TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Monday, April 24, 2017

Anderson:  Whittier Law School Closing Is Another Sad Story Of Generational Wealth Shifting, With Millennial Students Incurring Huge Debts To Subsidize Baby Boomer Faculty Sinecures

WhittierFollowing up on my previous posts (links below):  Robert Anderson (Pepperdine), Generational Wealth Shifting and the Unnecessary Whittier Law School Story:

[G]iven the performance of Whittier's grads on the bar exam in recent years as well as the drop in applications, closing Whittier is probably the right decision.

The unfortunate truth of this story is that none of this needed to happen. ... When the contraction began, law schools should have reduced class sizes to maintain their traditional standards for admission. ... Of course, reducing class size would entail a decrease in revenues that would require a reduction in expenses. Normally, such a reduction would be hard to find.

But law schools had a unique opportunity during this contraction, which many of them squandered. The number of retirement-age faculty was (and is) enormous, likely larger than it has ever been. If faculties had looked beyond their own personal financial self interest they could have easily contracted to meet the market demand and avoided the disastrous effects that have afflicted law students and now law schools.

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April 24, 2017 in Legal Education | Permalink | Comments (0)

Trump Promises To Unveil 'Massive' Tax Cut On Wednesday, Leaving Treasury Department Officials 'Speechless'

Trump

New York Times, Trump Vows to Unveil Tax-Cut Plan Next Week, Surprising Staff:

President Trump promised on Friday that he would unveil a “massive” tax cut for Americans next week, vowing a “big announcement on Wednesday,” but he revealed no details about what is certain to be an enormously complicated effort to overhaul the nation’s tax code.

Mr. Trump offered his tax tease in an interview and again during remarks at the Treasury Department on Friday afternoon as he raced to stack up legislative accomplishments before his 100th day in office at the end of next week.

His announcement surprised Capitol Hill and left Mr. Trump’s own Treasury officials speechless as he arrived at the Treasury offices to sign directives to roll back Obama-era tax rules and financial regulations. Earlier in the day, when reporters asked Steven Mnuchin, the Treasury secretary, how far away a tax overhaul proposal was, he said he could not give an answer. “Tax reform is way too complicated,” he said.

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April 24, 2017 in Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, April 23, 2017

Diamond:  Whittier's Decision To Close Its Law School Violates AAUP Tenure Protections, Harms Diversity, And Ignores The Rebounding Legal Employment Market

WhittierFollowing up on my previous posts (links below):  TaxProf Blog op-ed: Whittier’s Big Mistake, by Stephen Diamond (Santa Clara):

Inevitably law school critics are crowing over the recently announced closure by Whittier College of its 50 year old ABA accredited law school. The news shocked and angered students who appeared to have no advance notice. Faculty immediately filed for a TRO (represented by a recent star graduate of their own law school, by the way) which was denied but they no doubt intend to respond with a full lawsuit.

And they should.

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April 23, 2017 in Legal Education | Permalink | Comments (0)

Today Is Tax Freedom Day — Earlier In MS, TN & SD, Later In CT, NJ & NY

Tax Foundation logoTax Foundation, Tax Freedom Day 2017 is April 23rd:

  • This year, Tax Freedom Day falls on April 23rd, 113 days into the year.
  • Tax Freedom Day is a significant date for taxpayers and lawmakers because it represents how long Americans as a whole have to work in order to pay the nation’s tax burden.
  • Americans will pay $3.5 trillion in federal taxes and $1.6 trillion in state and local taxes, for a total bill of more than $5.1 trillion, or 31 percent of the nation’s income.
  • Americans will collectively spend more on taxes in 2017 than they will on food, clothing, and housing combined.
  • If you include annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur 14 days later, on May 7.

Tax Freedom Day

Center on Budget and Policy Priorities, Tax Foundation Figures Do Not Represent Typical Households’ Tax Burdens: Figures May Mislead Policymakers, Journalists, and the Public:

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April 23, 2017 in Tax, Think Tank Reports | Permalink | Comments (0)

The Top 5 Tax Paper Downloads

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

  1. [355 Downloads]  Background and Current Status of FATCA, by William Byrnes (Texas A&M) & Robert J. Munro (Texas A&M)
  2. [346 Downloads]  House Plan's Bad Math: Over-Estimates of Revenue from a Border Adjustment, by David Kamin (NYU) & Brad Setser (Council on Foreign Relations)
  3. [328 Downloads]  Destination-Based Cash Flow Taxation, by Alan Auerbach (UC-Berkeley), Michael P. Devereux (Oxford), Michael Keen (IMF) & John Vella (Oxford)
  4. [216 Downloads]  The Offshore Tax Enforcement Dragnet, by Shu-Yi Oei (Tulane)
  5. [200 Downloads]  The First McGee Annual Report on the Best and Worst States for Business, by Robert W. McGee (Fayetteville State University)

April 23, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 1445:  'True The Vote v. IRS' Lawyer: 'The Deep State Is Still Operating'

IRS Logo 2PJ Media, 'True the Vote v. IRS' Lawyer: 'The Deep State Is Still Operating':

A prominent constitutional attorney is sounding the alarm over Obama administration-style behavior by attorneys in President Trump's new administration. Jim Bopp, Jr., the attorney for the plaintiff in the landmark Citizens United suit, told PJ Media that he has seen no change in the attitude of government attorneys since Trump's inauguration:

The Deep State is still operating, no question. ...

