TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

A Member of the Law Professor Blogs Network

Thursday, November 13, 2014

GAO: IRS Lacks Adequate Internal Controls

GAOGovernment Accountability Office, IRS's Fiscal Years 2014 and 2013 Financial Statements (GAO-15-173):

In GAO's opinion, the Internal Revenue Service's (IRS) fiscal years 2014 and 2013 financial statements are fairly presented in all material respects. However, in GAO's opinion, IRS did not maintain effective internal control over financial reporting as of September 30, 2014, because of a continuing material weakness in internal control over unpaid tax assessments. ...

During fiscal year 2014, IRS continued to make important progress in addressing deficiencies in internal control over its financial reporting systems. However, GAO identified new and continuing deficiencies in internal control over information security, including missing security updates, insufficient monitoring of financial reporting systems and mainframe security, and ineffective maintenance of key application security, that constituted a significant deficiency in IRS's internal control over financial reporting systems. Until IRS fully addresses existing control deficiencies over its financial reporting systems, there is an increased risk that its financial and taxpayer data will remain vulnerable to inappropriate and undetected use, modification, or disclosure.

Continue reading

November 13, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

The National Jurist's 25 Most Influential People in Legal Education

National JuristNational Jurist, 4 New Faces Join list of Most Influential People in Legal Education:

The National Jurist’s list of the Most influential People in Legal Education will include four new names when it is unveiled in its entirety in January, the publication announced.

Paul Caron, Professor at Pepperdine University, Eric Janus, Dean at William Mitchell School of Law, Michael Hunter Schwartz, Dean at University of Arkansas at Little Rock and Maureen A. O’Rourke, Dean at Boston University School of Law all made the list for the first time. Philip J. Weiser, Dean at University of Colorado Law School will return to the list after a one-year absence.

Janus made news late last year as the dean of the first school to get ABA approval for a distance-learning program for J.D. students. Michael Hunter Schwartz and Maureen A. O’Rourke have each spearheaded legal education reforms at their schools. ... Caron, who is new to the list, is an editor of a popular blog that covers legal education in addition to tax law issues.

The National Jurist seeks nominations from every law school and then narrows the list down to 50 nominees. Law school deans, the magazine’s editors and other influencers in legal education then vote.

Twenty honorees return to the list. They are listed below in alphabetical order:

Continue reading

November 13, 2014 in Legal Education | Permalink | Comments (4)

NTA 107th Annual Conference on Taxation

NTA CoverThe National Tax Association 107th Annual Conference on Taxation kicks off today in Santa Fe. Tax Prof speakers include:

Tax Enforcement and Collections Discretion:
Session Chair:  Leigh Osofsky (Miami)
Papers:

  • Joshua Blank (NYU), Reconsidering Corporate Tax Privacy
  • Andrew Hayashi (Virginia), An Economic Analysis of Taxpayer Liquidity
  • Shu-Yi Oei (Tulane), What is Fair Tax Administration?
  • Leigh Osofsky (Miami),  Announcing Enforcement Priorities

Discussants:  Leandra Lederman (Indiana), Diane Ring (Boston College)

Municipal, Local, and Global Tax Incentives:
Session Chair:  Neil Buchanan (George Washington)
Papers:

  • Mirit Eyal-Cohen (Alabama), Urban Mavericks
  • Omri Marian (Florida), Corporate Inversions, Tax Residence, and Real Economic Effects: A Case Study Approach
  • Agustin Leon-Moreta (New Mexico), Tax-Expenditure Limitations and Special District Finance in the United States
  • Erin Scharff (Arizona State), Powerful Cities, Efficient Revenues: Limits on Municipal Taxing Authority and What to do About it

Discussant:  Neil Buchanan (George Washington)

Continue reading

November 13, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

40th Annual Notre Dame Tax and Estate Planning Institute

ND_TaxEstate_booklet coverThe 40th Annual Notre Dame Tax and Estate Planning Institute kicks off today:

The 40th Annual Institute will present topics relevant for all individuals, even those not exposed to the estate tax because of the high exemptions. Several sessions are designed to evaluate financial products and planning techniques so that one can better understand and evaluate these products and proposals in determining not only the tax and financial advantages they offer, but also their limitations. In addition, the Institute offers topics not found in most estate planning CLE programs such as protecting the elderly from scams and exploitation. As part of the objective of refreshing areas that can expand one’s practice, a session will review the income tax consequences of debt cancellation, foreclosures, and debt restructuring. Recognizing the importance of the income tax, the Institute will continue to devote sessions to income tax planning techniques clients can use immediately.

Tax Profs with speaking roles include:

Continue reading

November 13, 2014 in Conferences, Tax | Permalink | Comments (0)

Johnston: A Ray of Sunlight on Secretive Corporate Welfare

Al Jazeera:  A Ray of Sunlight on Secretive Corporate Welfare, by David Cay Johnston (Syracuse):

Each year billions of your state and local tax dollars get diverted from public coffers for corporate subsidies. Just how much you are forced to pay for corporate welfare could soon move from the darkness of official secrecy into the light — but only if you act now.

A proposed rule requiring state and local governments to disclose the total amount of property tax and some other abatements in any year is being considered by the little-known private rule-making body known as the Government Accounting Standards Board (GASB).

In 44 states, laws let county, city and other local officials grant tax reductions or exemptions to companies, often with little disclosure and no accountability. Exemptions from taxes benefit thousands of companies, from online retailer Amazon to shampoo maker Zotos International.

The proposal is tepid and narrow, but far better to let in a ray of light than to allow these deals the cover of total darkness in which they are typically carried out.

Continue reading

November 13, 2014 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 553

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

Continue reading

November 13, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, November 12, 2014

CBO: The Distribution of Household Income and Federal Taxes, 2011

Congressional Budget Office, The Distribution of Household Income and Federal Taxes, 2011:

Overall, federal taxes are progressive, meaning that average tax rates generally rise as income increases. Households in the lowest income quintile paid about $500 in federal taxes in 2011, on average, which amounted to an average federal tax rate of about 2 percent, CBO estimates. Households in the middle quintile paid about $7,000 in federal taxes, and households in the highest quintile paid about $58,000 in federal taxes, which results in average federal tax rates of approximately 11 percent and 23 percent, respectively.

