TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, June 17, 2016

ABA Associate Deans Conference On Adapting To A Changing Landscape

ABAThe 2016 ABA Associate Deans Conference on Adapting to a Changing Landscape continues today at the University of St. Thomas School of Law:

There is little about legal education that is not in transition right now. Associate Deans are all adjusting to similar challenges and opportunities across the nation. How do law schools respond to the new accreditation requirements and innovate in curricular design with decreasing resources? How do law schools educate a changing student population that is also facing increasing student debt loads and a legal job market that looks very different from when you graduated? How are you managing the shifting demands on your academic programs, student services, and faculty research? 

Today's morning plenary session is Managing People, Managing Resources, Managing Teams:

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June 17, 2016 in Conferences, Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 1135

IRS Logo 2Politico Morning Tax, What’s Next for Koskinen:

The House Oversight Committee cleared its measure to censure IRS Commissioner John Koskinen on Wednesday in a predictably partisan vote. But that action also raised a couple of questions: What’s next? And what’s going on with Koskinen’s pension?

The House Judiciary Committee will hold its hearing next week on standards for impeachment, Oversight Chairman Jason Chaffetz’s preferred avenue for punishing Koskinen over the loss of documents from Lois Lerner — the central figure in the IRS’s improper scrutiny of tea party groups. But Chaffetz also told Morning Tax that he’s not sure whether GOP leaders, who haven’t exactly embraced his efforts to remove Koskinen, will bring up the censure resolution. “I hope they do it sooner rather than later,” Chaffetz said. “Nothing negative, but nothing certain either on dates.”

On the other issue, our Katy O’Donnell notes that the censure resolution says Koskinen “should” lose his pension, while an Oversight release said the vote “requires” that step. And as Katy also notes, the Congressional Research Service has been skeptical that Congress can use a censure to impose a financial penalty on officials outside the legislative branch without it being an unconstitutional bill of attainder. For his part, Chaffetz acknowledged the censure couldn’t on its own claw back Koskinen’s pension. “We’re stating what we believe is the right course of action, that there ought to be some repercussions for losing the trust of the American people,” he told Morning Tax.

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June 17, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Thursday, June 16, 2016

NY Times:  Why The IRS Can't Close The $125 Billion Small Business Tax Gap

IRS Logo 2New York Times, Why the I.R.S. Fails to Crack the Small-Business Tax Nut:

Sizing up the honesty of small-business owners is one of the Internal Revenue Service’s most vexing problems.

The agency estimates that it collects $458 billion a year less in taxes from all Americans than the government is actually due. Most of that “tax gap” is income that goes unreported, and the biggest chunk of it, by far — $125 billion — is individual business income.

Taxpayers in this category, primarily sole proprietors, pay taxes on the money their operations make through their personal returns. Thus, their cash flows can be particularly opaque. ...

The dreaded audit is the main way the I.R.S. catches scofflaws and ferrets out unreported income, but it is a time-consuming and imperfect tool. Short on resources, the agency collected just $7.3 billion from audits last year, its lowest total in 13 years.

What the I.R.S. really wants is for business owners to voluntarily pay more of what they owe. But 63 percent of “low visibility” income, the kind that isn’t captured by outside parties on tax information documents, is not disclosed on tax forms, the agency says.

So for the last four years, the Taxpayer Advocate Service, an independent office within the I.R.S., has been running studies to help it figure out how more small-business owners who pay their taxes can be persuaded to report their earnings more accurately.

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June 16, 2016 in IRS News, Tax | Permalink | Comments (1)

The Best Thing A Young Lawyer Can Do Is Learn Technology

Above the Law:  The Best Thing A Young Lawyer Can Do Is Learn Technology, by Joe Bennion (Estey & Bomberger, San Diego):

Dear Lawyers Who Just Passed the Bar or Are Studying for the Next Bar Exam:

Soon, you’ll find that your advanced knowledge of the elements of the tort of battery and your ability to write as fast as you can without checking any legal authority is not going to do you very much good in the real world.

There are going to be some things you are going to want to do right off the bat. Get a mentor. Join some trade organizations. Learn about office politics. Learn that the best thing you can do in the office is be nice to your secretary. If you want to do things a little bit above your paygrade, learn technology.

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June 16, 2016 in Legal Education | Permalink | Comments (2)

Kysar:  Interpreting Tax Treaties

Rebecca Kysar (Brooklyn), Interpreting Tax Treaties, 101 Iowa L. Rev. 1387 (2016):

The circumstances, if any, that permit non-uniform, or differentiated, treaty interpretation are difficult to define. Generally, a differentiated approach stands in tension with the Vienna Convention’s rules of interpretation, which apply a methodology based on plain meaning to all treaties. Yet courts, states, and scholars widely accept the notion that some treaties warrant special interpretive rules. Thus far, however, efforts to justify differentiated treaty interpretation on the grounds of subject matter or treaty purpose have proven inadequate. A more promising avenue is the examination of the objective characteristics shared within a treaty type. One such characteristic, I argue, is the treaty’s degree of completeness. Specifically, all else being equal, standalone instruments call for less reliance upon extrinsic materials; interstitial instruments demand more.

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June 16, 2016 in Scholarship, Tax | Permalink | Comments (1)

Taylor:  The GRE Is No Law School Diversity Tool

GREAaron N. Taylor (Saint Louis; Director, Law School Survey of Student Engagement), The GRE Is No Diversity Tool:

In February, the University of Arizona College of Law announced that applicants for admission could submit Graduate Record Exam scores, in lieu of scores from the Law School Admission Test. The announcement made waves because for decades LSAT scores have been a requirement for law-school candidates.

The ABA, the primary accreditor of law schools, requires law schools to use a “valid and reliable admission test” to aid in selecting students. However, no particular test is stipulated. Arizona argues that the GRE is as good a predictor for law school success as the LSAT, which may be true.