I see no evidence the attitude of the IRS has changed. We have a new attorney general, and the Department of Justice is providing the lawyers to defend the IRS in this case. We've seen no change.

Bopp is currently involved with two similarly high-profile suits against the federal government and he says the Trump administration's defense attorneys are presenting arguments indistinguishable from those he faced during Obama's tenure.

In True the Vote v. IRS, election integrity watchdog True the Vote sued the federal government in 2013 over its targeting of pro-liberty non-profit groups for extra scrutiny. This case has wide implications for all non-profits that claimed their tax status was denied or delayed by Lois Lerner and a rogue IRS. ...

It boggles the mind that the IRS in a Trump administration would still be defending the actions of Lois Lerner and the notorious branch in Cincinnati. They had burdened groups with "Tea Party," "Liberty," "Constitution," and other related words in their title with mountains of extra paperwork to affirm their non-profit tax status. Yet, according to Bopp, that is indeed the case. ...

Bopp's observations come amid a renewed push by House Republicans to reopen the case against Lerner for possible prosecution. On April 9, House Ways and Means Committee Chairman Kevin Brady and Tax Policy Subcommittee Chairman Peter Roskam sent a letter to Attorney General Jeff Sessions requesting he reopen the probe.

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April 23, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, April 22, 2017

This Week's Ten Most Popular TaxProf Blog Posts

Harvard Seeks To Hire A Clinical Tax Prof

Harvard Law School (2016)Job Announcement:  Clinical Fellow, Harvard Law Sc hool Federal Tax Clinic:

Duties & Responsibilities:  The Legal Services Center of Harvard Law School (LSC) seeks to hire a Clinical Fellow in the Federal Tax Clinic [launched in Fall 2015]. The Clinic — through which Harvard Law students receive hands-on lawyering opportunities — provides direct legal representation in tax controversies to low-income taxpayers.

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April 22, 2017 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

100 Students Protest Closure Of Whittier Law School

WhittierFollowing up on my previous posts (links below):  Orange County Register, Dozens of Angry Whittier Law School Students Protest After College Announces Closure:

About 100 law students angry over the announced closure of Whittier College’s law school in Costa Mesa this week demonstrated at the college’s main campus on Friday, April 21.

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April 22, 2017 in Legal Education | Permalink | Comments (5)

The IRS Scandal, Day 1444:  Judicial Watch Sues IRS Over Email Preservation

IRS Logo 2Press Release, Judicial Watch Sues IRS Over Email Preservation:

Judicial Watch today announced that it filed a Freedom of Information Act (FOIA) lawsuit against the Internal Revenue Service (IRS) to obtain records relating to the agency’s “preservation and/or retention” of the email records of officials who have left the agency since January 2010. (Judicial Watch v. Internal Revenue Service (No.1:17-cv-00596)). The suit was filed as part of Judicial Watch’s continuing efforts to gain information about the IRS’ targeting of conservative groups and citizens during the Obama administration.

Judicial Watch filed the complaint after the IRS failed to respond to a November 15, 2016, FOIA request seeking:

  • All records concerning the preservation and/or retention of email records generated by IRS officials and employees upon their departure from the IRS; and
  • All records related to any changes, updates, or modifications to IRS policies and procedures for the retention of email records generated by IRS officials and employees.

The timeframe for the request is for records from January 1, 2010, to the present.

“Judicial Watch doesn’t trust the IRS, especially given its dishonesty about Lois Lerner’s emails,” said Judicial Watch President Tom Fitton. “The IRS was used by Obama and his allies to suppress his political opposition in a way that helped guarantee his re-election. Now we need to make certain that the IRS is not continuing to try to cover its tracks by destroying records.”

Judicial Watch’s litigation forced the IRS first to say that emails belonging to Lois Lerner, former director of the Exempt Organizations Unit of the IRS, were supposedly missing and later declare to the court that the emails were on IRS back-up systems.  Lerner was one of the top officials responsible for the IRS’ targeting of President Obama’s political opponents.

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April 22, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, April 21, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Daniel Hemel (Chicago) reviews a new article by Richard Schmalbeck (Duke), Jay Soled (Rutgers), and Kathleen DeLaney Thomas (North Carolina), Advocating A Carryover Tax Basis Regime, 93 Notre Dame L. Rev. (forthcoming 2017).

HemelCandidate Donald Trump’s campaign platform contained a cryptic line regarding the tax treatment of assets transferred at death: “The Trump Plan will repeal the death tax, but capital gains held until death and valued over $10 million will be subject to tax to exempt small businesses and family farms.” Some read that to mean Trump would treat death as a realization event; others interpreted it to mean that Trump would allow inheritors to defer capital gains tax until they sold the inherited asset, but with carryover rather than stepped-up basis. No one was quite sure how the $10 million exemption would work. Would it apply to the first $10 million in transferred assets or the first $10 million in capital gains? (Unless the decedent’s basis is zero, those two things aren’t the same.)

To help us sort through these alternatives, Richard Schmalbeck, Jay Soled, and Kathleen DeLaney Thomas have produced an excellent article arguing for a carryover basis regime and against any exemption. Soled, Thomas, and James Alm of Tulane have published two shorter pieces in Tax Notes advocating a carryover basis regime limited to marketable securities. (See Soled, Alm & Thomas, A New Carryover Tax Basis Regime for Marketable Securities, 154 Tax Notes 835 (Feb. 13, 2017); Soled, Alm & Thomas, Trump and a Populist Agenda?, 154 Tax Notes 1131 (Feb. 27, 2017).) Soled, Thomas, and Alm also have condensed their argument into an op-ed for The Hill, distilling a complicated issue of tax law into clear language comprehensible to nonlawyers.

