TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, October 18, 2017

Columbia Is Seventh Law School To Accept GRE For Admissions

Columbia (2017)Following up on my previous posts (links below):  Columbia is the sixth law school to accept the GRE as an alternative to the LSAT,  joining (in chronological order) Arizona, Harvard, Northwestern, Georgetown, Hawaii, and Washington University:

As part of its ongoing commitment to preparing students to be leaders in the legal profession, as well as other fields such as science, technology, public policy, and business, Columbia Law School will accept Graduate Record Exam (GRE) scores in addition to LSAT scores from applicants to the three-year J.D. program beginning on a trial basis in fall 2018. ...

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October 18, 2017 in Legal Education | Permalink | Comments (0)

Pittsburgh Tax Review Publishes New Issue

Tuesday, October 17, 2017

Weisbach Discusses The Unified Framework For Fixing Our Broken Tax Code Today At Columbia

WeisbachDavid A. Weisbach (Chicago) discusses the Treasury Department's Unified Framework For Fixing Our Broken Tax Code at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk.  The discussion builds on David's article, A Guide to the GOP Tax Plan – The Way to a Better Way,  8 Colum. J. Tax L. 171 (2017):

The tax reform plan — A Better Way — put forward by the chairman of the House Ways and Means Committee Kevin Brady and the Speaker of the House, Paul Ryan would be the most substantial tax reform in the United States since the enactment of the income tax in 1913. At the corporate level, the reform would allow immediate expensing of investments, deny deductions for net interest expense, and eliminate the taxation of income from sales in foreign countries while taxing the full value of imports (together shifting the tax base to a destination basis). At the individual level, the system would tax capital income including interest, dividends, and capital gains at half the rate that wages and salaries are taxed. It would also repeal the estate and generation skipping taxes. These changes would go a long way toward shifting the tax system to taxing consumption rather than income.

This paper considers the implementation of the House GOP tax plan and addresses issues that will need to be resolved if the plan is to work as intended. The plan is based on, and builds off of, a long history of thinking about consumption taxes. To understand the basic choices made in the plan, it is helpful to understand this history and how consumption taxes work in general.

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October 17, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Sander & Steinbuch: Mismatch And Bar Passage: A School-Specific Analysis

Richard H. Sander (UCLA) & Robert Steinbuch (Arkansas-Little Rock), Mismatch and Bar Passage: A School-Specific Analysis:

Past research on law school mismatch has been hampered by the absence of school-specific data, thus requiring scholars to estimate individual levels of mismatch through various indirect techniques. In this paper, the authors use data on nearly four thousand students at three law schools to directly measure mismatch levels based on LSAT scores or an academic index. The analysis shows large and statistically significant effects of mismatch; when one controls for mismatch, racial effects lose statistical significance. The results highlight the importance of mismatch in explaining both racial bar passage gaps and individual outcomes on the bar. The results also illustrate the great importance of individual school-level data across a range of schools in studying mismatch.

Table 2

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

Council of Economic Advisers: Reducing Corporate Tax Rate From 35% To 20% Would Increase Household Income By $4,000/Year

WHCouncil of Economic Advisers, Corporate Tax Reform and Wages: Theory and Evidence:

Wage growth in America has stagnated. Over the past eight years, the real median wage in the U.S. rose by an average of six-tenths of a percent per year. But even as Americans’ real wages stagnated, real corporate profits soared, increasing by an average of 11 percent per year. The relationship between corporate profits and worker compensation broke down in the late 1980s. Prior to 1990, worker wages rose by more than 1 percent for every 1 percent increase in corporate profits. From 1990-2016, the pass-through to workers was only 0.6 percent, and looking most recently, from 2008-2016, only 0.3 percent.1 The profits of U.S. multinationals are still American profits, but, increasingly, the benefits of those profits do not accrue to U.S. workers.

The deteriorating relationship between wages of American workers and U.S. corporate profits reflects the state of international tax competition. The problem is not unique to America; countries around the world have responded to the international flow of capital by cutting their corporate tax rates to attract capital back from other countries. They have doubled down on such policies as they have seen business-friendly policies benefit workers. This analysis from the Council of Economic Advisers reviews the evidence that has driven other developed countries to pursue the path of lower corporate tax rates and estimates how business tax reform in the Unified Framework for Fixing Our Broken Tax Code2 (hereafter, the “Unified Framework”) is expected to affect wages for American workers.

Reducing the statutory federal corporate tax rate from 35 to 20 percent would, the analysis below suggests, increase average household income in the United States by, very conservatively, $4,000 annually. The increases recur each year, and the estimated total value of corporate tax reform for the average U.S. household is therefore substantially higher than $4,000. Moreover, the broad range of results in the literature suggest that over a decade, this effect could be much larger.