But what is interesting, and perhaps disingenuous, is the school’s claim that accepting GRE scores will promote student-body diversity “in all its forms.” This is because if the GRE is misused in the same manner as the LSAT, the admissions process will remain inequitable, at the expense of racial, ethnic and socioeconomic diversity.

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June 16, 2016 in Legal Education | Permalink | Comments (1)

Tax Foundation:  Time Spent Filing Taxes Costs Economy $409 Billion/Year

Tax Foundation logoTax Foundation, The Compliance Costs of IRS Regulations:

Key Findings:

  • The growing complexity of the U.S. tax code has led to large compliance costs for households and businesses.
  • Using data from the Office of Information and Regulatory Affairs and the Bureau of Labor Statistics, it is possible to estimate the total cost of tax compliance on the U.S. economy.

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June 16, 2016 in Tax | Permalink | Comments (2)

Wu:  Is Legal Education Bouncing Back?

The Huffington Post:  Is Legal Education Bouncing Back?, by Frank Wu (Former Dean, UC-Hastings):

BounceI have been asked whether I believe the announcements from major law firms that they would increase starting salaries to $180,000 will cause legal education to bounce back. ... My reply, as you might guess, is an emphatic “no.” [Reforming Law Schools: A Manifesto, 46 U. Tol. L. Rev. 417 (2015)]

Bounce back means, I infer, the hope that legal education will return to the pre-recession levels of interest, with record numbers of applicants vying for seats at accredited law schools. Since then, there has been an unprecedented drop, amidst claims that legal education — even higher education more generally — is worthless or some sort of elaborate sham.

The problems have been publicized well enough if hyberbolically. But they are problems plural rather than singular. There is the lack of jobs, specifically those desirable to young people whose expectations have been set by the instant gratification of the internet era; the extraordinary cost of tuition, which typically is debt financed; and concerns over the utility of the skill set that is offered. Fixes for one problem or two problems exacerbate the third problem. For example, the two-year J.D., touted as a panacea (though some schools attempted to charge the same as for the full three-year version), might reduce cost but perforce reduce the training which is received.

A rush of young people into law schools is good for the law schools, to be sure. Whether it is good for the young people is another matter.

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June 16, 2016 in Legal Education | Permalink | Comments (8)

Corporate Clients Push Back Against $180k Starting Salary For First Year BigLaw Associates

$180,000Following up on last week's post, BigLaw First Year Associate Salaries Jump To $180,000 (From $160,000):  Wall Street Journal, Corporate Clients Push Back After Law Firms Hike Starting Salaries:

After Cravath, Swaine & Moore LLP said last week it would boost starting pay for its junior-most lawyers to $180,000, law firms across the country stumbled over themselves to announce salary increases for their own associates.

But now companies are pushing back.

Bank of America Corp.’s top lawyer recently sent an email to a group of law firms calling the increases in associate lawyer pay unjustified, making it clear the bank wouldn’t help firms absorb the cost. ...

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June 16, 2016 in Legal Education | Permalink | Comments (6)

McEntee:  Brooklyn Publishes 'Misleading,' 'Egregious' 92.5% Law Grad Employment Statistic

Brooklyn 2Kyle McEntee (Law School Transparency), Caveat Venditor: Throwback To The Days Of Junk Employment Statistics:

Welcome to the second installment of Caveat Venditor, a series that assesses claims made by law schools to separate truth from fiction. This week we look at Brooklyn Law School’s employment rate of 92.5% posted on its “By The Numbers” infographic. ...

After the continued bad news about the job market for law school graduates, 92.5% looks fantastic to students looking at Brooklyn Law School. It’s therefore worth examining further. ...

The employment rate on the infographic has an asterisk on it. Follow the asterisk to the bottom of the page and there’s a link. At that link, Brooklyn refers to an “adjusted employment rate” and explains the rate in minimal detail. Even with the explanation, however, the figure is misleading.

Indeed, it’s a return to the way things were before the law school transparency movement. Law schools and the ABA maintained a tapestry of fictional statistics that deceived the public. Schools advertised employment rates north of 90 percent without disclosing that its parts were… not what consumers thought. Much of the deception was unintentional because law school administrators were afflicted by the same cultural conditioning that afflicted applicants who saw these statistics and confirmed their perceptions of law school.

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June 16, 2016 in Legal Education | Permalink | Comments (6)

Yin:  A Maritime Lawyer, The Percentage Depletion Allowance, And The Joint Committee on Taxation

George K. Yin (Virginia), A Maritime Lawyer, the Percentage Depletion Allowance, and the Joint Committee on Taxation:

This year marks the 90th anniversary of both the percentage depletion allowance and the Joint Committee on Taxation. This essay relates the curious tale of Norman Beecher, a New York maritime lawyer with little background in energy, natural resources, or tax, who convinced Congress in 1918 to adopt a tax proposal that helped lead to both of these important features of the tax system eight years later.

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June 16, 2016 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1134

IRS Logo 2New York Times, House Panel Recommends Censure of I.R.S. Commissioner:

A polarized House committee on Wednesday recommended that the House censure the commissioner of the Internal Revenue Service, John A. Koskinen, and seek to strip him of his office and his federal pension for “a pattern of conduct” that betrayed the trust of Congress and the public.

Following the House Republicans’ vote in 2012 to hold the attorney general at the time, Eric H. Holder Jr., in contempt of Congress, the action against Mr. Koskinen appeared to show the lengths they would go to pursue Obama administration officials they oppose. Separately they are considering the more severe action of impeaching Mr. Koskinen, a move that has not been taken against a federal executive other than two presidents in 140 years.

Censure by the House would be the first step, supporters say, yet its impact will probably be limited to political symbolism. The Senate, also run by Republicans, is not expected to follow suit, or to support impeachment. It is unclear when the full House might act on the censure resolution, said aides to House Republican leaders, who are unenthusiastic about the effort against the commissioner.

