TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Wednesday, September 23, 2015

NY Times: IRS Ruling Makes After-Tax 401(k) Contributions More Attractive

IRS Logo 2New York Times, I.R.S. Ruling Makes After-Tax Contributions More Attractive:

Making pretax contributions to your 401(k) retirement plan is a no-brainer. But recent changes in federal tax rules may make it more attractive for serious savers to increase after-tax contributions, as well.

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September 23, 2015 in IRS News, Tax | Permalink | Comments (0)

Miami Seeks To Hire Entry Level Or Lateral Tax Prof

Miami LogoThe University of Miami School of Law is seeking to fill a tenured or tenure-track tax faculty position:

The University of Miami School of Law is interested in all persons of high academic achievement and promise, including those who hold Ph.D. degrees. We will consider applications from candidates at any level and with any area of specialization within tax.  

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September 23, 2015 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

For Third Time, ABA Committee Votes To Eliminate Ban On Academic Credit For Paid Externships

ABA Logo 2ABA Journal, ABA Committee for Third Time Proposes Eliminating Ban on Academic Credit for Paid Externships:

For the third time in less than two years, an ABA committee has proposed lifting the ban in the law school accreditation standards on students receiving academic credit for paid externships.

But the Standards Review Committee, which met Friday and Saturday in Atlanta, also agreed to forward such a proposal to the governing council of the Section of Legal Education and Admissions to the Bar in case the council decides to keep the ban. ...

At its meeting in Atlanta, the committee approved several proposed changes in that standard, including one that would define what a field placement course is and one that would require a written agreement spelling out the details of the placement between the student, the faculty member overseeing the placement and the site supervisor.

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September 23, 2015 in Legal Education | Permalink | Comments (1)

WSJ: Curbs Don’t Stop Tax-Driven Mergers — Inversion Deals, Foreign Takeovers Continue Apace

WSJWall Street Journal, Curbs Don’t Stop Tax-Driven Mergers: ‘Inversion’ Deals, Foreign Takeovers Continue Apace:

When Salix Pharmaceuticals Ltd. last October abandoned plans to buy an Irish drug company and move its headquarters overseas, it was chalked up as a win for Washington over “inversion” deals that were structured to avoid U.S. taxes.

The victory was short-lived. In the year since the Treasury Department tightened its rules to reduce the tax benefits of such deals, six U.S. companies have struck inversions, compared with the nine that did so the year before.

Meanwhile, foreign takeovers of U.S. companies have soared, with similarly draining effects on U.S. coffers. Just six months after calling off its inversion, Salix itself was sold to a Canadian rival, which expects to shave more than $560 million off Salix’s tax bill over the next five years, new documents show.

The results highlight the challenge for Washington in holding onto corporate tax dollars amid a global mergers-and-acquisitions boom. U.S. businesses, which are subject to a 35% tax rate, are worth more in the hands of more lightly taxed foreign rivals. The savings let overseas buyers offer high prices for those assets, which ramps up pressure on American boards to sell.

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September 23, 2015 in Tax | Permalink | Comments (0)

The IRS Scandal, Day 867

IRS Logo 2The Hill, Hatch Wonders About IRS Discipline Over Political Scrutiny:

The Senate’s top tax writer asked Tuesday why the IRS has cleared most employees referred for potential improper political scrutiny since the agency’s Tea Party controversy erupted in 2013.

Finance Chairman Orrin Hatch (R-Utah) noted that Treasury’s inspector general for tax administration had referred 47 employees to the IRS in recent years for potentially breaking the rules for reviewing tax-exempt applications.

The inspector general sent those referrals when it thought an employee’s actions weren’t criminal, leaving any potential punishment up to the IRS.

But of those 47 referrals, the IRS found that 20 employees had done nothing wrong, and another five resigned during their investigations.

The IRS found another eight employees could face disciplinary action for future conduct, after the agency found “no clear” evidence of misconduct. Eleven referrals are still pending, while the rest of the 47 are protected by privacy laws.

In a Tuesday letter, Hatch asked for more details about how the IRS investigates those referrals and about any role the National Treasury Employees Union plays in those inquiries.

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September 23, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, September 22, 2015

The Tax Lawyer Publishes New Issue

The Tax Lawyer (2013)The Tax Lawyer has published Vol. 68, No. 4 (Summer 2015) (State and Local Tax Edition):

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September 22, 2015 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)

Buchanan Reviews Schmalbeck's Ending The Sweetheart Deal Between Big-Time College Sports And The Tax System

Neil H. Buchanan (George Washington), Using the Tax Code to Help Universities Put Big-Time College Sports in (Some) Perspective (Jotwell), reviewing Richard Schmalbeck (Duke), Ending the Sweetheart Deal between Big-Time College Sports and the Tax System:

Richard Schmalbeck ... describes two tax provisions—universities not having to pay the Unrelated Business Income Tax” (UBIT) on their sports-related profits, and a provision allowing a partial deduction for barely disguised added charges for admission to games—that are “egregiously bad,” and he concludes that “these defects amount to an implicit tax subsidy of college sports that is neither healthy nor in any way justified.” Because of space limitations, I will focus here only on the first provision. Suffice it to say that Professor Schmalbeck’s arguments regarding the second provision are as strong as those for the first, which is to say very strong indeed. ...

