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Thursday, August 21, 2014

DOJ Allows Bank of America to Deduct $12 Billion of $17 Billion Settlement

Wall Street Journal, BofA Could See $4 Billion in Tax Savings From $16.65 Billion Settlement;Parts of Settlement Reached Over Soured Mortgage Securities Will Be Tax Deductible:

BOA Logo (2014)Bank of America Corp.will pay roughly $4 billion less to the government after-tax than the $16.65 billion it agreed to in a settlement over soured mortgage securities, because parts of the settlement will be tax deductible, the bank said Thursday.

The bank has already taken some of the savings from the settlement's tax deductions in previous quarters, so the savings won't all come in the current third quarter. But tallying the total tax savings to roughly $4 billion "would be fair," a bank spokesman said.

Federal law allows companies to deduct large portions of the costs of settling with federal agencies on their tax returns. But that effectively shifts part of the settlement's burden to taxpayers, and some lawmakers and consumer advocates have expressed concerns that the public can be misled when regulators tout giant settlement amounts that companies aren't fully paying. ...

Fines and penalties imposed as part of a settlement can't be deducted, so that knocks out the $5.02 billion in fines Bank of America agreed to pay. But other amounts paid can be deducted as ordinary business expenses—including the $4.63 billion in compensatory payments that Bank of America agreed to pay, and the costs it incurs in providing $7 billion in mortgage modifications for struggling homeowners and other consumer relief.

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August 21, 2014 in Tax | Permalink | Comments (0)

Why Did American University’s Law School Plunge in the Rankings?

Washington City Paper, Why Did American University’s Law School Plunge in the Rankings?:

American Logo (2014)American University’s law school woos its students with a chance at the kind of international law jobs in which they might handle classified documents. In the spring of 2012, however, one graduate says his classmates got some practice being secretive about something decidedly less important to national security: their own job prospects.

In order to avoid offending classmates who faced unemployment after racking up more than $150,000 in student debt—nine months after graduation, just 42 percent of the class had jobs that required passing the bar—students who actually had offers had to engage in their own cover-ups. “Everything was sort of hush-hush,” says the graduate, who asked not to be named to avoid so as not to damage his new, nonlegal career.

Lately, the prospects for American University’s Washington College of Law have looked just as grim. Since 2013, the school has plummeted down the U.S. News and World Report law-school rankings, dropping 23 positions from 49th in the country to 72nd. Thanks to its graduates’ dubious employment prospects, meanwhile, Washington College of Law has become a target for activists who see it as one of the worst examples of a law school that dupes students with unlikely legal ambitions, only to stick them with a mountain of inescapable debt when they graduate. 

All the same, the school has started construction on a new campus in Tenleytown that the university expects will cost $130 million. As the Washington College of Law expands its goals in the face of its ratings collapse and a nationwide drop in law applications, it looks headed for a collision between its aspirations and the realities of what a mid-tier law school can realistically offer its students. ...

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August 21, 2014 in Legal Education | Permalink | Comments (0)

ObamaCare Tax Forms Pose Challenge for Enrollees, Exchanges

Washington Times, Obamacare Tax Forms May Pose Challenge for Enrollees, Exchanges:

Obamacare customers won’t be able to file their tax returns next year until the government sends them a form detailing their coverage and tax credits, and if those forms are late some taxpayers could face a delay in seeking their refunds.

1095A

Federal and state officials said they’re working on the forms, known as the 1095A, and vowed to meet the Jan. 31 deadline for issuing them. But some tax professionals are skeptical, citing the administration’s iffy track record on being able to meet other deadlines in the massive health overhaul law. “It really strains credulity to think 1095A is not going to be a big problem,” said George Brandes, vice president for health programs at Jackson Hewitt Tax Service.

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August 21, 2014 in IRS News, Tax | Permalink | Comments (0)

Dear Committee Members: A Novel

Slate Book Review:  Strongest Possible Endorsement: A Funny and Lacerating Novel of Academia Written in the Form of Letters of Recommendation:

Dear CommitteeI have been tasked with assessing Julie Schumacher’s Dear Committee Members, an epistolary novel consisting entirely of fictionalized letters of recommendation penned by professor Jason Fitger (failed novelist, failed husband, successful misanthrope). Although professor Fitger is—despite his correct opinions on the current state of the academic professions, and rare mitzvahs for his few remaining friends—an abhorrent human being, I cannot help but give this year in his life—which is narrated solely through his self-centered, off-topic, usually-counterproductive “endorsements” of colleagues, students, and friends—my strongest possible recommendation. 

Indeed, like his innumerable crotchety-white-male-academic protagonist predecessors (some of my favorites: Nabokov’s Humbert, Goethe’s Faust, Chabon’s Grady, Franzen’s Chip), Jason Fitger makes up in self-importance what he lacks in human contact with anyone who can stand him. “I’ll get around to my evaluation of Professor Ali,” Fitger explains in an alleged letter of support for a colleague’s tenure case. “But I have a few other things on my mind also, and it would be foolish of me, I think—it would be remiss—if I didn’t take this opportunity to address a few of them. After all, how often does a lowly professor of creative writing and English have the ear” of the associate vice provost? He then unleashes a tirade of grievances about the decrepit facilities and lackluster funding of his department, touching only briefly on his colleague’s many accomplishments. ...

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August 21, 2014 in Book Club, Legal Education | Permalink | Comments (0)

Tax Profs on Twitter

August 21, 2014 in Legal Education, Tax | Permalink | Comments (1)

The Deductibility of $100 Charitable Contributions to ALS in the Ice Bucket Challenge

Forbes:  Could The IRS Disallow Ice Bucket Challenge Charitable Contributions?, by Tony Nitti:

IceSo let’s say you were challenged via social media to either take the Ice Bucket Challenge or contribute to ALS. Assume further that you are unable or unwilling to get cold and wet, and choose instead to donate to ALS. Do you possess the necessary donative intent if you otherwise wouldn’t have contributed to the cause, and are doing it merely to avoid being publicly chastised by your Facebook friends? Did you make the donation with the anticipation of receiving the benefit of, you know…not having to dump a freezing bucket of water on your head?

OK, rest easy; the IRS isn’t coming after your ALS donation. While the principle of donative intent is very real, in recent years, the courts have tied this principle to a “quid pro quo test,” which states that in order for a donation to lack donative intent, the donor must anticipate receiving a financial benefit from the contribution commensurate with the value the donor transferred to the charity. Because an ice bucket dodger has received no financial benefit, but rather merely a physical one, the contribution is (should be) immune to attack. Plus, I think I’ve read somewhere that the IRS is dealing with a bit of a public perception problem these days, so attacking contributions to a horrible disease is probably not in its best interest.

August 21, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Measuring Merit: The Shultz-Zedeck Research on Law School Admissions

Kristen Holmquist, Marjorie Shultz, Sheldon Zedeck & David Oppenheimer (all of UC-Berkeley), Measuring Merit: The Shultz-Zedeck Research on Law School Admissions, 63 J. Legal Educ. 565 (2014):

Law schools profess a commitment to racial diversity both for the educational benefits diversity confers and for its contribution to the profession. But they admit students based on standards that, while not discriminatory in a legal sense, undeniably favor white applicants. Today the question of who belongs in any given law school, or law school at all, turns almost exclusively on an applicant’s score on the Law School Admission Test (LSAT). Law schools are not blind to the racial impact that accompanies this narrow measure of merit. But rather than taking a hard look at whether legal educators have adequately, or accurately, identified what qualities best qualify students for law school, the admissions process largely relies on affirmative action to ameliorate the current process's negative effects. That approach is imperfect for a whole host of reasons, not least of which is that affirmative action’s legal use in higher education may be about to end. Should race-conscious admissions practices be banned, every law school that truly values diversity will have to explore race-neutral means of achieving it. The good news is that research conducted by Marjorie Shultz and Sheldon Zedeck suggests that this is possible -- that qualities relevant to effective lawyering can be defined and predicted without recreating the LSAT's disparate impact [Predicting Lawyer Effectiveness -- A New Assessment for Use in Law School Admission Decisions]. This essay describes that research and the promise that it holds for improved, race-neutral, admissions processes.