The House Oversight and Government Reform Committee voted 23 to 15 for his censure, with Republicans in support and Democrats opposed, after hours of exchanging condemnation and praise for Mr. Koskinen.

New York Times, Head of I.R.S., Facing Censure, Relishes a Job Few Could Love:

By John A. Koskinen’s reckoning, at nearly 77 years of age he might finally have his best job ever: commissioner of the Internal Revenue Service.

“If it’s a job where the first thing people say is, ‘Why would you do that?’ then it’s got to be a good job,” he said in an interview.

Little could Mr. Koskinen have imagined how “good” the job would get.

[S]ome Republicans say [censure] will just be a prelude to his impeachment. Besides two presidents, no federal executive has been impeached since William W. Belknap, the secretary of war, in 1876.

Meantime, though, thank you for your service. ...

Mr. Koskinen became the nation’s top tax collector in December 2013 to steady an agency rattled by political upheaval, the latest in a string of knotty assignments he has gotten from presidents of both parties. Since then, things have not gone so smoothly. Critics say Mr. Koskinen obstructed justice and misled Congress as House Republicans continued their inquiries into allegations that I.R.S. employees discriminated against conservative groups seeking tax-exempt status in 2010 and beyond — scrutiny that began before Mr. Koskinen’s arrival.

He has denied the allegations and said his testimony about missing agency emails that turned out to be wrong was based on what he believed to be true at the time. Other investigators — including the Treasury’s inspector general, a Republican, and a bipartisan Senate Finance Committee — criticized Mr. Koskinen’s lapses but found no evidence politics played a role. ...

The genial septuagenarian has long enjoyed a sort of behind-the-scenes prominence, well known to Washington insiders and business leaders. He is also well known to fans of soccer and Duke University — his dual passions — and the soccer stadium there, Koskinen Stadium, is named after him. Mr. Koskinen won the prestigious Elliot L. Richardson Prize this year “for excellence and integrity in government service,” timing that suggested the selection panel’s indifference to the well-publicized complaints of congressional Republicans. ...

In Mr. Koskinen’s telling, he does not get hired; he is “dragooned” — he used the word more than once during an interview in a spacious, if drab, office with few personal touches besides family photos and mementos from previous jobs.

“I never apply for jobs — I just keep getting them,” Mr. Koskinen said. “I say I’m going to go into the witness protection program, and they’ll never find me again.”

He has a physics degree from Duke and a law degree from Yale.

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June 16, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, June 15, 2016

T&E Is Resurgent In BigLaw:  '50% Psychiatrist, 50% Tax Geek'

T&E 2American Lawyer, The Lawyers Behind the 0.1 Percent:

High-end trusts and estates lawyers ... have some of the most fascinating practices in Big Law, with client lists packed with entertainment stars, business moguls, Internet entrepreneurs and reclusive billionaires. While drafting wills, setting up trusts for wayward children, crafting prenuptial agreements for third wives and structuring complex vehicles to reduce taxes, they're privy to the intimate personal and financial details of the lives of the creative and the ultrawealthy. ...

Putting aside the glamour factor, the practice has taken on increasing relevance, with top T&E lawyers on the front lines of one of the most pressing political issues of our time: the shocking wealth disparity in the country. Their typical client sits in the top 0.1 percent of U.S. households, defined as those with more than $20 million in assets. These individuals own 22 percent of the nation's total wealth—roughly the same amount held by the bottom 90 percent, according to Federal Reserve data. These are the lawyers who help ensure that the 0.1 Percent stay comfortably at the top.

With the increasing concentration of riches, some firms are refocusing on these clients. "I know a lot of big firms want to start estate planning practices," says Julie Miraglia Kwon, a T&E partner in McDermott, Will & Emery's Menlo Park office. Noting the number of calls she's received lately from recruiters, she remarks, "Maybe they see headlines about all the wealth."

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June 15, 2016 in Legal Education, Tax | Permalink | Comments (1)

Legal Tech Firm UnitedLex Establishes Residency Program At Seventh Law School (Boston University)

UnitedLex LogoLegal technology services provider UnitedLex has established a legal residency program with Boston University, joining pre-existing programs with Emory, Miami, Notre Dame, Ohio State, USC, and Vanderbilt law schools:

The The two-year program will train recent Boston University School of Law graduates in cutting-edge legal technologies, project management, and delivery processes to provide high-quality, efficient legal services to corporate legal departments and top law firms. Those selected for the residency program each year will receive rigorous classroom instruction provided by senior attorneys, serve in a supervisory capacity for client engagements, and work directly with clients to deliver legal services in key emerging legal areas including: litigation management, e-discovery, cyber security, contract management, patent licensing, IP management, and immigration law. Residents will earn salaries and benefits equivalent to judicial clerkships.

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June 15, 2016 in Legal Education | Permalink | Comments (0)

New Evidence Donald Trump Didn’t Pay Taxes

TrumpThe Daily Beast: New Evidence Donald Trump Didn’t Pay Taxes, by David Cay Johnston:

New questions about the integrity of Donald Trump’s income tax returns, and new indications that he does not pay income taxes, arise from rulings in two tax appeals that Trump filed in the 1990s. Trump lost both cases. ...

These two decisions should prompt new calls for Trump to release his tax returns. He claims, falsely, that he cannot release his returns since 2012 because they are being audited. But a tax return is filed under penalty of perjury and releasing a return has no effect on an audit, as many tax authorities (including a former IRS commissioner) have noted.

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June 15, 2016 in Political News, Tax | Permalink | Comments (5)

WSJ:  Jobs, Salaries Dwindle For Ph.D.s

Wall Street Journal, Job-Seeking Ph.D. Holders Look to Life Outside School:

[A] conversation [is] taking place across dozens of research universities that is aimed at preparing doctoral candidates entering the job market for a jarring reality: Their Ph.D. doesn’t deliver the bang for the buck it once did.

