Gender Equality, Taxation, And The COVID-19 Recovery

Yvette Lind (Copenhagen Business School; Google Scholar) & Åsa Gunnarsson (University of Umea), Gender Equality, Taxation, and the COVID-19 Recovery: A Study of Sweden and Denmark, 101 Tax Notes Int'l 581 (Feb. 1, 2021):

The impact of COVID-19 is at the moment undeniably extensive as the world faces the most severe recession in nearly a century. Economic emergency programs, the design and implementation of COVID-19 tax policies and subsequent state aid actions have been launched in many countries to mitigate the impact of the pandemic. Women have, in comparison to men, also reduced their hours of work to care for, and home school, children. Aggregating already existing problems associated to both the loss of paid work hours and to the gender-segregated allocation of unpaid hours for household work and caring. The sudden closure of childcare programs and schools in many countries has had a crucial impact for women whose labour force participation depends on these institutions. The possibility of several waves of the virus that could trigger additional childcare closures make it extremely likely that married women (in general when considering the current norm of heterosexual couples) in particular may be slower to re-enter the work force in the hope of protecting the (single-breadwinner) family income.

The ambition with this paper is to tackle the complexity of both new and old societal challenges for the realization of gender equality obligations through tax provisions and tax policies at the national level.

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AI For Tax Analogies And Code Renumbering

Andrew Blair-Stanek (Maryland; Google Scholar) & Benjamin Van Durme (Johns Hopkins; Google Scholar), AI for Tax Analogies and Code Renumbering, 170 Tax Notes Fed. 1997 (Mar. 29, 2021):

Blair-Stanek and Van Durme present an artificial intelligence tool that can complete analogies in tax law and provide evidence-based guidance on how Congress can renumber IRC sections in future tax reform efforts.

Conclusion
We have described two limited applications of AI in tax law, but we and other researchers are pursuing many others. New models with millions of mathematical neurons approximating the neurons in the human brain promise much more power than the model we used here. Moreover, all AI models rely on data; having more data and higher-quality data is always better. The full Tax Analysts Federal Research Library, just released under an agreement between Tax Analysts and Deloitte Tax LLP, contains extensive, very high-quality tax law text. This combination of more powerful models with more and better data is reason for optimism that AI will result in many more tools to aid tax practitioners and policymakers.

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Sullivan: Measuring Disparate Racial Tax Outcomes Before And After The TCJA

Martin Sullivan (Tax Analysts), Measuring Disparate Racial Tax Outcomes Before and After the TCJA, 170 Tax Notes Fed. 1666 (Mar. 15, 2021):

Our preliminary analysis of 2017 and 2018 tax return data indicates that, on average, effective tax rates were lower for ZIP codes where most of the population identified as white than for ZIP codes with more racial diversity.

Also, the analysis indicates that after passage of the Tax Cuts and Jobs Act, larger percentage point reductions are seen in ZIP codes with predominantly white populations.

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Ordower: New York’s Proposed Mark-To-Market Tax Decouples From Federal Tax

Following up on my previous post, New York's Proposed Mark-to-Market Wealth Tax Would Raise $23 Billion From <200 Billionaires:  Henry Ordower (Saint Louis), New York’s Proposed Mark-to-Market Tax Decouples From Federal Tax, 170 Tax Notes Fed. 1243 (Feb. 22, 2021):

In this article, Ordower examines proposed legislation in New York that would tax the unrealized gain and other deferred income of billionaires in the state, and the complexities that the legislation’s enactment is likely to generate. ...

This article addresses the structure of state income taxes and credits for taxes paid by residents to other states and the confusion that nonuniform decoupling generates across state borders. Separation from federal rules may help to stanch the loss of state revenue from federal tax amendments and enhance state tax revenue — especially revenue that the state otherwise might never capture but to which it may have a claim.

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Utz: How Insurance Recoveries Are Taxed Under The IRC

Stephen Utz (Connecticut), How Insurance Recoveries are Taxed under the IRC, 98 Tax Notes State 607 (Nov. 9, 2020):

Jeffrey H. Kahn, the Harry W. Walborsky Professor of Law at the Florida State University College of Law, has criticized my account of the tax treatment of insurance coverage in an article I published with Sachin S. Pandya concerning the tax treatment of litigation expenses. Sachin S. Pandya (Connecticut) & Stephen Utz (Connecticut), Designing the Tax Treatment of Litigation-Related Costs, 21 Fla. Tax Rev. 533 (2018). Kahn argues that the article was wrong to assert that the insurance payment of a claim against the insured “is not excludable [from gross income] unless the expense involved would have been deductible if paid by the insured and not reimbursed.” Jeffrey H. Kahn (Florida State), The Tax Treatment of Liability Insurance Coverage, 163 Tax Notes 1381, 1381 (May 27, 2019). ... This article defends the premise that the exclusion of insurance proceeds from the income of the insured depends on the deductibility by the insured of the covered obligation. ...