Figure 2

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October 17, 2017 in Gov't Reports, Tax | Permalink | Comments (0)

Shobe:  Supercharged IPOs And The Up-C

Gladriel Shobe (BYU), Supercharged IPOs and the Up-C, 88  U. Colo. L. Rev. 913 (2017):

The “supercharged IPO”, a new and increasingly popular financial transaction, has fundamentally changed the nature of IPOs for many companies. Traditionally, an IPO was a tax nonevent for the company and the owners, meaning it created no tax liability for either. Through creative and questionable tax planning, companies have found a way to do better than this by effectively generating a negative tax liability for the company and its owners. These transactions have received substantial attention from practicing lawyers, investment bankers, journalists, and even briefly caught the attention of Congress. Yet these transactions have attracted surprisingly little scrutiny from scholars, and the attention they have received has failed to consider the different types of supercharged IPOs, which is necessary for understanding why these transactions exist, why they have increased in popularity, and whether they are justified legally and normatively. This Article examines the costs and benefits of the different types of supercharged IPOs to show that some of these transactions have greater tax benefits than scholars have realized. It places a particular emphasis on the Up-C, a structure with the greatest tax benefits, which scholars have overlooked even though it is by far the most common, and increasingly popular, form of supercharged IPO. A closer examination of the Up-C, separate from other supercharged IPOs, reveals that this structure produces tax benefits that are not justified by the regulations that supposedly allow them.

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October 17, 2017 in Scholarship, Tax | Permalink | Comments (0)

Hickman: Altera Meets Chamber Of Commerce

Hickman (2017)TaxProf Blog op-ed:  Altera Meets Chamber of Commerce, by Kristin Hickman (Minnesota):

Last week, a Ninth Circuit panel heard oral arguments in the government’s appeal from Altera Corp. & Subs. v. Commissioner, 145 T.C. 91 (2015).  Frequent readers of this blog will recall that the appeal concerns the Tax Court’s decision to invalidate regulations under Section 482 regarding cost-sharing arrangements on grounds that the regulations were not the product of reasoned decisionmaking as required by the arbitrary and capricious standard of Administrative Procedure Act (APA) § 706(2)(A) and Motor Vehicle Manufacturers Association of the United States v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29 (1983).  For the most part, the oral argument considered the substantive reasonableness of the regulations in question as an interpretation of Section 482, although there was also some discussion of whether the IRS adequately explained its reasoning in the regulatory preamble.  Judge Kathleen O’Malley of the Federal Circuit, sitting by designation, asked a question that in turn raises an interesting issue, particularly in light of recent coverage of Chamber of Commerce v. IRS, in which a federal district court in Texas interpreted the Anti-Injunction Act (AIA), 26 U.S.C. § 7421(a), as allowing pre-enforcement judicial review of an APA procedural challenge against Treasury regulations addressing inversion transactions.

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October 17, 2017 in New Cases, Scholarship, Tax | Permalink | Comments (0)

Harvard Law Review Elects First Ever Majority Female Class

HarvardHarvard Crimson, Law Review Elects First Ever Majority Female Class:

The Harvard Law Review selected more female editors than male editors to join the prestigious journal’s ranks this summer, welcoming a majority-female class for the first time in the publication’s history.

The editorial class, chosen after a rigorous competition tested the skills of prospective first-year law students, consists of 24 women and 22 men.

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October 17, 2017 in Legal Education | Permalink | Comments (0)

The Problem Of Taxpayer Communications And The Return Receipt Requirement

Return Receipt 2Nina Olson, the National Taxpayer Advocate (as if you did not know), had a great blog last week describing a really cool study her office conducted on how to improve taxpayer compliance with the Earned Income Tax Credit (ETIC ... again, as if you did not know).

The basic idea was to see if a simple letter mailed to taxpayers who had demonstrated some identifiable error in their 2014 EITC claims would result in them making fewer errors in their 2015 EITC claims. Not only that, but the study compared that group to a control group of similar taxpayers who made similar errors but who were not sent a letter explaining where they went wrong.

Certainly, my intuition as a teacher is that when you give feedback on what students do wrong, they tend to do better. The study supports that intuition’s application to taxpayers: tell them what they were doing wrong and they will do better overall and will certainly do better than those who get no such feedback.

What struck me as particularly interesting and worth further comment was the feature of just how the Taxpayer Advocate Service sent the letter to the taxpayers. Nina gives this description:

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October 17, 2017 in Bryan Camp, Gov't Reports, Tax, Tax Practice And Procedure | Permalink | Comments (0)

Yu: Cross-Deductions In The Net Investment Income Tax Imposed On A Trust Or Estate With Separate Shares

Michael T. Yu (California-Western), Cross-Deductions in the Net Investment Income Tax Imposed on a Trust or Estate with Separate Shares, 14 Pitt. Tax. Rev. 77 (2016):

The Health Care and Education Reconciliation Act of 2010 imposed, through new Code § 1411, a tax of 3.8% on certain net investment income (NII) of certain individuals, estates, and trusts for taxable years beginning after December 31, 2012 (the Net Investment Income Tax, or NIIT). Final regulations under § 1411 were published on December 16, 2013, which are effective for taxable years beginning after December 31, 2013.2 Section 1411 and the regulations thereunder, despite imposing the NIIT on certain trusts and estates, contain no reference to § 663 or the regulations thereunder (the separate share rule). Neither § 663(c) nor the regulations thereunder have been amended to reflect new § 1411 or the regulations thereunder. Treasury Regulation § 1.1411-1(a) ostensibly incorporates § 663(c) (and all other Chapter 1 Code provisions that determine taxable income under § 63(a), sometimes referred to in this article as the regular income tax) into determining the NIIT, but I argue that the regulation uses imprecise language and should be amended along the lines of my proposed language.