The percentage of new doctorate recipients without jobs or plans for further study climbed to 39% in 2014 from 31% in 2009, according to a National Science Foundation survey released in April. Median salaries for midcareer Ph.D.s working full time fell 6% between 2010 and 2013.

WSJ

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June 15, 2016 in Legal Education | Permalink | Comments (12)

NYU Call For Papers:  Human Rights And Tax In An Unequal World

NYUCall for Papers: Human Rights and Tax in an Unequal World:

The NYU Center for Human Rights and Global Justice (CHRGJ) invites submissions of scholarly papers for a conference on human rights and tax, to be held at NYU School of Law on September 22-23, 2016. The conference aims to develop a deeper understanding of the ways in which tax policy is a centrally important form of human rights policy, and to consider how the international human rights framework can best be used to promote greater equality and justice through the global tax regime.

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June 15, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

More On Law Firm (And Law School) Tech 'Disruptors'

Ross

Following up on yesterday's post, Artificial Intelligence Will Revolutionize Legal Practice (And Legal Education):  Keith Lee has a great series of posts from the 2016 Stanford CodeX Future Law Conference on these "legal disruptors": 

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June 15, 2016 in Legal Education | Permalink | Comments (0)

Boston College Symposium:  The Centennial of the Estate Tax

Boston College (2017)Symposium, The Centennial of the Estate Tax: Perspectives and Recommendations, 57 B.C. L. Rev. 801-1078 (2016):

Keynote Address:  Michael J. Graetz (Columbia), "Death Taxes" and Politics, 57 B.C. L. Rev. 801 (2016)

Panel #1

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June 15, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Harvard Grad Who Flunked Bar Sues Over Loss Of Big-Law Job

WycheNational Law Journal:  Harvard Grad Who Flunked Bar Sues Over Loss of Big-Law Job, by Karen Sloan:

A 2013 Harvard graduate who twice failed the bar exam has sued the New York State Board of Law Examiners, claiming its refusal to provide testing accommodations derailed her career at Ropes & Gray.

Tamara Wyche, who alleges she suffers from anxiety and cognitive impairment, asserts that the board’s decision not to grant all of her requested accommodations the first two times she took the exam led to her termination from the Boston-based law firm. She passed the exam on the third try in 2015 with additional accommodations but hasn’t been able to find work at a large firm, according to the complaint, filed June 10 in the U.S. District Court for the Eastern District of New York. ...

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June 15, 2016 in Legal Education | Permalink | Comments (45)

Tax Foundation:  Modeling The Estate Tax Proposals Of 2016

Tax Foundation:  Modeling the Estate Tax Proposals of 2016, by Alan Cole:

Tax Foundation

Key Findings:

  • Several lawmakers and presidential candidates in 2016 have proposed changes to the federal estate tax. These changes are a worthwhile case study in economic modeling of tax proposals.
  • The estate tax’s marginal rate greatly exceeds its average rate, which makes its disincentives to save relatively strong for the small amount of revenue collected.

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June 15, 2016 in Tax, Think Tank Reports | Permalink | Comments (0)

ABA Proposes Changes To Law School Accreditation Standards

ABA Section on Legal EdABA Section of Legal Education and Admissions to the Bar, ABA Standards for Approval of Law Schools Matters for Notice and Comment (June 14, 2016):

At its meeting held on June 3-4, 2016, the Council of the Section of Legal Education and Admissions to the Bar approved for Notice and Comment the following proposed revisions to the ABA Standards and Rules of Procedure for Approval of Law Schools:

  • Standard 204
  • Standard 303
  • Use of the term “Full-Time Faculty” in the Standards

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June 15, 2016 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 1133

IRS Logo 2Nonprofit Quarterly: After a 3-Year Wait, IRS Releases List of Groups Targeted in Scandal, by Michael Wyland:

In response to a class action lawsuit, the IRS released a list of 426 organizations it says were singled out for special scrutiny beginning in 2010 in what became known as the IRS scandal. The list is larger than the 298 overwhelmingly conservative groups identified by U.S. Treasury Inspector J. Russell George in his May 2013 report that first brought the scandal to public attention. ...

Most people have lost track of the IRS scandal, and some even deny to this day that there ever was a scandal. Paul Caron, a law Professor at Pepperdine University, is continuing to keep count of the days. (June 7, 2016 is Day 1125.) The House Judiciary Committee is considering the impeachment of IRS Commissioner John Koskinen, but this is widely seen as a partisan exercise by Republicans—even by those who believe others, especially former Exempt Organizations Director Lois Lerner, should be held accountable for their actions in the IRS targeting scandal.

One observation NPQ has made in the past bears restating as the political and judicial processes continue: The public disclosure of much of what we have learned over the past year or more has come as the result of nonprofit advocacy and the access of nonprofit advocates to support from federal courts. Groups such as Judicial Watch and Cause of Action have peppered executive agencies with Freedom of Information Act (FOIA) requests and sued in court when their requests were refused or ignored.  The class action lawsuit is led by the NorCal Tea Party Patriots, a 501(c)(4) social welfare nonprofit and one of the groups targeted by the IRS. Judicial Watch and Cause of Action are also aggressively pursuing other issues associated with political conservatives, including Hillary Clinton’s State Department emails and the Obama administration’s enforcement of immigration laws. There is a developing appearance that nonprofit advocacy groups, with judicial support, are having better success than Congress in investigating the executive branch of the federal government and securing the release of documentary evidence.

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June 15, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, June 14, 2016

The ABA Is Auditing Law School Placement Data For The First Time

ABAAuditNational Law Journal: ABA to Audit Law Schools' Job Stats for Accuracy,  by Karen Sloan:

For the first time, the American Bar Association is randomly auditing graduate employment data reported by law schools to ensure its accuracy.

The closer scrutiny of the jobs numbers has been in the works since 2012 but the employment data for the class of 2015, which the ABA made public in May, is the first to be analyzed under the ABA’s new audit procedure.