As a result of the progressive federal tax structure, households in the highest quintile of before-tax income paid a greater share of federal taxes in 2011 than they received in before-tax income, while households in each of the other quintiles paid a smaller share of federal taxes than they received in before-tax income (see figure below). Households in the highest income quintile received a little more than half of total before-tax income and paid more than two-thirds of all federal taxes in 2011. In contrast, households in the lowest income quintile received approximately 5 percent of total before-tax income in 2011 and paid less than 1 percent of all federal taxes, CBO estimates.

Chart 1A

CBO estimates that average federal tax rates under 2013 law would be higher—relative to tax rates in 2011—across the income spectrum. The estimated rates under 2013 law would still be well below the average rates from 1979 through 2011 for the bottom four income quintiles, slightly below the average rate over that period for households in the 81st through 99th percentiles, and well above the average rate over that period for households in the top 1 percent of the income distribution.

Chart 2A

Government transfers and federal taxes lessen income inequality because federal taxes are progressive and payments from government transfer programs generally decline as a share of income as income rises. Between 1979 and 2011, government transfers reduced income inequality to a greater extent than federal taxes, based on a standard measure of inequality known as the Gini index. In 2011, government transfers accounted for approximately two-thirds of the reduction in income inequality observed between market income and after-tax income.

Chart 18

Continue reading

November 12, 2014 in Congressional News, Tax | Permalink | Comments (0)

Organ: MBE Is More to Blame Than Deteriorating Student Quality for Lower Bar Pass Rates

Following up on my earlier posts (here and here):  The Legal Whiteboard:  What Might Have Contributed to an Historic Year-Over-Year Decline In the MBE Mean Scaled Score?, by Jerry Organ (St. Thomas):

The National Conference of Bar Examiners (NCBE) has taken the position that the historic drop in the MBE Mean Scaled Score of 2.8 points between the July 2013 administration of the bar exam (144.3) and the July 2014 administration of the bar exam (141.5) is solely attributable to a decline in the quality of those taking a bar exam this July. ... I am not persuaded. (Neither is Brooklyn Law School Dean Nicholas Allard, who has responded by calling the letter “offensive” and by asking for a “thorough investigation of the administration and scoring of the July 2014 exam.” Nor is Derek Muller, who earlier today posted a blog suggesting that the LSAT profile of the class of 2014 did not portend the sharp drop in MBE scores.)  ...

If one looks at the LSAT distribution of the matriculants in 2011 (who became the graduating class of 2014) and compares it with the LSAT distribution of the matriculants in 2010 (who became the graduating class of 2013), the NCBE probably is correct in noting that the group that sat in July 2014 is slightly “less able” than the group that sat in July 2013.  But for the reasons set forth below, I think the NCBE is wrong to suggest that this alone accounts for the historic drop in the MBE Mean Scaled Score. Rather, a comparison of the LSAT profile of the Class of 2014 with the LSAT profile of the Class of 2013 would suggest that one could have anticipated a modest drop in the MBE Mean Scaled Score of perhaps .5 to 1.0.  The modest decrease in the LSAT profile of the Class of 2014 when compared with the Class of 2013, by itself, does not explain the historic drop of 2.8 reported in the MBE Mean Scaled Score between July 2013 and July 2014. ...

In his article, Unpacing the Bar: Cut Scores, Competence and Crucibles, Professor Gary Rosin of the South Texas College of Law developed a statistical model for predicting bar passage rates for different LSAT scores.  I used his bar passage prediction chart to assess the “relative strength” of each entering class from 2001 through 2013. 

LSAT RANGE

Prediction of Bar Exam Success Based on Lowest LSAT in Range

175-180

.98

170-174

.97

165-169

.95

160-164

.91

155-159

.85

150-154

.76

145-149

.65

140-144

.50

135-139

.36

130-134

.25

Continue reading

November 12, 2014 in Legal Education | Permalink | Comments (0)

Kleinbard: Invisible Man -- Losing Sight of the Real Adam Smith

Commonweal:   Invisible Man:  Losing Sight of the Real Adam Smith, by Edward D. Kleinbard (USC):

Adam SmithIf contemporary economists fielded a football team, it would no doubt be named the Smiths, in honor of the illustrious eighteenth-century Scot who is rightly regarded as the founder of modern economic theory. But the team mascot as presented by those economists would have as much in common with the real Adam Smith the as the Washington Redskins’ mascot has in common with a real Native American. Few thinkers of Smith’s stature have been so routinely misrepresented and misappropriated. 

George Stigler, a Nobel laureate economist, wrote that Adam Smith’s great work The Wealth of Nations demonstrated that “the efficiency property of competition” was “the crucial argument for unfettered individual choice in public policy.” Politicians and pundits alike regularly invoke Smith’s name to contrast the efficiency of markets in allocating goods and services with what they see as the damage done by government when it constrains “unfettered individual choice.” And in doing so, they regularly misapply Smith’s most famous metaphor, turning the “invisible hand” into an embodiment of the virtues of an unfettered market.

But all this is the Adam Smith of legend. The real Adam Smith was a sophisticated thinker about moral virtues as well as efficient markets, not a cartoon spokesperson for laissez-faire economic policy. Smith never intended his metaphor of the invisible hand to become synonymous with an omniscient and efficient Mr. Marketplace. Specialists have known this all along, but the caricature version of Smith continues to distort our policy discourse.