August 21, 2014 in Legal Education, Scholarship | Permalink | Comments (0)

The IRS Scandal, Day 469

IRS Logo 2Breitbart:  Federal Judge Takes Extraordinaru Steps in IRS Lawsuit:

The order from U.S. District Court Judge Emmett Sullivan was certainly clear enough. In a landmark victory for Judicial Watch, the federal judge ordered the IRS to submit sworn declarations detailing what happened to Lois Lerner’s “lost” emails and what steps were being taken to find them. What was provided was a garbled explanation from no less than five IRS officials with more holes than a block of Swiss cheese. ...

These sworn declarations came from five IRS officials: Aaron G. Signor, John H. Minsek, Stephen L. Manning, Timothy P. Camus, and Thomas J. Kane.

We noted that the IRS and DOJ filings seem to treat as a joke Judge Sullivan’s order requiring the IRS to produce details about Lois Lerner’s “lost” emails and any efforts to retrieve and produce them to Judicial Watch as required under law.

This is the story we’re supposed to believe, according to these IRS officials: Lerner’s crashed drive was analyzed by two technicians who employed a variety of tech tactics to recover the data, to no avail. The drives – which, mind you, had no recoverable data according to these experts – were then “degaussed” (wiped clean) “to protect against any possible disclosure of… taxpayer information.” Anyone with even a passing familiarity with the IRS email scandal would have realized that these filings were a blatant continuation of the cover-up.

Well, if there’s one thing I know, it is that most federal courts don’t take kindly to being treated disrespectfully and expected to act like a somnolent member of Congress as administration officials mislead, omit, and play games.

Sure enough, in a stunning move, Judge Sullivan took the extraordinary step of launching an independent inquiry into the issue of Lerner’s missing emails. ...

Judicial Watch has filed hundreds of FOIA lawsuits. I have never seen this type of court action in all my 16 years at Judicial Watch.

Judge Sullivan has already authorized Judicial Watch to submit a request for limited discovery into the missing IRS records after September 10. So stay tuned for further details very soon.

Judge Sullivan took the additional step of appointing Magistrate Judge John M. Facciola to manage and assist in discussions between Judicial Watch and the IRS about how to obtain the missing records. Magistrate Facciola is an expert in e-discovery.

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August 21, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, August 20, 2014

Which States Give You the Biggest Bang For Your Buck?

Survey: Grads Give High Marks to Law Schools for Professors, Training & ROI, But Not Job Placement

Kaplan, Class of 2014 Law School Graduates Give Their Schools Solid Grades in Professor Quality, “Practice Ready” Training and ROI — But Job Placement Gets More “F”s than “A”s:

Kaplan LogoAccording to a Kaplan Bar Review survey* of over 1,200 law school graduates from the class of 2014, a strong majority of tomorrow’s attorneys give their alma maters strong marks overall: 40% of law school graduates gave their overall law school education an “A” (up from 37% in 2012), while 45% gave it a “B”.  Only 11% gave their legal education a “C”; and a relatively small percentage (4%) scored it as below average or failing.  And while law school grads gave their former JD programs generally favorable marks in a number of subcategories, there was one glaring exception:  job placement.

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August 20, 2014 in Legal Education | Permalink | Comments (1)

ABA Tax Section Publishes Summer 2014 Issue of News Quarterly

ABA News QuarterlyThe ABA Tax Section has published 33 News Quarterly No. 4 (Summer 2014):

August 20, 2014 in ABA Tax Section, Tax | Permalink | Comments (0)

LinkedIn Law School Rankings?

LinkedInInside Higher Ed, The New Rankings?:

LinkedIn is one of several players in a growing market: the business of aggregating data about career outcomes for prospective college students. Rankings still dominate conversations about which colleges are best, to the chagrin of many college presidents. But a number of companies are developing data-backed search tools to help students decide where to apply, where to attend and what to study.

Students and parents are the consumers most of these companies have in mind. But the services also attract business from colleges and universities that the aggregated data depicts favorably. Tulane now features its LinkedIn page in its promotional materials. ...

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August 20, 2014 in Law School Rankings, Legal Education | Permalink | Comments (0)

Law Professor Blogs Network Launches Legal Technology Blog

LPBN LogoThe Law Professor Blogs Network is thrilled to announce the launch of Legal Technology Blog, edited by Jeanne Eicks (Vermont), Oliver Goodenough (Vermont), Stephanie Kimbro (Stanford), and Michele Pistone (Villanova). From their inaugural post:

What will law practice look like in the next decade? What should legal professionals know about technology to be competent and profitable in legal practice? How will we educate the next generation of lawyers entering a legal field deeply altered by technology? Who are these legal entrepreneurs changing the face of law – and should we fear them or emulate them? Will innovation happen at a stately pace, trimming the edges of inefficiency and risk aversion in legal practice? Or will innovation happen disruptively as technology entrepreneurs make an end-run around the more deliberate pace of legal practitioners? To borrow from Richard Susskind, a visionary in this field, who are tomorrow’s lawyers and how will they be trained?

We seek answers to these questions and more. This blog will focus on the topics at the nexus of law, legal practice and legal education and technology. Welcome.

With the support of our sponsor, Wolters Kluwer Law & Business/Aspen Publishers, the Network is seeking to expand in two ways.

First, I am actively recruiting law professors to launch blogs in other areas of the law school curriculum not currently covered by the Network, including Administrative Law, Bankruptcy, Intellectual Property, National Security, Native American Law, Race and the Law, and Trial Advocacy.

Second, I am actively recruiting law professors to affiliate their existing blogs with the Network, like Brian Leiter's Law School Reports, Brian Leiter's Law School Rankings, Mirror of Justice, REFinBlog, The Right Coast, and Sentencing Law and Policy

The Network offers law professors the premier blogging platform and the opportunity to share in growing sponsorship and advertising revenues. For more information about these opportunities, see here.

August 20, 2014 in About This Blog, Legal Education, Tax | Permalink | Comments (0)

Welcome to the Law School Class of 2017: Should You Stay or Should You Go?

Forbes:  Law School Begins: Here's A Message to the New Crop of 1L's, by Michael I. Krauss (George Mason):

Clash 1Later this week I will teach the first Torts class to George Mason Law School’s newly matriculated 1L’s.  Here is my message, both to them and to 1L’s nationally.

You have decided to enter law school during “interesting” times.  The business model for the private practice of law is a-changin, and many say it is broken.  Law school tuition is higher than ever, yet incomes are stagnant and perhaps dropping.  Law school loans, guaranteed by Uncle Sam and not dischargeable by bankruptcy, help you pay for tuition, but every increase in the generosity of federal largess is yet another incentive for universities to capture rents by increasing tuition further.