Students who feel duped by overly rosy employment projections have questioned the veracity of the school-released employment data since at least 2011. The new audit is “intended to promote confidence among the ABA, law schools, law school applicants, and other interested parties that law graduate employment information is complete, accurate, and not misleading,” according to a 2014 ABA memo.

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June 14, 2016 in Legal Education | Permalink | Comments (7)

Avi-Yonah:  Reflections On 'Google Taxes', BEPS, And The DBCT

Reuven Avi-Yonah (Michigan), Three Steps Forward, One Step Back? Reflections on 'Google Taxes', BEPS, and the DBCT:

Since the market is less subject to tax competition pressures than the location of headquarters or production facilities, reducing the PE threshold makes it easier to prevent BEPS. This has recently led some jurisdictions to enact new taxes aimed specifically at structures that seek to exploit the domestic market while avoiding a PE. This article will discuss these taxes in the UK, Australia and India, explore their relationship to the BEPS project, and then consider whether further steps can be taken toward a destination-based corporate tax (DBCT) that will be a permanent cure for BEPS.

June 14, 2016 in Scholarship, Tax | Permalink | Comments (0)

Artificial Intelligence Will Revolutionize Legal Practice (And Legal Education)

Ross

Following up on my previous post, BakerHostetler Hires Robot Lawyer 'Ross', Ushers In Legal Jobs Apocalypse:

Deborah J. Merritt (Ohio State), Artificially Intelligent Legal Research:

At least three law firms have now adopted ROSS, an artificial legal intelligence system based on IBM’s pathbreaking Watson technology. The firms include two legal giants, Latham & Watkins and BakerHostetler, along with the Wisconsin firm vonBriesen. Commitments by these firms seem likely to spur interest among their competitors. Watch for ROSS and other forms of legal AI to spread over the next few years.

What is ROSS, what does it do, and what does it mean for lawyers and legal educators? Here are a few preliminary thoughts.

College Fix, Still in Law School? Artificial Intelligence Begins to Take Over Legal Work:

For those thinking of law school, keep in mind that technology may revolutionize the profession before you earn that J.D.

In the research-driven, labor-intensive legal profession, the age-old question of man vs. machine is being answered as some law firms have begun to use an “artificially intelligent attorney” to research and hash out legal issues – a trend that legal minds predict will displace some human lawyers.

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June 14, 2016 in Legal Education | Permalink | Comments (3)

Ryan:  Marital Sharing Of Transfer Tax Exemptions

Kerry A. Ryan (Saint Louis), Marital Sharing of Transfer Tax Exemptions, 57 B.C. L. Rev. ___ (2016):

This Article analyzes portability and its antecedents in order to distill a positive account of marital sharing of transfer tax exemption amounts. Prior to 2010, the estate and gift tax exemption equivalent was a nontransferable, separate tax attribute of each spouse. A spouse could only access his or her spouse’s effective exemption by shifting property into the other spouse’s tax base. With the enactment of portability, Congress decoupled tax-free availability of a spouse’s unified credit from the necessity of a prior intra-spousal transfer. All that is required is an election by the decedent spouse, via the executor, to share the decedent’s unused exemption equivalent with the surviving spouse.

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June 14, 2016 in Scholarship, Tax | Permalink | Comments (0)

Bilionis:  Professional Formation And The Political Economy Of The American Law School

Louis D. Bilionis (Former Dean, Cincinnati), Professional Formation and the Political Economy of the American Law School, 83 Tenn. L. Rev. ___ (2016):

This article proposes that a comprehensive model for doing professional formation in law school is now in sight. The model can work for formation – which is to say that it has the right vision of the fundamentals and the appropriate program features and pedagogies to effectively support students in the development of their professional identities. The model also can work for the political economy of the typical American law school – which is to say that its strategy and approach to roles and resources makes it congenial to postulates about power, resources, work, and governance that shape relations inside the law school.

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June 14, 2016 in Legal Education, Scholarship | Permalink | Comments (0)

Christians & Ezenagu:  Kill-Switches In The New U.S. Model Tax Treaty

KillAllison Christians (McGill) & Alexander Ezenagu (Ph.D. Candidate, McGill), Kill-Switches in the New U.S. Model Tax Treaty, 41 Brook. J. Int'l L. ___ (2016):

The new US model income tax treaty contains an unusual addition: mechanisms for the parties to unilaterally override the negotiated treaty rates in specified circumstances. Previewed last year in proposed form — a first for Treasury — these new mechanisms work as kill-switches, partially terminating the treaty as to one or both treaty partners. The idea is to forestall a more problematic outcome, such as an enduring breach of one of the parties’ expectations, or the opposite, a complete termination of all the treaty terms in the face of such a breach. Yet embedding a kill-switch in a treaty creates distinct legal, procedural, and political pressures in the tax-treaty relationship that implicate treaty negotiation, ratification, interpretation, and dispute resolution. Kill-switches also communicate a defensive tenor in the tax treaty relationships among many countries. This Article analyzes the new kill-switch provisions and concludes that their introduction in the U.S. Model reflects the steady deterioration of tax treaties from essentially diplomatic documents premised on the good faith of the parties to detailed contracts drafted in anticipation of the opposite.

June 14, 2016 in Scholarship, Tax | Permalink | Comments (0)

Why Microsoft, With $100 Billion Of Cash, Wants To Borrow $26 Billion To Purchase LinkedIn

MLIBloomberg:  Why Microsoft, With $100 Billion, Wants a Loan for LinkedIn, by David Kocieniewski:

Microsoft Corp. has enough cash to buy LinkedIn Corp. four times over. So why is it taking out a big loan to pay for its latest purchase?

Maybe because it’ll lower the technology giant’s tax bill.

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June 14, 2016 in Tax | Permalink | Comments (3)

SSRN Tax Professor Rankings

SSRN LogoSSRN has updated its monthly rankings of 750 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 June 1, 2016) 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.)