Continue reading

November 12, 2014 in Tax | Permalink | Comments (3)

Closing The Law School Gender Gap: 'Gender Inequality In Grading Is Sensitive to Pedagogy'

Gender GapInside Higher Ed, Closing the Law School Gender Gap:

Reducing class size and shaking up grading systems could help close the gender gap in professional schools, suggests new research in the Journal of Legal Studies [A Natural Experiment in Law]. Authors Daniel Ho and [Vice Dean] Mark Kelman, both professors of law at Stanford University, say that common professional school pedagogies, such as the Socratic and adversarial methods, may put women at a disadvantage when class sizes are big. In their study, Ho and Kelman analyzed 15,689 grades assigned by 91 instructors to 1,897 students from 2001-12.  

Continue reading

November 12, 2014 in Legal Education, Scholarship | Permalink | Comments (3)

Death of Ginny Chung

Chung 2Ginny Chung, Acting Deputy International Tax Counsel at the Treasury Department, died of colon cancer last Saturday at the age of 43.  From her Washington Post obituary:

She earned her undergraduate degree from Wellesley College, her JD from Emory University, and a Master of Laws in Taxation from Georgetown University. Ginny spent all of her professional life working for the United States Government, first for the IRS and most recently serving as the Acting Deputy International Tax Counsel for the Department of the Treasury. ...

Ginny is survived by her husband Aaron King; two children [ages 5 and 10]; her parents George and Grace Chung of New Jersey; and sister Christine Chung of London.

Continue reading

November 12, 2014 in IRS News, Obituaries, Tax | Permalink | Comments (1)

Vanderbilt Roundtable on Comptroller v. Wynne

Vandy 2The Vanderbilt Law Review En Banc Roundtable takes up Maryland State Comptroller of the Treasury v. Wynne, to be argued today in the Supreme Court:

In Wynne, the Court considers whether the Constitution bans a state from taxing its residents’ income, wherever earned, by requiring a credit for taxes paid on income taxed in other states. The Court could answer many questions: How far is the reach of the dormant Commerce Clause in the context of income taxation? What is the extent of a state’s power to enforce personal income taxes on its residents? What kinds of residents are subject to double taxation and why? .

November 12, 2014 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Muller: Class of 2014 LSAT Scores Did Not Portend Sharp Drop in MBE Scores

Unlike Brits, Americans Don't Think Tax Is Morally Right

YouGov, Unlike Brits, Americans Don't Think Tax Is Morally Right:

Most Americans think that their moral right to keep the money they earn trumps their duty to contribute towards public services, the exact opposite of attitudes in Britain.

Yg

(Hat Tip: Bruce Bartlett.)

November 12, 2014 in Tax | Permalink | Comments (2)

2014 Businessweek Business School Rankings

BloombergBloomberg Businessweek, The Complete 2014 Business School Rankings (methodology: 45% employer reputation; 45% student reputation; 10% faculty research):

  1. Duke
  2. Pennsylvania
  3. Chicago
  4. Stanford
  5. Columbia
  6. Yale
  7. Northwestern
  8. Harvard
  9. Michigan
  10. Carnegie Mellon
  11. UCLA
  12. North Carolina
  13. Cornell
  14. MIT
  15. Dartmouth
  16. Indiana
  17. Maryland
  18. Emory
  19. UC-Berkeley
  20. Virginia
  21. USC
  22. NYU
  23. Texas
  24. Georgetown
  25. Rice

Congratulations to  Pepperdine's Business School, ranked #63.

November 12, 2014 in Law School Rankings, Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 552

Continue reading

November 12, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, November 11, 2014

Steuerle Presents How to Restore Fiscal Freedom and Rescue Our Future Today at Columbia

DeadC. Eugene Steuerle (Urban Institute) presents Dead Men Ruling: How to Restore Fiscal Freedom and Rescue Our Future at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex RaskolnikovDavid Schizer, and Wojciech Kopczuk:

Eugene Steuerle argues that these seemingly separable economic and political problems are actually symptoms of a common disease, one unique to our time. Unless that disease and the history of how it spread over time is understood, Steuerle says, it is easy for politicians and voters alike to fall prey to believing in simple but ineffective nostrums, hoping that a cure lies merely in switching political parties or reducing the deficit or protecting and expanding our favorite program.

Despite the despairing claims of many, Steuerle points out that we no more live in an age of austerity than did Americans at the turn into the twentieth century with the demise of the frontier. Conditions are ripe to advance opportunity in ways never before possible, including doing for children and the young in this century what the twentieth did for senior citizens, yet without abandoning those earlier gains. Recognizing this extraordinary but checked potential is also the secret to breaking the political logjam that —as Steuerle points out —was created largely by now dead (or retired) men.

November 11, 2014 in Book Club, Colloquia, Scholarship, Tax | Permalink | Comments (0)

Predict Your Law School Class Rank Online Calculator

Rob Anderson (Pepperdine) has unveiled a nifty Predict Your Law School Class Rank Online Calculator:

This is a law school class rank calculator that uses publicly available data to predict law school class rank based on LSAT and undergraduate GPA. The calculator itself is fairly accurate for LSATs and GPAs that are between the 25th and 75th percentiles for each school. Its accuracy decreases for very low or very high LSATs or GPAs for a particular school.

Continue reading

November 11, 2014 in Legal Education | Permalink | Comments (0)

Buchanan: Legal Scholarship Makes the World a Better Place

WorldNeil H. Buchanan (George Washington), Legal Scholarship Makes the World a Better Place:

This article responds to claims that law professors are engaged in scholarly pursuits that fail to serve important social functions. I argue that legal scholarship “matters” in important ways, and in particular that the legal academy has improved its service to society by embracing interdisciplinary approaches to studying the law.

November 11, 2014 in Legal Education, Scholarship, Tax | Permalink | Comments (3)

France To Investigate ‘The Invisible Women’s Tax’

Think Progress, France To Investigate ‘The Invisible Women’s Tax’:

France’s finance ministry will investigate why products that are targeted to women cost more than ones targeted to men, following a petition that gathered over 30,000 signatures.

A campaign organized by the women’s group Georgette Sand found that products such as shampoo and razors that are advertised as “female” cost more than identical products marketed to men. They have called on stores, such as the chain Monoprix, where many examples of the gendered pricing was found, to get rid of what they call “invisible woman’s tax.” Monoprix has argued that the gap exists because there are additional manufacturing costs involved in women’s products.