Mason students are at a “top-50″ school, but many readers of this column will be matriculating at lower-ranked institutions (and others will be at higher-rated schools).  Most Mason students ranked near the top of their undergraduate class and did quite well on their LSAT.  But half of you will get GPA’s at Mason that are lower than you’ve ever experienced before, both because your undergrad institution had succumbed to grade inflation and because our mandatory GPA mean immunizes us against this to some extent.  Those in the bottom half of the class won’t be eligible for Law Review, and they generally won’t be invited to those coveted on-campus interviews with BigLaw firms.  For them, and for many in the top half of the class as well, “summer camp” at a BigLaw firm after 2L will never happen; and the famous $160K starting salary after graduation will be pie in the sky.  Most law grads learn to their sorrow that the income distribution for freshly-minted JD’s is quite bimodal.  And those who do catch that brass ring will be in for a life that is usually exhausting and often boring, if not soul-destroying.

Are these facts part of an effort to get you to rethink your decision to attend law school?  For some of you, frankly, yes; but for others, absolutely not.  ...

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August 20, 2014 in Legal Education | Permalink | Comments (6)

Tax Profs Debate President Obama's Authority to Stop Tax Inversions

Following up on my previous posts:

Wall Street Journal editorial, Beltway 'Strip' Club: Democrats Imagine New Ways to Raise Taxes on Corporations:

Washington's tax collectors fear that foreign firms may fund their U.S. subsidiaries with debt so these U.S. units can deduct the interest payments. The foreign parent companies can then receive these interest payments. With more debt held in the U.S., the firms may be able to boost the profits of their overseas units and pay less in taxes, since taxes are lower nearly everywhere else in the world than in the U.S. ...

The White House is nonetheless looking to raise corporate taxes administratively while Mr. Schumer seeks to do so legislatively. Team Obama was thrilled by a recent paper from former Treasury official and current Harvard Law School professor Stephen Shay. Mr. Shay claims that without any change in the law the Administration can simply overturn years of precedent by declaring that some debt will now be treated as equity, and voila, higher tax bills.

This would involve claiming authority under a provision of law known as Section 385 that was not intended to stop corporate inversions, but rather to define generally what is stock and what is debt. As Mr. Shay admits, "Section 385 is not normally thought of as an antiabuse provision (indeed, it has hardly been thought of at all since it was amended in 1992) and this proposal is to apply it to only a subset of related party cases—those involving expatriated entities."

No doubt a wave of lawsuits would follow. But if Treasury is looking for a short-term political victory it could issue a temporary regulation, avoid the usual notice and comment period, and earn headlines by interrupting pending inversion deals. Another full election cycle might pass before the courts rule on the legality of this tax grab.

The Harvard Law brand might seem to lend some heft to this novel idea, but in his paper Mr. Shay credits the intellectual contributions of two, er, scholars from Change to Win, the advocacy shop funded by labor unions. And nobody does disinterested legal analysis like the Teamsters. ...

Bloomberg BNA, Executive Action on Inversions? Not So Fast:

Can President Obama deal with corporate inversions-which occur when a U.S. company merges with a foreign competitor in order to create a parent organization with a tax residency abroad--on his own?

After pressure from his fellow Democrats, Obama and the Department of Treasury have said they're looking into it. Some former officials -- including Stephen Shay, a professor of law at Harvard University and a former deputy assistant secretary at Treasury -- have suggested that Obama can use his executive authority to deal with earnings stripping, one of the chief incentives for inversion deals.

The dynamic might make it seem like the issue is mainly a political one -- that, as with immigration and climate change, the main consideration for the White House is whether the policy goal is worth enraging Congress even further.

But, in fact, the legal authority for Obama or the Treasury Department to act is far from certain. In fact, many tax experts -- some who share the goal of cracking down on inversions -- believe the president has very little leeway to act without support from Congress.

"The arguments for Treasury regulation are based on laudable policy instincts, which I share. But they are very strained readings of the relevant regulatory authority," said Edward Kleinbard, a professor of law at the University of Southern California and the former chief of staff for the U.S. Congress Joint Committee on Taxation. "In fact, they are so strained, I think in the long term they would do more harm than good in terms of Treasury's ongoing relationships with Congress, and its ability to take courageous stands through regulation in the future." ...

"My reading of this rule is that they are authorized to have a general rule that distinguishes debt from equity," said Reuven Avi-Yonah, director of the international tax LL.M. program at the University of Michigan Law School. "If they try to do that, I think the companies would sue them." ...

Ultimately, the statement that Treasury was looking into possible anti-inversion regulations may be more important than any actual regulations the department might issue. "I frankly think it's a question of whether they could make enough noise to scare people," said Willard Taylor, an adjunct professor of law at New York University, who has written about inversions in the past. "As to specific options, I really don't see very much there."

August 20, 2014 in Tax | Permalink | Comments (1)

The IRS Scandal, Day 468

IRS Logo 2Wonkette:  Laura Ingraham Explains That Thugs Gonna Thug:

What do you think would have happened, guys, if tea party activists, right, came to Washington D.C. after the IRS scandal broke and decided to start smashing windows, rampaging through neighborhoods, throwing fire bombs. What do you think Eric Holder and Barack Obama would do? Would they start saying, ‘Well, we understand that people are angry, we really get your emotion here, but this isn’t acceptable. Do you really think there would have been this nuanced language, this emoting that has become the pastime of this administration?

Washington Times:  Intolerance on the Left: The Marketplace of Ideas Can’t Function Without Civility:

We often hear those on the right branded as “intolerant.” We’re all a bunch of extremists who just want to shut down the other side, right? We’re unlike those on the left, who welcome debate and want to give all viewpoints a respectful hearing.

Or so we’re told. We might even start to believe it — until we encounter the oh-so-tolerant voices of our loyal opposition. Voices such as: ...

Lois Lerner: According to emails written by the former Internal Revenue Service official, conservatives are “crazies” and another word too obscene to quote. Conservatives who dare to criticize the government, in her view, want to “take us down.” Small wonder that the agency targeted conservative groups during Ms. Lerner’s tenure.

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August 20, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Details Emerge in Murder of Dan Markel

Markel[Continually Updated]  More details are emerging in the July 18 murder of Dan Markel, D’Alemberte Professor of Law at Florida State and founder of PrawfsBlawg, as the result of a shooting in his home:

I have collected links to the many tributes to Dan here.

Dan Markel Memorial Fund To Benefit His Sons, Benjamin Amichai Markel and Lincoln Jonah Markel:

Markel

August 20, 2014 in Legal Education | Permalink | Comments (9)

Tuesday, August 19, 2014

NY Times: Tax Burden in U.S. Not as Heavy as It Looks, Kleinbard Says

New York Times DealBook:  Tax Burden in U.S. Not as Heavy as It Looks, Report Says, by Andrew Ross Sorkin:

NY Times Dealbook (2013)For years, chief executives have complained bitterly about the United States corporate tax code, arguing that it is too complicated and that rates are too high. The issue has reached a near boiling point this summer as many large American companies have sought to buy smaller foreign rivals so they can renounce their United States corporate citizenship and reincorporate overseas to lower their tax bills. Others are considering the move, known as an inversion.

Again and again, we hear that these deals are being driven by an effort to make our companies more competitive globally and that unless we “reform” our tax system — which is code for “lower our corporate tax rate” — we will lose business to foreign rivals.

It is a compelling narrative. But it may be wrong.

Edward D. Kleinbard, a professor at the Gould School of Law at the University of Southern California and a former chief of staff to the Congressional Joint Committee on Taxation, makes a captivating argument in an academic paper ['Competitiveness' Has Nothing to Do With It] that the United States tax code — counter to the conventional wisdom — is not impeding global competitiveness. In fact, the opposite is true.

