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Monday, January 19, 2015

Martin Luther King, Jr. and the IRS

In honor of Martin Luther King, Jr. Day:  Tallahassee Democrat, Dr. Martin Luther King Jr. and the IRS:

This past year, much ado was made about the so-called “IRS-Gate” and concerns that the Obama administration may have used the agency to target Tea Party and other right wing groups. ... [W]hat often is not stated during the Martin Luther King Holiday weekend is that King, early in his leadership of the Southern Christian Leadership Conference (SCLC), was routinely subjected to IRS audits of his individual accounts, SCLC accounts as well as accounts of his lawyers, first starting during the administration of President Dwight Eisenhower and continuing through the Kennedy administration. ...

[B]y 1962, King had settled with the IRS for a mere $500 dollars for a deduction that he could not explain to auditors. Two years earlier, in February of 1960, a Montgomery, Alabama Grand Jury made King the first person ever charged in that state with criminal tax fraud charges, alleging that in 1956 and 1958, that King through the Montgomery Improvement Association, the organization that had led the successful bus boycotts in that city and was the precursor to the SCLC, had failed to pay the state approximately $45,000 that it was owed in taxes. ...

Looking back, that King was even indicted proved and proves that when necessary, there were and remain many other Americans who were and are more than willing to use the IRS and other tax authorities to harrass individuals and organizations with which they disagree.

(Click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate.)

January 19, 2015 in Celebrity Tax Lore, IRS News, Tax | Permalink | Comments (0)

Reviews of Piketty's Capital in the Twenty-First Century

Mark W. Hendrickson (Grove City College), Problems with Piketty: The Flaws and Fallacies in Capital in the Twenty-First Century (2014):

HendricksonIf you have read or even heard about Capital in the Twenty-First Century—economist Thomas Piketty’s egalitarian treatise—you owe it to yourself to read Hendrickson’s powerful critique. Hendrickson combines extensive knowledge, mature wisdom, common sense, and a rare ability to render complex subjects clear and easily understood. Problems with Piketty shows us the grim consequences of egalitarian policies; exposes the flaws and explodes the fallacies in Piketty’s book; and presents a stirring defense of free enterprise.

Far more than just a corrective to Capital’s many errors, Problems with Piketty works well as a stand-alone teaching tool. Thanks to a detailed Table of Contents, its multiple lessons are easy to find. You may find yourself referring to this book for years to come.

Michael Potter (Australian National University), Capital in the Twenty-First Century: A Critique of Thomas Piketty’s Political Economy, 21 Agenda 91 (2014):

PikettyThe argument by Piketty and others that there is growing inequality and this is causing damage is not new. But regardless of who is running this argument, it is significantly flawed. The poor have definitely improved their situation, especially if taxes and income support are included, in many countries in the developing world and the US. A focus on inequality to the exclusion of poverty glosses over the large successes over recent decades. It paints a false picture of decline when large improvements have occurred.

To the extent there have been increases in executive wages, this has probably been driven by technology and globalisation, not by poor corporate governance. And the returns to wealth being (relatively) high should be expected given the riskiness of owning wealth, and is actually necessary to ensure that investment occurs. Piketty’s (implied) argument that investment is bad should be dismissed out of hand, as should his argument that high taxes are required on wealth. Instead, the problems generated by ‘unfairly’ acquired wealth should be addressed by removing rents. Policymakers should consider broadening the ownership of capital and assisting those who are in genuine need, and reject proposals that pander to envy.

For my perspective, see Thomas Piketty and Inequality: Legal Causes and Tax Solutions, 64 Emory L.J. Online ___ (2015):

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January 19, 2015 in Book Club, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 620

IRS Logo 2Wall Street Journal editorial, The IRS Is Not Here to Help You: The Agency Will Punish Tax Filers For its Own Stonewalling:

Hard to believe, but the Internal Revenue Service says its customer service is about to get worse. Commissioner John Koskinen wrote to employees this week: “We now anticipate an even lower level of telephone service than before, which raises the real possibility that fewer than half of taxpayers trying to call us will actually reach us.” A new report from the IRS’s Taxpayer Advocate Nina Olson suggests that the odds of some taxpayers getting satisfactory answers could literally be zero. ...

As a responsible chief executive, President Obama has been aggressively managing this agency crisis to ensure the least disruption for taxpayers most in need. Just kidding. ...

The IRS is pleading poverty due to recent cuts imposed by Congress, which is frustrated with the agency’s lack of cooperation investigating IRS abuse of conservatives. But while Ms. Olson emphasizes budget cuts in bringing the IRS to this pass, she also cites the agency’s failure to prioritize and the targeting of Tea Party groups that eroded public trust.

From 1997 to 2012 the IRS budget increased 64% to $11.8 billion in nominal dollars. IRS abuse of the President’s philosophical opponents came to light in 2013. Agency stonewalling—plus a less friendly environment for discretionary spending given federal debt of more than $18 trillion—resulted in a new budget of $10.9 billion. So now the agency is cutting key services and threatening delayed refunds as it pressures Congress to re-open the budget spigot.

If the IRS continues to stonewall the political targeting investigation, as Mr. Koskinen has, then the only tool Congress has to express disapproval is the power of the purse. In any case it’s hard to imagine the IRS could offer worse service than it already does.