The Local, Women in France Forced to Pay Hidden 'Pink Tax'

(Hat Tip: Francine Lipman.)

November 11, 2014 in Tax | Permalink | Comments (0)

Harvey: Corporate Inversions -- Background, Causes, and Policy Options

J. Richard Harvey (Villanova), Corporate Inversions -- Background, Causes, and Policy Options:

Corporate inversions have been front page news during most of 2014. In addition to providing background on inversions, this presentation discusses why inversions are occurring and various policy options.

Continue reading

November 11, 2014 in Scholarship, Tax | Permalink | Comments (0)

SSRN Tax Professor Rankings

SSRN LogoSSRN has updated its monthly rankings of 944 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through November 1, 2014) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

 

 

All-Time

 

Recent

1

Reuven Avi-Yonah (Mich.)

41,073

Reuven Avi-Yonah (Mich.)

6743

2

Paul Caron (Pepperdine)

26,895

Ed Kleinbard (USC)

5136

3

Louis Kaplow (Harvard)

23,155

D. Dharmapala (Chicago)

2787

4

D. Dharmapala (Chicago)

20,980

Richard Ainsworth (BU) 

2603

5

Vic Fleischer (San Diego)

20,248

Paul Caron (Pepperdine)

2552

6

James Hines (Michigan)

20,069

Omri Marian (Florida)

1990

7

Ted Seto (Loyola-L.A.)

19,350

Robert Sitkoff (Harvard)

1979

8

Richard Kaplan (Illinois)

19.183

Katie Pratt (Loyola-L.A.)

1803

9

Ed Kleinbard (USC)

16,778

Jen Kowal (Loyola-L.A.)

1552

10

Katie Pratt (Loyola-L.A.)

16,486

David Gamage (UCBerkeley)

1551

11

Dennis Ventry (UC-Davis)

15,449

Bridget Crawford (Pace)

1550

12

Carter Bishop (Suffolk)

15,332

Brad Borden (Brooklyn)

1535

13

Jen Kowal (Loyola-L.A.)

14,690

Jeff Kwall (Loyola-Chicago)

1502

14

David Weisbach (Chicago)

14,581

Louis Kaplow (Harvard)

1483

15

Chris Sanchirico (Penn)

14,459

Dan Shaviro (NYU)

1376

16

Richard Ainsworth (BU)

14,437

Francine Lipman (UNLV)

1371

17

Robert Sitkoff (Harvard)

14,244

James Hines (Michigan)

1370

18

Brad Borden (Brooklyn)

14,123

Dick Harvey (Villanova)

1316

19

Francine Lipman (UNLV)

14,075

Vic Fleischer (San Diego)

1314

20

Bridget Crawford (Pace)

14,030

Richard Kaplan (Illinois)

1266

21

David Walker (Boston Univ.)

14,007

Ted Seto (Loyola-L.A.)

1240

22

Herwig Schlunk (Vanderbilt)

12,550

Carter Bishop (Suffolk)

1235

23

Dan Shaviro (NYU)

12,250

Chris Sanchirico (Penn)

1224

24

Wendy Gerzog (Baltimore)

11,799

Gregg Polsky (North Carolina)

1158

25

Ed McCaffery (USC)

11,820

David Weisbach (Chicago)

1105

Note that this ranking includes full-time tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.

Continue reading

November 11, 2014 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

WSJ: MBE, Brooklyn Dean Debate Cause of Declining Bar Pass Rates: Students or the Test?

Wall Street Journal Law Blog, Decline in Bar Exam Scores Sparks War of Words:

A steep decline in bar exam scores on the most recent test has led to an outbreak of finger-pointing over who’s to blame for the downward swing.

In a sharply worded letter, the dean of Brooklyn Law School on Monday reproached the head of a national bar exam group for suggesting to law school leaders that their graduates who took the July exam were less prepared than students who sat for the test in previous years.

The dean’s letter came in response to an October memo by Erica Moeser, the president of the National Conference of Bar Examiners, addressed to law school deans across the country in which she defended the integrity of the group’s exam and raised concerns about the ability of the would-be lawyers who took it. ...

Continue reading

November 11, 2014 in Legal Education | Permalink | Comments (5)

Should Law Schools Offer Degrees in Legal Analytics?

Wall Street Journal, Big Data Gets Master Treatment at B-Schools; One-Year Analytics Programs Cater to Shift in Students’ Ambitions:

Big DataB-school students can’t get enough of big data. Neither can recruiters.

Interest in specialized, one-year master’s programs in business analytics, the discipline of using data to explore and solve business problems, has increased lately, prompting at least five business schools to roll out stand-alone programs in the past two years.

The growing interest in analytics comes amid a broader shift in students’ ambitions. No longer content with jobs at big financial and consulting firms, the most plum jobs for B-school grads are now in technology or in roles that combine business skills with data acumen, say school administrators.

But some faculty and school administrators remain unconvinced that the programs properly prepare students to work with analytics.

The University of Southern California’s Marshall School of Business began its Master of Business Analytics program this fall with 30 students. About 50 to 60 students are expected to enroll in the $47,000 program next year, the school said. ... Amy Hillman, dean at Arizona State University’s W.P. Carey School of Business, said interest in a year-old master’s program in business analytics has spread “like wildfire.” More than 300 people applied for 87 spots in this year’s class, according to the school. ...

Yet others say it is smarter to deliver analytics training to all students, rather than a select few.

Northwestern University’s Kellogg School of Management offers several courses in analytics, some of which are required for M.B.A.s. The school has no plans to offer a stand-alone business-analytics degree, said Florian Zettelmeyer, director of Kellogg’s Program on Data Analytics.

“These one-year masters programs are creating a type of person who is neither fish nor fowl,” Dr. Zettelmeyer said. “We fear they’re neither as competent with data as real data scientists, nor have the leadership skills that you really need to drive change in analytics,” he said.