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September 22, 2015 in Scholarship, Tax | Permalink | Comments (1)

Yale Law Students Prefer Efficiency Over Equality, Despite Self-Identifying As Democrats Rather Than Republicans By Over 10 To 1

Science 3Ray Fisman (Boston University), Pamela Jakiela (Maryland), Shachar Kariv (UC-Berkeley) & Daniel Markovits (Yale), The Distributional Preferences of an Elite, Science, Sept. 2015:

We compared the preferences of this highly elite group of students to those of a sample drawn from the American Life Panel (ALP), a broad cross-section of Americans, and to the preferences of an intermediate elite drawn from the student body at the University of California, Berkeley (UCB).

YLS subjects were substantially more efficiency-focused than were the ALP subjects drawn from the general population. Overall, 79.8% of YLS subjects were efficiency-focused, versus only 49.8% of the ALP sample. The YLS subjects displayed this distinctive preference for efficiency over equality in spite of overwhelmingly (by more than 10 to 1) self-identifying as Democrats rather than Republicans. In addition, YLS subjects were less likely to be classified as fair-minded and more likely to be classified as selfish than were the ALP subjects. Subjects from the intermediate elite fell between the YLS and ALP subjects with respect to efficiency-mindedness but were less likely to be fair-minded and more likely to be selfish than were the YLS subjects. We also demonstrate the predictive validity of our experimental measure of equality-efficiency tradeoffs by showing that it predicts the subsequent career choices of YLS subjects: More efficiency-focused behavior in the laboratory was associated with a greater likelihood of choosing private sector employment after graduation, whereas more equality-focused behavior was associated with a greater likelihood of choosing nonprofit sector employment.

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September 22, 2015 in Legal Education | Permalink | Comments (3)

Warren Pushes Treasury To Finalize Private Equity Fee Rule

Following up on my previous posts (links below):  Bloomberg, Warren Pushes Treasury to Finalize Private Equity Fee Rule:

Senator Elizabeth Warren urged the Treasury Department to finalize its rule limiting the tax benefits enjoyed by private equity managers.

Warren, a Massachusetts Democrat, sent a letter Monday to the Treasury calling for quick finalization and swift enforcement of the rule. Warren sent the letter along with Senate Democrats Al Franken of Minnesota, Tammy Baldwin of Wisconsin and Sheldon Whitehouse of Rhode Island.

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September 22, 2015 in News, Tax | Permalink | Comments (0)

NY Times: Kickstarter Reincorporates As Public Benefit Corporation, Eschews 'Loopholes And Other Esoteric But Legal Tax Strategies To Reduce Its Tax Burden'

Kickstarter LogoNew York Times, Kickstarter Focuses Its Mission on Altruism Over Profit:

Many technology start-ups aim to become “unicorns,” the companies that get valued at $1 billion or more on their way to probable vast riches. Yancey Strickler and Perry Chen have no interest in that.

As co-founders of Kickstarter, the popular online crowdfunding website that lets people raise money to help fund all manner of projects, including cooking gadgets and movies, Mr. Strickler and Mr. Chen could have tried to take their company public or sell it, earning millions of dollars for themselves and other shareholders.

Instead, they announced on Sunday that Kickstarter was reincorporating as a “public benefit corporation,” a legal change they said would ensure that money — or the promise of it — would not corrupt their company’s mission of enabling creative projects to be funded.

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September 22, 2015 in Tax | Permalink | Comments (0)

The Most (Montana) And Least (Washington) Fair State & Local Tax Systems

Wallet HubWalletHub, 2015’s Most & Least Fair State Tax Systems:

With summer ending, the 2016 elections are starting to heat up. And, as usual, tax policy is a hot-button issue, as political candidates from both sides of the aisle claim their plan is more “fair.” But what does a fair tax system look like? Which states actually have the fairest tax systems?

WalletHub analyzed and ranked the 50 states based on the fairness of their state and local tax systems — including income taxes, sales and excise taxes, and property taxes. To rank the states, Wallethub used the results of a nationally representative online survey of 1,050 individuals to assess what Americans think a fair state and local tax system looks like. Our analysts then compared public perception to data on the real structure of tax systems in all 50 states.

We believe this is the first ever ranking of state and local tax fairness that matches representative data on what Americans consider “fair” with real data on the structure of state and local tax systems.