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April 21, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (1)

Weekly Tax Roundup

Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog):

Monday, April 17, 2017

Diane Ring, Panama Papers: The One-Year Anniversary (Surly Subgroup). "At its core, the leak revealed the true ownership of over 200,000 offshore entities, thereby raising a host of tax and political questions regarding many of the entities’ owners."

Jack Townsend, Court Denies Motion to Dismiss Counts Against Tax Shelter Lawyer. “I will cut and paste Judge Rakoff’s discussion about § 7212(a) which I think offers good review for tax crimes lawyers.”

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April 21, 2017 in IRS News, Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

Faculty Weighs Legal Options To Block Closure Of Whittier Law School After Court Rejects TRO; Board Pulled Plug With Only 40 Students Expected In Fall 2017 1L Class, Down 70% From 2016 (And 87% From 2010)

WhittierFollowing up on my previous posts (links below):  

Orange County Register, Faculty Fights Back Against Plan to Close Whittier Law School:

Whittier Law School faculty, angered at this week’s announcement that the campus will close its doors, are mulling over legal options after last-minute efforts to delay the public disclosure fell short.

A day before the Whittier College Board of Trustees announced that the law school will be discontinued, attorneys for more than a half-dozen faculty members filed an attempt for a temporary restraining order against the parent school.

A judge denied their request. But the issues raised in the court filings — including questions about the fate of millions of dollars raised in a recent sale of the Costa Mesa campus property that faculty contend was promised to the law school — will likely be at the center of future litigation, an attorney for the faculty members said on Thursday.

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April 21, 2017 in Legal Education | Permalink | Comments (2)

NY Times:  The IRS Enlists Debt Collectors To Recover Overdue Taxes, 'Placing A Bull’s-Eye On The Backs Of Low-Income Taxpayers' And 'Putting Out Barrels Of Honey For Scammers'

IRS Logo 2Following up on Tuesday's post, The IRS's Use Of Private Debt Collectors Will Not End Well (Again):  New York Times, I.R.S. Enlists Debt Collectors to Recover Overdue Taxes:

The Internal Revenue Service is about to start using four private debt-collection companies to chase down overdue payments from hundreds of thousands of people who owe money to the federal government, a job it has handled in house for years.

Unlike I.R.S. agents, who are not usually allowed to call delinquent taxpayers by telephone, the outside debt-collection agencies will have free rein to do so. Consumer watchdogs are fearful that some of the nation’s most vulnerable taxpayers will be harassed and that criminals will take advantage of the system by phoning people and impersonating I.R.S. collectors.

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April 21, 2017 in IRS News, Tax | Permalink | Comments (0)

Thursday, April 20, 2017

Experts: Whittier Law School’s Collapse Won’t Be The Last

WhittierNational Law Journal, Whittier Law School’s Collapse Won’t Be the Last: Experts:

Whittier Law School on Wednesday became the second law school in the past year to announce plans to shutter, leaving legal education pundits speculating as to if — or, more likely, when — the next school will collapse.

“It’s a big deal,” said Paul Caron, incoming dean of Pepperdine University School of Law who writes about legal education on the TaxProf Blog.

Whittier’s demise reflects the larger struggle legal education faces as enrollments have fallen and the entry-level legal job market stagnates. Adding to Whittier’s woes is an angry faculty that has taken to the courts to try and stop its closure.

Whittier’s closure likely could be the first of others, because its economic troubles are not unique, Caron said.

“There has been a thought that there might be some university presidents out there not wanting to go first, who feel their law school no longer makes financial sense but were hesitant to pull the plug,” he said. ...

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April 20, 2017 in Legal Education | Permalink | Comments (4)

LSAC Moves Toward Digital LSAT (Ten Years After MCAT), Says It Was Not Due To Growing Use Of GRE In Law School Admissions

LSAT (2015)National Law Journal, Embracing Digital, LSAT Loosens Its Grip on the No. 2 Pencil:

The Law School Admission Test’s 69-year stint as a pencil-and-paper exam could be coming to a close.

The Law School Admission Council Inc., which administers the LSAT, on May 20, will conduct the first nationwide digital exam with 1,000 prospective law students taking the test on tablet computers. The May exam is just a pilot to test the logistics of deploying the tablets, and the scores won’t be official or be provided to schools for admissions purposes. But the large-scale test signals that the LSAC is closely examining a digital future.

“The LSAT is the last remaining paper-and-pencil test out there, at least in the graduate school admissions space,” said Jeff Thomas, executive director of pre-law programs for Kaplan Test Prep. “They’re late to the game.”

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April 20, 2017 in Legal Education | Permalink | Comments (2)

The Taxing Power After Sebelius

Bret N. Bogenschneider (University of Surrey), The Taxing Power After Sebelius, 51 Wake Forest L. Rev. 941 (2016):

In National Federation of Independent Business v. Sebelius, the individual mandate of the Affordable Care Act was upheld under Congress’s taxing power rather than pursuant to the Commerce Clause. Although politically expedient, the salutary effect of the decision came at the expense of an undefined expansion of the taxing power. The Congressional Research Service concluded that, after Sebelius, the limits of the Congressional taxing power are unknown. Accordingly, the Congressional staff attorneys listed prior cases that ostensibly limit the taxing power and then predicted that future cases will be needed to define the limits going forward.