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August 19, 2014 in Tax | Permalink | Comments (2)

Perkins: Salience and Sin -- Designing Taxes in the New Sin Era

Rachelle Holmes Perkins (George Mason), Salience and Sin: Designing Taxes in the New Sin Era, 2014 BYU L. Rev. 143 (2014):

Tax salience reflects the extent to which consumers take into account the after-tax cost of a good or service prior to making their consumption decision. Recent empirical work on tax salience has revealed something that is perhaps intuitive, but nevertheless important to the design of sin taxes. Taxpayers are more likely to make consumption decisions based on pre-tax rather than post-tax prices when the salience, or visibility, of a tax is diminished. Thus, consumers are less likely to change their demand for a particular product if shelf prices are tax-exclusive rather than tax-inclusive. Economically, this makes low salience taxes mimic some of the benefits of taxes on inelastically demanded goods. Because a taxpayer’s demand change in response to a tax increase is diminished, the deadweight loss generated by the imposition of the tax can be reduced. Notwithstanding the potential for efficiency gains, politicians and academics alike have expressed various fairness, distributional, and normative concerns regarding the use of low salience taxes. In fact, a number of countries already require tax-inclusive pricing for consumer products in order to purportedly preserve consumer awareness and transparency.

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August 19, 2014 in Scholarship, Tax | Permalink | Comments (1)

TIGTA: ObamaCare Medical Device Tax Is Raising 25% Less Revenue Than Expected, IRS Administration of Tax Is Rife With Errors

TIGTA The Treasury Inspector General for Tax Administration today released The Affordable Care Act: An Improved Strategy Is Needed to Ensure Accurate Reporting and Payment of the Medical Device Excise Tax (2014-43-043):

The Affordable Care Act includes a tax provision that provides for an excise tax equal to 2.3 percent of the sales price for medical devices sold beginning January 1, 2013. Manufacturers, producers, and importers are responsible for collecting the medical device excise tax and must file a Form 720, Quarterly Federal Excise Tax Return. The Joint Committee on Taxation estimated revenues from the medical device excise tax of $20 billion for Fiscal Years 2013 through 2019. ...

Our review found that both the number of Forms 720 filed reporting the medical device excise tax and the amount of the associated revenue reported are lower than estimated. The IRS is attempting to develop a compliance strategy to ensure that businesses are compliant with medical device excise tax filing and payment requirements and has taken several measures to advise medical device manufacturers of the new excise tax. However, the IRS cannot identify the population of medical device manufacturers registered with the Food and Drug Administration that are required to file a Form 720 and pay the excise tax.

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August 19, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

Taxing the Rich Can Strengthen Democracy

Washington Post:  Can Taxing the Wealthy Strengthen Democracy?, by Deborah Boucoyannis (Virginia):

“Taxing the rich” has emerged as a controversial proposal on how to deal with the historic rise in inequality of the last few decades. Thomas Piketty recently recommended taxing the top 1 percent globally to redistribute wealth, reduce inequality and provide a generous social safety net. The policy has been attacked on both the left and the right as unfeasible, unpredictable in its effects, even unconstitutional, and in any case inadequate to address the needs of a welfare state, although other research powerfully contradicts them.

The historical record, however, suggests that taxing the wealthiest does have an important, but different, consequence: making the wealthy vested in the common good. In fact, taxing the wealthy was crucial for the emergence of representative government itself. ...

“[T]axing the rich” can actually help democracy. When the government is strong enough to impose a substantial obligation on the richest people, they are inclined to lobby the government to ensure those funds are efficiently spent. This is quite different than the pattern that mostly occurs today, where the wealthy lobby the government for tax breaks or private interests—and the state is too weak or too unwilling to resist. “Taxing the rich something more than in proportion” to their wealth is what Adam Smith himself still praised about the English system of taxation many centuries after its Parliament was born.

August 19, 2014 in Tax | Permalink | Comments (0)

Obama's Use of Executive Authority: Could a Republican President Refuse to Enforce the Estate Tax?

New York Magazine:  Obama's Immigration Plan Should Scare Liberals, Too, by Jonathan Chait:

What if a Republican president announced that he would stop enforcing the payment of estate taxes?

The New Republic, The Liberal Fear of Obama's Executive Action Is Irrational, by Brian Beutler:

[L]et’s look at the estate tax. First, it’s important to note that Obama isn’t proposing to “suspend” immigration law. It’s impossible to reconcile Chait’s admission that the action Obama’s considering is legal with the suggestion that he will be suspending the law. He’s rather proposing to direct resources toward enforcing the law against higher-priority offenders. Washington Post reporter Greg Sargent’s expert sources have more here. So the proper comparison isn’t to a Republican president who suspends the estate tax, but to a Republican president who decides to enforce the estate tax against the highest priority offenders—the super-duper rich—rather than the merely exorbitantly wealthy.

I can’t claim to know (yet) whether a presidential administration has identical discretion over tax law as it does over immigration law, so I don’t know whether this would pass the threshold test of legality. I suspect the president has more discretion over the latter than the former, and if deferred action for recently deceased wealthy people were slam-dunk illegal, I would oppose it on those grounds. But assuming President Ted Cruz could plausibly shield estates valued below, say, $20 million from tax, within the bounds of the law, my instinct would neither be to scream “Caesar!” nor to blame Obama for setting a bad precedent, but to note that Cruz was insane. It’d be crazy for any president to apply tax law more leniently to people who hit the estate tax threshold than to regular people who don't accrue much if any wealth, and I believe they’d ultimately lose that fight in the political realm, either through legislation or at the ballot or upon the election of a Democratic president who would resume strict enforcement. ...

If Ted Cruz becomes president and his Republican Congress gets to work on a comprehensive tax reform plan that would (among other things) abolish the estate tax, a decision to defer estate tax enforcement through 2017 might make sense (again, assuming legality) to avoid penalizing people who have the misfortune of dying before Cruz can sign the bill. If that bill were to fail, enforcement would surely resume at some point. Norms wouldn't have very much to do with it.

The Daily Caller:  Nice Try, New Republic, by Micky Kaus:

[V]irtually any categorical we-won’t-prosecute-you decree will serve the interests of “consistency” and “predictability.” Take the hypothetical that Obama’s defenders seem to have the most trouble dealing with: Imagine Mitt Romney, campaigning on a platform of raising the limit on taxable estates to $20 million dollars (from the current $5.3 million).  Romney wins the election. He’s President! But he can’t get his estate tax bill through Congress. He decides he can’t wait! If Congress won’t act to boost the incentives to “job creators,” he will! His IRS announces that, as a matter of “prosecutorial discretion,” no estates under $20 million that fail to pay estate tax will be pursued by the IRS.  Romney could grant case by case leniency power to IRS auditors and lawyers — but a blanket categorical free pass makes the law so much more predictable, don’t you think? And predictability is important for job creators!  They have investments to make. You wouldn’t want an IRS with the leeway to play favorites — going soft on Republicans, or Romney donors, while coming down hard on dead multimillionaire Democrats. ...

President Romney, for example, could cite the Internal Revenue Code’s goal of increasing tax receipts and spurring economic growth — and argue that because a zero capital gains rate would encourage revenue-producing asset sales, he would now exercise his discretion to avoid punishing people who don’t pay their (legislated) capital gains taxes as well as most of  those who duck their estate taxes. Jonathan Chait is right to be worried.

P.S.: TNR‘s Brian Beutler takes a simpler approach. He appears to argue that, if there aren’t statutory provisions that would make a Romney estate-tax move “slam-dunk illegal” (which there probably aren’t) then Romney is free to go ahead. He’d be “insane,” Beutler says. The voters would probably reinstall the Democrats at the next election. But democracy itself would provide the limit.