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October 17, 2017 in Scholarship, Tax | Permalink | Comments (0)

Monday, October 16, 2017

Burman Presents A Tax Credit To Make Work Really Pay Today At Loyola-L.A

Burman (2016)Leonard Burman (Tax Policy Center) presents A Tax Credit to Make Work Really Pay at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Katie Pratt and Ted Seto:

Middle class wages have been stagnant for the past four decades, barely keeping up with inflation. This pattern is unlikely to change. The main factor depressing wages for low- and middle-skilled workers is technology. While technology once made workers more productive and boosted wages and employment, technology increasingly substitutes for workers. It is one reason why manufacturing employment in the U.S. has plummeted even as production of manufactured goods has soared. The failure of the market to broadly share the gains from economic growth calls for an intervention.

This paper proposes a universal wage tax credit of 100% of the first $10,000 of earnings financed by a broad-based dedicated value-added tax (VAT) of about 8 percent.

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October 16, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Law Professors As Triathletes

TriathleteJudith M. Stinson (Arizona State), The Teaching, Scholarship, and Service Triathlon:

How can legal writing faculty, who spend a significant amount of time and energy teaching, commenting on student papers, and working individually with students to explicitly teach the skills of legal analysis and communication, be successful in a discipline that requires the balancing of so many roles? For each professor, one part may be easier than the others or more enjoyable than the others. In addition, individual faculty members may be better at one part than at the others. But legal academia does not offer the luxury of choosing which core requirement or requirements to fulfill. Likewise, triathletes deal with the fundamental challenge of balancing three complementary but different core tasks. Swimming, cycling, and running each require different skills – yet the real difference between a successful and unsuccessful triathlete is how well one accomplishes all three components.

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October 16, 2017 in Legal Education | Permalink | Comments (0)

Head Of Tax Practice At BigLaw Firm Sentenced To 24 Months In Federal Prison For Tax Evasion: 'Everyone — Including Tax Lawyers — Must Be Truthful In Reporting Their Income'

LevineNew York Law Journal, Judge Hands Two-Year Sentence to Ex-Herrick Tax Head:

Four months after pleading guilty to tax charges, former Herrick Feinstein partner Harold Levine in New York was sentenced Wednesday to 24 months in federal prison for his role in a scheme to defraud the IRS.

U.S. District Judge Jed Rakoff of the Southern District of New York in Manhattan handed down the sentence against Levine, who was indicted a year ago this month on wire fraud and tax evasion charges.

U.S. Attorney’s Office for the Southern District of New York Press Release, Manhattan Tax Attorney Sentenced To Two Years In Prison For Participation In Multimillion-Dollar Tax Evasion Scheme And Lying To The IRS:

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

Thimmesch, Gamage & Shanske: The Case For Consumer-Based Use Tax Enforcement

Adam B. Thimmesch (Nebraska), David Gamage (Indiana) & Darien Shanske (UC-Davis), The Case for Consumer-Based Use Tax Enforcement, 85 State Tax Notes 1049 (Sept. 11, 2017):

This essay argues that state governments’ current focus on getting vendors to collect their sales and use taxes is insufficient, especially in regard to e-commerce transactions. If state governments want their use taxes to serve as effective and lawful backstops to their sales taxes — as state governments claim is their goal — then states must also focus on the consumer side of the use-tax equation.

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October 16, 2017 in Scholarship, Tax | Permalink | Comments (0)

Yes, U.S. Tax Cuts Will Mainly Benefit Those Who ... Pay the Most Taxes

New York Post op-ed:  Yes, U.S. Tax Cuts Will Mainly Benefit Those Who ... Pay the Most Taxes, by Brian M. Riedl (Manhattan Institute):

A popular Facebook and Twitter game asks friends to post an unpopular opinion. Here is an unpopular fact: Tax reformers cannot deeply cut income taxes for lower-income families, because they already pay no collective income tax.

Tax reform is intended to bring simplification and economic growth. Yet many commentators seem interested in only redistribution.

This explains the teeth-gnashing over the Tax Policy Center estimate that the Republican tax blueprint would save the median family $420, but a family in the top income quintile $10,610.
While that sounds unfair, consider this: The top-earning 20 percent of households currently pay 88 percent of all federal income taxes. So even a proportional income-tax cut will save them the most money.

MI1

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October 16, 2017 in Tax | Permalink | Comments (1)

NY Times: U.S. And Europe May Collide On Taxing Amazon And Apple

Amazon appleNew York Times, U.S. and Europe May Collide on Taxing Apple and Amazon:

President Trump and congressional lawmakers are not the only ones interested in collecting taxes on global profits that American corporations are hoarding overseas. European regulators, knee deep in a campaign to stamp out tax avoidance, have their own plans for that money.