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April 20, 2017 in Scholarship, Tax | Permalink | Comments (2)

Tenured Faculty Sue To Stop Closure Of Whittier Law School

WhittierFollowing up on yesterday's post, Whittier Law School To Close, Will Not Admit A 1L Class This Fall:  several tenured faculty have filed this lawsuit to enjoin the law school's closing:

Since 1985, the Law School has been fully accredited by the American Bar Association (the "ABA").  In 1996, the College acquired a 14-acre campus in Costa Mesa on which the Law School has operated continuously. Throughout that time, the Law School has remained a highly profitable part of the College. The Law School tuition revenues have covered all of the Law School's operating expenses, including servicing all debt on its 14-acre campus. And the lion's share of all residual Law School tuition revenues has been appropriated each year by the College-purportedly to cover overhead services allegedly provided by the College to the Law School.

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April 20, 2017 in Legal Education | Permalink | Comments (12)

The IRS Scandal, Day 1442:  Editorial Calls For Firing IRS Commissioner Koskinen

IRS Logo 2Washington Examiner, Fire IRS chief John Koskinen:

President Trump needs a win. The public would benefit from reassurance about the institutions of government. Luckily, both can be achieved with a single action. Trump should dismiss IRS Commissioner John Koskinen.

By telling the taxman he's fired, the president would re-energize his young administration. More importantly, he would also significantly reform the most loathed agency in Washington. Tax Day provides a perfect chance for this sort of principled populism. ...

So long as Koskinen stays in his job, taxpayers have no such assurance. He was brought in by President Obama to clean up the IRS in 2013, but has succeeded only in making the agency more corrupt. A political crook and a liar, Koskinen has no place working in the Trump administration. ...

But Koskinen set himself above the rules. Trump vows to drain the swamp, and the IRS boss is an especially capable and devious swamp monster. House Republicans have tried shaming, censuring, and even threatening to impeach him. But each time, he's found a way to survive.

The failure of past lawmakers provides Trump a perfect opportunity. As the head of an administrative agency, Koskinen serves at the pleasure of the president. A word from Trump would send him packing and bring closure to the controversy.

A principled power move, firing Koskinen would also provide the White House with a needed influx of political capital. What's more, it would signal the beginning of a new era of good government during the Trump era.

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April 20, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, April 19, 2017

Whittier Law School To Close, Will Not Admit A 1L Class This Fall

WhittierA Message from the Whittier College Board of Trustees:

The Board of Trustees has been greatly concerned by the challenges affecting our law program in recent years and, in 2015, the Board appointed a subcommittee to explore options for the future of the Law School. These have included working with the administration and faculty to redirect resources and efforts to improve student outcomes and right-size the operation in a manner to achieve enhanced academic viability. The Board invited a faculty task force to assess the educational program and considered faculty plans for improvement. The Board also entered into conversations with entities capable of investing in, merging with, or acquiring the Law School.

We believe we have looked at every realistic option to continue a successful law program. Unfortunately, these efforts did not lead to a desired outcome.

Accordingly, on April 15, 2017 the Board voted not to enroll new 1L classes at the Law School beginning this fall. We are committed to ensuring that students currently enrolled will have an opportunity to complete their degree in a timely fashion. At the appropriate time, the program of legal education will be discontinued.

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April 19, 2017 in Legal Education | Permalink | Comments (7)

President Trump Threatens Law Schools' $350 Million Revenue From Foreign LL.M. Students

Trump LLMNational Law Journal, Will Law Schools’ LL.M Programs Suffer from Trump’s ‘America First’ Stance?:

Law school administrators say concerns are growing from foreign students about how the myriad immigration and travel policies emerging from Washington could impact their plans to obtain LL.M degrees in the United States.

The advanced law degree programs bring in about $350 million annually to the more than 100 U.S. law schools that offer them, with around 10,000 foreign students coming here each year to pursue an LL.M.

LL.M faculty are worried that those lucrative programs could lose their luster should the United States gain a reputation as unwelcoming to foreigners, and they say some LL.M applicants are grappling with whether they want to come to such a place.

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April 19, 2017 in Legal Education | Permalink | Comments (13)

Steve Ballmer Launches USAFacts To Track Government Spending And Taxing

USAFactsWashington Post, Tax Transparency in the Age of Trump:

Steve Ballmer, former CEO of Microsoft and current owner of the Los Angeles Clippers, is doing a significant public service. According to an article in the New York Times, Ballmer has funded a project to compile where every cent of government money is raised and spent at the federal, state and local levels. By clicking on USAFacts.org, anyone will be able to discover how much is raised in corporate versus sales or income taxes; how much money goes to their school district and what percentage is spent on teacher versus administrative salaries; how much the government spends on treating some specific categories of disease, such as depression; how much goes to diplomatic services versus the military. And so on. One hopes that Ballmer’s old friends at Xbox could turn all this data into an entertaining and instructive video game called “Taxes Versus Spending.”

Ballmer hopes that public debate will be strengthened by the availability of a common set of accurate data, perhaps echoing Daniel Patrick Moynihan’s saying that one is “entitled to his own opinion, but not his own facts.”