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From 'Boy Tax' And 'Girl Tax' To Diverse And Inclusive Tax

Larissa Neumann (Fenwick & West, Mountain View, CA; Lecturer, UC-Berkeley), A Virtuous Cycle: Investing in Diversity and Inclusion, 99 Tax Notes State 995 (Mar. 8, 2021):

The call for more equal representation of women in positions of power in the tax law profession has never been louder than it is today. Companies, professional organizations, law schools, and society at large are initiating a concerted push for greater gender diversity within law firms. According to the American Bar Association’s “ABA Profile of the Profession 2020 Report,” the percentage of female lawyers has increased very slowly in the last 10 years; it stood at 31 percent in 2010 and is now at 37 percent. Male attorneys still greatly outnumber female attorneys, especially in management and equity partner positions. Although women generally have made up half of graduating law school classes for the last 20 years, there continues to be a disparity in the legal profession.

While most law firms have explicitly professed a desire for more women in leadership, implicit biases and structural impediments within the profession have kept women significantly underrepresented within the upper reaches of the tax law hierarchy. To display commitment to the firm, women who are parents have felt the pressure to submit to a work environment and time schedule at tension with their obligations as mothers and domestic partners. The recent ABA report “Walking Out the Door,” which includes results from a survey of more than 1,200 senior lawyers at the nation’s biggest private law firms, reported that 58 percent of women viewed caretaking commitments as the most important reason that female lawyers leave their jobs. To fit the mold of a dedicated professional, women have felt pressure to delay or alter the timing of significant life events such as marriage and pregnancy. Over time, the frictions of these structural impediments wear against female attorneys’ psyches, often causing them to compromise their careers for the sake of family and personal commitments.

Throughout my career I have worked in tandem with my firm, Fenwick & West LLP, to dismantle these subtle and not-so-subtle structures of male power that have stood in the way of female professional empowerment. By advocating for my own interests and having a progressive law firm that took those interests to heart, I have been able to advance in my career without disregarding my unique experiences and challenges as a wife and a mother. By seeing me and hearing me as a woman, Fenwick has demonstrated a commitment to diversity in its highest levels of power and laid the institutional foundations for many more female attorneys to follow in my footsteps.

I remember staring at the little pink lines indicating that I was pregnant with mixed emotions. I was filled with guarded joy that was also clouded with a faint concern when I thought of my career. In 2006 pregnancy announcements were not expected from first-year associates at a law firm — at least not from associates who were at all serious about becoming partners. “Wait until you are a partner until you have kids” was standard advice, and doing otherwise would sabotage your ability as a woman to prove your dedication to the firm and credibility in the profession. But my life path had taken a drastic detour from the career trajectory mapped out by conventional wisdom.

After having my first child, I returned to work eager to add value to every project I was assigned and grow in my practice as a tax attorney. Thankfully, at Fenwick, I was not spared difficult assignments and challenging projects in my days after returning from maternity. One of my mentors, Jim Fuller, recounted how when he started tax law there was “Girl Tax,” which was estates and trusts, and “Boy Tax,” which was international tax. He expressed how he thought that was inappropriate and supported my taking on challenging international tax projects, including inversion transaction, transfer pricing, and controversy.

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Avi-Yonah, Gamage, Shanske & Stark: Is New York's Mark-to-Market Act Unconstitutionally Retroactive?

Following up on my previous post, New York's Proposed Mark-to-Market Wealth Tax Would Raise $23 Billion From <200 Billionaires:  Reuven S. Avi-Yonah (Michigan), David Gamage (Indiana), Darien Shanske (UC-Davis) & Kirk J. Stark (UCLA), Is New York's Mark-to-Market Act Unconstitutionally Retroactive?, 99 Tax Notes State 541 (Feb. 8, 2021):

It is well known in tax literature that rudimentary tax planning strategies enable wealthy individuals to avoid state and federal income tax on much of their true economic income. Indeed, the existing income tax has been described as being effectively optional for those who derive their income chiefly from the ownership of assets rather than the provision of services. The reason is — except for a few relatively narrowly tailored deemed-realization rules — both state and federal income taxes rely on the realization principle. Under realization accounting, taxpayers generally do not owe tax on economic gains until they sell their appreciated assets. Moreover, this is so even when taxpayers fund lavish lifestyles by borrowing against their appreciated assets.