Last week, for instance, the European Commission billed Amazon for $293 million in unpaid taxes in Luxembourg, arguing that the country’s failure to collect the tax amounted to an illegal state subsidy. It also took Ireland to court for not following up on the $15.2 billion tax bill imposed on Apple last year.

“The Europeans are targeting U.S. dollars overseas that the U.S. believes should be taxed here,” said Dave Camp, a former Republican representative from Michigan who was chairman of the House Ways and Means Committee and the author of an unsuccessful tax overhaul in 2014. “We have to address this problem before the Europeans get there first.”

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October 16, 2017 in Tax | Permalink | Comments (2)

More Reaction To The Wax & Alexander Op-Ed On The Breakdown Of The 'Bourgeois Culture' 

Following up on my previous coverage of the op-ed by Amy Wax (Pennsylvania) and Larry Alexander (San Diego), Paying the Price for Breakdown of the Country's Bourgeois Culture:

Wall Street Journal op-ed:  Black Americans Need Bourgeois Norms: Frederick Douglass Would Have Agreed With Amy Wax, by Robert L. Woodson:

This summer, law professors Amy Wax and Larry Alexander caused a stir with an op-ed lamenting the decline of what they called “bourgeois norms.” “All cultures are not equal,” they rightly observed. Those that encourage self-restraint, delayed gratification, marriage and a strong work ethic tend to thrive. Those that tolerate or excuse substance abuse, out-of-wedlock pregnancy and dropping out tend to break down.

Ms. Wax and Mr. Alexander were instantly accused of racism by the growing army of angry academics who police the prevailing narrative of black victimhood. According to this narrative, black progress is determined not by personal choices and individual behavior, but by white supremacy, America’s history of slavery and discrimination, and institutional racism. Touting “bourgeois values” is interpreted as an offense against authentic black culture. ...

A better life has always been available to those who reject undisciplined and irresponsible behavior, and embrace self-determination and personal responsibility. So-called bourgeois values have always empowered blacks to persevere and overcome bitter oppression. They provided the moral “glue” that held the black community together during the hardest of times.

The life-affirming values that enabled [Frederick] Douglass and others to survive retain their potency in the 21st century. ...

Above the Law:  Black People Do Have Bourgeois Values: That’s Why So Many White People Are Still Alive, by Elie Mystal:

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October 16, 2017 in Legal Education | Permalink | Comments (2)

TaxProf Blog Weekend Roundup

Sunday, October 15, 2017

Brunson & Herzig: The Treasury Department Should Create Blacklist Of What Constitutes Prohibited Discrimination By Religious Organizations

Samuel D. Brunson (Loyola-Chicago) & David J. Herzig (Valparaiso), A Diachronic Approach to Bob Jones: Religious Tax Exemptions after Obergefell, 92 Ind. L.J. 1175 (2017):

In Bob Jones v. U.S., the Supreme Court held that an entity may lose its tax exemption if it violates a fundamental public policy, even where religious beliefs demand that violation. In that case, the Court held that racial discrimination violated fundamental public policy. Could the determination to exclude same-sex individuals from marriage or attending a college also be considered a violation of fundamental public policy? There is uncertainty in the answer. In the recent Obergefell v. Hodges case that legalized same-sex marriage, the Court asserted that LGBT individuals are entitled to “equal dignity in the eyes of the law.” Constitutional law scholars, such as Lawrence Tribe, are advocating that faith groups might lose their status, citing that this decision is the dawning of a new era of constitutional doctrine in which fundamental public policy will have a more broad application.

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October 15, 2017 in Scholarship, Tax | Permalink | Comments (0)

Court Uses First Amendment To Reverse Conviction Of Man Who Flipped The Bird At His Pastor During A Sermon

ABA Journal, Man Who Flipped the Bird At His Pastor Gets His Conviction Overturned On First Amendment Grounds:

A churchgoer convicted of disorderly conduct for flipping the bird at his pastor was engaging in speech protected by the First Amendment, according to the Georgia Supreme Court.

The court reversed the conviction of David Justin Freeman in a decision on Monday, the Atlanta Journal-Constitution reports.

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

Zelinsky: The House Appropriations Committee And The Johnson Amendment

Edward Zelinsky (Cardozo), The House Appropriations Committee and the Johnson Amendment:

The Committee on Appropriations of the US House of Representatives, in a so-called rider to the pending federal budget bill, has proposed significant procedural restrictions on the IRS’s ability to enforce the Johnson Amendment. The Johnson Amendment is the provision of the Internal Revenue Code which prevents all tax-exempt institutions (including churches) from participating in political campaigns. The Committee’s budget rider is the most recent salvo in the ongoing dispute about churches and politics.