56,816

Reuven Avi-Yonah (Mich.)

10,444

2

Michael Simkovic (S. Hall)

32,439

Michael Simkovic (S. Hall)

4594

3

Paul Caron (Pepperdine)

31,397

D. Dharmapala (Chicago)

3327

4

D. Dharmapala (Chicago)

26,921

Paul Caron (Pepperdine)

2639

5

Louis Kaplow (Harvard)

26,006

Richard Ainsworth (BU)

2413

6

Vic Fleischer (San Diego)

22,410

Jeff Kwall (Loyola-Chicago)

1942

7

James Hines (Michigan)

21,820

Nancy McLaughlin (Utah)

1907

8

Richard Kaplan (Illinois)

21,119

Robert Sitkoff (Harvard)

1761

9

Ted Seto (Loyola-L.A.)

21,044

Louis Kaplan (Harvard)

1756

10

Ed Kleinbard (USC)

19,843

Chris Hoyt (UMKC)

1736

11

Katie Pratt (Loyola-L.A.)

18,905

David Weisbach (Chicago)

1718

12

Richard Ainsworth (BU)

18,018

Omri Marian (UC-Irvine)

1670

13

Robert Sitkoff (Harvard)

17,045

William Byrnes (Texas A&M)

1668

14

Carter Bishop (Suffolk)

17,005

Brad Borden (Brooklyn)

1588

15

Brad Borden (Brooklyn)

16,939

Dan Shaviro (NYU)

1578

16

David Weisbach (Chicago)

16,877

Ed Kleinbard (USC)

1500

17

Jen Kowal (Loyola-L.A.)

16,598

Vic Fleischer (San Diego)

1488

18

Chris Sanchirico (Penn)

16,450

Jack Manhire (Texas A&M)

1472

19

Dennis Ventry (UC-Davis)

16,075

Katie Pratt (Loyola-L.A.)

1421

20

Francine Lipman (UNLV)

16,010

Yariv Brauner (Florida)

1412

21

Bridget Crawford (Pace)

15,673

Richard Kaplan (Illinois)

1367

22

David Walker (BU)

15,028

Steven Bank (UCLA)

1311

23

Dan Shaviro (NYU)

14,887

Chris Sanchirico (Penn)

1280

24

Steven Bank (UCLA)

13,368

Gregg Polsky (N. Carolina)

1275

25

Herwig Schlunk (Vanderbilt)

13,198

Francine Lipman (UNLV)

1270

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.

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June 14, 2016 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

Law Schools Cancel Classes On Election Day (Nov. 8)

VoteBloomberg Law, Law Schools Cancel Classes for Election Day:

Some law schools want to make sure voters turn out for this year’s presidential election cycle.

Northwestern University Pritzker School of Law just became the latest school to announce that classes are cancelled on Nov. 8, when American voters will have to decide between Hillary Clinton or Donald Trump.

The announcement came after two campus groups — American Constitution Society for Law and Policy and the conservative Federalist Society — pushed law school administrators to make the decision.

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June 14, 2016 in Legal Education | Permalink | Comments (3)

Senate Holds Hearing Today On Energy Tax Policy

Senate Finance LogoThe Senate Finance Committee holds a hearing today on Energy Tax Policy in 2016 and Beyond:

  • Karen Alderman Harbert (U.S. Chamber of Commerce, Washington, D.C.)
  • Susan Kennedy (Advanced Microgrid Solutions, San Francisco)
  • Steve Miller (Bulk Handling Systems, Eugene, OR)
  • Benjamin Zycher (American Enterprise Institute, Washington, D.C.)

In connection with the hearing, the Joint Committee on Taxation has released Present Law And Analysis Of Energy-Related Tax Expenditures (JCX-46-16):

Since 2004, the Congress has been active in enacting legislation related to energy production (including oil and gas and renewables) and conservation. Part I of this document ... provides tables that summarize current energy-related Federal tax incentives.

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June 14, 2016 in Congressional News, Tax | Permalink | Comments (0)

The Disappearing Humanities Faculty Jobs

Inside Higher Ed, The Disappearing Humanities Jobs:

The arrival of annual reports on the job market in various humanities fields this year left many graduate students depressed about their prospects and professors worried about the futures of their disciplines. English and foreign language openings were down 3 percent and 7.6 percent, respectively. History jobs fell 8 percent.

On Sunday, the American Academy of Arts & Sciences released several new collections of data that show that these declines, part of a continuing pattern, are far more dramatic when viewed over a longer time frame. The academy also released new data showing that the proportion of all faculty members who are in the humanities -- crucial not only to their own fields but to general education at many colleges and universities -- has been flat amid substantial gains for the health professions.

For all humanities disciplines, listings for positions are at least 31 percent below the levels reported in the 2007-08 academic year, the last year before the economic downturn hit in 2008. Many of these fields were relatively stable or even increasing in the years leading up to 2008, so the most recent data from the academy show significant long-term losses.

IHE

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June 14, 2016 in Legal Education | Permalink | Comments (10)

The IRS Scandal, Day 1132

IRS Logo 2The Hill, Oversight Panel to Vote on Resolution to Censure IRS Chief:

The House Oversight and Government Reform Committee is set to vote Wednesday on a resolution to censure Internal Revenue Service Commissioner John Koskinen.

The vote is part of a larger effort by House Republicans against Koskinen. Many GOP lawmakers have accused him of engaging in misconduct while Congress was investigating findings that the IRS subjected conservative groups' applications for tax-exempt status to extra scrutiny. 

The House Judiciary Committee is also weighing whether Koskinen should be impeached and is holding its second hearing on the matter next week.