Source: WalletHub

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September 22, 2015 in Tax | Permalink | Comments (0)

Duke Professor Denied Job At UNC Brings Antitrust Lawsuit Alleging Non-Poaching Agreement Stifled Lateral Faculty Moves

Duke UNCFollowing up on my previous post, North Carolina Retains 64% Of Faculty Who Receive Lateral Offers; Lawsuit Challenges Alleged Agreement With Duke To Forswear Lateral Hiring Of Each Other's Faculty:  Inside Higher Ed, Good Neighbors or Conspirators?:

Colleges and universities lure top faculty members away from competitor institutions all the time, and the practice is (generally speaking) entirely legal. But while some relish it, others consider faculty poaching, or actively recruiting faculty members from competitors, bad form and try to avoid doing it regularly -- especially to institutions in the same geographic area.

A new antitrust lawsuit alleges much more than a neighborly understanding between Duke University and the University of North Carolina at Chapel Hill, however. The suit, brought against Duke by a medical faculty member there, rather alleges a binding no-hire agreement between the two Research Triangle institutions prevented her from getting a job at Carolina that otherwise would have been hers. The faculty member alleges there are others like her, and she’s proposed a class action.

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September 22, 2015 in Legal Education | Permalink | Comments (4)

The IRS Scandal, Day 866

IRS Logo 2USA Today op-ed:  Why Congress Should Impeach Gina McCarthy, John Koskinen, and Other Obama Administration Obstructers-of-Justice, by Glenn Reynolds (Tennessee):

Is impeachment the only solution for lack of executive accountability? ...

Congress is considering impeaching [EPA Administrator] Gina McCarthy, ... Rep. Paul Gosar (R-Ariz.) has introduced a resolution of impeachment against her because he says she lied during testimony about the EPA’s new clean water rules. ... McCarthy is accused of perjuring herself three times, in discussing the scientific and engineering basis for those rules. So, you might wonder, why not just prosecute her for perjury?

The problem is that criminal prosecutions are brought by the executive branch, and there’s not much chance that Obama administration Attorney General Loretta Lynch will bring a perjury prosecution against a fellow member of the administration. And there’s nothing Congress can do to change that. ...

The framers of the Constitution knew that, of course, which is why they gave Congress another power, that of impeachment. ...

Congress has had a lot of trouble with this administration. The IRS stonewalled on the emails implicating Lois Lerner in political targeting of Tea Party groups, the State Department (and Hillary Clinton personally) have stonewalled and foot-dragged on releasing Hillary’s emails, and other officials, such as Director of National Intelligence James Clapper, have provided “clearly erroneous” statements to Congress and suffered no penalty.

Traditionally, presidents have been willing to sacrifice underlings caught in this sort of behavior, but the Obama administration hasn’t been so quick to force them out. And like any behavior, lying to Congress and stonewalling congressional oversight becomes more common when it becomes clear that there will be no significant price to be paid.

Impeaching lower level officials may be a solution. Not only is the threat of removal from office a significant one, but most cabinet officials — and even many lower-level appointees — have bigger ambitions. Rendering them ineligible for further federal office is a genuine threat.

That’s why impeaching McCarthy — and, as some, including Ed Morrissey, have already suggested, IRS chief John Koskinen, whose stonewalling over the IRS political-targeting scandal has been egregious, or Clapper — might encourage better behavior in the future. The Republican House majority leader says it won't happen, but as Congressional Republicans seek a way to hold the Obama administration accountable, the pressure to do something may change that political calculus.

We live in a world where these officials pay no price, and where no one lost their job over the EPA’s disastrous Colorado mine spill, and where the Veterans Administration is in many cases firing whistleblowers before accountable officials for botched veteran care.

Is impeachment the answer to lack of accountability in the executive branch? If it isn’t, what is?

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September 22, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Monday, September 21, 2015

Galle Presents Regulating Internalities Today At Loyola-L.A.

Galle (2016)Brian Galle (Georgetown) presents Regulating Internalities at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

An extensive existing literature examines the optimal design of tools for correcting externalities. This Article is among the first to extend that literature to the field of internalities, or harms that individuals do to themselves. I show that several pieces of conventional wisdom in the externality literature likely do not hold in the internality context. For example, moral hazard concerns lead prior commentators to overwhelmingly favor sticks over carrots. Yet moral hazard is likely not a concern for internalities, implying that other factors that have traditionally gotten little attention, such as income effects, may be important. I also show that internality regulation can in some contexts be a highly efficient source of revenue—again unlike the externality context, there may be a “double dividend” for internality-correcting taxes. And, finally, I address some standard concerns with the project of regulating internalities generally.

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September 21, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Schmalbeck Presents Ending The Sweetheart Deal Between Big-Time College Sports And The Tax System Today At BC

SchmalbeckRichard Schmalbeck (Duke) presents Ending the Sweetheart Deal between Big-Time College Sports and the Tax System at Boston College today as part of its Tax Policy Workshop Series hosted by James Repetti and Diane Ring:

This paper was prepared for a recent conference of the National Center for Philanthropy and Law, of the NYU Law School. The overall topic was “Tax Issues Affecting Colleges and Universities,” and I was asked to address specifically those issues relating to athletics. This paper considers two specific issues that have in common that they involve college ”revenue” sports, and are plagued by egregiously bad tax rules.