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October 15, 2017 in Congressional News, Tax | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and new papers debuting on the list at #3 and #5:

  1. [1,594 Downloads]  Private Benefits in Public Offerings: Tax Receivable Agreements in IPOs,, by Gladriel Shobe (BYU)
  2. [406 Downloads]  Is Efficiency Biased?, by Zachary Liscow (Yale)
  3. [244 Downloads]  Background and Current Status of FATCA and CRS, by William Byrnes (Texas A&M)
  4. [230 Downloads]  The Rise of Trust Decanting in the United States, by Robert Sitkoff (Harvard)
  5. [208 Downloads]  Rejecting Charity: Why the IRS Denies Tax Exemption to 501(C)(3) Applicants, by Terri Lynn Helge (Texas A&M)

October 15, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, October 14, 2017

This Week's Ten Most Popular TaxProf Blog Posts

IMF: Higher Taxes On The Rich Will Reduce Inequality Without Hurting Economic Growth

IMF Fiscal Monitor, Tackling Inequality, October 2017:

Rising inequality and slow economic growth in many countries have focused attention on policies to support inclusive growth. While some inequality is inevitable in a market-based economic system, excessive inequality can erode social cohesion, lead to political polarization, and ultimately lower economic growth. This Fiscal Monitor discusses how fiscal policies can help achieve redistributive objectives. It focuses on three salient policy debates: tax rates at the top of the income distribution, the introduction of a universal basic income, and the role of public spending on education and health.

IMF 1

New York Times, I.M.F. Cautions Against Tax Cuts for Wealthy as Republicans Consider Them:

The International Monetary Fund delivered a blunt warning to international policy makers ahead of the fund’s annual meeting this week: Governments risk undermining global economic growth by cutting taxes on the wealthy.

The message, while aimed broadly at all developed nations, carries particular resonance in the United States as the Trump administration and Republican lawmakers push a tax plan that critics say will exacerbate income inequality by reducing taxes for the richest Americans. ...

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October 14, 2017 in Gov't Reports, Tax | Permalink | Comments (3)

Lesson From Tax Court: The Downside of Easy Tax Exemption Approval

These would seem to be fat times for organizations that want tax-exempt status. As everyone and their little dog seems to know, Service resource constraints have made recognition as a tax-exempt organization “virtually automatic” for most applicants on the front end. Even the National Taxpayer Advocate complained that it was too easy for organizations to obtain approval.

This week’s lesson from the Tax Court is that the upside of easy approval on the front end may carry a significant downside on the back end. In the reviewed opinion Creditguard of America, Inc. v. Commissioner, 149 T.C. No. 17, Judge Lauber expressed the Tax Court’s opinion that when the Service revokes an organization’s tax exempt status retroactive to a given year, interest starts running from that retroactive year’s return due date, and not just from the date when the Service made its determination to revoke or actually assessed the tax liability. Why is this such a downside? Because the very resource constraints that make for easy application approval on the front end also create significant delays in completing examinations on the back end. In the Creditguard case, the examined year was 2002, the audit was opened in 2003, completed in 2012 and the resulting deficiency assessed in 2013. And now it’s 2017. That’s a lotta interest. More below the fold.

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October 14, 2017 in Bryan Camp, New Cases, Tax | Permalink | Comments (0)

The Smartest Americans Are Heading West

Bloomberg, The Smartest Americans Are Heading West:

Bloomberg 1

Three cities in Colorado — a state whose fortunes have been tied to the boom and bust of oil, gas and other commodities — are among the top 10 leading destinations for the nation’s best and brightest as old cow and mining towns morph into technology hubs, according to data compiled by Bloomberg. ... Filling out the top 10 of the Brain Concentration Index are cities rich in technology and higher education, including San Francisco (2), Washington (5), Raleigh (6) and Seattle (9).

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October 14, 2017 in Tax | Permalink | Comments (3)

Anne-Marie Rhodes Named John J. Waldron Professor Of Law At Loyola-Chicago

RhodesRhodes Named John J. Waldron Professor of Law:

Loyola University Chicago School of Law is pleased to announce the appointment of Professor Anne-Marie Rhodes as the John J. Waldron Professor of Law.  Rhodes has been a member of Loyola’s full-time law faculty since 1980.  She teaches courses in estate-and-gift tax, income tax, estate planning, trusts and estates, art law, and comparative law, and is a frequent presenter and is widely published in these areas. Her book Fundamentals of Federal Estate, Gift, and Generation-Skipping Taxes (West Academic) was published this year.  Her casebook Art Law & Transactions (Carolina Academic Press) was published in 2011.

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October 14, 2017 | Permalink | Comments (0)

Friday, October 13, 2017

Weekly SSRN Tax Article Review And Roundup

This week, Sloan Speck (Colorado) reviews a new work by Tsilly Dagan (Bar Ilan University), The Future of Corporate Residency.

Speck (2017)Grim. That, in a word, is Tsilly Dagan’s conclusion in her compelling paper, The Future of Corporate Residency. Although Dagan’s position may not surprise many, the route she takes reveals much about the current—and perhaps future—state of international taxation. Dagan begins at the beginning, tracing multinational corporations as legal constructs from the East India Company to the advent of general incorporation statutes in the second half of the nineteenth century. After a brief discussion of the rise and fall of benefits theories of taxation, Dagan exposits a revival in de facto benefits taxation, at least among multinational corporations. Two factors drive this revival: the “marketization” of corporate residence, in which jurisdictions compete for multinationals’ presence, and the “fragmentation” of the state-derived benefits of incorporation, in which multinationals divide their presence among multiple jurisdictions to create “mix-and-match” legal regimes. Dagan is skeptical that cooperation can overcome marketization and fragmentation. Furthermore, Dagan notes that cooperation may be undesirable, if it entails efficiency losses and disadvantages developing countries.