Legislation under consideration in New York would limit the ability of the state’s wealthiest taxpayers to escape tax in this manner. The Billionaire Mark-to-Market (MTM) Tax Act (S. 8277B/A. 10414) would require these taxpayers to reports gains and losses as they accrue, rather than upon sale or exchange as under current law.

Opponents claim that the MTM Act is unconstitutional. In a separate essay, we will explain why and how the New York Constitution authorizes accrual taxation through deemed realizations as in the MTM Act (and also as in a number of existing provisions of state income tax law). Here, we evaluate the retroactivity concerns that the legislation’s opponents have raised.

On its face, the MTM Act is not retroactive.

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COVID-19: The Year Of The Great Tax Migration

Timothy P. Noonan & Emma M. Savino (Hodgson Russ, New York), COVID-19: The Year of the Great Migration, 99 Tax Notes State 897 (Mar. 1, 2021):

We have seen all sorts of changes in behavior over the past 12 months as a result of the COVID-19 pandemic. Remote working. No live music. Limited (or no) family gatherings. And, for some, an extra 15 pounds. But in the state and local tax world, we’ve seen another striking change in people’s behavior.

People. Are. Moving.

They are moving to Florida. They are moving to the Hamptons. They are moving home to live with their parents. They are moving in with their kids. They are leaving California, Illinois, New Jersey, and New York, and they are landing in places with lower taxes and, usually, better weather. And many need tax advice!

Here at Noonan’s Notes World Headquarters, we’ve generated more residency-change checklists and playbooks in the past 12 months than we’ve probably sent out in the last 10 years. And the types of situations we’ve seen are so much more varied and different from the typical retirees shuffling off to their shuffleboards in Florida. Hedge-fund millennials are moving. Parents with young kids are moving. Taxpayers in their working prime are moving. And with these moves come a whole host of interesting tax issues.

So this month, we thought we’d dive into these residency issues a bit more and give you a glimpse into the world of a tax residency practitioner during 2020 and 2021. ...

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Thimmesch: States And The PPP — The Tax Policy Case For State Nondeductibility

Adam B. Thimmesch (Nebraska), States and the PPP: The Tax Policy Case for State Nondeductibility, 99 Tax Notes State 129 (Jan. 11, 2021):

This article is the second in a series evaluating the state tax aspects of the federal Paycheck Protection Program. The first article introduced the program and explained the potential effect on states if Congress were to change the law to allow taxpayers to deduct their PPP-funded expenses. This article continues that analysis and explores the tax policy reasons why states should prepare to deviate from federal law now that Congress has provided for PPP deductibility in its year-end COVID relief bill.

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McLaughlin: Amendment Clauses In Easements — Ensuring Protection In Perpetuity

Nancy A. McLaughlin (Utah), Amendment Clauses in Easements: Ensuring Protection in Perpetuity, 168 Tax Notes Fed. 819 (Aug. 3, 2020):

Internal Revenue Code § 170(h)(5)(A) requires that the conservation purpose of a deductible conservation easement be “protected in perpetuity.” This article explains how the protected-in-perpetuity requirement should limit the parties’ ability to reserve the right to make post-donation changes to the terms of a deductible easement.

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Johnson: Taxing Meals And Civic Virtue

Calvin H. Johnson (Texas), Return to Civic Virtue: Tax Meals, 170 Tax Notes Fed. 1105 (Aug. 15, 2021):

Excluding meals from taxation, when other forms of compensation are taxed, inevitably causes a loss of value — a waste — that economists call deadweight loss. The exclusion for meals causes a shift from cash to meals, until in equilibrium, the loss of value from the meals is just short of the tax avoided. In equilibrium, the loss is a tax-caused destruction of resources — not physically, but by value. The recent Consolidated Appropriations Act decreased the tax on meals by allowing a 100 percent deduction for some business meals, repealing the prior law’s 50 percent deduction, which is the wrong direction to go. The end of the limited deduction was instigated by former President Trump himself and was a high priority for the Trump Treasury in its negotiations with Congress over the appropriations bill. Trump personally takes advantage of tax-exempt meals and has interests in restaurants selling meals. Thus, the change in law was narcissistic and a betrayal of civic virtue.