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September 21, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Would The IRS Revoke The Catholic Church's Tax Exempt Status If Pope Francis Endorses Bernie Sanders?

Pope BernieForbes:  Presidential Race — Let's Talk Religion, Politics And The IRS, by Peter J. Reilly:

The IRS continues to make it clear that political campaign intervention by 501(c)(3) organizations including churches is absolutely prohibited. ... Of course when it comes to such a prohibition, the devil is in the details.  ”Certain activities may not be prohibited depending on the facts and circumstances”.  As we head into a new election season, it is worth looking at some of those devilish details.

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September 21, 2015 in Political News, Tax | Permalink | Comments (9)

Condlin: Assessing Experiential Learning, Jobs And All

Robert Condlin (Maryland), Assessing Experiential Learning, Jobs and All: A Response to the Three Professors, 2015 Wis. L. Rev. Online ___ :

Does clinical practice experience improve a law student’s chances of getting a legal job? If not, would it, if employers were given better information about that experience? And if not, are there other reasons to justify a law school’s decision to fund a clinical program? The answer to the first two questions is almost certainly no. For many reasons — the uneven and situation-driven nature of clinical practice experience, the Delphic quality of practice evaluations, the availability of more effective in-house training options, and the like — most private law firms prefer to trust conventional academic credentials more than practice experience in deciding whom to hire.

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September 21, 2015 in Legal Education | Permalink | Comments (1)

Loyola-L.A. Seeks To Hire A Two-Year Summer Tax Visitor

Loyola-L.A. Logo (2013)Loyola-L.A. seeks to hire a Visiting Professor of Tax Law to teach its six-unit Business Tax Intensive course during the summers of 2016 and 2017:

The course covers basic and advanced Corporate Taxation and Partnership Taxation and meets Monday through Thursday for eight weeks from early June through the end of July. It is part of a twelve unit Intensive Summer Tax Session ("summer tax bootcamp”), offered as part of Loyola's unique Joint JD/Tax LLM Program.  By the end of bootcamp, students have most of the skills they need to operate at a first- or second-year big firm tax associate level; employers come to Loyola specially to recruit bootcamp graduates. Joint Program students, including visiting students from JD programs at other law schools, attend the bootcamp after their first or second JD year, take an additional 12 units of advanced tax courses during the regular academic year, and then graduate in three years with both a JD and a Tax LLM.

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September 21, 2015 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

Department Of Education's New Loan Repayment Program Punishes Law School Grads

The American Lawyer:  A Loan Repayment Plan That Punishes Law Grads, by Matt Leichter:

Despite plummeting law school applications and a glut of highly indebted, underemployed law school graduates, Washington appears to believe that its student loan reforms treat law grads too gently.

After promoting the Pay-As-You-Earn (PAYE) repayment plan to ease debt burdens, the Department of Education is pulling back. In July 2015, the department posted the latest addition to its list of income-sensitive repayment plans: Revised Pay-As-You-Earn (REPAYE). As the new plan’s name implies, the government is dissatisfied with PAYE, which was itself intended to improve upon the Income-Based Repayment (IBR) option. The department hopes to make REPAYE available by Dec. 31, 2015.

REPAYE differs notably from its predecessor by demanding more from graduate and professional students, who tend to borrow more than undergrads. Instead of cracking down on tuition or curtailing its lending programs, the department proposes to extract more from the students. Unfortunately, most law school debtors do not have the large incomes necessary to fully repay their loans. And because law students make up a large proportion of the borrowers using federal loans to pay for graduate education, they will likely bear the brunt of REPAYE's graduate-student-unfriendly changes.

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September 21, 2015 in Legal Education | Permalink | Comments (8)

The IRS Scandal, Day 865

IRS Logo 2Providence Journal op-ed, Selective Interest in Enforcing the Law, by Rick Manning (President, Americans for Limited Government):

Who said this? “I would just say on principle that the success of our democracy depends on rule of law. And there is no public official that is above the law, certainly not the president of the United States. But neither is the Rowan County clerk. That’s a principle that is enshrined in our Constitution and in our democracy and it's one obviously the courts are seeking to uphold. ”

That was White House Press Secretary Josh Earnest speaking on Sept. 3 about the arrest of Rowan County Clerk Kim Davis of Kentucky for refusing to process gay-marriage licenses.

The rule of law is fundamental to our nation’s existence, and it has been virtually destroyed over the past seven years both by the Obama administration and federal courts with acquiescence from the congressional leadership.