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October 13, 2017 in Scholarship, Tax | Permalink | Comments (0)

Tax Policy In The Trump Administration

Weekly Legal Education Roundup

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October 13, 2017 in Legal Education, Weekly Legal Education Roundup | Permalink | Comments (0)

Camp: FDR And The Forgotten History Of The Earned Income Tax Credit

FDRBryan Camp (Texas Tech), Franklin Roosevelt and the Forgotten History of the Earned Income Tax Credit, 20 Green Bag 2d 337 (2017):

On his 1934 income tax return, Franklin Roosevelt claimed an "earned income credit" of $1,400. We usually think of the Earned Income Tax Credit (ETIC) as a subsidy for the poor. This article recovers the original history of the credit back when it was a subsidy for the rich, or at least wealthy taxpayers who earned their wealth through their labor. The purpose of this credit, which lasted up until WWII, was to offset the huge tax preference given to wealthy taxpayers whose income came from capital.

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October 13, 2017 in Scholarship, Tax | Permalink | Comments (0)

Michigan Hosts International Tax Law Conference Today On Perspectives On The Multilateral Instrument

Michigan Law Logo (2015)Michigan hosts an International Tax Law Conference today on  Perspectives on the Multilateral Instrument:

Join tax specialists and international law experts from universities, private practice, and global institutions as they explore the impact of the recently signed Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The MLI, which has been signed by almost 70 jurisdictions, will modify many existing bilateral tax treaties by introducing anti-tax avoidance measures.

Pasquale Pistone (IBFD), Dispute Settlement under the MLI and the EU Arbitration Convention
Commentator: Kim Brooks (Dalhousie)

Richard Reinhold (Willkie Farr), Article 7 and Prevention of Treaty Abuse
Commentator: Reuven Avi‐Yonah

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October 13, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Kahng: Who Owns Human Capital?

Lily Kahng (Seattle), Who Owns Human Capital?, 94 Wash. U. L. Rev. 607 (2017):

This Article analyzes the tax law’s capital income preference through the lens of intellectual capital, an increasingly important driver of economic productivity whose value derives primarily from workers’ knowledge, experience and skills. The Article discusses how business owners increasingly are able to “propertize” labor into intellectual capital — to control their workers and appropriate the returns on their labor through the expansive use of intellectual property laws, contract and employment laws, and other legal mechanisms. The Article then shows how the tax law provides significant subsidies to the process of propertization and thereby contributes to the inequitable distribution of returns between business owners and workers.

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October 13, 2017 in Scholarship, Tax | Permalink | Comments (1)

Camp: Equitable Principles And Jurisdictional Time Periods

Bryan Camp (Texas Tech), Equitable Principles and Jurisdictional Time Periods, Part 1, 156 Tax Notes 1397 (Sept. 11, 2017):

Like other federal courts, the Tax Court is very, very cautious about not overstepping its Congressionally-given bounds. However, the Tax Court also strives to allow taxpayers their day in Court. These two impulses — the caution to stay within the statutory grants of power and the drive to decide cases on the merits — sometimes collide. When that happens, the Tax Court struggles in applying the relevant limitation period and, as a result, sometimes lies or cheats. It sometimes lies by claiming that it may not apply equitable principles to the relevant limitation period. It sometimes cheats by accomplishing the same result by manipulating facts to bring a case within the relevant time period. It sometimes does both at the same time.

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October 13, 2017 in Scholarship, Tax | Permalink | Comments (0)

Effect Of Tax Subsidies To Fossil Fuel Companies On U.S. Crude Oil Production

Peter Erickson (Stockholm Environment Institute), Adrian Down (Stockholm Environment Institute), Michael Lazarus (Stockholm Environment Institute) & Doug Koplow (Earth Track), Effect of Subsidies to Fossil Fuel Companies on United States Crude Oil Production:

Countries in the G20 have committed to phase out ‘inefficient’ fossil fuel subsidies. However, there remains a limited understanding of how subsidy removal would affect fossil fuel investment returns and production, particularly for subsidies to producers. Here, we assess the impact of major federal and state subsidies on US crude oil producers. We find that, at recent oil prices of US$50 per barrel, tax preferences and other subsidies push nearly half of new, yet-to-be-developed oil investments into profitability, potentially increasing US oil production by 17 billion barrels over the next few decades. This oil, equivalent to 6 billion tonnes of CO2, could make up as much as 20% of US oil production through 2050 under a carbon budget aimed at limiting warming to 2 °C. Our findings show that removal of tax incentives and other fossil fuel support policies could both fulfil G20 commitments and yield climate benefits.