Prior TaxProf Blog coverage:

November 11, 2014 | Permalink | Comments (1)

Save the Date: Mugel National Tax Moot Court Competition

MugelThe annual Albert R. Mugel National Tax Moot Court Competition will be held February 19-21, 2015.

  • Registration Deadline:  December 30, 2014
  • Problem Released:  January 12, 2015
  • Briefs Due:  February 12, 2015

November 11, 2014 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 551

IRS Logo 2Wall Street Journal:  At Last, a Chance to Get to the Bottom of the IRS Mess, by Cleta Mitchell (Foley & Lardner, Washington, D.C.):

The day after Republicans won solid majorities in the House and Senate, House Speaker John Boehner and Senate Majority Leader-to-be Mitch McConnell outlined priorities for the newly elected Congress. High on the list is fundamental tax reform. In addition to overhauling the federal tax code, however, Congress should rein in the Internal Revenue Service.

Much has already been learned about the arrogance of the IRS from the House investigations of the agency’s targeting of conservatives. The revelations emerged despite strenuous efforts by Democrats in Washington and by the IRS itself to block inquiries and deny the existence of political targeting—targeting that the former head of the IRS Exempt Organizations Unit, Lois Lerner, eventually acknowledged and apologized for in May 2013.

Bringing the IRS to heel can start with re-energizing and expanding congressional investigations and holding accountable those responsible for the targeting and other abuses. To serve notice that the IRS’s thumbing of its nose at Congress by ignoring multiple congressional subpoenas will no longer be tolerated, the House GOP Steering Committee should elect Rep. Jim Jordan as the new chairman of the House Oversight and Government Reform Committee (where current chairman Darrell Issa is term-limited). ...

Since 2012, House investigators have been subjected to an IRS rope-a-dope game by the refusal of the agency and various officials to respond to subpoenas or to answer questions fully and forthrightly. The House should now reissue the subpoenas that will expire at the end of this Congress and proceed to federal court to enforce all outstanding subpoenas previously issued to the IRS and its personnel during the course of the investigations.

More important, the House should ask the federal courts to enforce its May 2014 contempt resolution against Ms. Lerner for refusing to answer questions from Congress about her role in the targeting of conservatives. It is clear that the Obama Justice Department has willfully failed to file an enforcement proceeding in federal court. There also are strong separation-of-powers arguments against allowing the executive branch to unilaterally disregard congressional disciplinary actions taken against an executive-branch official like Ms. Lerner for refusing to testify before Congress.

Beyond all this, Republicans now have the opportunity to expand their inquiries into other areas of IRS misconduct. ... As Congress shines a light on these and other unacceptable IRS practices, public support for fundamental tax reform will only increase. The new Republican-controlled Congress will thus have a rare opportunity to overhaul a tax policy and a tax-collecting agency that both desperately need it.

Continue reading

November 11, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (7)

Monday, November 10, 2014

Logue Presents Delegating Tax Today at Loyola-L.A.

Logue 2Kyle D. Logue (Michigan) presents Delegating Tax (with James R. Hines, Jr. (Michigan)) at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

Congress delegates extensive and growing lawmaking authority to federal administrative agencies in areas other than taxation, but tightly limits the scope of IRS and Treasury regulatory discretion in the tax area, specifically not permitting these agencies to select or adjust tax rates. This Article questions why tax policy does and should differ from other policy areas in this respect, noting some of the potential policy benefits of delegation. Greater delegation of tax lawmaking authority would permit policies to benefit from the expertise of administrative agencies, and afford timely adjustment to changing economic circumstances. Furthermore, delegation of the tax reform process to an independent commission or agency offers the prospect of Congress committing itself to rational reform and long-run budget sustainability in a way that is more apt to succeed than are piecemeal legislative efforts. The Article concludes with an analysis of the constitutionality of tax delegation, noting the applicability of recent Supreme Court interpretations that Congress has broad discretion to delegate rulemaking authority to federal agencies, and that tax policy is of a kind with other federal policies.

Jason Oh (UCLA) is the commentator.

November 10, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Dwenger Presents Improving Tax Collection by Public Shaming Today at UC-Berkeley

Dwenger 2Nadja Dwenger (Max Planck) presents Improving Tax Collection by Public Shaming: Evidence from Slovenia, at UC-Berkeley today as part of the Robert D. Burch Center for Tax Policy and Public Finance Seminar:

Do the public spotlight and social-image concerns provide an effective measure for facilitating tax compliance and tax collection? This question is at the heart of an ongoing debate in the tax compliance literature asking whether tax compliance decisions are co-determined by social incentives. If social incentives such as social-image concerns are at play in taxpayers’ tax compliance decisions it might be attractive for tax authorities to revert to an instrument which has been widely used in our societies in other contexts: public shaming.

Continue reading

November 10, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

O'Neill Presents Corporations, Conventionalism, Taxation, and Social Justice Today at McGill

OneilMartin O’Neill (York University) presents Corporations, Conventionalism, Taxation and Social Justice at McGill today as part of its Spiegel Sohmer Tax Policy Colloquium Series hosted by Allison Christians and Daniel Weinstock:

A failure to take seriously the conventionality of corporations has led to an unimaginative view of corporate taxation as being structurally analogous to the taxation of individuals. There are, in fact, many disanalogies between the two: corporate profit should not be treated as analogous to individual income; low-profit corporations should not be treated advantageously by a tax system in the same way as it should treat low-income individuals; and, most significantly, corporations are not owed the same level of care and determinacy as individuals with regard to the tax rules that they face. Breaking the perceived link between individual taxation and corporate taxation makes room for a reassessment of the structure and purpose of corporate taxation.

Continue reading

November 10, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

WSJ: Millennials Have More Debt, Less Jobs, Savings, and Net Worth

GenWall Street Journal, Younger Generation Faces a Savings Deficit:

Adults under age 35—the so-called millennial generation—currently have a savings rate of negative 2%, meaning they are burning through their assets or going into debt, according to Moody’s Analytics. That compares with a positive savings rate of about 3% for those age 35 to 44, 6% for those 45 to 54, and 13% for those 55 and older. 