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January 19, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Sunday, January 18, 2015

President Obama Proposes $320 Billion Tax Increase on the Wealthy to Fund Middle Class Tax Cuts

WHite HouseIn advance of Tuesday's State of the Union Address, the White House yesterday released Fact Sheet: A Simpler, Fairer Tax Code That Responsibly Invests in Middle Class Families

The plan would raise $320 billion in revenue over ten years.  Key components include:

  • Close the trust fund loophole – the single largest capital gains tax loophole – to ensure the wealthiest Americans pay their fair share on inherited assets. Hundreds of billions of dollars escape capital gains taxation each year because of the “stepped-up” basis loophole that lets the wealthy pass appreciated assets onto their heirs tax-free.
  • Raise the top capital gains and dividend rate back to the rate under President Reagan. The President’s plan would increase the total capital gains and dividends rates for high-income households to 28 percent.
  • Reform financial sector taxation to make it more costly for the biggest financial firms to finance their activities with excessive borrowing. The President will propose a fee on large, highly-leveraged financial institutions to discourage excessive borrowing.

The plan includes a bevy of middle class tax cuts totaling $175 billion over ten years, including:

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January 18, 2015 in Tax | Permalink | Comments (3)

Final Report Issued on $5.4 Million Forgivable Loan Program for University of Texas Law Profs

Texas LogoAustin American-Statesman, AG’s Office Wraps Up Investigation of Forgivable Loans at UT Law School:

Supplemental compensation from a foundation to University of Texas law professors lacked transparency and violated accountability standards and university rules, whether intentionally or as the product of negligence, according to a much-delayed report by the state attorney general’s office. ...

The report said there is no question that forgivable loans, second mortgages and housing allowances from the UT Law School Foundation helped place the school in a competitive position when it comes to recruiting and retaining faculty members.

“The failure to provide the UT System and Regents the full picture of compensation is subject to one of many narratives depending upon the source,” the report said. “Whether this failure was intentional or simply negligence, the Law School’s failure to follow University rules is also without question.”

The documents list forgivable loans to law faculty totaling $5.4 million:

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January 18, 2015 in Legal Education | Permalink | Comments (0)

The Top 5 Tax Paper Downloads

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list.  The #1 paper is now #69 in all-time downloads among 10,644 tax papers:

  1. [1631 Downloads]  A Compendium of Private Equity Tax Games, by Gregg D. Polsky (North Carolina)
  2. [223 Downloads]  The Rise and Fall of the Consumption Tax: A Historical Perspective, by Reuven Avi-Yonah (Michigan)
  3. [192 Downloads]  Important Developments in Federal Income Taxation (2014), by Edward A. Morse (Creighton)
  4. [149 Downloads]  Do Audits Matter?: A Parallax Theory of the Relation between Tax Enforcement and Underreporting, by J. T. Manhire (U.S. Treasury Department)
  5. [126 Downloads]  Thomas Piketty and Inequality: Legal Causes and Tax Solutions, by Paul L. Caron (Pepperdine)

January 18, 2015 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 619

IRS Logo 2USA Today, IRS Boss: Please Don't Call During Filing Season:

Grover Norquist, the anti-tax crusader behind Americans for Tax Reform, accused the IRS Wednesday of employing the "Washington Monument" strategy of cutting the most popular programs in response to budget cuts.

It's an allegation Koskinen denied. "It's clearly Illusory at this point that you can cut the budget any further and not have an impact," he said. "If I wanted to do a Washington Monument, I'd shut the place down in the middle of filing season, to demonstrate to people what it would look like. Obviously, we want to do anything but that."

Wall Street Journal, Taxman Shrugged: Will the IRS Go on Strike?, by James Taranto:

[A]nother law-enforcement agency is threatening to follow suit. “Taxpayers could see delays in getting their refunds this year—as well as ‘unacceptable’ customer service—as the IRS commissioner warns budget cuts are forcing the agency to cut back,” Fox News reports. ...

It’s all rather comical—but also galling. The IRS’s abuse of power in its harassment of conservative nonprofits aimed in substantial part at suppressing opposition to ObamaCare. That is, the IRS traduced the free-speech rights of citizens in order to preserve a law expanding IRS power and creating more work for IRS agents.

Now the commissioner complains that the IRS has too much work and not enough resources and threatens to make life even more difficult for taxpayers. It’s like the guy who killed his parents and then pleaded for mercy because he was an orphan.

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January 18, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, January 17, 2015

Cost Cutting in an Age of Declining Law School Enrollment

Cutting CostsThe Faculty Lounge:  Cost Cutting in an Age of Declining Law School Enrollment, by David Frakt (Barry):

Five years into the great law school recession, most law schools have presumably found all the obvious ways to cut costs and explored feasible alternatives for increasing revenues. The low-hanging fruit having been picked, more and more law schools are going to be faced with some very difficult choices. In this post, I will explore some of those choices and offer some ways that law schools might cut costs so they will not have to lower standards any further. I invite those with other good ideas, either theoretical or based on experience at their schools, to share them in the comments.

  • Voluntary Retirements/Voluntary Pay Cuts 
  • Cuts to Faculty Research Support
  • Cut/Consolidate Administrative Positions
  • Reduce the Number of Course Offerings/Mandate More Courses
  • Law Library
  • International Programs
  • Overhead

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January 17, 2015 in Legal Education | Permalink | Comments (4)

Thomas West Named Tax Legislative Counsel

WestThomas C. West, Jr. (J.D., Temple; LL.M. (Taxation), Georgetown), Deputy Tax Legislative Counsel in the U.S. Treasury Department, has been named Tax Legislative Counsel, replacing Lisa Zarlenga, who served in the positiojn for four years. Prior to joining the Treasury Department, Mr. West was a shareholder at Greenberg Traurig. Previously, he worked at both Ernst & Young and PricewaterhouseCoopers.