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October 13, 2017 in Scholarship, Tax | Permalink | Comments (0)

Thursday, October 12, 2017

Virginia Tax Review Publishes New Issue

Virginia Tax Review (2016)The Virginia Tax Review has published Vol. 36, No. 2 (Summer 2017):

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October 12, 2017 in Scholarship, Tax | Permalink | Comments (0)

Law Firms Continue To Cling To Desktops In Age Of Tablets And Laptops

Legal Tech News, Desktop's Not Dead: Law Firms Continue to Use Desktops for Security, Upkeep Concerns:

Amid all the slick tech hardware on the market today, desktop computers perhaps seem like a relic of an ancient past. They're bulky, arguably unattractive and chained to one specific location — the name literally points to its permanent fixture on a desk top. And yet, 45 percent of all law firms plan to equip attorneys with desktop computers in their 2017 hardware refresh.

In the modern legal workplace, where attorneys are expected to be reachable at any given hour of the day, it may seem counterintuitive for law firms to invest too heavily in desktop technology. Law firms have taken significant steps towards embracing the kind of mobility and flexibility needed to stay available to clients at any time of the day. In the last decade, laptops and tablets began to outstrip desktop computers in law firm purchasing. Aiding in the matter, law firms have widely adopted cloud-based data hosting, enabling attorneys to work remotely and collaboratively.

Yet in a few key ways, desktop computers still play an integral role in law firms' technology strategies. Desktop computers are still potentially the most secure, reliable and cheaply maintained option for many law firms.

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October 12, 2017 | Permalink | Comments (0)

Soled & Alm: W(h)ither The Tax Gap?

Jay A. Soled (Rutgers) & James Alm (Tulane), W(h)ither the Tax Gap?:, 92 Wash. L. Rev. 521 (2017):

For decades, policy makers and politicians have railed against the “tax gap,” or the difference between what taxpayers are legally obligated to pay in taxes and what they actually pay in taxes. To close the gap, Congress has instituted numerous reforms, with varying degrees of success. Notwithstanding these efforts, the tax gap has largely remained intact, and, if anything, its size has gradually grown over the last several decades.

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October 12, 2017 in Scholarship, Tax | Permalink | Comments (0)

600 Friends Celebrate Charles Ogletree's Life As He Battles Alzheimer’s

Following up on my previous post, Charles Ogletree Sees 'Blessing' In Alzheimer’s Diagnosis At Age 63:  Harvard Law Today:  Honoring Charles Ogletree: 600 Colleagues, Former Students, Friends Gather to Celebrate Life and Legacy of Influential Law Professor:

It felt like a family reunion — with 600 relatives.

That many friends, former students, colleagues, and well-wishers gathered Oct. 2 in a joyful celebration of the life and career of Harvard Law Professor Charles Ogletree, advocate for Civil Rights, author of books on race and justice, and mentor to former President Barack Obama and first lady Michelle Obama.

Last year, Ogletree ’78, the Jesse Climenko Professor of Law and founding and executive director of the Charles Hamilton Houston Institute for Race & Justice, revealed he had been diagnosed with Alzheimer’s disease.

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October 12, 2017 in Legal Education | Permalink | Comments (1)

McCormack: Postpartum Taxation And The Squeezed Out Mom

Shannon Weeks McCormack (University of Washington), Postpartum Taxation and the Squeezed Out Mom, 105 Geo. L.J. 1323 (2017):

Faced with too-short (or nonexistent) maternity leaves, inflexible work schedules, and the soaring costs of childcare in the United States, many new mothers temporarily leave the workforce to care for their young children. Although media attention has focused on the “opt-out” mom, many more mothers are squeezed out of the external workplace. But mothers that try to return to work may discover that it is difficult to do so, as employers have been shown to be less likely to hire mothers than others. A mother that does reenter may find that even short periods out of work cost (sometimes far) more than the income foregone during her intended time out and may result in a reduction in her overall earning potential, retirement, disability, and Medicare benefits. This may contribute to severe economic hardships among divorced mothers and their children, the underrepresentation of women in high-level leadership positions, and a wage gap between mothers and others, to name a few problems.

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October 12, 2017 in Scholarship, Tax | Permalink | Comments (4)

ABA Legal Ed Committee Proposes Changes To Accreditation Standard On Law School Admissions Tests

ABA Section On Legal Education (2016)ABA Journal, ABA Legal Ed Committee Suggests Changes to Rule on Law School Admissions Tests:

After recent announcements from various law schools that they will accept the GRE from applicants in addition to the LSAT, an American Bar Association section committee recently made various accreditation standard recommendations, including doing away with the separate admissions test rule entirely.

In March, the council of the ABA’s Section of Legal Education and Admissions to the Bar sought notice and comment for a proposed revision to Standard 503 — which covers admission tests — that called for the council to establish a process that determines the reliability and validity of other tests besides the LSAT. That’s a change from the current version, which directs law schools using alternate admissions tests to demonstrate that the exams are valid and reliable.