The president’s Internal Revenue Service engaged in political targeting of conservative groups and auditing conservative donors in one of the most dangerous abuses of executive branch power in our nation’s history, and the perpetrator faces no federal charges and continues to draw payments from the federal government. Lois Lerner has been, and continues to be, above the law.

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September 21, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

TaxProf Blog Weekend Roundup

Sunday, September 20, 2015

Washington Post Debate: Should Churches Be Tax Exempt?

The Top 5 Tax Paper Downloads

ABA Tax Section Fall CLE Meeting

ABA Tax Section Logo (2012)The ABA Tax Section concluded its three-day joint Fall CLE Meeting with the ABA Real Property, Trust and Estate Law Section yesterday in Chicago.  The full program is here.  Tax Profs with speaking roles included:

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September 20, 2015 in ABA Tax Section, Conferences, Tax | Permalink | Comments (0)

The IRS Scandal, Day 864

IRS Logo 2CNN, IRS scandal Fast Facts:

Here’s some background information about the Internal Revenue Service (IRS) scandal involving the targeting of certain groups. In May 2013, the Treasury Inspector General for Tax Administration released a report indicating the targeting involved delaying the processing of applications by certain conservative groups and requesting information from them that was later deemed unnecessary.

The Justice Department is investigating circumstances surrounding the disappearance of IRS emails that Republicans believe could shed light on the possible targeting of conservative and other political groups by the agency.

Other Facts: The investigation into the email disappearance, which the IRS said was due to a crash of former IRS official Lois Lerner’s hard drive, is part of a wider criminal probe of whether any IRS employees broke the law in unfairly singling out specific political groups for extra scrutiny.

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September 20, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, September 19, 2015

This Week's Ten Most Popular TaxProf Blog Posts

IRS Says Coca-Cola Owes $3.3 Billion In Taxes In Foreign Transfer Pricing Dispute

Diet CokeWall Street Journal, Coca-Cola Owes $3.3 Billion in Taxes Over Foreign Transfer Licensing:

Coca-Cola Co. on Friday said the Internal Revenue Service had notified it of a potential $3.3 billion federal income-tax liability, becoming the latest U.S. multinational challenged over so-called foreign transfer pricing.

The Atlanta beverage giant also disclosed the IRS has recommended the matter be designated for litigation after a government audit determined the company’s reported income from 2007 to 2009 should have been higher.

“The company firmly believes that the assessments are without merit and plans to pursue all administrative and judicial remedies necessary to resolve this matter,” Coke said in a regulatory filing, adding it plans to file a petition in U.S. Tax Court challenging the notice. ...

Coke says it derived 57% of its $46 billion in revenue last year from outside the U.S., but it books a higher percentage of its operating income overseas. As a result, it reported an effective tax rate of 23.6% in 2014, below the statutory U.S. tax rate of 35%.

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September 19, 2015 in Tax | Permalink | Comments (1)

Is Legal Education In Crisis? A Dean Responds

Following up on my previous posts (links below):  The American Lawyer op-ed, Is Legal Education in Crisis? A Dean Responds, by Jeremy Paul (Dean, Northeastern):

I am pleased that my letter to The New York Times provoked a response by Steven Harper in The American Lawyer. We now see clearly how those dissatisfied with U.S. law schools are more interested in winning arguments than achieving reform. ...

Mr. Harper rightly calls everyone’s attention to the problem of student debt, a problem that goes far beyond law schools. But here too he ignores the realities. Student debt will begin dropping at many schools because tuition discounting has become a fact of life. Every law dean in the U.S. is working hard to contain costs and provide more value for student money. And legal education has never offered students more in terms of clinical experiences, broad curricula and individualized instruction. 

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September 19, 2015 in Legal Education | Permalink | Comments (8)

The IRS Scandal, Day 863

IRS Logo 2American Thinker, Uh-oh: Hillary's Server Data May be Recoverable:

Hard though it is to believe, maybe all that feigning of ignorance (”You mean like with a cloth?”) about wiping a server was genuine. Three writers from the Washington Post (Rosalind S. Helderman, Tom Hamburger, and Carol D. Leonig) burrow into the question of what actually was done to the famous server data, and come up with the possibility that the data was not expertly “wiped” by overwriting it multiple times with nonsense characters. ...

How did the original server get to be blank? If Platte River Networks didn’t wipe it, then theoretically that data should be recoverable. And it appears Pagliano had no access to it after the data was migrated, only to the second server.

Either a mysterious “sinister force” (a phrase from Watergate - Google it) destroyed the data on the original server, or it should be fully recoverable despite being “blank.” Unlike Lois Lerner’s hard drive, apparently nobody came in with a hammer and physically destroyed it.