January 17, 2015 in IRS News, Tax | Permalink | Comments (0)

American College of Employee Benefits Counsel Student Writing Competition

ACBThe American College of Employee Benefits Counsel is sponsoring its 11th Annual Employee Benefits Writing Competition on any topic in the field of employee benefits law. The competition is open to any J.D. and graduate (L.L.M. or S.J.D) law students enrolled at any time between August 14, 2014 and August 15, 2015. Two $1,500 prizes will be awarded. The submission deadline is June 2, 2015.

January 17, 2015 in Scholarship, Tax, Teaching | Permalink | Comments (0)

The IRS Scandal, Day 618

IRS Logo 2The Blog of the Legal Times, Feds Take Pro-Israel Group's IRS Suit to DC Circuit:

The U.S. Department of Justice is challenging a Washington federal trial judge’s ruling to keep alive a suit that a pro-Israel advocacy group brought over alleged Internal Revenue Service discrimination.

Lawyers with the DOJ Tax Division on Wednesday filed a notice of appeal with U.S. Court of Appeals for the D.C. Circuit, asking the court to review U.S. District Judge Ketanji Brown Jackson's May ruling in favor of Z Street, the plaintiff in the case against the IRS.

Pennsylvania-based Z Street, which advocates for and defends Israel, sued the IRS over what the group claimed was viewpoint discrimination that violated the First Amendment. The organization has claimed that its application for tax-exempt status in 2009 received extra IRS scrutiny due to differing opinions it and the Barack Obama administration have on Israel.

The government argued that the Anti-Injunction Act prohibited Z Street's lawsuit. The law bars cases that seek to restrain the assessment of taxes.

In refusing to dismiss the case, Jackson wrote in an opinion that the group "seeks only to have its application—good or bad—be evaluated using the same standards are criteria that apply to other organizations that the IRS reviews."

(Hat Tip: Ted Seto.)

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January 17, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, January 16, 2015

Who Are The Happiest Law Firm Associates? Tax Lawyers

Vault, Switch to Your Law Firm's Tax Group ASAP!:

Many factors contribute to overall satisfaction with a legal job—co-workers, commute time, the jerk level of the boss—but one of the most important factors may be the subject matter associates are required to stare at ALL DAY LONG and the type of work related to that subject matter. Switching practice groups may be the solution to unhappiness in the workplace—whether that is an available option is another question.

According to data collected from Vault’s 2014 Law Firm Associate Survey, a survey of nearly 17,000 associates from over 150 large and mid-sized law firms, out of the 20 practice areas surveyed, tax lawyers are the most satisfied with their jobs.

Associate Satisfaction

Tax law may be satisfying work because it is often described as solving a puzzle, allowing lawyers to find creative solutions to their clients’ problems. One Skadden associated noted, “We get to do incredibly interesting work in tax, and I think I am always learning new things.”

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January 16, 2015 in Legal Education, Tax | Permalink | Comments (8)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

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January 16, 2015 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

San Diego Offers LSAT-Free Law School Admission To Its Undergraduates With 620 SAT And 3.5 GPA

USD 2014Press Release, USD School of Law Launches Direct Admissions Program for USD Undergraduate Students:

Today, the University of San Diego (USD) School of Law announced the launch of the new Direct Admissions Program, which will allow USD undergraduate students to be admitted to USD School of Law without taking the Law School Admissions Test (LSAT).

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January 16, 2015 in Legal Education | Permalink | Comments (1)

Lowering the Bar: Law Schools Are Increasingly Admitting Students Who Are Unlikely to Pass the Bar Exam

LowerInside Higher Ed, Lowering the Bar:

As the number of students going to law school drops dramatically, law schools are increasingly competing for students with lower undergraduate grades and LSAT scores.

Thomas M. Cooley Law School – the largest law school in the country – is known for admitting students other law schools would not touch. The reputation is increasingly inaccurate. Last fall, seven law schools had entering classes with lower median LSAT scores than Cooley’s.

Professors who study legal education worry that schools are enrolling more and more students who have not proved they can graduate law school. Equally concerning is that law schools are admitting and then graduating students who might not be able to pass the bar exam.

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January 16, 2015 in Legal Education | Permalink | Comments (6)

More Debate Over the New BLS Lawyer Projections

BLS (2015)Following up on my previous post,  Steven J. Harper (Adjunct Professor, Northwestern), 2015: The Year That the Law School Crisis Ended (Or Not) -- Part II:

Part I of this series addressed the ABA rule change that will allow 2014 law graduates until March 15 — an extra month from prior years — to find jobs before their schools have to report those graduates’ employment results to the ABA (and U.S. News). That change will almost certainly produce higher overall employment rates. But relying on any alleged trend that results solely from an underlying change in the rules of the game — such as extending the reporting period from nine months to ten — would be a mistake.

This post considers a second rule change. It comes from the U.S. Department of Labor, and it’s a whopper.

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January 16, 2015 in Legal Education | Permalink | Comments (1)

WSJ: Colleges Deploy Technology to Track Student Attendance to Raise Grades, Graduation Rates

Wall Street Journal, Cracking Down on Skipping Class:

Skipping class undetected for a game of ultimate Frisbee might become a thing of the past as more universities adopt mandatory-attendance policies and acquire high-tech trackers that snitch when students skip. ...

The latest entrant into the market of tracking student’s whereabouts: Class120, a $199-a-year notification service that tracks a student through the GPS in their smartphone and alerts their parents (or another third party) in real time if their child isn’t within a geofence mapped around the classroom where they are scheduled to be. ...