The section’s Standards Review Committee — which met Friday and Saturday in Boston —recommends that the council reject the earlier proposal, and consider three options:

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October 12, 2017 in Legal Education | Permalink | Comments (8)

Doran: Uncapping Executive Pay

Michael Doran (Virginia), Uncapping Executive Pay, 90 S. Cal. L. Rev. 815 (2017) (reviewed here):

This article sets out the case for repealing the $1 million tax cap on executive pay. The cap is easily avoided and, when not avoided, widely ignored. Since enactment in 1993, the cap has had little effect in reducing executive pay or in linking pay to performance. Even worse, the cap increases corporate tax liabilities — liabilities that likely burden workers and investors. In effect, the cap punishes rank-and-file employees and shareholders for pay deals made by directors and executives. This article demonstrates why prominent reform proposals would be ineffective and counterproductive. It then devises a novel reform approach — a confiscatory tax on excessive executive pay — that would limit executive pay without burdening workers or investors.

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October 12, 2017 in Scholarship, Tax | Permalink | Comments (1)

Avi-Yonah: The Structural Problems Of The Tax Reform Framework

Trump Tax ReformReuven S. Avi-Yonah (Michigan), Slicing and Dicing: The Structural Problems of the Tax Reform Framework:

The Unified Framework for Fixing Our Broken Tax Code (the “Framework”) released by the “Big Six” group of Treasury, White House and Congressional leaders on September 27 has been the focus of a lot of commentary. Most of the comments have focused on the distributive aspects of the plan and on the proposed rate structure, as well as the impact on revenues and the federal deficit.

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October 12, 2017 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, October 11, 2017

Marian Presents Is All Corporate Tax Planning Good For Shareholders? Today At Penn

Marian (2016)Omri Marian (UC-Irvine) presents Is All Corporate Tax Planning Good for Shareholders at Pennsylvania today as part of its Tax Policy Workshop Series hosted by Chris Sanchirico and Reed Shuldiner:

Multiple commentators argue that corporate managers have an affirmative duty to engage in corporate tax planning. Underlying this argument is the assumption that reduced corporate tax liability enhances shareholder value. In this article, I explain that this common perception is frequently incorrect. Corporate tax reduction schemes may increase the overall tax burden on shareholders. I make the following descriptive arguments in this regard:

First, I show that in many cases, successful (and legal) corporate tax planning schemes are not Pareto-optimal to shareholders. Some classes of shareholders (generally, tax-exempt shareholders) may see a net benefit, while other shareholders (usually taxable shareholders) experience a net loss. Second, I show that in certain instances it is reasonable to expect that legal corporate tax planning schemes will be overall inefficient. Meaning, the losses to taxable shareholders may exceed the gains to tax-exempt shareholders. Lastly, I show that because of an underappreciated agency problem, shareholders approve inefficient corporate tax plans, even when information about the potential detriment is freely available.

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October 11, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Cockfield Presents What's International Tax Law Got To Do With It? Today At Toronto

Cockfield (2016)Arthur Cockfield (Queen's) presents What's International Tax Law Got to do With It? at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

The OECD and G20 Base Erosion and Profits (BEPS) project represents the greatest multilateral cooperative effort to date to inhibit aggressive international tax planning and offshore tax evasion. While accepting that cooperation is normally helpful, the Article explores some of the theoretical and practical limits to international tax cooperation along with the potential for unilateral tax reform to confront pressing challenges.

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October 11, 2017 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Stanford Symposium: Lawyers And Leadership

Stanford 2

Symposium, Raising the Bar: Lawyers and Leadership, 69 Stan. L. Rev. 1593-1853 (2017):

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October 11, 2017 in Conferences, Scholarship, Tax | Permalink | Comments (1)

How The Trump Tax Plan Affects Working Families

Two weeks after the release of their tax reform blueprint, the Trump administration and congressional Republican leaders still haven't said how much their plan would raise the child tax credit or how they would treat head-of-household filers. In the meantime, Kyle Rozema (Chicago) and I have tried to estimate the change in net tax liability under the Trump plan for working families (adjusted gross income of $75,000 or less) under a number of plausible scenarios.

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October 11, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (4)

The Tax Lawyer Publishes New Issue

The Tax Lawyer (2013)The Tax Lawyer has published Vol. 70, No. 4 (Summer 2017) (State and Local Tax Edition):

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October 11, 2017 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)

Summers: Trump's Tax Plan Is An Atrocity

Washington Post op-ed:  The Trump Administration’s Tax Plan Is An Atrocity, by Lawrence Summers:

The Trump administration’s tax plan is not a plan. It is a melange of ideas put forth without precision or arithmetic. It is not clear enough to permit the kind of careful quantitative analysis of its expected budget costs, economic effects and distributional implications that precedes such legislation in a serious country.

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October 11, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

Advice To Law Students Seeking Letters Of Recommendation

Bridget Crawford (Pace) reprinted the great advice from Chris Walker (Ohio State) to law students seeking letters of recommendation:

1. When reaching out, please include resume, transcript, and talking points.
2. Talking points should tell me what you want me to cover substantively and bonus points if in a format I could cut and paste into letter.
3. Talking points are even better if they situate my letter within the context of any other letters, personal statement, etc.
4. Talking points should include as much detail of our substantive interactions as possible, as that detail really makes the letter.
5. Don't assume I'll remember the highlights of our interactions. Remind me. Even when I do remember, your framing is often much better.

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October 11, 2017 in Legal Education | Permalink | Comments (6)