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June 14, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, June 13, 2016

Former Qwest CEO Nacchio Denied Tax Deduction For $45 Million Forfeiture Of Insider Trading Profits

Insider TradingNacchio v. United States, Nos. 2015-5114 & 2015-5115 (Fed. Cir. June 10, 2016):

This is a tax case arising out of a criminal conviction for insider trading. Joseph P. Nacchio and Anne M. Esker (“Nacchio”) filed this action in the Court of Federal Claims seeking an income tax credit of $17,974,832 for taxes paid on trading profits of $44,632,464.38, which Nacchio was later ordered to forfeit to the United States following his conviction for insider trading with respect to those profits. The government opposed Nacchio’s request, contending that his forfeiture payment was a nondeductible penalty or fine and that he was estopped from seeking tax relief because of his criminal conviction. The parties filed cross-motions for summary judgment.

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June 13, 2016 in Celebrity Tax Lore, New Cases, Tax | Permalink | Comments (0)

Bentley University Seeks To Hire A Tenure-Track Tax Prof

BentleyBentley University (Waltham, MA) is seeking to hire a tenure-track Assistant Professor of Law in its Law, Tax & Financial Planning Department:

The Law Taxation and Financial Planning Department at Bentley University, located in the suburbs of Boston, Massachusetts, is seeking a full-time tenure-track Assistant Professor of Law to start in July 2017. With a strong faculty of teacher-scholars, Bentley strives to lead higher education in the integration of global business with the arts and sciences, information technology, and corporate ethics and social responsibility. Providing an intellectually stimulating academic community for both faculty and students, Bentley supports its faculty as they pursue high quality and impactful cutting-edge research and bring their expertise and real world experiences into the classroom. We seek individuals who represent different backgrounds, interests and talents and who share a commitment to the fusion of business and arts & sciences education, information technology, and business ethics.

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June 13, 2016 in Legal Education, Tax, Tax Prof Jobs | Permalink | Comments (0)

Wu:  Higher Education And Legal Education Are Headed Toward Disaster

Frank Wu (Former Dean, UC-Hastings), Is Higher Education Headed Toward Disaster?:

I will be honest. I’m surprised nobody has shouted this already.

The latest news about higher education is dire. We might be headed for disaster. The “discount rate” has reached record levels for many institutions.

Discount

[F]or an increasing number of schools, the “discount rate” should be triggering alarms. It has become the means, at best a stop-gap, of “enrollment management.”

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June 13, 2016 in Legal Education | Permalink | Comments (6)

Trump 2.0 Tax Plan Under Discussion

Trump Tax Plan

Bloomberg:  Less Costly ‘Trump 2.0’ Tax Plan Urged by Reagan-Era Economists, by Lynnley Browning:

Donald Trump has said his main tax-policy goal is a cut for the middle class, yet his guest list for a series of policy presentations at Trump Tower included a Reagan-era economist who has suggested revamping that plan.

Lobbyists and business leaders, including oil billionaire and Trump ally Harold Hamm, gathered June 9 at the presumptive Republican nominee’s New York headquarters to present their policy wish lists. Among them: economist Stephen Moore, who has been offering Trump advice on tax policy -- particularly suggestions for cutting his plan’s estimated cost of $10 trillion over 10 years.

But Moore and fellow conservative economist Lawrence Kudlow have recommended changes that would “all but erase” the middle-class benefits Trump favors, according to Kyle Pomerleau, a senior policy specialist at the right-leaning Tax Foundation in Washington. The foundation, a non-profit research group, reviewed the revisions at the request of Moore and Kudlow. 

Trump hasn’t committed to any of their suggestions, and spokeswoman Hope Hicks told the New York Times last month that Moore and Kudlow don’t speak for the campaign. Nonetheless, Moore’s appearance at Thursday’s Trump Tower conclave -- where he said he was one of the presenters -- suggests that the final contours of Trump’s tax plan remain under discussion.

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June 13, 2016 in Tax | Permalink | Comments (1)

Brooks:  Using Facts Of Tax Cases To Reveal Something About Who We Are

Kim Brooks (Dalhousie), The High Cost of Transferring the Dream:

This paper is part of a larger project where I use the facts in tax decisions to reveal something about who we are. It looks through a small window into the lives of the people who find themselves caught between our collective and their individual expenditure aspirations. More specifically, it explores the circumstances in which individuals find that their outstanding tax debts pose a threat to their ability to maintain ownership of their home.

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June 13, 2016 in New Cases, Scholarship, Tax | Permalink | Comments (0)

ABA Section Of Legal Education And Admissions To The Bar 2016-17 Council Nominees

ABA Section on Legal EdABA Section of Legal Education and Admissions to the Bar, Nominating Committee Announces 2016-2017 Council Slate:

The Nominating Committee, chaired by the Honorable Solomon Oliver Jr., Chief Judge of the U.S. District Court for the Northern District of Ohio, presented the following slate to the Council. The election of Council officers and members will take place at the Section’s annual business meeting, Saturday, August 6, 10:15-11:15 a.m., at the Park Central San Francisco during the ABA Annual Meeting.

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June 13, 2016 in Legal Education | Permalink | Comments (1)

WaPo:  How An Obscure Nonprofit In Washington Protects Tax Havens For The Rich

Center for Freedom & ProsperityWashington Post, How An Obscure Nonprofit In Washington Protects Tax Havens For The Rich:

In May 2007, during a global crackdown on offshore tax havens, an obscure nonprofit lobbying group in Northern Virginia sent a fundraising pitch to a law firm in one of the biggest tax havens in the world — Panama.

The Center for Freedom and Prosperity promised to persuade Congress, members of the George W. Bush administration and key policymakers to protect the players of the offshore world, where hundreds of thousands of shell companies had been created, often to hide money and evade taxes.

To reach out to American officials and fund its U.S. operations, the center said it needed an infusion of cash for an eight-month campaign: at least $247,000. ...

In the eight-page fundraising document discovered by The Post, the Center for Freedom and Prosperity in Alexandria, Va., said that it had already persuaded the Bush administration to thwart an international effort to require more transparency from tax havens. Now the center was promising to derail similar reforms in legislation before Congress.  ...