Attendance is the best known predictor of college grades, even more so than scores on standardized admissions tests, said Marcus Crede, a professor of psychology at Iowa State University who studies the subject. The correlation is particularly high in science, engineering and math. And grades, in turn, seem linked to graduation rates, he said.

WSJ

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January 16, 2015 in Legal Education | Permalink | Comments (1)

Billy Joel and Guests Perform Piano Man

Billy Joel performs Piano Man with Kevin Spacey, Boyz II Men, Natalie Maines, Josh Groban, Gavin DeGraw, Tony Bennett, LeAnn Rimes and Michael Feinstein during the ceremony honoring him with the Library of Congress Gershwin Prize for Popular Song (click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate):

The entire one hour PBS broadcast:

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January 16, 2015 in Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 617

IRS Logo 2Headline & Global News, Ted Cruz Urges GOP-led Congress To Shut Down The IRS, Claims It Will Be 'The Single Most Important Tax Reform':

The new GOP-led Congress should wield its power to officially shut down the Internal Revenue System, Republican Sen. Ted Cruz said on Monday.

At Heritage Action's 2015 conservative policy summit, Cruz claimed that Republicans should take advantage of their control of Congress to abolish the U.S. government tax agency, The Daily Caller reported.

"We need to pass fundamental tax reform making our tax code simpler, flatter, fairer," he said. "And I'll tell you, the single most important tax reform, we should abolish the IRS."

"The last two years have fundamentally changed the dynamics of this debate [on the tax code]," he continued. "As we have seen the weaponization of the IRS, as we have seen the Obama administration using the IRS in a partisan manner to punish its political enemies."

"In my view there is a powerful populist instinct to take the 110,000 employees at the IRS, to padlock the building, and to put all 110,000 of them down on our southern border."

Ex-IRS official Lois Learner, who headed the IRS division, has been accused of processing Tea Party and conservative groups' for tax exempt status in an unfair manner before the 2010 and 2012 elections, including the IRS who improperly delayed dozens of applications for years, according to an internal audit by the agency's inspector general. Documents show that some liberal groups were singled out, too, Politico reported.

Since the scandal broke in 2013, documents from various agencies and individuals have been requested by GOP-led House committees, with IRS claiming to have spent $10 million in compliance of such requests. But Lerner, who was placed on administrative leave shortly after the scandal broke, and has since retired, remained the focal suspicion of the controversy, repeatedly denying any illegal behavior.

Although Cruz acknowledged that it might not be entirely possible to eradicate the IRS or adopt a flat tax while Obama is in office, he said bold steps could be taken to reduce the power of Washington by simplifying the tax code and reducing the burden of American citizens, according to The Daily Caller.

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January 16, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Thursday, January 15, 2015

'Bitcoin Jesus' Who Renounced Citizenship to Avoid U.S. Taxes Is Upset That U.S. Won't Let Him Attend Conference in Miami

RogerTalking Points Memo, I'm So, So Glad This Guy Exists:

This is Roger Ver. Last year he renounced his citizenship to avoid paying US taxes. Now he's upset that the "tyrants" in the US government won't give him a visa to visit Miami this weekend to speak at a Bitcoin conference.

As many of you know, unitary, robust citizenship is an important value to me. Another big interest of mine is morons and arrogant douchebags, especially people who fall into both categories. Which brings us back to Roger Ver, variously known as a "Bitcoin entrepreneur" or the "Bitcoin Jesus." Ver is now a citizen of Federation of Saint Kitts and Nevis. He was so excited about avoiding taxes that as soon as he became a Nevisian he set up yet another start up that would allow you to use bitcoins to buy a Saint Kitts and Nevis passport so you too could avoid US taxes. Alas, it folded after a few months, apparently because the St Kitts government disavowed it.

Unlike Facebook billionaire Eduardo Saverin who renounced his citizenship to avoid US taxes back in 2012, I don't get the impression that Ver is remotely that rich. He may be worth a few or even many millions of dollars. But he does not seem remotely in the category of 100s of millions, let alone billions. In any case, now he wants a visa to return to the US to speak at a Bitcoin conference this weekend in Miami. But the US has repeatedly denied his requests. And he's extremely upset at "the tyrants [who] won't allow me to attend #CES2015, #TNABC or anything in the US."

Here's Roger with his "Borders are Imaginary Lines" t-shirt he wore for his appointment at the US Embassy Barbados to apply for a Visa. He even seems to be selling these shirts as a way people can express their opposition to the tyranny that is keeping him from visiting the US.

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January 15, 2015 in Tax | Permalink | Comments (3)

Testimony at House Hearing on Policies to Promote Job Creation and Economic Growth

House LogoTestimony at Tuesday's House Ways & Means Committee hearing on Moving America Forward: With a Focus on Economic Growth:

The first hearing of the 114th Congress focused on the state of the U.S. economy and policies that can promote job creation and economic growth.

January 15, 2015 in Congressional News, Tax | Permalink | Comments (0)

The Winter Of Our Discontent: Legal Practice, Legal Education, and the Culture of Distrust

WinterAlfred S. Konefsky (SUNY-Buffalo) & Barry Sullivan (Loyola-Chicago), In This, the Winter of Our Discontent: Legal Practice, Legal Education, and the Culture of Distrust, 62 Buff. L. Rev. 659 (2014):

This essay seeks to situate the challenges facing legal education within the broader context of professional culture — a context that seems to us to have been neglected in the present debates. In a sense, the “market reformers” have been swept up, consciously or not, in a wider movement that elevates markets over other forms of social analysis and therefore asserts and takes for granted what is in fact deeply contested. More specifically, they have pushed to the side the public-serving dimension of the lawyer’s role because it allegedly conflicts with the psychology of classical economic liberalism. Our aim, then, is to restore the concept of the public domain to a discussion now dominated by mere considerations of costs and a belief in the inevitable triumph of a narrowed sense of professional culture. Before we can begin to reform the infrastructures of legal education, we need to identify the function of the legal profession in a democratic society and the role that a legal education might play in preparing men and women for service in a profession so conceived. In that sense, cost is not an independent variable, and any judgment about the cost-effectiveness of legal education necessarily depends on a decision concerning the purposes to be served by a legal education.