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September 19, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, September 18, 2015

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

Weekly Student Tax Note Roundup

Bloomberg: Bar Exam Scores Drop To Their Lowest Point In Decades — Unprepared Students Can't Handle A Harder Test

Bar ExamFollowing up on yesterday's post, More Bar Exam Carnage?:  Bloomberg, Bar Exam Scores Drop to Their Lowest Point in Decades: Unprepared Students Can't Handle a Harder Test:

American law graduates are increasingly getting a taste of failure before they start their careers. Performance on the bar exam has continued to slip, early results show.

The average score on the multiple-choice portion of the July test fell 1.6 points from the previous year, reaching its lowest level since 1988, according to data provided to Bloomberg by the National Conference of Bar Examiners. The mean score on this summer's exam was 139.9, down from 141.5 in July 2014.

"It was not unexpected," says Erica Moeser, the president of the NCBE, which creates the multiple choice part of the test. "We are in a period where we can expect to see some decline, until the market for going to law school improves."

Law schools have been admitting students with lower qualifications who "may encounter difficulty" when taking the bar, Moeser says. 

About a dozen states have published their pass rates, and the numbers are even worse than last year, when graduates performed historically badly. Pass rates for students who took the test in July were down in most states that have reported results.

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September 18, 2015 in Legal Education | Permalink | Comments (10)

McMahon: Should Divorce Be More Taxing?

Stephanie Hunter McMahon (Cincinnati), Should Divorce Be More Taxing? Structuring Tax Reduction to Reduce Inequality, 3 Ind. J. L. & Soc. Equal. 75 (2015):

Current law makes divorce a time for minimizing some couples’ taxes. The group who benefit from the reduction are unlikely to be those in greatest financial need following divorce. Existing divorce-related taxation focuses on shifting the tax burden between spouses, the implicit and explicit elections that enable this shifting, and the classification of who should be entitled to this tax reduction. This article argues that Congress should focus tax reduction on those with minimal resources following divorce to ensure an equitable distribution of the nation’s tax burden.

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September 18, 2015 in Scholarship, Tax | Permalink | Comments (3)

41st Annual Notre Dame Tax And Estate Planning Institute

NDThe 41st Annual Notre Dame Tax and Estate Planning Institute concludes today:

With the permanence of the $5,000,000 exemptions, the Annual Notre Dame Tax & Estate Planning Institute has and will continue to present topics that are relevant regardless of whether or not a family is exposed to the estate tax. In addition to estate planning topics for high net worth individuals, the Institute devotes sessions to income tax planning techniques that provide immediate tax benets that need not wait until one’s death. 

Tax Profs with speaking roles include:

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September 18, 2015 in Conferences, Tax | Permalink | Comments (0)

The IRS Scandal, Day 862

IRS Logo 2Robert W. Wood (Forbes), IRS 'Tax Protester' Label Is Harder To Delete Than Lois Lerner Emails:

In 1998, Congress passed a law prohibiting the IRS from labeling people as “illegal tax protesters.” In fact, Congress ordered the IRS to purge the “protester” code from its computer files on 57,000 Americans. Every year, the Treasury Department’s Inspector General reviews how well the IRS is doing at purging the protester label. It turns out the protester epithet is hard to entirely eliminate, even after all these years. The 2015 audit report says a few people at the IRS still do it.

Using illegal tax protester or other similar designations may stigmatize taxpayers and may cause the IRS to be biased against them in future contacts. Congress enacted the prohibition against illegal tax protester designations because it was concerned that some taxpayers were being permanently labeled that way even though they later fixed their tax problems or stopped doing things the IRS thought were unreasonably against the tax system.

Mostly, the IRS is careful about these hot button words now. The report says of approximately 4.8 million records and cases, there were only four instances in which IRS employees referred to taxpayers as “Tax Protester,” “Constitutionally Challenged,” or other similar designations in case narratives in the Appeals Centralized Database System.

The Inspector General recommended that the Chief, Appeals, emphasize to all Appeals employees the importance of reinforcing that taxpayers are not to be referred to as Illegal Tax Protesters or any other similar designations. In a response to the report, the IRS management agreed. Of course, there are plenty of negative things you can be called in the tax world–for example “aggressive” or “delinquent”–one of the worst to be called is “frivolous.” In IRS lingo it’s about as bad as you can get, just shy of the other “f” word, “fraudulent.”

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September 18, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, September 17, 2015

The Richest Americans Are Winning the Economic Recovery

Bloomberg, The Richest Americans Are Winning the Economic Recovery:

U.S. Census Bureau data out Wednesday underscore just how lousy the recovery has been if you aren't rich.

Looking at eight groups of household income selected by Census, only those whose incomes are already high to begin with have seen improvement since 2006, the last full year of expansion before the recession. Households at the 95th and 90th percentiles had larger earnings through 2014, the latest year for which data are available.