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August 19, 2014 in Tax | Permalink | Comments (3)

Johnston: Kinder Morgan’s Evolving Tax Strategy

Tax Analysys Logo (2013)David Cay Johnston (Syracuse), Kinder Morgan’s Evolving Tax Strategy, 144 Tax Notes 881 (Aug. 18, 2014):

Johnston looks at Kinder Morgan’s recent announcement that it would be folding two master limited partnerships into a C corporation holding company.

August 19, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

NY Times: Behind Closed Doors, Obama Crafts Executive Action on Tax Inversions

Following up on yesterday's post, WSJ: Meet the Law Professor Who’s Crashing the Inversion Party: New York Times, Behind Closed Doors, Obama Crafts Executive Actions:

When President Obama announced in June that he planned to bypass congressional gridlock and overhaul the nation’s immigration system on his own, he did so in a most public way: a speech in the White House Rose Garden.

Since then, the process of drafting what will likely be the only significant immigration changes of his presidency — and his most consequential use of executive power — has been conducted almost entirely behind closed doors, where lobbyists and interest groups invited to the White House are making their case out of public view.

Mr. Obama’s increasingly expansive appetite for the use of unilateral action on issues including immigration, tax policy and gay rights has emboldened activists and businesses to flock to the administration with their policy wish lists. It also has opened the president, already facing charges of executive overreach, to criticism that he is presiding over opaque policy-making, with the potential to reward political backers at the expense of other interests, including some on the losing side who are threatening to sue. ...

Consumer groups and organized labor want the Treasury Department to act on its own to limit financial incentives for companies that move overseas for tax breaks and stop so-called inversions. ... One group, Change to Win, a labor union-backed consumer advocacy organization that has pressed for congressional action to block corporate inversions, sought out a legal expert with Obama administration ties, Stephen E. Shay, to press its case.

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August 19, 2014 in Tax | Permalink | Comments (0)

The Cause of Higher Tenure Rates for Men: Productivity or Sexism?

Inside Higher Ed, Productivity or Sexism?:

In discussions about the gender gap among tenured professors at research universities, there is little dispute that there are far more men than women with tenure in most disciplines. But why? Many have speculated that men are outperforming women in research, which is particularly valued over teaching and service at research universities. With women (of those with children) shouldering a disproportionate share of child care, the theory goes, they may not be able to keep up with publishing and research to the same extent as their male counterparts.

A study presented here Sunday at the annual meeting of the American Sociological Association finds that those assumptions may be untrue in some disciplines. [Kate Weisshaar (Stanford), Measuring the Glass Ceiling Effect: An Assessment of Discrimination in Academia.] The study compared tenure rates at research universities in computer science, English and sociology -- and then controlled for research productivity. 

Not only are men more likely than women to earn tenure, but in computer science and sociology, they are significantly more likely to earn tenure than are women who have the same research productivity. In English men are slightly (but not in a statistically significant way) more likely than women to earn tenure. ...

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August 19, 2014 in Legal Education | Permalink | Comments (6)

Tax Inversions Often Don't Produce Big Returns for Investors

Reuters,  When Companies Flee U.S. Tax System, Investors Often Don't Reap Big Returns:

Establishing a tax domicile abroad to avoid U.S. taxes is a hot strategy in corporate America, but many companies that have done such "inversion" deals have failed to produce above-average returns for investors, a Reuters analysis has found.

Looking back three decades at 52 completed transactions, the review showed 19 of the companies have subsequently outperformed the Standard & Poor's 500 index, while 19 have underperformed. Another 10 have been bought by rivals, three have gone out of business and one has reincorporated back in the United States. ...

It is impossible to know how the companies might have fared in the market had they not inverted. Innumerable factors other than taxes influence a stock's performance, and no two of these deals are identical, complicating simple comparisons. But the analysis makes one thing clear: inversions, on their own, despite largely providing the tax savings that companies seek, are no guarantee of superior returns for investors.

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August 19, 2014 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 467

IRS Logo 2Forbes:  Are 'Expendables 3' & IRS Equally Expendable?, by Robert W. Wood:

The Expendables 3 is a little like the IRS. Did we need this third installment of the action movie franchise? It had a lackluster opening weekend and tepid reviews, so perhaps with ‘Expendables 3′ the Third Time’s Not a Charm. But it may have a hidden message.

An expendable movie about a cadre of aging action stars is a little like the sagging IRS. The IRS may never have been a star, but its star has fallen in recent years. For over a year now, it has been plagued by scandal and what sometimes seems like downright arrogance at the top. Even in the face of these sad developments, some claim there is not a ‘Smidgen Of Corruption’ at the IRS.

Like an aging action star demanding too much money and being frozen out, such behavior doesn’t bode well for the IRS. ... Expendables—the IRS—features an agency that collects billions and is charged with administering the nation’s tax laws. Make no mistake, that’s no easy job. Yet on the whole, I still think the IRS does a generally good job (no hate mail please). That is why it’s so terribly important that we restore some trust and accountability. ...

Does our our country have more important problems? Sure we do. But it’s still wrong that we cannot seem to get straight answers. The latest order from Judge Emmet G. Sullivan in the litigation filed by Judicial Watch asks for answers about the recently ‘lost’ emails of Lois Lerner and other IRS officials. See Judicial Watch v. IRS (No. 1:13-cv-1559).

The fact that a federal judge has had to launch this inquiry into the issue of the missing emails is a sad day for the IRS, regardless of whether the IRS realizes it. The IRS filings were at least lackluster and seemed not to take seriously the judge’s request for sworn declarations about the IRS email issue. The judge really means it.

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August 19, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, August 18, 2014

Ajay Mehrotra's Making the Modern American Fiscal State Wins 2014 U.S. Intellectual History Book Award

Ajay2014 Society for U.S. Intellectual History Book Award Winner:

We are pleased to announce our selection of Ajay K. Mehrotra’s Making the Modern American Fiscal State: Law, Politics, and the Rise of Progressive Taxation, 1877-1929 (Cambridge University Press, 2013) as this year’s winner of the S-USIH annual book award for 2014.

Mehrotra’s important and ambitious book chronicles the early 20th-century transformation in American tax policy and public finance. It analyzes the shift from the nineteenth-century “regime of indirect, hidden, partisan, and regressive taxes” to the “direct, transparent, professionally administered, and progressive tax system” we know today. A book on taxation may well seem a curious choice for an intellectual history prize, but we were struck by how successfully Mehrotra weaves together the intellectual, legal, administrative threads of his argument. Mehrotra takes ideas seriously. He traces legal and administrative change to a prior “conceptual revolution,” wrought primarily by a cohort of professionally trained intellectuals, including Henry Carter Adams, Richard Ely, and Edwin R.A. Seligman. And he shows how notions of economic justice, political obligation, ethical duty, and democratic reciprocity underwrote the new progressive conception of what Mehrotra aptly labels “fiscal citizenship.” He also shows what happened to those ideas as they traveled through a contested political process and were embodied in a complex administrative apparatus with paradoxical and often unintended consequences. Mehrotra’s book is thus a history of ideas in action. It makes a signal contribution to the field by demonstrating how even the most seemingly mundane features of our world have strikingly rich intellectual histories.

August 18, 2014 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Johnston: Income of Highest Earners Fell From 2000 to 2012

Al Jazeera:  Highest Earners Making Less, Social Security Data Show, by David Cay Johnston (Syracuse):

It is getting much harder to earn big bucks in America, my new analysis of official wage data shows.

The number of workers making $2 million or more per year declined almost 5 percent, from 39,650 in 2000 to 37,714 in 2012. This decline is especially remarkable, given 11 percent population growth.