New York Times Deal Book: Steve Ballmer Serves Up a Fascinating Data Trove, by Aaron Ross Sorkin:

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April 19, 2017 in Tax | Permalink | Comments (0)

The IRS Will Issue Tax Refunds This Year In Forever Stamps Rather Than Cash

Forever 2The Onion, IRS Announces Refunds Will Come In Form Of Forever Stamps This Year:

Stating that the policy change represented the kind of reform taxpayers have long demanded, the IRS announced Tuesday that all refunds for the 2016 fiscal year will be disbursed in the form of Forever stamps. “Persons anticipating a refund will receive a ream of Forever stamps equal to the expected amount within six to eight weeks of filing their taxes,” said IRS commissioner John Koskinen, explaining that someone with a $500 tax refund, for example, will receive an envelope containing 1,020 stamps, or roughly 51 booklets of the 49-cent postage.

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April 19, 2017 in IRS News, Tax | Permalink | Comments (5)

NYU Tax Law Review Publishes New Issue

NYU Law (2016)The Tax Law Review has published a new issue (Vol. 69, No. 4 (Summer 2016)):

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April 19, 2017 in Scholarship, Tax | Permalink | Comments (0)

Bill Henderson: Goodbye, But Not Farewell; Jerry Organ Joins TaxProf Blog

HOABA Journal, Legal Industry-Focused Blog to Go Dark: Prof Plans New Site Focused on Legal Productivity:

The Legal Whiteboard, a blog with data-focused posts about U.S. law schools and the legal profession, is coming to an end April 30, editor Bill Henderson posted there Monday.

“I am shutting down The Legal Whiteboard so I can make a more ambitious investment in online publishing. For the next year or so, and perhaps longer if the experiment works, virtually all of my professional efforts outside of teaching will be focused on building an online publication for my core research on the legal industry,” wrote Henderson, a professor at Indiana University Maurer School of Law.

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April 19, 2017 | Permalink | Comments (0)

The IRS Scandal, Day 1441:  Lois Lerner Remains Relevant On Tax Day

IRS Logo 2Forbes: Lois Lerner, Former IRS Official, Remains Relevant On Tax Day, by Robert W. Wood:

President Trump is still facing a big backlash over his tax returns. Despite big protests, he has not released them, and there is no sign that he will. As this Tax Day passes, it seems unlikely that public cries for his tax returns are going away anytime soon. Yet curiously, some people on the right seem to be as upset with a now barely uttered name from the IRS’s past, Lois Lerner. Ms. Lerner was the former IRS official at the center of the targeting scandal. That mostly forgotten issue has nothing to do with Trump's tax returns, and it is unlikely to garner the kind of popular outcry that has been triggered over Trump's returns.

Even so, some observers cannot let go of the IRS targeting scandal. Partisan treatment from the IRS is worrisome. Some claim that Lois Lerner got off easy in the IRS scandal, and want it reopened. In fact, House Ways and Means Committee Chairman Kevin Brady and Tax Policy Subcommittee Chairman Peter Roskam sent a letter to Attorney General Jeff Sessions asking the Department of Justice to re-open a probe of her conduct. ...

IRS Commissioner John Koskinen is still at the helm of the agency, and there is no sign that he will be replaced. In addition to Ms. Lerner’s own conduct, there were numerous gaffes or glitches over the course of several years. To outsiders, the IRS seemed to behave in ways that no taxpayer engaged in a tax audit would be allowed to act. Taken as a whole, the IRS made itself look at least sloppy. For example, as recently as 2016, despite a court order to preserve documents, the IRS wiped the hard drive of an important IRS official, Mr. Samuel Maruca involved in hiring an outside law firm. Senate Finance Committee Chairman Orrin Hatch wrote a letter to the IRS complaining about the strange deal and its big fees.

The deal had nothing to do with Lois Lerner or targeting. Yet, the fact that the IRS wiped Mr. Maruca's hard drive was a reminder of Lois Lerner and all that came with her. ...

In March 2014, nine months after receiving a congressional subpoena to preserve and turn over the information, the IRS deleted approximately 24,000 Lerner emails and destroyed Lerner’s hard drive. Many emails were lost forever when 422 backup tapes were wiped clean despite a preservation order and subpoena. The House Oversight Committee report said the IRS failed to take even simple steps to ensure compliance with the order. On Tax Day, some taxpayers might wonder if the IRS would be likely to accept similar taxpayer arguments.

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April 19, 2017 | Permalink | Comments (6)

Tuesday, April 18, 2017

Galle Presents Design And Implementation Of A Charitable Regulation Regime Today At Georgetown

Galle (2016)Brian Galle (Georgetown) presents Design and Implementation of a Charitable Regulation Regime at Georgetown today as part of its Tax Law and Public Finance Workshop Series hosted by John Brooks and Itai Grinberg:

Charitable organizations are often billed as private alternatives to the governmental provision of public goods (Weisbrod 1975). Yet in developed countries many aspects of charities are subject to government dictate, or at least oversight. Government rules may circumscribe, or at least incentivize, the organizational structure of the firm, the rights and obligations of its stakeholders, what activities it will engage in or not, how much it will spend or save, even to whom it will communicate and the content of those communications. In a federated system such as the United States, a single multi-state firm might be answerable to literally dozens of separate regulators.

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April 18, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

WSJ:  How $100 Of Your Taxes Are Spent

Wall Street Journal, How $100 of Your Taxes Are Spent:

With April 18 nearly here, U.S. taxpayers are likely asking themselves: Where exactly are my tax dollars going?

To answer the question, here is a “Taxpayer Receipt” showing how each $100 of taxes was spent, both for 2016 and five years earlier. It was prepared by the Committee for a Responsible Federal Budget, a nonpartisan nonprofit group in Washington that monitors federal spending. The group’s three chairmen are Republican Mitch Daniels, Democrat Leon Panetta and independent Tim Penny.