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January 15, 2015 in Legal Education, Scholarship | Permalink | Comments (0)

Kirsch: The Tax Treatment of Citizens Abroad

Florida Tax ReviewMichael S. Kirsch (Notre Dame), Revisiting the Tax Treatment of Citizens Abroad: Reconciling Principle and Practice, 16 Fla. Tax Rev. 117 (2014):

In an increasingly mobile world, the taxation of citizens living abroad has taken on increased importance. Recent international administrative developments — most notably, the weakening of foreign bank secrecy and expansion of global information sharing norms — have further raised the profile of this issue. While U.S. law traditionally has taxed U.S. citizens living abroad in the same general manner as citizens living in the United States, a number of scholars have proposed abandoning the use of citizenship as a jurisdictional basis to tax. In its place, they would apply residence-based principles — i.e., exercising full taxing rights over U.S. citizens only if the citizens reside in the United States. Citizens residing outside the United States would be taxed in the same limited manner as non-citizens residing outside the United States.

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January 15, 2015 in Scholarship, Tax | Permalink | Comments (0)

Brunson: It Is Time for the IRS to Enforce the Prohibition on Campaigning by Churches

CHurchSamuel Brunson (Loyola-Chicago), Dear IRS, It Is Time to Enforce the Campaigning Prohibition. Even Against Churches:

In 1954, Congress prohibited tax-exempt public charites, including churches, from endorsing or opposing candidates for office. To the extent a tax-exempt public charity violated this prohibition, it would no longer qualify as tax-exempt, and the IRS was to revoke its exemption.

While simple in theory, in practice, the IRS rarely penalizes churches that violate the campaigning prohibition, and virtually never revokes a church’s tax exemption. And, because no taxpayer has standing to cuhallenge the IRS’s inaction, the IRS has no external imperative to revoke the exemptions of churches that do campaign on behalf of or against candidates for office.

This argment makes the normative case that, notwithstanding the IRS’s administrative discretion and the inability of taxpayers to challenge its nonenforcement in court, the time has come for the IRS to begin enforcing the campaigning prohibition.

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January 15, 2015 in IRS News, Scholarship, Tax | Permalink | Comments (5)

Seto: The November Jobs Data: Good News for Law Grads (and Law Schools)

Seto (2014)TaxProf Blog op-ed:  The November 2014 Job Openings and Labor Turnover Survey Data, by Theodore P. Seto (Loyola-L.A.):

According to the Bureau of Labor Statistics' JOLTS (“Job Openings and Labor Turnover Survey”) report issued Jan. 13, job openings rose to their highest level in nearly 14 years at the end of November.

Although this is good news for the economy, it may be even better news for law grads. The publicly released data do not break the reported numbers down by occupation. They do, however, break them into market sectors, the one most relevant to law being “Professional and Business Services,” which reported the highest rate of job openings (job openings as a percentage of current employment plus job openings) of any market sector:

Chart 1

The BLS’s time series data suggest that an extended period of stagnation in the Professional and Business Services sector may now be breaking. Here are the sector’s job opening rates from January 2008 to November 2014:

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January 15, 2015 in Legal Education | Permalink | Comments (2)

California Incubator Grants Put Young Lawyers to Work

National Law Journal, California Incubator Grants Put Young Lawyers to Work:

Legal leaders in California hope to narrow the justice gap by steering cash to “legal incubators”—programs that help graduates jump-start their careers while providing low-cost legal help to people who otherwise couldn’t afford to hire lawyers.

The California Commission on Access to Justice has announced $185,000 in grants to launch three legal incubators and to support an existing incubator in Orange County. ...

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January 15, 2015 in Legal Education | Permalink | Comments (7)

The Case for a $200 Federal Tax Credit for Campaign Contributions

CACConstitutional Accountability Center:  Participation and Campaign Finance: The Case for a Federal Tax Credit, by David H. Gans:

Five years after the Supreme Court’s ruling in Citizens United v. FEC, our democracy is badly broken.  Chief Justice John Roberts and his conservative colleagues have turned our Constitution’s promise of democracy of, by, and for the people on its head, striking down a host of federal and state laws designed to limits opportunities for corruption.  Meanwhile, the national conversation over money in politics has grown stale, with Congress gridlocked and unable to accomplish anything.  Now, more than ever, we need to find reforms that can bridge the divide over money in politics and help improve our democracy. 

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January 15, 2015 in Tax, Think Tank Reports | Permalink | Comments (0)

Fall 2015 Law School Applicants Are Down 8.5%

LSACLSAC:

As of 1/09/15, there are 135,408 fall 2015 applications submitted by 19,904 applicants. Applicants are down 8.5% and applications are down 10.8% from 2014. Last year at this time, we had 40% of the preliminary final applicant count.