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September 17, 2015 in Tax | Permalink | Comments (1)

Bias Suit Targets Microsoft Employee Ranking

RankFollowing up on my previous post, Microsoft, GE Abandon 'Stack Ranking' of Employees -- No More 'Rank and Yank':  The Recorder, Bias Suit Targets Microsoft Employee Ranking:

Lawyers ... on Wednesday filed a putative class action against Microsoft, accusing the Redmond, Wash.-based company of discriminating against female employees in technical and engineering positions.

The suit, filed in the U.S. District Court for the Western District of Washington, specifically targets Microsoft's "stack ranking" system, which rates each employee's job performance on a scale of one to five, with one being the best. The company, according to the complaint, caps how many workers can be given a certain rating; only 20 percent of workers, for example, can be classified as "ones." Employees' twice-a-year ratings are used in determining pay and promotions.

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September 17, 2015 in Legal Education | Permalink | Comments (0)

NY Times: The University Of California’s Upward-Mobility Machine

University of California (2015)New York Times:  California’s Upward-Mobility Machine, by David Leonhardt:

The University of California is struggling with budget woes that have deeply affected campus life. Yet the system’s nine colleges still lead the nation in providing top-flight college education to the masses.

At many other colleges, poor and truly middle-class students remain a distinct minority. Affluent students predominate at liberal-arts colleges like Oberlin and Bates, private universities like Cornell and Texas Christian and even many public universities, including Wisconsin, Penn State and Georgia Tech. The University of California, by contrast, enrolls large number of high-performing students of all economic backgrounds.

That contrast is the most striking result of this year’s College Access Index, a New York Times measure of economic diversity at top colleges. Six of the top seven spots in this year’s index belong to University of California campuses, with Irvine at No. 1, and the flagship Berkeley campus at No. 7.

NY Times

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September 17, 2015 in Legal Education | Permalink | Comments (2)

A Defense Of Horizontal Equity

Florida Tax ReviewIra Lindsay (Dartmouth), Tax Fairness by Convention: A Defense of Horizontal Equity, 18 Fla. Tax Rev. ___ (2016):

Horizontal equity is the principle that people who earn equal income should owe equal tax. It has gotten a bad name. Although horizontal equity remains a textbook criterion of tax fairness, scholarly literature is largely hostile. Scholars ranging from the legal theorist Louis Kaplow to philosophers Thomas Nagel and Liam Murphy question its conceptual coherence and normative significance. The crux of the case against horizontal equity is that it seems irrational to worry about the relationship between pre-tax income and tax obligations rather than determining tax policy in light of what our best theory of distributive justice tells us is the best post-tax outcome. I argue that horizontal equity is best understood as a compromise principle for people who disagree about deeper principles of distributive justice.

The debate over horizontal equity reflects two distinct ways of thinking about fairness. One approach starts with principles that specify a just distribution of income, resources or utility and uses these principles to derive appropriate tax laws. A second approach analyzes fairness norms as stable and mutually advantageous compromises between people who have conflicting interests and differing moral commitments. Proponents and opponents of redistributive taxation can agree that at any given level of redistribution they will each be better off if taxes are horizontally equitable. Horizontally equitable taxation can thus prevent rent-seeking and ideological conflict over tax policy from generating a wasteful patchwork of narrow taxes and tax subsidies. Observing horizontal equity may be unimportant when people agree on ideal principles of justice and the relevant empirical facts. But under more usual conditions of deep moral and empirical disagreement over tax policy, treating pre-tax income as a normative baseline can prevent conflict over distributive questions from leading to wasteful and inequitable tax policy. 

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

Utah Dean Adler: 100% Bar Passage/100% Professional Employment And The Value Of Aspiration

100%Following up on my previous post, Utah Law School Celebrates Opening Of New Building With Audacious Goal: 100% Bar Passage, 100% Professional Employment:  Robert W. Adler (Dean, Utah), 100/100 and the Value of Aspiration:

At the dedication of the new home for the University of Utah’s S.J. Quinney College of Law, I announced our new 100/100 Initiative, which establishes a firm goal of attaining 100% first-time bar passage and 100% full-time professional employment for our new graduates as quickly as possible. ...

I fully expected mixed reactions to my announcement of the 100/100 Initiative, from praise to some serious skepticism. In his otherwise positive blog post, Professor Paul Caron referred to the 100/100 goals as “audacious.” I agree. They are bold, and intentionally so. We care about every one of our students, and we want every one of them to succeed.

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September 17, 2015 | Permalink | Comments (2)

WSJ: Is The IRS Undercounting Americans Renouncing U.S. Citizenship?

Passport (2014)Wall Street Journal, Is the IRS Undercounting Americans Renouncing U.S. Citizenship?:

Attorney Andrew Mitchel, an expert in U.S. citizenship renunciations, asks in a blog post today: ‘Is the IRS Missing Names From Its Quarterly Publication of Expatriates?’