The turnabout in savings tendencies shows how the personal finances of millennials have become increasingly precarious despite five years of economic growth and sustained job creation. A lack of savings increases the vulnerability of young workers in the postrecession economy, leaving many without a financial cushion for unexpected expenses, raising the difficulty of job transitions and leaving them further away from goals like eventual homeownership—let alone retirement. ...

The problems from a lack of savings promise to reverberate for years. Those who don’t save are unlikely to be wealthy in the future, meaning American angst over wealth inequality seems poised to persist if most millennials are unable to save or choose not to. ...

For some young households, the inability to save reflects the weak job market. ... Another big difference from earlier generations is the rise of student loans. In 1995, borrowers under 35 had median student debt of $6,100, according to Fed data. That has risen to $17,200.

WSJ 2

November 10, 2014 in Legal Education | Permalink | Comments (0)

Former IRS Agent Settles Religious Discrimination Claim Over Firing for Wearing Ceremonial Dagger to Work

Following up on my prior posts (links below):  Houston Chronicle, Former IRS Worker, U.S. Reach Agreement in Ritual Dagger Case:

TagoreIn what her lawyers called a "historic settlement," former Houston IRS worker Kawaljeet Tagore and the U.S. government this week reached an agreement in a lawsuit stemming from the Sikh woman's dismissal for insisting on wearing a 3-inch ceremonial dagger sacred to her faith to work.

The settlement announced Thursday expunges Tagore's firing from her record, allows her to enter federal buildings with the blade for a period of three years and awards her lawyers $400,000 for fees and expenses. Tagore, 41, will be barred from seeking re-employment with the IRS, but may seek work with other federal agencies.

Tagore, 41, who currently works as a self-employed tax consultant, filed the lawsuit in 2009.

Houston lawyer Scott Newar, who worked with attorneys from the Becket Fund for Religious Liberty, said the case prompted Federal Protective Services to acknowledge for the first time that wearing the blade, known as a "kirpan," is protected under the Religious Freedom Restoration Act.

Prior TaxProf Blog coverage:

Continue reading

November 10, 2014 in IRS News, Tax | Permalink | Comments (0)

Graetz & Warren: Unlocking Business Tax Reform

Tax Analysys Logo (2013)Michael J. Graetz (Columbia) & Alvin C. Warren Jr. (Harvard), Unlocking Business Tax Reform, 145 Tax Notes 707 (Nov. 10, 2014):

In this article, Graetz and Warren explain why integration should be on today’s tax reform agenda and discuss how that change could be structured.

In conjunction with this article, Tax Analysts is republishing as an eBook, now available on Amazon, the 1998 volume of Integration of the U.S. Corporate and Individual Income Taxes: The Treasury Department and American Law Institute Reports:

Integration 2Business tax reform now seems stymied despite important proposals from prominent political leaders in both parties, including the president and the chairs of the House and Senate tax writing committees. Each represents a serious effort to reform business taxation. But those proposals have failed to advance in either the House or Senate.

Integration of corporate and shareholder taxes offers a straightforward approach that could help resolve many of the most difficult issues and provide the key to unlocking business tax reform. The general idea is to convert at least part of the corporate tax into a withholding tax that would be credited against individual shareholder taxes due on dividends.

The United States has long had what is called a classical income tax system, under which income is taxed to corporations and shareholders as distinct taxpayers. As a result, taxable income earned by a corporation and then distributed as a dividend may be taxed twice, once to the corporation and once to the shareholder on receipt of a dividend. In contrast, earnings on corporate debt are not taxed at the corporate level because, unlike dividends, interest is deductible. And businesses taxed as partnerships can benefit from lower total taxes than those taxed as corporations. This incoherent combination of results creates undesirable distortions in corporate and investor behavior.

Continue reading

November 10, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

Seyfarth Partner Quits Law Firm ($925k Income) to Become High School Teacher ($53k Income)

American Lawyer LogoThe American Lawyer, Seyfarth Partner Quits Law Firm Life to Become High School Teacher:

For labor and employment partner Michael Viccora, it took the death of his parents to realize he wanted a chance at a second career. So after 25 years at Seyfarth Shaw, he decided it was time to wean himself from law firm life and pursue his first love: teaching high school social studies.

At 51, Viccora is now enrolled in a teacher certification and master’s degree program at George Mason University in Fairfax, Va. His last day of work in Seyfarth’s Washington, D.C., office was Sept. 30.

Viccora says the job change was a long time in coming, but not because he had grown dissatisfied with the practice of law, where he counseled and litigated on behalf of clients in health care, public relations, construction, government contracting and hospitality. Rather, he says he was inspired by some of his own public school teachers growing up in Bethel, Conn. He also did a short stint as a history teacher at a private preparatory school in upstate New York while preparing for his LSATs after graduating from Dartmouth College with a degree in government in 1985. 

“It was always a goal of mine to at some point return to teaching, but like lots of our goals and dreams, it was in the very far background," he says. Viccora started taking steps toward making that dream a reality after the death of his father in 2009, followed by the death of his mother a year later. “Those events underscored that if I wanted to make a move to do some of these other things in life, I had to get up and do them,” he reflects. “It prompted me to be more active in my goal to make the move.” ...

He and his wife also met with their financial planner and increased their savings in anticipation of a 90 percent income drop when he starts teaching in 2016. Viccora did not disclose his former income, but according to the latest Am Law 100 survey, average profits per partner at Seyfarth in 2013 was $925,000. A beginning high school public school teacher with a master’s degree in Fairfax County, on the other hand, is expected to earn about $53,000 in 2015, according to public records.

November 10, 2014 in Legal Education | Permalink | Comments (1)

NY Times on Ken Starr

StarrInteresting New York Times article on Ken Starr, former Pepperdine Dean (2004-10) (and former D.C. Circuit Judge (1983-89), U.S. Solicitor General (1989-93), and Independent Counsel (1994-99)) and since 2010 President of Baylor University:

Many remember Mr. Starr from his days as independent counsel, when he delivered a report to Congress that chronicled President Bill Clinton’s dalliance with Monica Lewinsky, a White House intern. They would strain to recognize him in university life, where he is viewed as a goofy professor.