January 15, 2015 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 616

IRS Logo 2Judicial Watch, New Documents: Lerner Objected to IRS Deputy Director Visit to Cincinnati Office During Congressional Inquiries into Tea Party Targeting:

Judicial Watch today released a new batch of Internal Revenue Service (IRS) documents, including a series of emails from former IRS official Lois Lerner to then-Tax Exempt and Government Entities (TE/GE) Division Deputy Director Joseph H. Grant strongly objecting to his planned visit to the IRS Cincinnati office “smack dab in the middle” of congressional inquiries into the IRS targeting of conservative groups. Lerner also expresses concerns about a pending investigation by the Treasury Inspector General for Tax Administration (TIGTA) into the IRS’s handing of Tea Party applications.

The new IRS internal documents were released in response to a federal court order addressing the October 9, 2013, Freedom of Information Act (FOIA) lawsuit Judicial Watch filed seeking compliance with four separate FOIA requests about the IRS scandal.

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January 15, 2015 in IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, January 14, 2015

Chodorow Presents Pope Francis, the Bible, and Tax Policy Today at Pepperdine

ChodorowAdam Chodorow (Arizona State) presents Pope Francis, the Bible, and Tax Policy at Pepperdine today as part of our Tax Policy Colloquium Series:

  1. What does the Bible actually say, either directly about taxes and tax-like institutions or indirectly about principles that should guide policymakers, regarding an appropriate tax system?
  2. To what extent should the Bible or religious views guide votes or opinions on such secular policy matters?

Biblical Tax Systems and the Case for Progressive Taxation, 23 J.L. & Relig. 53 (2008):

With the political rise of the religious right, American policymakers have increasingly looked to religion for guidance on important policy issues, including questions of distributive justice and how best to allocate tax burdens. While many claim that Judeo-Christian values require progressivity, the examples of taxation found in the sacred texts apparently refute this claim. This article examines four examples of taxation found in the Bible and Talmud to determine whether it is appropriate to infer from them a Judeo-Christian principle of tax fairness that should apply in a modern, secular tax system. I find that, not only do these examples use different methods for allocating tax burdens, making it impossible to identify one principle, but, more important, each example bears the stamp of its religious purpose or historical circumstances, making it inappropriate to rely on these examples as evidence of a divinely-sanctioned principle of tax justice.

Adam's visit is sponsored by Pepeprdine's Diane and Guilford Glazer Institute for Jewish Studies.

Update:  Post-presentation lunch:

Adam

January 14, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

State Tax Inequality Index

Institute on Taxation and Economic Policy, Who Pays? A Distributional Analysis of the Tax Systems in All 50 States (5th ed. Jan. 2015):

B1

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January 14, 2015 in Tax, Think Tank Reports | Permalink | Comments (0)

8th Circuit Rejects Discrimination Claim by Tenured Tax Prof Over Her Termination Following Conviction For Tax Evasion

Magee Following up on my prior posts:

National Law Journal, Eighth Circuit Again Rejects Fired Hamline Prof’s Suit:

A federal appeals court for the second time has affirmed dismissal of a lawsuit brought against Hamline University and its former law dean by a professor who was fired after being found guilty of failing to file state tax returns.

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January 14, 2015 in Legal Education, New Cases, Tax | Permalink | Comments (2)

National Taxpayer Advocate Releases Annual Report to Congress

NTATaxpayer Advocate Nina E. Olson today released (IR-2015-2) her 2014 Annual Report to Congress:

National Taxpayer Advocate Nina E. Olson today released her 2014 annual report to Congress, which expresses concern that taxpayers this year are likely to receive the worst levels of taxpayer service since at least 2001 when the IRS implemented its current performance measures.  The report recommends that Congress enact a principles-based Taxpayer Bill of Rights, adopt additional safeguards to make those rights meaningful, and provide sufficient funding to make the “Right to Quality Service” a reality.

In the preface to the report, Olson emphasizes four points:

  • “First, the budget environment of the last five years has brought about a devastating erosion of taxpayer service, harming taxpayers individually and collectively;
  • “Second, the lack of effective administrative and congressional oversight, in conjunction with the failure to pass taxpayer rights legislation, has eroded taxpayer protections enacted 16 or more years ago;
  • “Third, the combined effect of these trends is reshaping U.S. tax administration in ways that are not positive for future tax compliance or for public trust in the fairness of the tax system; and
  • “Fourth, this downward slide can be addressed if Congress makes an investment in the IRS and holds it accountable for how it applies that investment.”

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January 14, 2015 in IRS News, Tax | Permalink | Comments (1)

American University Law Prof Slams George Washington's 'Predatory' Poaching of 54 Its Students (Out of 97 Transfer Students)

Following up on my previous posts:

George Washington Law Logo (2016)GW Hatchet, Transfer Students Pad Law School's Enrollment as Selectivity Dips Again:

The GW Law School’s selectivity took another hit this year.

The school’s admissions rate climbed to 45.19 percent, more than doubling from the acceptance rate a decade ago. It’s a smaller increase than last year’s 13-percentage-point jump, but still puts GW in the bottom half of its peer schools that have law schools. ...

The school also enrolled nearly 100 transfer students, which could help boost its bottom line as GW’s schools fight for limited resources. ... More than half of transfers came from American University's Washington College of Law across town. U.S. News & World Report ranks GW’s law school No. 20 in the country and American’s at No. 72.

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January 14, 2015 in Legal Education | Permalink | Comments (14)

Tax Profs on Twitter

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January 14, 2015 in Legal Education, Tax | Permalink | Comments (0)

TurboTax Customers Angry Over Change In Tax Return Software

Turbo Tax (2015)CBS News, TurboTax Customers Angry Over Change In Tax Return Software:

Changes to the popular tax program, TurboTax, has some customers mad.