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Lazerow: Income Tax Planning For Visual Artists, Their Dealers, Investors, And Collectors

Herbert I. Lazerow (San Diego), Income Tax Planning for Visual Artists, Their Dealers, Investors, and Collectors, 170 Tax Notes Fed. 923 (Feb. 8, 2021):

The tax issues of visual artists, art dealers, art investors, and art collectors all revolve around the same type of property: artwork. Be it a painting, drawing, print, sculpture, photograph, fabric, or glass art, that property raises tax issues for which advance planning can be useful. Some tax problems are shared by artists, dealers, investors, and collectors alike, such as the necessity to prove a profit motive in order to deduct expenses. However, those four categories of taxpayers face different tax results for the same activity in some cases, such as when artwork is sold or donated. This report explores those similarities and differences and suggests steps advisers can take to maximize tax benefits for their clients. It occasionally questions whether the similarities and differences — or the rules applied by the IRS — make sense.

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Conservation Easements And Development Rights: Law And Policy

Nancy A. McLaughlin (Utah; Google Scholar) & Ann Taylor Schwing, Conservation Easements and Development Rights: Law and Policy, 169 Tax Notes Fed. 531 (Oct. 26, 2020):

This article examines the requirements in Internal Revenue Code § 170(h) that limit a taxpayer’s ability to grant the donee of a deductible easement the discretion to approve development on the subject property post-donation.

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Zelinsky: A Response To The Initiative To Accelerate Charitable Giving

Edward A. Zelinsky (Cardozo), A Response to the Initiative to Accelerate Charitable Giving, 170 Tax Notes Fed. 755 (Feb. 1, 2021):

The Initiative to Accelerate Charitable Giving describes itself as “a broad coalition dedicated to promoting common-sense, nonpartisan charitable giving reforms.”

Among its proposals, the initiative would tighten and expand the provisions of the IRC relative to private foundations and donor-advised funds. The initiative performs an important public service by highlighting a topic the Biden administration and the 117th Congress should address and by advancing important proposals.

In this article I respond to the initiative, agreeing with much (but not all) of its perspective and arguing that the rules applied to private foundations should also govern donor-advised funds.

Considerations of fairness and efficiency counsel that similar persons and entities should be taxed and regulated similarly. Donor-advised funds are functional substitutes for private foundations and should be treated equivalently by the law. Consequently, the code’s minimum distribution requirement and its excise tax on net investment incomes, now applicable just to private foundations, should apply to donor-advised funds as well.

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How Property Taxes Fuel Racial Inequality

Andrew Kahrl (Virginia), More for Less: How Property Taxes Fuel Racial Inequality, 99 Tax Notes State 315 (Jan. 25, 2021):

The Search for Tax Justice is a Tax Notes State series examining the inequities inherent in state and federal taxes. In this inaugural installment, Andrew Kahrl, professor of history and African American studies at the University of Virginia, explores the history of discriminatory tax practices against Black property owners.

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Blair-Stanek: How The IRS Should Fight The COVID-19 Economic Crisis

Andrew Blair-Stanek (Maryland), How the IRS Should Fight the COVID-19 Economic Crisis, 166 Tax Notes Fed. 2067 (Mar. 30, 2020):

In this article, Blair-Stanek reviews the IRS’s responses — some good, some flawed — to the 2007-2009 financial crisis and draws a clear lesson to guide the agency’s responses to the economic crisis sparked by COVID-19.

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Hellerstein & Appleby: State Tax Credit Issues Raised By SALT Cap Workaround Legislation

Walter Hellerstein (Georgia) & Andrew Appleby (Stetson), State Tax Credit Issues Raised by SALT Cap Workaround Legislation, 99 Tax Notes State 211 (Jan. 18, 2021):

For tax years 2018 through 2025, the federal Tax Cuts and Jobs Act of 2017 limited the aggregate amount of itemized state and local tax deductions for federal personal income tax purposes to $10,000. To avoid the impact of this “SALT cap” insofar as it limited the personal income tax deductions of passthrough entity (PTE) owners for federal income tax purposes, several states adopted legislation imposing taxes directly on the PTEs’ incomes. The theory underlying the PTE tax legislation was that state income taxes paid by the PTE would be deductible from the PTE’s income and would correspondingly reduce individual PTE owners’ taxable distributive shares of passthrough income for federal personal income tax purposes without regard to the SALT cap, thereby working around the SALT cap. At the same time, however, to avoid imposing a double state tax burden on individual PTE owners who are now effectively paying state income tax at the entity level, states adopting SALT cap workaround legislation generally provide individual PTE owners with corresponding owner-level tax benefits, in the form of credits, deductions, and exemptions, regarding their state personal income taxes. In essence, the PTE tax legislation simply shifts the incidence of the tax to the entity instead of the individual to circumvent the federal SALT cap imposed on individuals.

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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.

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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. 

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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.

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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.

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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.

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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.

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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.

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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.

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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. ...

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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))

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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.

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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.

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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: ...

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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. ...

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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.

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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?

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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.

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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.

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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.

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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.

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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.

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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.