These top jobs paid less too, despite 22 percent real growth in the economy over those 12 years. Measured in 2012 dollars, average pay at the top was $5.04 million, down from $5.27 million in 2000. That’s 4.3 percent less pay per top worker.

Combined, the decline in big bucks jobs and average pay meant top earners got a smaller slice of the national wage pie. The pie grew 7.2 percent. But the $2 million and up workers saw their slice shrink from 3.4 percent to 2.9 percent. ...

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August 18, 2014 in Tax | Permalink | Comments (3)

Financial Times Offers $25k Prize for Business Book of the Year

FTThe Bracken Bower Prize:

The Financial Times and McKinsey & Company, organisers of the Business Book of the Year Award, want to encourage young authors to tackle emerging business themes. They hope to unearth new talent and encourage writers to research ideas that could fill future business books of the year. A prize of £15,000 [$25,000] will be given for the best book proposal. ...

The inaugural prize will be awarded to the best proposal for a book about the challenges and opportunities of growth. The main theme of the proposed work should be forward-looking. In the spirit of the Business Book of the Year, the proposed book should aim to provide a compelling and enjoyable insight into future trends in business, economics, finance or management. The judges will favour authors who write with knowledge, creativity, originality and style and whose proposed books promise to break new ground, or examine pressing business challenges in original ways. Only writers who are under 35 on November 11 2014 (the day the prize will be awarded) are eligible.

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August 18, 2014 in Scholarship, Tax | Permalink | Comments (0)

Tax Man Too Incompetent to be Trusted With Tax Grab Powers

The Telegraph, HMRC Too Incompetent to be Trusted With Tax Grab Powers:

HMRCThe taxman is too incompetent to be trusted with powers to raid people's bank accounts, according to Britain's banking industry.

In a letter to the Chancellor, the British Bankers' Association, which represents UK lenders, said HM Revenue and Customs could not be trusted with the power to grab money directly from the accounts of people with unpaid tax bills.

(Hat Tip:  Andy Morriss.)

August 18, 2014 in Tax | Permalink | Comments (0)

Quinnipiac Law School Opens New $50 Million Building Amidst 33% Decline in 1L Enrollment

New Haven Register News, Quinnipiac University Opens New Law School Building in North Haven:

Quinnipiac LogoOn Monday, Quinnipiac University law students will start the academic year in a $50 million new building at the school’s North Haven campus. ...

Currently, the school has 292 students enrolled, but [President John] Lahey said the new building was built with the potential to grow the law student population after numbers declined from 400 students. “It’s designed to get back to 400, but it can hold up to 500,” Lahey said.

Despite student enrollment dropping, Lahey said he’s looking forward to the law school growing in its new location. “There’s a decline for the demand for lawyers. Even with the decline, we’re the only school in country to spend $50 million for a new (law)school. It shows that Quinnipiac has a long-term, strategic commitment to law. It reflects my confidence and the university’s confidence in [Dean] Jen Brown,” Lahey said. 

Quinnipiac enrolled 84 students (65 full time) in Fall 2013 (with 154 LSAT/3.34 GPA medians), compared to 127 students (107 full time) in Fall 2012 (with 156 LSAT/3.39 GPA medians).

(Hat Tip: Above the Law.)

Update:  News 8, Tuition on the Rise at Quinnipiac

August 18, 2014 in Legal Education | Permalink | Comments (2)

Law School Accreditation Standards: Implementation and Next Steps

ABA Logo 2Following up on last week's post, ABA Approves Changes to Law School Accreditation Standards:

ABA Section of Legal Education and Admission to the Bar, Transition to and Implementation of the New Standards and Rules of Procedure for Approval of Law Schools:

The Standards Review process was a major project, and now the Council, Accreditation Committee, staff, and law schools have another major undertaking in implementing what the Council has adopted. Faculties and staff will have to consider the ways in which the new Standards require action and changes to their program of legal education. For the Section, implementing and transitioning to the new Standards and Rules involves questions of timing; substantial work that will need to be done to the Site Evaluation Questionnaire (SEQ), Annual Questionnaire (AQ), and related documents; and education and training for schools, the Council and Accreditation Committee, and site evaluators.

The revised Standards (referred to here as the “new Standards”) and Rules became legally effective at the end of the ABA Annual Meeting on August 12, 2014. ...

While the new Standards and Rules are effective now, some of the new Standards will require changes that it will take schools time to make. It will also take time to integrate all of the changes into our systems and processes. In the past when a Standards change required a phase-in period or a delayed effective date, that has been done, and we will do that on this occasion as well.

With that background, the transition and implementation plan is ...

Dan Rodriguez (Dean, Northwestern), What’s Next for ABA Standards Review?:

One suspects that the ABA Council is taking a deep breath, and perhaps also a victory lap, after several years in which it reviewed existing standards and made some meaningful reforms. Attention rightly shifts to the implementation of these reforms and, one hopes, to working constructively with law schools to best manage the burdens (and also the benefits) of these new standards.

But we should not lose sight of the fact that there is much more constructive work to do. The multiyear process just completed was described as a comprehensive one. Yet, the most comprehensive approach to reform would look freshly at all the rules in toto, asking simultaneously the questions: What is the fundamental purpose of law school regulation? How do the standards maintain public confidence in legal education while encouraging law schools to revisit their basic instructional and economic models, in light of the changing landscape for students, faculty, and lawyers? And how can these standards be framed as drivers of innovation and of creative reform, rather than as maintenance of a model of legal education that is coming under challenge, and from many quarters, as ill-suited to the needs, wants, and exigencies of the profession?

Drilling deep into these questions can assist the Council and its many stakeholders in opening the kind of dialogue that promises to lead, albeit not in the next few months or even couple years, to important change.

More specifically, the ABA Council might think in earnest about the following ...

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August 18, 2014 in Legal Education | Permalink | Comments (0)

WSJ: Meet the Law Professor Who’s Crashing the Inversion Party

Following up on my previous posts (here and here):  Wall Street Journal, Meet the Law Professor Who’s Crashing the Inversion Party:

ShayHarvard Law School professor Stephen Shay may have single-handedly crashed the corporate inversion party.

The U.S. Treasury Department has in recent days begun weighing how it could use its power to write regulations that would eliminate some of the key economic benefits U.S. corporations get when they acquire a non-U.S. company.

Mr. Shay, who served for seven years in the Treasury during two different administrations and spent 22 years as a tax partner at Ropes & Gray LLP, appeared to be the first person to make the government aware of its powers to crack down on the advantageous tax treatment of inversions in an article published on July 29, 2014 in Tax Notes, a publication closely followed by tax professionals.

“I just started asking the question, ‘What could be done with regulation rather than legislation’,” Mr. Shay said in an interview.

His answers — in the article entitled Mr. Secretary, Take the Tax Juice Out of Corporate Expatriations — have sent chills through corporate boardrooms and the law firms that have been profiting off the recent merger mania.

August 18, 2014 in Legal Education, Scholarship, Tax | Permalink | Comments (1)

Welcome, Pepperdine 1Ls

Welcome to the Pepperdine 1Ls, beginning their legal education today with a week-long program put on by our new Parris Institute for Professional Formation, ably led by Al Sturgeon and Danny DeWalt.

LAUNCH WEEK 2014

August 18, 2014 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 466

IRS Logo 2New York Observer: Deadline: Judge Emmet Sullivan Lays Down the Law:

On behalf of the country, Judge Emmet Sullivan is pounding the IRS and appears as unsatisfied as most of America with the agency’s stalling, side-stepping, neglect, arrogance, and cavalier attitude toward its legally required record-retention responsibilities. Late yesterday afternoon, Judge Sullivan entered an order that demands answers to a lot more questions.