“People are just livid. They feel deceived,” says consumer advocate Edgar Dworsky. “They feel they’ve used this product for so many years, they’ve trusted it, and now they’re being sandbagged.” Dworsky is a TurboTax customer unhappy after Intuit, the maker of TurboTax, changed the deluxe version of the popular tax preparation software product.

The changes require customers to upgrade to more expensive versions if reporting investment, self-employment, or rental income — costing an extra $30 to $40 — and surprising many long-time Turbo customers. “Imagine their surprise when they get halfway through doing their taxes and there is a roadblock in the program that says you have to upgrade,” added Dworsky.

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January 14, 2015 in Tax | Permalink | Comments (35)

Judicial Misconceptions About Domestic Violence and Innocent Spouse Relief

Jacqueline Clarke, (In)equitable Relief: How Judicial Misconceptions About Domestic Violence Prevent Victims From Attaining Innocent Spouse Relief Under I.R.C. Section 6015(f), 22 Am. U. J. Gender Soc. Pol'y & L. 825 (2014):

Although innocent spouse relief has been in existence for a number of years, judges are still grappling with many of the intricacies of the factors promulgated by Revenue Ruling 2003-61. Domestic abuse is a concept not normally addressed by Tax Court judges and tax practitioners alike. Even the U.S. Department of the Treasury, the IRS, and various Tax Court judges have acknowledged that they are not well-versed in the complexities of domestic violence.165 Thus, more needs to be done to ensure that requesting taxpayers who are victims of domestic abuse have the ability to attain equitable relief or, perhaps more significantly, that these individuals are not barred from relief simply because the presiding judge does not understand the intricacies of a relationship plagued by domestic violence. 

January 14, 2015 in Scholarship, Tax | Permalink | Comments (0)

Tax Court Finds Tax Protester Joe Banister (Former CPA, IRS Agent) Liable for Fraud and Frivolous Argument Penalties

BanisterAccounting Today, Former CPA and IRS Agent Liable for Fraud and Frivolous Argument Penalties:

The Tax Court has held that a former special agent in the IRS Criminal Investigation division was liable for additional tax and penalties.

In the case, Banister v. Commissioner, T.C. Memo. 2015-10 (Jan. 12, 2015), Joseph Banister, a CPA who had previously worked at KPMG (then KPMG Peat Marwick), was employed by the IRS as a special agent from 1993 to 1999. In 1999 he authored a book in which he presented a variety of arguments that citizens were not obligated to pay federal income tax for reasons including that the payment was voluntary, that the Sixteenth Amendment had not been legally ratified, and that government financing operations are unconstitutional. He began providing tax consultation services, speaking at conventions throughout the country, operating Web sites, and selling books, CDs and DVDs setting forth his views on the income tax.

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January 14, 2015 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 615

IRS Logo 2Washington Times, IRS Keeps Albuquerque Tea Party in Limbo 5 Years After Tax-exempt Status Application:

Before there were the lost Lerner emails, the congressional hearings and the retaliatory budget cuts, there was the Albuquerque Tea Party, a group of politically minded folks in New Mexico who wanted to get together and share ideas for taking back their country. The IRS had other ideas about them.

Five years after the Albuquerque Tea Party applied for tax-exempt status under section 501(c)(4) of the tax code, they remain in limbo — their application apparently no closer to being approved or denied than it was the day they mailed it to the IRS on Dec. 29, 2009.

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January 14, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, January 13, 2015

Virginia Tax Review Publishes New Issue

Virginia Tax Review (2014)The Virginia Tax Review has published Vol. 34, No. 1 (Summer 2014):

January 13, 2015 in Scholarship, Tax | Permalink | Comments (0)

49th Annual Heckerling Institute on Estate Planning

Heckerling Cover_Page_1Tax Prof speakers at this week's 49th Annual Heckerling Institute on Estate Planning in Orlando:

  • Sam Donaldson (University of Washington), Recent Developments 2014
  • David Herzig (Valparaiso), The Most Important Elements, Clauses and Ideas for Trust Design
  • Susan Gary (Oregon), Restricted Charitable Gifts: Drafting Agreements that Stand the Test of Time
  • Tom Gallinas (Iowa), A Closer Look at Powers of Appointment in the Current Planning Environment
  • Mary Radford  (Georgia State), Case Studies in the Ethical Considerations in Acting as an Executor or Trustee

January 13, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (1)

Occupy Wall Street, Distributive Justice, and Tax Scholarship

OccupyPatrick Crawford (Crawford Tax Law Group, Los Angeles), Occupy Wall Street, Distributive Justice, and Tax Scholarship: An Ideology Critique of the Consumption Tax Debate, 12 U. N.H. L. Rev. 137 (2014):

This Article argues that the pro-consumption tax literature is wrong to claim that no legitimate fairness objections to the consumption tax exist. It argues that the persistent and widespread wariness about replacing our current hybrid consumption tax/income tax system with a pure consumption tax is, contrary to what the pro-consumption tax literature asserts, completely justified. In fact, our reservations about the consumption tax’s fairness reflect legitimate concern about the role of capitalist power in America, particularly over the past thirty years. Indeed, the more the nation continues to experience the social welfare effects of increased capitalist power, the more compelling these objections become. History proves these concerns not just legitimate, but paramount. A full account, not a dismissal, of how capitalist power might benefit from a consumption tax is what would be required to meet these fairness objections.