Looking at the list of expenditures, it is clear why some say the U.S. is a giant insurance company with an army. Half of all spending goes for Social Security benefits and health programs such as Medicare and Medicaid, while another 20% is for defense and military benefits.

WSJ

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April 18, 2017 in Tax | Permalink | Comments (5)

Sen. Flake Releases Report on 'Outlandish Tax Rackets'

Flake

Sen. Jeff Flake (R-AZ), Tax Rackets: Outlandish Loopholes to Lower Tax Liabilities (press release):

As Tax Day approaches and Congress considers long-overdue tax reforms, the report is intended to highlight loopholes that create fake markets for unnecessary or unwanted goods and services; encourage more borrowing, spending, and taxing by local governments; and shift the tax burden to the middle class. ...

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April 18, 2017 in Congressional News, Tax | Permalink | Comments (1)

Columbia Symposium:  The House GOP Better Way To Tax Reform

Better WaySymposium, The Better Way Plan, 8 Colum. J. Tax L. 113-308 (2017):

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April 18, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

BYU And Pepperdine Are The Most Ideologically Balanced Faculties Among The Top 50 Law Schools (2013)

Adam Bonica (Stanford), Adam S. Chilton (Chicago), Kyle Rozema (Northwestern) & Maya Sen (Harvard), The Legal Academy's Ideological Uniformity:

Ideology

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April 18, 2017 in Legal Education, Scholarship | Permalink | Comments (8)

Chodorow:  The IRS's Use Of Private Debt Collectors Will Not End Well (Again)

Slate (2017)Slate:  The IRS Is Using Private Debt Collectors Again. And It May Not End Well, by Adam Chodorow (Arizona State):

Last year, Congress authorized the Internal Revenue Service to use private debt collectors to go after unpaid tax liabilities — and this month, if you are one of the unfortunate, you may have already had the pleasure first-hand. The U.S. Treasury hopes to assign up to 1,000 delinquent accounts a month to each of four different companies, which will be able to keep 25 percent of the tax bills they collect.

We’ve been here before — twice, in fact — and the government actually lost money. It is not at all clear why this time should be different. And even if the program does save the government money, as its proponents promise, turning over delinquent tax accounts to private debt collectors raises a host of issues that should give us pause. ...

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April 18, 2017 in IRS News, Tax | Permalink | Comments (3)

Monday, April 17, 2017

Perry Fleischer Presents The Libertarian Case For A Universal Basic Income Today At NYU

Fleischer (Miranda)Miranda Perry Fleischer (San Diego) presents Atlas Nods: The Libertarian Case for a Universal Basic Income (with Daniel Hemel (Chicago)) at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Rosanne Altshuler: :

Proposals for a universal basic income are generating interest across the globe, with pilot experiments underway or in the works in Finland, Kenya, the Netherlands, and the city of Oakland, California. Surprisingly, many of the most outspoken supporters of a universal basic income have been self-described libertarians — even though libertarians are generally considered to be antagonistic toward redistribution and a universal basic income is, at its core, a program of income redistribution. What explains such strong libertarian support for a policy that seems so contrary to libertarian ideals?

This Article seeks to answer that question. We first show that a basic safety net is not only consistent with, but likely required by, several strands of libertarianism. We then explain why libertarians committed to limited redistribution and limited government might support a system of unconditional cash transfers paid periodically. Delivering benefits in cash, rather than in-kind, furthers autonomy by recognizing that all citizens —  even poor ones — are the best judges of their needs. Decoupling such transfers from a work requirement acknowledges that the state lacks the ability to distinguish between work-capable and work-incapable individuals. Providing payments periodically, rather than through a once-in-a-lifetime lump sum grant, ensures that all individuals can receive a minimum level of support over lifespans of variable lengths, while also allowing individuals to adjust payment flows through financial market transactions.

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April 17, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (2)

Female Professors Outperform Men in Service, To Their Professional Detriment

Inside Higher Ed, Female Professors Outperform Men in Terms of Service — To Their Possible Professional Detriment:

Women shoulder a disproportionately large workload at home in ways that might disadvantage them professionally. But are female professors also “taking care of the academic family” via disproportionate service loads? A new study [Faculty Service Loads and Gender: Are Women Taking Care of the Academic Family?] says yes and adds to a growing body of research suggesting the same.

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April 17, 2017 in Legal Education | Permalink | Comments (3)

Thomas Brennan Named Stanley Surrey Professor of Law At Harvard Law School

Harvard Law School, Focus and Perspective in Taxation: Tom Brennan receives the Stanley S. Surrey Professorship of Law:

In a lecture marking his appointment as the Stanley S. Surrey Professor of Law at Harvard Law School, Tom Brennan ’01 delivered a talk titled “Focus and Perspective in Taxation.”

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April 17, 2017 in Legal Education, Scholarship, Tax | Permalink | Comments (0)

Camp:  Are We Ready For A Federal Ready Return System?

Camp (2017)TaxProf Blog op-ed:  Are We Ready for a Federal Ready Return System? Or Who Ya Gonna Call?, by Bryan T. Camp (Texas Tech):

This is the time of year where thoughtful people raise what seems like a very basic question: why does preparing taxes have to be so complicated? For example, in a recent New York Times op-ed [Filing Taxes in Japan Is a Breeze. Why Not Here?], Mr. T.R. Reid opines that our government should be able to what governments in other countries do: pre-populate tax forms. Mr. Reid says that in these other countries (Japan and the Netherlands are the two he cites),

[t]he taxpayer just has to check the numbers. If the agency got something wrong, there’s a mechanism for appeal. Our own Internal Revenue Service could do the same for tens of millions of taxpayers. For most families, the I.R.S. already knows all the numbers — wages, dividends and interest received, capital gains, mortgage interest paid, taxes withheld — that we are required to enter on Form 1040.