He writes that recent State Department and FBI data show an estimate of about 6,000 Certificates of Loss of Nationality applied for or issued in the fiscal year ending Sept. 30. Yet, he adds, in the first quarter, the IRS published 2,857 names, which would lead one to expect around 3,809 for the full fiscal year. “Based on this factor alone, the IRS would appear to be missing roughly 2,000 names,” Mr. Mitchel writes.

Moreover, he says, the State Department recently gave an estimate of 5,986 applications for CLNs for the 2015 fiscal year, and forecast 559 citizenship relinquishments — a total of 6,545 that far outstrips the IRS’s count.

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September 17, 2015 in Tax | Permalink | Comments (9)

More Bar Exam Carnage?

The IRS Scandal, Day 861

IRS Logo 2Real Clear Politics, Descent Into Lawlessness, by Victor Davis Hanson (Stanford):

In the eight-plus since the [Scooter] Libby trial, the Obama administration has blown up the law as we have known it for centuries. ...

Just as scary is the application of the law on the basis of the perceived politics of a suspect.

IRS bureaucrat Lois Lerner was exposed as a rank partisan whose office gave particular scrutiny to would-be tax-exempt groups deemed opponents of Obama's re-election efforts. She invoked the Fifth Amendment and refused to testify before a congressional committee about her actions at the IRS. Lerner has never been indicted.

Almost everything former Secretary of State Hillary Clinton has stated about her improper use of a private email account and server has been proven false. A State Department staffer who worked on Clinton's private server plans to invoke the Fifth Amendment to avoid testifying before a congressional committee about his role in privatizing Clinton's email.

But like Lerner, Clinton has escaped an indictment or jailing.

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September 17, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, September 16, 2015

Milligan Presents A Reset For The Child Tax Benefit System Today At Toronto

MilliganKevin Milligan (British Columbia) presents A Reset for the Child Tax Benefit System at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

There is a logical foundation for differential treatment of families with children under our tax system. However, trying to make good on this principle of special tax treatment for children has resulted in overwhelming complexity. For example, a family in British Columbia in 2012 had to assess its eligibility for ten separate child-focused tax measures. These benefits cross paths, conflict and confuse. The way forward, I suggest, is to rationalize the cornucopia of credits into one delivery method (I propose a refundable tax credit), to remove overlap by consolidating existing measures into fewer programs, and finally to impose a seriously simplified structure on the whole system.

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September 16, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Rosen Presents Artificial Intelligence And Predicting Tax Evasion Today at Cornell

RosenJacob Rosen (MIT) presents Tax Noncompliance Detection Using Co-Evolution of Tax Evasion Risk and Audit Likelihood at Cornell at 4:00 p.m. EST (live stream here) as part of its Joint Department of Information Science Colloquium Series:

We detect tax law abuse by simulating the co-evolution of tax evasion schemes and their discovery through audits. Tax evasion accounts for billions of dollars of lost income each year. When the IRS pursues a tax evasion scheme and changes the tax law or audit procedures, the tax evasion schemes evolve and change into undetectable forms. The arms race between tax evasion schemes and tax authorities presents a serious compliance challenge. Tax evasion schemes are sequences of transactions where each transaction is individually compliant. However, when all transactions are combined they have no other purpose than to evade tax and are thus non-compliant.

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September 16, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Heritage: The Redistributive State — The Allocation Of Government Benefits, Services, And Taxes In The United States

Heritage Foundation, The Redistributive State: The Allocation of Government Benefits, Services, and Taxes in the United States:

Each year, families and individuals pay taxes to the government and receive back a wide variety of services and benefits. A fiscal deficit occurs when the benefits and services received by one household or a group of households exceed the taxes paid. When such a deficit occurs, other households must pay, through taxes, for the services and benefits of the group in deficit. Thus, government functions as a redistributive mechanism for transferring resources between groups in society.

This paper examines fiscal balance in the United States by income class. It estimates the distribution of the full array of government benefits and services including cash and near cash benefits, means-tested aid, education services, and general social services. It also estimates the distribution of all direct and indirect taxes used to finance government expenditure.

Heritage 2

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September 16, 2015 in Tax, Think Tank Reports | Permalink | Comments (0)

When It Rains In L.A.

We got some much-needed rain yesterday in Los Angeles:

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

WSJ: IRS Raises Red Flag On Real Estate Spinoffs

Spinoff 2Wall Street Journal, IRS Raises Red Flag on Real-Estate Spinoffs:

Activist investors have been clamoring for companies to spin off real estate and unlock the value hidden in their headquarters, stores and land. This week, U.S. tax authorities weighed in with a message of their own: Not so fast.

In new guidance [Notice 2015-59], the IRS signaled its discomfort with a range of corporate spinoffs, specifically calling out deals in which companies split their real estate and other physical assets from their mainstream operations. The agency said it was concerned that some of these transactions may violate rules meant to ensure that companies don’t disguise dividends and other taxable transactions as spinoffs to avoid paying taxes.

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September 16, 2015 in IRS News, Tax | Permalink | Comments (0)