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January 13, 2015 in Scholarship, Tax | Permalink | Comments (0)

Bid to Lower Corporate Tax Rate Stirs Backlash From Pass-Through Entities

Bloomberg, Bid to Lower Corporate Tax Rate Stirs Backlash From Business, by Richard Rubin:

Pass-ThroughThe latest plan in Congress to cut business tax rates faces a major obstacle: U.S. businesses.

Many Democrats and Republicans, including new House Ways and Means Committee Chairman Paul Ryan, agree that they will try to reduce the 35 percent corporate tax rate and curb business tax breaks to help pay for it. They’ll leave individual rates alone to avoid a politically charged fight.

The complication is that millions of U.S. businesses -- from the largest hedge funds to neighborhood restaurants -- don’t pay taxes through the corporate system. Instead, income and tax breaks appear on the individual returns of those businesses’ owners, in effect intertwining the corporate and individual parts of the tax code.

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January 13, 2015 in Tax | Permalink | Comments (0)

Luttmer & Singhal: Tax Morale

Erzo F. P. Luttmer (Dartmouth) & Monica Singhal (Harvard), Tax Morale, 28 J. Econ. Perspectives 149 (Fall 2014):

There is an apparent disconnect between much of the academic literature on tax compliance and the administration of tax policy. In the benchmark economic model, the key policy parameters affecting tax evasion are the tax rate, the detection probability, and the penalty imposed conditional on the evasion being detected. Meanwhile, tax administrators also tend to place a great deal of emphasis on the importance of improving "tax morale," by which they generally mean increasing voluntary compliance with tax laws and creating a social norm of compliance. We will define tax morale broadly to include nonpecuniary motivations for tax compliance as well as factors that fall outside the standard, expected utility framework. Tax morale does indeed appear to be an important component of compliance decisions. We demonstrate that tax morale operates through a variety of underlying mechanisms, drawing on evidence from laboratory studies, natural experiments, and an emerging literature employing randomized field experiments. We consider the implications for tax policy and attempt to understand why recent interventions designed to improve morale, and thereby compliance, have had mixed results to date.

January 13, 2015 in Scholarship, Tax | Permalink | Comments (0)

Pepperdine Tax Policy Workshop Series (Spring 2015)

Here is the schedule for my Spring 2015 Pepperdine Tax Policy Workshop Series:

  • Jan. 14    Adam Chodorow (Arizona State), Pope Francis, the Bible, and Tax Policy
  • Feb. 2     Michael Graetz (Columbia), The Tax Reform Road Not Taken -- Yet
  • Feb. 18   Ed Kleinbard (USC), We Are Better Than This: How Government Should Spend Our Money
  • Mar. 2    Shu-Yi Oei (Tulane), Human Equity? Regulating the New Income Share Agreements
  • Mar. 23  Gregg Polsky (North Carolina), Private Equity Tax Games
  • Apr. 6     Miranda Fleischer (San Diego), Libertarianism and the Charitable Tax Subsidies
  • Apr. 20   Heather Field (UC-Hastings), Aggressive Tax Planning and the Ethical Tax Lawyer

I will of course blog each professor's paper on the day of their presentation.  Southern California professors and practitioners are welcome to attend any of the sessions (11:00 a.m. - 12:30 p.m.) -- just let me know.

Pepperdine Tax Policy Workshop Series (Spring 2014)

Pepperdine 2015 (2)

January 13, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Johnson: The Circular 230 Regulations May Be Invalid

Tax Analysys Logo (2013) Steve Johnson (Florida State), How Far Does Circular 230 Exceed Treasury's Statutory Authority?, 146 Tax Notes 221 (Jan. 12, 2015):

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

January 13, 2015 in Scholarship, Tax, Tax Analysts | Permalink | Comments (1)

Armstrong: The Overreaction to Codification of the Economic Substance Doctrine

Monica D. Armstrong (Mercer), OMG! ESD Codified!: The Overreaction to Codification of the Economic Substance Doctrine, 9 Fla. A&M U. L. Rev. 113 (2013):

Section 7701(o) is not inherently flawed as the critics suggest. The decision not to provide further guidance with respect to the application of the economic substance test will not result in taxpayer uncertainty and a halt in normal business practices. If nothing else, it brings about certainty to the taxpayer, as well as to the government and the courts as to how to apply the proper test. Taxpayers engaging in legitimate transactions should feel comfortable continuing with such transactions. The questions that the critics demand from the government such as what constitutes a “meaningful change” and “substantial,” will be answered by the proper authority--the courts.

January 13, 2015 in Scholarship, Tax | Permalink | Comments (0)

85 Students Enroll in Nation's First Hybrid Online J.D. Program at William Mitchell

MitchellFollowing up on my previous posts (links below), First Class of On-campus, Online Law Students Matriculate to William Mitchell College of Law:

Monday, Jan. 12, 2015 marks the first day of class for 85 students from across the country who enrolled in the nation’s first hybrid on-campus/online program at an ABA-approved law school.

The aspiring lawyers are medical doctors, college professors, bankers, baggage handlers, mothers, and fathers, from 31 states and two countries. They range in age from 22 to 67. At least 35 have advanced degrees—including 14 MBA degrees, five medical doctors, and three Ph.D. degrees. Forty-five percent of the students are women and 19 percent are people of color.

The new enrollment option builds on the law school’s tradition of innovation by combining the best of face-to-face instruction with the best of digital learning. Students are able to attend courses from anywhere in the world. ...

William Mitchell is the first law school to ask for and receive ABA approval for a hybrid enrollment option. The part-time, four-year, hybrid program is offered alongside the traditional full-time and part-time J.D. programs. ...

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January 13, 2015 in Legal Education | Permalink | Comments (4)