“We love him,” Gracie Millard, a freshman, said. “Around campus, people take selfies with him.”

Echoing several other undergraduates born in the mid-1990s, Ms. Millard added, “I didn’t know he was big in D.C.” ...

[C]ollege sports have given Mr. Starr’s public life a second act. He restored stability to Baylor, the country’s largest Baptist university, after becoming its fifth president in six years, including interims, and twice used his legal experience to help hold the Big 12 together amid the storms of realignment.

“He’s already an epic and transformational figure,” said Don Willett, a Texas Supreme Court justice and active Baylor alumnus. ...

Continue reading

November 10, 2014 in Legal Education | Permalink | Comments (1)

The IRS Scandal, Day 550

IRS Logo 2Washington Examiner:  Congress' To-do List: Major Unsolved Scandals Top the List for New U.S. Congress:

The pending 114th Congress needs to dig into some serioius issues without delay because they are concerns that the Democratic Senate led by Sen. Harry Reid refused to investigate during the most recent Senate. ...

The IRS scandal that still leaves many stones unturned. While persons in the Obama administration have been investigating to a small degree, there is obvious a need to conduct more of an investigation into this concern. The assertions of lost emails by persons involved, such as Lois Lerner, is still unsettled. ...

Needless to say, the IRS scandal remains and has not settled well with Americans who want to know the truth. After all, targeting conservative groups prior to the 2010 election when the Democrats fared well, wasn’t right. Naturally, the whole truth needs come out, and those who were involved need to be held accountable – and punished as need be.

Continue reading

November 10, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, November 9, 2014

ABA Recommends Approval of Sale of Charleston Law School to InfiLaw

ICThe ABA Section of Legal Education and Admission to the Bar has sent this 2-page letter and attached 6-page recommendation of the accreditation committee to Dean Andrew Abrams recommending that the sale of Charleston Law School to Infilaw be approved by the ABA Council, subject to two conditions:

  1. InfiLaw obtain a license from the South Carolina Commission on Higher Education
  2. InfiLaw complete the acquisition within 6 months after the ABA Council's approval

(Hat Tip:  Law Deans on Legal Education Blog.) For more, see:

November 9, 2014 in Legal Education | Permalink | Comments (1)

Legal Education, Gay Rights and Religion: Living by a Different Law

Following up on my previous post (links below):  The Economist, Higher Education, Gay Rights and Religion: Living by a Different Law:

TrinityBefore attending a single class, students at Trinity Western University, which offers a broad range of arts and science subjects, must sign what the school calls a community covenant [FAQ]. This is a solemn pledge that they won’t, among other things, lie, cheat and watch porn. They also vow to abstain from premarital sex and specifically any sexual intimacy between people of the same sex. Critics call the covenant anti-gay; the school retorts that it's asserting its entitlement under the Canadian Charter of Rights and Freedom to practise its beliefs. All this was an academic argument until recently; but it is coming to a head because of the university’s decision to begin a law school, which would accept its first students in 2016.

Continue reading

November 9, 2014 in Legal Education | Permalink | Comments (1)

Top 5 Tax Paper Downloads

The IRS Scandal, Day 549

IRS Logo 2Wall Street Journal editorial:  Overseeing Obama:

Election Day is over. But if Americans ever hope to get to the bottom of the IRS scandal, they’ll be hoping for victory in a more obscure campaign. The House Republican leadership will soon select the next chairman of the Oversight and Government Reform Committee. In a crowded field, Rep. Jim Jordan (R., Ohio) is the candidate best equipped to conduct thorough and credible investigations of federal waste, fraud and abuse. ...

Current Oversight Chairman Darrell Issa is stepping down due to GOP term limits for committee heads. Mr. Jordan has done as much as anyone to shine a light on IRS abuse of the President’s philosophical opponents, both in hearings and behind the scenes.

More than a year before the public learned the name of Lois Lerner, Mr. Jordan was seeking answers from the IRS’s tax-exempt organizations chief on political targeting allegations. He then requested an inspector general’s audit at the Treasury Department. Cleta Mitchell, a lawyer representing various IRS targeting victims, tells us that if not for Mr. Jordan there would have been no Treasury investigation “and no public admission that, indeed, conservative groups were being subjected to unprecedented scrutiny and mistreatment.” ...

Speaker John Boehner and other members of the elected GOP House leadership should elevate Mr. Jordan and send a clear message of reform and accountability.

Continue reading

November 9, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, November 8, 2014

WSJ: Asian Students Outperform Americans on GMAT, So B-Schools Demand Separate Ranking of U.S. Students

Wall Street Journal, On B-School Test, Americans Fail to Measure Up; High GMAT Scores From China, India Spur Separate Rankings for U.S. Students:

GMAT 2New waves of Indians and Chinese are taking America’s business-school entrance exam, and that’s causing a big problem for America’s prospective M.B.A.s.

Why? The foreign students are much better at the test.

Asia-Pacific students have shown a mastery of the quantitative portion of the four-part Graduate Management Admission Test. That has skewed mean test scores upward, and vexed U.S. students, whose results are looking increasingly poor in comparison. In response, admissions officers at U.S. schools are seeking new ways of measurement, to make U.S. students look better. ...

Percentile rankings are calculated using a raw score—for the quantitative section, typically between 0 and 51. In 2004, a raw score of 48 in the quantitative section yielded a ranking in the 86th percentile, according to GMAC; today, that same score would land the test-taker in the 74th percentile.

U.S. students’ raw scores on the quantitative section have remained roughly flat over the last decade at around 33, but their percentile ranking has fallen as more of their higher-scoring international counterparts take the exam. ...