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April 17, 2017 in IRS News, Tax | Permalink | Comments (2)

Horwitz:  Why Full-Time Law Profs Should Support The ABA's Proposal To Permit Adjunct Profs To Teach More Courses

ABA Section On Legal Education (2016)Following up on my previous posts:

Paul Horwitz (Alabama), The Legal Academy Becomes More Like the Rest of the Academy, Part XVIIII:

Via TaxProf Blog and the ABA Journal comes the news that the ABA's Council of the Section of Legal Education and Admissions to the Bar has proposed a rule change to the current ABA standard requiring that more than half of all credit hours offered by accredited law schools be taught by full-time, and hence generally "academic," faculty. The proposal would reduce the required number to one third. Some observations: ...

2)  This is a proposal driven by real or perceived economic necessity, and a desire to legitimate changes that either are already happening — or that might need to happen if law schools are to remain afloat while cutting to the bone. ...

3)  On the whole and as an initial matter, I favor the proposal. In a now-ancient book review of Brian Tamanaha's Failing Law Schools [What Ails the Law Schools?, 111 Mich. L. Rev. 955 (2013)], I wrote approvingly of Tamanaha's proposal that we "pare down ABA accreditation requirements that force law schools into a single educational model," so that some schools can maintain the traditional and more "elite" model while others offer a "cheaper and more practically oriented model."

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April 17, 2017 in Legal Education | Permalink | Comments (5)

TaxProf Blog Weekend Roundup

Sunday, April 16, 2017

This Week's Ten Most Popular TaxProf Blog Posts

Gene Nichol Criticizes 'Nakedly Ideological' Attack On UNC Center For Civil Rights, Calls Out 'Cowardly' Dean, Provost, And Chancellor

North Carolina LogoFollowing up on my previous posts:

News & Observer op-ed: Julius Chambers Warned That Conservatives Would Oppose UNC’s Civil Rights Center, by Gene Nichol (North Carolina):

The law school in Chapel Hill is a storied institution. It has produced remarkable North Carolina leaders like Frank Graham, Bill Friday, Terry Sanford, Bill Aycock, Suzie Sharp, Jim Hunt and Henry Frye. But, at bottom, it’s a school for lawyers. And none doubt UNC’s greatest lawyer was Julius Chambers.

When I came to Carolina to become dean in 1999, one of my principal goals, ratified by the faculty and Chancellor Michael Hooker, was to establish a civil rights center. It would link powerfully to the state’s history, focus on its continuing challenges, provide otherwise unattainable experiences for students, and, I hoped, be led by America’s greatest civil rights lawyer, then N.C. Central chancellor, Julius Chambers.

It took eighteen months to talk Chambers into coming. I visited him eight times during his last year at Central. The first four he said no. The next couple, he bent a little, saying he’d think about it. On the last visit, he was serious. He began by asking, “do you have some kind of death wish?” This is North Carolina, he explained. “They won’t let you open a center to represent poor black people.” And if they do, “and if we do our work, they’ll close us down.” I was naïve. He wasn’t.

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April 16, 2017 in Legal Education | Permalink | Comments (21)

The 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, with new papers debuting on the list at #3, #4, and #5:

  1. [327 Downloads]  House Plan's Bad Math: Over-Estimates of Revenue from a Border Adjustment, by David Kamin (NYU) & Brad Setser (Council on Foreign Relations)
  2. [307 Downloads]  Destination-Based Cash Flow Taxation, by Alan Auerbach (UC-Berkeley), Michael P. Devereux (Oxford), Michael Keen (IMF) & John Vella (Oxford)
  3. [299 Downloads]  Background and Current Status of FATCA, by William Byrnes (Texas A&M) & Robert J. Munro (Texas A&M)
  4. [203 Downloads]  The Offshore Tax Enforcement Dragnet, by Shu-Yi Oei (Tulane)
  5. [195 Downloads]  The First McGee Annual Report on the Best and Worst States for Business, by Robert W. McGee (Fayetteville State University)

April 16, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 1438:  Sessions Is Noncommittal On GOP Request To Reopen DOJ Probe Of Lois Lerner

IRS Logo 2WND, Sessions 'Will Evaluate' Request to Probe IRS Boss: GOP Lawmakers Charge Lois Lerner Criminally Targeted Tea Party:

Attorney General Jeff Sessions was noncommittal when asked in an interview whether he would fulfill a request by Republican lawmakers to review evidence that former IRS official Lois Lerner engaged in criminal misconduct by targeting tea-party and conservative groups for their political beliefs.

“Are you inclined to open an investigation of Lois Lerner and the IRS?” asked Boston talk-radio host Howie Carr Thursday.

Sessions hesitated.

“Well, I would, I’m, uh, interested in that letter,” he said.

“We’re going to respond to it, and I think it would be appropriate to review certain cases, and we’ll evaluate this one for possible review,” the attorney general said.