The IRS’s filing in Judge Sullivan’s court Monday evidenced no interest in finding the emails all of us know are out there somewhere. The fact that the IRS took thirty days to file its meager declarations, which actually said less than it had disclosed to Congress, is truly insulting. The agency better take Judge Sullivan seriously—and fast—or he’s the one who will be furious. Have IRS officials Kane and Koskinen still not reviewed what this fearless enforcer of the law did to the last Department of Justice prosecutors who played games with the truth in his courtroom? ...

The IRS is represented by Department of Justice attorneys. Do they not read the news, the latest books, or the law? This column has tried to warn them repeatedly that, like Toto, they’re not in Kansas any more. They are in the federal courtroom of a real Article III judge who has powers they should bloody well know not to ignore—the same kind wielded by Judge John Sirica, whose integrity and persistence in dealing with the Watergate case led to the resignation of Richard M. Nixon.

This is the same Emmet Sullivan who appointed a special prosecutor and initiated criminal contempt proceedings and a full investigation of the Department of Justice attorneys who played unethical and dishonest games in the prosecution of United States Senator Ted Stevens.

Someone in DOJ or the IRS better find those emails, fast, or this Judge will do it for them and they’ll just think they were caught up in a Category V tornado—or wish they had been and carried off to Oz instead. Judge Sullivan will keep on until he finds the man behind the curtain.

One of the things I can’t help but continue to wonder is, if the emails and all the information truly were not recoverable from the Lerner hard drive, why did the hard drive have to be “degaussed” and destroyed to “protect taxpayer privacy”? And why did someone testify to Congress that an IRS IT expert said it should be given to an outside vendor to retrieve the messages—and instead, the hard drive was degaussed and shredded?

With each turn, the IRS has raised more questions than it has answered. But this time it’s not the media and the citizens doing the asking. They’ve now got a week to answer to a judge.

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August 18, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, August 17, 2014

Who Killed Dan Markel?

Hit the Reset Button in Your Brain

New York Times Sunday Review:  Hit the Reset Button in Your Brain, by Daniel J. Levitin (McGill) (author, The Organized Mind (2014)):

Organized MindThis month, many Americans will take time off from work to go on vacation, catch up on household projects and simply be with family and friends. And many of us will feel guilty for doing so. We will worry about all of the emails piling up at work, and in many cases continue to compulsively check email during our precious time off.

But beware the false break. Make sure you have a real one. The summer vacation is more than a quaint tradition. Along with family time, mealtime and weekends, it is an important way that we can make the most of our beautiful brains. ...

If you’re feeling overwhelmed, there’s a reason: The processing capacity of the conscious mind is limited. This is a result of how the brain’s attentional system evolved. Our brains have two dominant modes of attention: the task-positive network and the task-negative network (they’re called networks because they comprise distributed networks of neurons, like electrical circuits within the brain). The task-positive network is active when you’re actively engaged in a task, focused on it, and undistracted; neuroscientists have taken to calling it the central executive. The task-negative network is active when your mind is wandering; this is the daydreaming mode. These two attentional networks operate like a seesaw in the brain: when one is active the other is not. ...

Every status update you read on Facebook, every tweet or text message you get from a friend, is competing for resources in your brain with important things like whether to put your savings in stocks or bonds, where you left your passport or how best to reconcile with a close friend you just had an argument with.

If you want to be more productive and creative, and to have more energy, the science dictates that you should partition your day into project periods. Your social networking should be done during a designated time, not as constant interruptions to your day.

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August 17, 2014 in Book Club, Legal Education, Tax | Permalink | Comments (0)

Are You a Faculty of Hunters or a Faculty of Farmers?

Above the Law, Are You A Hunter Or A Farmer?:

David Maister, in his classic book Managing the Professional Firm, makes an observation that most professional firms fall into two categories: Farmers and Hunters.

Hunters

Traits

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August 17, 2014 in Legal Education | Permalink | Comments (0)

Top 5 Tax Paper Downloads

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads on SSRN, with a new #1 paper and new papers debuting on the list at #4 and #5:

  1. [370 Downloads]  Guide to FATCA Compliance (Chapter 1, Background and Current Status of FATCA) (LexisNexis 2d ed. 2014), by William Byrnes (Thomas Jefferson), Denis Kleinfeld, & Alberto Gil Soriano
  2. [228 Downloads]  Desperate Retirees: The Perplexing Challenge of Covering Retirement Health Care Costs in a YOYO World, by Richard L. Kaplan (Illinois)
  3. [203 Downloads]  Unconstitutional Perpetual Trusts, by Steven Horowitz (Sidley Austin, Chicago) & Robert Sitkoff (Harvard)
  4. [153 Downloads]  The Futility of Tax Protestor Arguments, by Allen D. Madison (South Dakota)
  5. [128 Downloads]  The Most Critical Issue Facing Tax Administration Today -- And What to Do About It, by George K. Yin (Virginia)

August 17, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 465

IRS Logo 2Bloomberg: Federal Judge Wants Answers From the IRS on Missing E-mails:

A federal judge signaled that he doesn’t believe the Internal Revenue Service did all it could to unearth the missing e-mails at the heart of a Congressional investigation into the agency’s treatment of Tea Party organizations.

U.S. District Judge Emmet Sullivan late yesterday asked the IRS for a list of steps it took to retrieve e-mails of Lois Lerner, who was the official in charge of determining whether the antitax Tea Party groups could qualify for nonprofit status. The IRS has said a crash of her hard drive wiped out e-mails from 2009 to 2011.

Sullivan, appointed to the court by former President Bill Clinton in 1994, gave the IRS until next week to answer several questions about how it decided the e-mails were beyond recovery. Among them, he asked the agency whether it sought e-mails from alternate sources, such as a BlackBerry, iPhone, or iPad; to explain how it tracks computer parts when they’re serviced or taken out of use; and to provide a statement from an outside vendor “who can verify the IRS’ destruction policies concerning hard drives.”

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August 17, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, August 16, 2014

Why Law School Rankings Matter More Than College, Business School, and Medical School Rankings

U.S. News (2015)Forbes, Why Law School Rankings Matter More Than Any Other Education Rankings:

[I]s all the hysteria warranted? Does a higher rank really guarantee better job prospects, higher salaries, and ultimately, a better life? The data says no…for the most part. While rankings are certainly helpful in a broad, directional sense, most of the obsession is groundless…with the exception of law school. At FindTheBest, we took a look at each major type of institution—undergraduate, business, medicine, and law—to see which rankings actually matter.

Undergraduate Rankings ... Conclusion: rankings don’t matter much
Business School Rankings ... Conclusion: rankings only matter a little, and can change quickly
Medical School Rankings ... Conclusion: rankings do matter, to a point, but residencies and concentrations should be your primary concern

Law School Rankings And so we finally arrive at law school, where as it turns out, rankings couldn’t be more important. For starters, consider that the top 14 schools in the nation have remained unchanged for 25 years—without a single new contender since US News started publishing law school rankings in 1989. Yes, the exact order among these 14 has changed a bit from year to year, but the top 14 (often abbreviated as the T14), has maintained its elite, unassailable status.

The T14’s dominance has created a year-after-year, self-fulfilling prophecy, where students covet these top institutions, the best professors desire to teach at these institutions, and law firms choose to hire from these institutions, essentially ensuring that the same group will remain the T14 for years to come. Employers admit that JDs from the T14 will be welcomed at law firms across the nation, while graduates of even the next best schools (like UCLA or Texas, perennially ranked between 15-20) will be much better off sticking to local markets.

