury's anti-inversion guidance [Notice 2014-52] could affect PayPal's announced spinoff from parent company eBay.

Thimmesch: The Tax Hangover -- Trailing Nexus

Adam B. Thimmesch (Nebraska), Evaluating the Tax Hangover: Trailing Nexus, 74 State Tax Notes 83 (Oct. 13, 2014):

In this article, which is adapted from a longer law review article [The Tax Hangover: Trailing Nexus, 33 Va. Tax Rev. 497 (2014)], Thimmesch examines the concept of trailing nexus. He argues that the concept is consistent with the physical presence standard and proposes an economic latency approach, which he asserts is consistent with both constitutional principles and economic reality.

Christians: It's Time to Fix FBAR

Allison Christians (McGill), Paperwork and Punishment: It's Time to Fix FBAR, 76 Tax Notes Int'l 147 (Oct. 13, 2014):

Allison Christians argues that the U.S. Foreign Bank Account Report regime is excessive and offers suggestions to narrow its scope and ease compliance burdens.

Ryan: Valuation Lessons From Estate of Adell

Kerry A. Ryan (St. Louis), Valuation Lessons From Estate of Adell, 144 Tax Notes 1455 (Sept. 22, 2014):

In Estate of Adell [T.C. Memo. 2014-155], the Tax Court determined that the correct value of a decedent’s interest in a closely held corporation was the figure reported on the original estate tax return. The court rejected alternative values as either using the incorrect valuation method or failing to account for the significant value of a key employee’s personal goodwill. 

Blanchard: Notice 2014-52 and the New Anti-Inversion Rules

Kimberly S. Blanchard (Weil, Gotshal & Manges, New York), Extensive New Anti-Inversion Rules Issued, 145 Tax Notes 89 (Oct. 6, 2014):

Blanchard summarizes the provisions of anti-inversion guidance Notice 2014-52 and suggests some practical tips for what it might mean in the future.

Blanchard Takes Issue With Kleinbard's Call for Anti-Inversion Legislation

Kimberly S. Blanchard (Weil, Gotshal & Manges, New York), Blanchard Argues Against More Anti-Inversion Rules, 144 Tax Notes 1335 (Sept. 15, 2014):

I write to comment on Edward D. Kleinbard's recent article ['Competitiveness' Has Nothing to Do With It, 144 Tax Notes 1055 (Sept. 1, 2014)] on the subject of "inversions." Kleinbard is, as usual, erudite and funny, but all the erudition and humor in the universe cannot hide the hole in his argument.

Continue reading

State Tax Haven Laws

Daniel M. Dixon, Michael A. Jacobs, Michael I. Lurie & Jack Trachtenberg (all of Reed Smith), To Blacklist or Not to Blacklist -- The Trend Toward State Tax Haven Laws, 73 State Tax Notes 635 (Sept. 8, 2014):

In this article, the authors discuss tax havens and how states are cracking down on multinational corporations that are perceived as abusing the tax laws of tax haven nations. The authors argue that both of the tax haven tests used by states -- the factor test and tax haven blacklist -- have constitutional issues.

ABA Tax Section Releases 2014-15 Law Student Tax Challenge Problem

The ABA Tax Section has released the J.D. Problem (rules; entry form) and LL.M. Problem (rules; entry form) for the 14th Annual Law Student Tax Challenge (2014-2015):

An alternative to traditional moot court competitions, the Law Student Tax Challenge asks two-person teams of students to solve a cutting-edge and complex business problem that might arise in everyday tax practice. Teams are initially evaluated on two criteria: a memorandum to a senior partner and a letter to a client explaining the result. Based on the written work product, six teams from the J.D. Division and four teams from the LL.M. Division receive a free trip (including airfare and accommodations for two nights) to the Section of Taxation 2015 Midyear Meeting, January 29-31 in Houston, TX, where each team will defend its submission before a panel of judges consisting of the country’s top tax practitioners and government officials, including tax court judges. The competition is a great way for law students to showcase their knowledge in a real-world setting and gain valuable exposure to the tax law community. On average, more than 60 teams compete in the J.D. Division and more than 40 teams compete in the LL .M. Division. For examples of the "Best Written" winners from past competitions, please click here.

IMPORTANT DATES

1. Submission Deadline: November 7, 2014
2. Notification of Semifinalists and Finalists: December 19, 2014
3. Semifinal and Final Oral Defense Rounds: January 30, 2015 in Houston, TX