Continue reading

November 8, 2014 in Legal Education | Permalink | Comments (6)

WSJ: Steps to Take by Dec. 31 to Cut Your 2014 Tax Bill

WSJ ChartWall Street Journal Tax Report:  Act Now to Lower Your 2014 Taxes; Many Tax-Saving Strategies Require Action by Year-End, by Laura Saunders:

If you want to lower your 2014 income taxes, you need to act now to limit Uncle Sam’s reach next April.

The number of tax-cutting opportunities shrinks significantly after Dec. 31. Too often taxpayers let this deadline slip, says Ellen Minkow, an accountant at the firm MS 1040 in New York. She often finds herself asking clients, “Where were you in November?”  ...

Here are key areas to focus on before year-end.

Continue reading

November 8, 2014 in Tax | Permalink | Comments (0)

Supreme Court Grants Cert. to Hear Challenge to IRS's Expansion of Affordable Care Act Tax Credit

Supreme Court (2014)The Volokh Conspiracy:  Supreme Court to Hear King v. Burwell Challenge to IRS Tax Credit Rule, by Jonathan H. Adler (Case Western):

Friday the Supreme Court granted certiorari in King v. Burwell, one of four pending challenges to the IRS rule authorizing tax credits and cost-sharing subsidies for the purchase of health insurance in federally established exchanges. ...

With this grant, the Court has the opportunity to reaffirm the principle that the law is what Congress enacts, not what the administration or others wish Congress had enacted with the benefit of hindsight. Granting tax credits to those who need help purchasing health insurance may be a good idea, and may have bipartisan support, but the IRS lacks the authority to authorize such tax credits where Congress failed to do so. The PPACA only authorizes tax credits for the purchase of insurance  on exchanges “established by the State.”

Prior TaxProf Blog coverage:

(Hat Tip: Greg McNeal.)

November 8, 2014 in New Cases, Tax | Permalink | Comments (3)

The IRS Scandal, Day 548

IRS Logo 2Forbes:  What If Lois Lerner Was Right About The Tea Party?, by Peter J. Reilly:

The e-mails I have been getting from Jenny Beth Martin, Chairman of the Tea Party Patriots Citizens Fund, have me thinking about Lois Lerner and  Teapartygate.  I went back and took another look at a report prepared by the staff of Darrell Issa’s Committee on Oversight and Government.  The report is titled Lois Lerner’s Involvement in the IRS Targeting of Tax-Exempt Organizations.  It is well worth reading the whole report and I recommend it.  I still don’t think it adds up to some sort of crusade against conservatives, but that’s just me. You can read it yourself. It seems that Lerner was strongly against money in politics and sensitive to the criticism that IRS was letting 501(c)(4) organizations get away with too much political activity.  And along comes the Tea Party, which Lerner sees as “very dangerous”.

One GD thing after another and now we are on Day 542 of the IRS Scandal, by TaxProf count, with no end in sight. Here is the question that is troubling me right now thanks to the e-mails I have been getting from Jenny Beth Martin.  If there is a pretty compelling case that Tea Party Patriots Inc was intended from day 1 to be a political organization, rather than a social welfare organization, would that make any difference in how we view Lois Lerner? ...

The IRS has to collect over two trillion dollars, which is a pretty big job, so it would be better if it did not get caught up in side issues.  Still Lois Lerner was in charge of exempt organizations and there are rules that the IRS was accused of ignoring.  There is a lot of diversity in the grassroots Tea Party groups, but I have a hard time seeing the self proclaimed flagship as anything but a political organization based on how it has been behaving lately.  Does that make the scandal any more or less scandalous?  What do you think?

Continue reading

November 8, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Friday, November 7, 2014

NY Times: Will 'Purposeful Planning' Replace Estate Planning?

PPNew York Times, Focusing on the Human Element of Estate Planning:

[E]every trust and estate lawyer has stories about trust-fund beneficiaries who embody all the worst traits of spoiled rich kids. But this particular call got Mr. Warnick, then a lawyer at a large law firm in Denver, thinking about how estate planning was missing the human component. The emphasis was on transferring the most money to heirs free of estate tax and then insulating that money from creditors. “I said, ‘There has to be a better way to do planning so all this tax-efficient, elegant trust planning doesn’t hurt people,'  ” he said. “I saw well-intentioned, technically precise plans reap negative unintended consequences.”

Alas, this is not a story about a eureka moment that led immediately to change. It took Mr. Warnick another decade of toiling away at the law firm before he crystallized his goals and created the Purposeful Planning Institute. ...

So how does purposeful planning differ from traditional estate planning? “What we stand for is making sure the planning has a deeper purpose and meaning to it than just being driven by taxes,” Mr. Warnick said. “The challenge is to get those core planning disciplines — lawyers, C.P.A.s, wealth managers — to start with ‘why’ instead of immediately march into ‘how.'  ” To accomplish this, Mr. Warnick has come up with seven keys of purposeful trusts. ...

Continue reading

November 7, 2014 in Tax | Permalink | Comments (0)

Weekly Tax Roundup

November 7, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

80 Law Schools Are at Risk of Closure, Mostly in California, Florida, Indiana, Michigan, Ohio, and Pennsylvania

ClosedDavid Barnhizer (Cleveland State), Looking at the Law School ‘Crisis’ from the Perspective of the University:

Even with the very large excess capacity represented by the number of law schools and graduates versus the available jobs it is unlikely that the number of closings of ABA accredited schools will exceed the predictions offered below by Matt Leichter, Jerry Organ [10%] and Brian Leiter [up to 10]. ... But as many as 20 law schools could be closed in the near future and many others will be forced to adjust and adapt. ... My best guess would be that 80 law schools are at some degree of risk. The risks will in many cases be managed by shrinkage, layoffs, mergers and consolidations, distance learning and computer-based instruction strategies, and by adoption of additional kinds of educational missions. Accessing new applicant pools that benefit from some modified forms of education in law while not seeking the right to practice in the traditional sense will also produce new versions of law schools or new components within schools. The changes will be exciting but for many they will be painful.

Continue reading

November 7, 2014 in Legal Education | Permalink | Comments (10)