Note how the top 14 schools claim the best employment rates in the nation:

The discrepancy is even more obvious if you look at employment at the largest, most desirable firms:

The T14 phenomenon has been around for decades, but recent trends in the legal market have exacerbated the situation. With an over-saturated pool of lawyers and law firms receiving an unprecedented number of applications, employers can be extremely picky, choosing only candidates guaranteed to be stellar. T14 graduates quickly snap up spots at the best employers, leaving lower-ranked law school graduates the smaller-firm crumbs.

Conclusion: rankings matter tremendously—a spot in a top 14 school is essential

So when it comes to most educational rankings, don’t worry so much about whether you’re attending the #1, #10, or even #50 school: students end up doing just as well, and there are often more important details to keep in mind. Don’t worry, that is, unless you’re going to law school, where it can make all the difference in the world.

Above the Law, Why You Absolutely Should Care About Law School Rankings

August 16, 2014 in Law School Rankings, Legal Education | Permalink | Comments (7)

Dear Mr. President, Why I'm Leaving America

America Getting OutForbes, Dear Mr. President, Why I'm Leaving America:

Dear Mr. President,

I am writing with a heavy heart as I, my husband, and our daughter are all seriously contemplating giving up our U.S. citizenship. We are doing this not to avoid paying U.S. taxes but because we strongly object to a system that is blatantly discriminatory and unfair to law-abiding Americans living outside the country. In addition, it has become too expensive, too difficult, and frankly, too frightening, to try to comply with all of the tax filing requirements that now apply to citizens living abroad. ...

[T]he overall burden and the unfairness have become too heavy to reasonably bear. My earliest known American ancestor, who sailed from Europe and settled in Kentucky 166 years ago, is probably “rolling over in his grave” to think that I am giving up my U.S. citizenship. However, growing up in Colorado I was raised and educated to stand up for what is right. I have been doing that ever since.

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August 16, 2014 in Tax | Permalink | Comments (2)

Massive (50%-70%?) Faculty Layoffs at Cooley Law School

WMU Cooley logoLansing City Pulse, Cooley 'Right-Sizing': Large-Scale Layoffs Underway at WMU Cooley Law School:

Western Michigan University Thomas M. Cooley Law School is delivering pink slips to faculty and staff in all of its Michigan campuses.

Sources in Lansing who are being laid off say the cuts are deep, upwards of 50 percent, according to one. Another said the impact could be as high as 70 percent. A Cooley spokesman disputed the amount, but said he did not have numbers.

“We have non-disparagement and confidentiality clauses upon which our severance packages hinge so I cannot say anything on the record and very little off the record other than to confirm that the cuts to faculty and staff are significant and I am among those in that category,” shared one faculty member, who spoke under condition of anonymity. “Plus I am really, really pissed.” ... Cooley, the country’s largest law school by enrollment, boasted a faculty of 271, full time and part time, according to its website.

James Robb, associate dean of external affairs and senior counsel to the school, confirmed the layoffs are underway. They are a “painful but necessary” process to help “right-size the organization,” he said. ... WMU Cooley Law School has seen more than a 40 percent drop in enrollment over the past few years. Cooley has raised tuition by 9 percent. S&P gave it a negative rating at the end of last year. ...

When asked if the cuts were as deep as 50 percent Robb said, “I think you’re hearing wrong.” ... Robb said he expects the layoff process to be completed by the end of August.

August 16, 2014 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 464

IRS Logo 2Legal Insurrection:  Judge Launches Special Inquiry Into Missing IRS Emails and Lerner Hard Drive, by William Jacobson (Cornell):

Judicial Watch has sued over missing IRS emails in the federal district court in D.C., pursuant to its FOIA request for such documents.

The IRS was ordered to provide explanations as to missing emails, particularly Lois Lerner.

The IRS provided explanations, but those were not good enough for the Judge, who launched his own inquiry into the matter, as Judicial Watch explained in a statement posted on its website.

Here is the Judge’s Order (emphasis added, hard paragraph breaks inserted for ease of reading):

MINUTE ORDER. In light of [26] the Declarations filed by the IRS, the IRS is hereby ORDERED to file a sworn Declaration, by an official with the authority to speak under oath for the Agency, by no later than August 22, 2014.
In this Declaration, the IRS must:
(1) provide information about its efforts, if any, to recover missing Lois Lerner emails from alternate sources (i.e., Blackberry, iPhone, iPad);
(2) provide additional information explaining the IRS’s policy of tracking inventory through use of bar code property tags, including whether component parts, such as hard drives, receive a bar code tag when serviced. If individual components do not receive a bar code tag, provide information on how the IRS tracks component parts, such as hard drives, when being serviced;
(3) provide information about the IRS’s policy to degauss hard drives, including whether the IRS records whose hard drive is degaussed, either by tracking the employee’s name or the particular machine with which the hard drive was associated; and
(4) provide information about the outside vendor who can verify the IRS’s destruction policies concerning hard drives.
Signed by Judge Emmet G. Sullivan on August 14, 2014.

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August 16, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, August 15, 2014

Weekly Tax Roundup

August 15, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Is Legal Scholarship Politically Biased?

Adam S. Chilton (Chicago) & Eric A. Posner (Chicago), An Empirical Study of Political Bias in Legal Scholarship:

Law professors routinely accuse each other of making politically biased arguments in their scholarship. They have also helped produce a large empirical literature on judicial behavior that has found that judicial opinions sometimes reflect the ideological biases of the judges who join them. Yet no one has used statistical methods to test the parallel hypothesis that legal scholarship reflects the political biases of law professors. This paper provides the results of such a test. We find that, at a statistically significant level, law professors at elite law schools who make donations to Democratic political candidates write liberal scholarship, and law professors who make donations to Republican political candidates write conservative scholarship. These findings raise questions about standards of objectivity in legal scholarship.

Figure 3

Professors who are Democrats (adjusted)—shown in the left panel—have an average article ideology of -2.67 with a 90% confidence interval of -3.13 to -2.21. Using a t-test, we can say that this is statistically different from zero (p-value < 0.00). Professors who are Republicans (adjusted)—shown in the right panel—have an average article ideology of 0.17 with a 90% confidence interval of -0.72 to 1.10. For these professors, we cannot reject the possibility that the true net ideology of their articles is zero (p-value = 0.72). In other words, our data suggest that Democrats in our sample do not write articles that are on balance neutral, but that Republicans in our sample may write articles that are on balance neutral. ...

[I]f it is in fact the case that Republicans write less ideologically biased scholarship than Democrats do, then one would naturally ask why. The most plausible explanation is that if the dominant ethos in the top law schools is liberal or left-wing,51 then Republicans are likely to conceal their ideological views in their writings. Republican professors might fear that scholarship that appears conservative may be rejected by leftleaning law review editors, and disparaged or ignored by their colleagues, which will damage their chances for promotions, research money, and lateral appointments. This would explain why even nondonors tilt left. Republicans could suppress their ideological views by avoiding controversial topics, taking refuge in fields that have little ideological valence, focusing on empirical or analytical work, or simply writing things that they don’t believe.

Table 4

The data presented in Table 4 suggest that constitutional rights scholars are less ideologically diverse than other legal scholars. Among constitutional rights scholars, 77% are net Democratic donors, and 4% are net Republican donors. In the rest of the sample, 40% are net Democratic donors, and 20% are net Republican donors. It also shows that constitutional rights scholars are more likely to produce biased research (mean of -3.85 conservative articles) than Republican and Democratic scholars in other fields (mean of -1.35 conservative articles).

August 15, 2014 in Legal Education, Scholarship | Permalink | Comments (3)

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