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April 16, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, April 15, 2017

UC-Berkeley, Former Law School Dean Settle All Litigation Over Alleged Sexual Harassment; Sujit Choudhry Agrees To Pay $100,000, Resign From Tenured Faculty In Spring 2018

ChoudryFollowing up on my previous posts (links below): National Law Journal, Berkeley Law, Ex-Dean Settle Suits Over Alleged Sexual Harassment:

UC Berkeley has reached a settlement with ousted law school dean Sujit Choudhry, ending a tumultuous saga that erupted last year after his former executive assistant sued him for sexual harassment. The settlement terminates the university's ongoing disciplinary action against Choudhry, and resolves the civil lawsuit brought by his former assistant, Tyann Sorrell.

The former law dean will pay $50,000 to Sorrell's attorneys and another $50,000 to a charity of Sorrell's choice under the terms of the deal. He will also be allowed to remain a tenured professor while on sabbatical until spring 2018, at which point he will resign. ”It was important that the world understand that he [is] a tenured professor in good standing," Choudhry's lawyer, William Taylor of Zuckerman Spaeder, told The Recorder Friday evening.

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April 15, 2017 in Legal Education | Permalink | Comments (2)

Tax Policy In The Trump Administration

Groups Representing 40% Of Harvard Law Students Endorse David Wilkins For Dean

WilkinsHarvard Law Record, HLS Affinity Groups Endorse Professor Wilkins for Dean:

Thank you for including student input in your search for the next Dean of Harvard Law School. We write you as student leaders from the Asian Pacific American Law Students Association (APALSA), Harvard Black Law Students Association (HBLSA), Harvard African Law Association (HALA), Lambda, La Alianza, Middle East Law Students Association (MELSA), Native American Law Students Association (NALSA), Queer Trans People of Color (QTPOC), South Asian Law Students Association (SALSA), and Women’s Law Association (WLA). It is difficult to calculate the number of unique individuals we represent due to the intersecting identities of some of our members, but our combined membership totals at least 700 students, which is about 40% of the J.D. student body.

Collectively, we wholeheartedly offer our endorsement of Professor David Wilkins, a scholar, a researcher, an innovator, and a member of the Harvard Law School faculty. While we do not know the list of candidates under your consideration, we sincerely believe that Professor Wilkins has demonstrated a strong commitment to innovative legal thought, a deep understanding of the legal profession and legal education, and an unwavering commitment to equality and justice in the rule of law. His lived experience and nuanced understanding of the power of discourse puts him in a unique position to lead Harvard Law School into arguably one of the most crucial chapters in our school’s two-hundred-year history.

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April 15, 2017 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 1437: Lois Lerner Fears For Her Life, Asks Federal Court To Seal Her Upcoming Deposition Testimony

IRS Logo 2Washington Times, Lois Lerner Demands Secrecy, Blames Death Threats Over IRS Tea Party Targeting:

Former IRS senior executive Lois G. Lerner told a federal court this week that she faces the possibility of death threats if her role in the tax agency’s tea party-targeting becomes public, and asked a judge to forever seal her upcoming deposition in a class-action lawsuit brought by hundreds of groups that were targeted.

Mr. Lerner and Holly Paz, another figure from the IRS tea party targeting, told the judge they’ve already faced “harassment and death threats” before, and said they fear another media firestorm if their version of events from the tea party targeting were to become public.

The two women said they are willing to testify, but said they could be putting “their lives in serious jeopardy.”

“Mss. Lerner and Paz have demonstrated that the public dissemination of their deposition testimony would expose them and their families to harassment and a credible risk of violence and physical harm,” they said in documents submitted by their lawyer to Judge Michael R. Barrett. ...

The class action lawsuit involves 428 groups who were snared by the IRS targeting procedures. That case, which is being heard in a federal court in Ohio, is in the discovery phase, and Ms. Lerner and Ms. Paz are supposed to give testimony. ...

Meanwhile, in Washington, D.C., two cases brought by tea party groups are proceeding. A judge on Wednesday granted limited discovery in those cases, ordering the IRS to detail its past and current approval processes for tax-exempt organizations. Judge Reggie B. Walton also said the groups could depose Tamera L. Ripperda, a former IRS employee who ran the Cincinnati office that processed the applications. The groups also can depose the unnamed IRS employee who currently holds that same post.

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April 15, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (11)

Friday, April 14, 2017

Weekly Tax Highlight And Roundup

This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) discusses a recent Tax Court decision denying limited partner status to law firm partners.

KristanLaw firm partners find the limits of “limited.”

In the beginning, there were general partnerships and limited partnerships.

But the lawyers came down and said, “Come, let us go down and confuse their language so they will not understand each other.” Thus LLCs, LLP, LLLPs, PLCs, PLLCs, and so forth were loosed upon the firmament.

But the IRS self-employment tax regulations, in their wisdom, ignored this, and continued to speak only of general partnerships and limited partnerships. And thus a Mississippi law firm ended up in Tax Court.

In the simple world of the old regulations, general partners in a service firm pay self employment tax on all of their K-1 income, and limited partners don’t. The Mississippi law firm practiced as a “PLLC,” short for “professional limited liability company.” Under the tax law, it was treated as a partnership. The “limited liability” thing makes it sound like a limited partnership. On the advice of their tax preparer, they treated their “guaranteed payments” — what non-partners call wages and bonuses — as self-employment income, and their residual income on their K-1s as income not subject to self-employment tax. According the Tax Court opinion, “the guaranteed payments were commensurate with local legal salaries as determined by a survey of legal salaries in the area.”

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April 14, 2017 in Tax, Weekly Tax Roundup | Permalink | Comments (0)