“It’s sort of like fishing, you have to keep casting your lure,” said Daniel Mitchell, one of the directors of the center, in a recent interview with The Post. ...

Former senator Carl Levin (D-Mich.), once one of the leading voices in Congress on tax haven abuses, said in a recent interview that the center’s activities run counter to America’s values and undermine the nation’s ability to raise revenue.

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June 13, 2016 in Tax | Permalink | Comments (0)

Update On Murder-For-Hire Investigation Into Dan Markel's Death

Tallahassee Democrat, Mystery Endures: What We Don't Know About the Markel Investigation:

A surge of initial details following the first arrest in the 2014 killing of Dan Markel provided a rough but compelling outline of what investigators say happened to the Florida State law professor.

But more than a week after the bombshell probable cause report for the arrest of 34-year-old Sigfredo Garcia was made public, many key questions remain unanswered.

With no more arrests — so far — theories still swirl in the case that has captivated Tallahassee and beyond.

Here are some of the outstanding mysteries yet to be revealed:

  • Anatomy of a Hit [interactive]

Anatomy

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June 13, 2016 in Legal Education | Permalink | Comments (4)

Medtronic Wins $2 Billion Transfer Pricing Tax Court Case

MedtronicBloomberg BNA, Tax Court Slams IRS ‘Medtronic'Analysis, Says $2B Too Much:

The IRS grossly underrated the contributions of Medtronic Inc.'s Puerto Rican affiliate to the quality of the company's products, the U.S. Tax Court ruled, finding for the medical device maker in its $2 billion transfer pricing dispute (Medtronic v. Commissioner, T.C. Memo. 2016-112 (June 9, 2016)).

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June 13, 2016 in New Cases, Tax | Permalink | Comments (0)

Thirty Reflection Questions To Help Law Students Find Meaningful Employment And Develop An Integrated Professional Identity

Neil W. Hamilton (St. Thomas ) & Jerome M. Organ (St. Thomas), Thirty Reflection Questions to Help Each Student Find Meaningful Employment and Develop an Integrated Professional Identity (Professional Formation), 83 Tenn. L. Rev. ___ (2016):

Law schools must now define learning outcomes for their programs of legal education. Many law schools (and many professors in individual courses) are defining learning outcomes that include values beyond just minimal compliance with the law of lawyering — called here professional-formation learning outcomes.

This article, drawing on and synthesizing scholarship from law and other disciplines, will focus on the design of a curriculum with thirty reflection questions to help each student’s step-by-step development toward professional-formation learning outcomes beyond mere compliance with the law of lawyering. Section I of this article will describe the present context in which law schools must develop learning outcomes, and will highlight the number of law schools that have embraced one or both of the elements of a professional-formation learning outcome where a law school or a professor in an individual course requires that each student demonstrate an understanding and integration of:

1. proactive professional development toward excellence at all the competencies needed to serve clients and the legal system well;
2. an internalized deep responsibility to clients and the legal system.

Section II of the article analyzes the principles that should inform the design of an effective curriculum for these two professional-formation learning outcomes. Section III of the article will suggest thirty reflection questions that help each student:

1) reflect on the story, experiences and passions that brought her to law school and that she develops during law school as a means of both (a) identifying what she wants to do with her law degree and (b) proactively taking ownership over her growth toward meaningful post-graduate employment; and
2) make progress moving through developmental stages regarding these two professional formation learning outcomes; so that
3) she can begin to define and to live out who she wants to be as a lawyer in the context of what clients and the legal system expect of her.

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June 13, 2016 in Legal Education, Scholarship | Permalink | Comments (1)

The IRS Scandal, Day 1131

House LogoH.R. Rep. No. 612, 114th Cong., 2d Sess.:

I. SUMMARY AND BACKGROUND

A. PURPOSE AND SUMMARY

H.R. 5053, as reported by the Committee on Ways and Means, would prohibit the Internal Revenue Service (IRS) from collecting the identity of donors who contribute to tax-exempt organizations. Under this legislation, a tax-exempt organization would be required to report only information on donors who contribute $5,000 or more during a single tax year and who are either an officer or director of the organization or one of its five highest paid employees. This information would be excluded from public disclosure.

B. BACKGROUND AND NEED FOR LEGISLATION

Current law requires section 501(c)(3) tax-exempt organizations to report information on substantial donors. The IRS defines a substantial donor as a contributor who gives $5,000 or more to an organization in a calendar year. This information is reported on the Schedule B of the Form 990. The requirement to file a Form 990 applies to tax-exempt organizations generally, not just to section 501(c)(3) tax-exempt organizations. Thus, the IRS has expanded the substantial donor reporting requirements to more than section 501(c)(3) tax-exempt organizations. While the IRS does not make this information public, there have been instances where IRS employees have improperly accessed and released the Schedule B donor list. A notable example is the National Organization for Marriage, which had information from its Schedule B leaked in 2012 and the IRS subsequently paid $50,000 to settle a lawsuit with the organization claiming that the IRS improperly accessed the information. Certain states, including California, have moved to make Schedule B information public. The move to publicize Schedule B information was the subject of a recent lawsuit, Americans for Prosperity Foundation v. Kamala Harris, Attorney General for California. The Attorney General of California wanted to require that the Americans for Prosperity Foundation disclose its Schedule B to the California State Registry. In April 2016, the U.S. District Court ruled that requiring the organization to disclose its Schedule B was unconstitutional.

In recent years it was also revealed that the IRS used inappropriate criteria to target organizations applying for tax-exempt status. Additionally, the IRS is considering eliminating Schedule B entirely. H.R. 5053 would protect taxpayers from improper disclosure of Schedule B information, as well as limit the IRS’s ability to target organizations improperly. The legislation also eliminates a burdensome reporting requirement for tax-exempt organizations. ...

II. EXPLANATION OF THE BILL

A. PROHIBITION ON REQUIRING THAT IDENTITY OF CERTAIN CONTRIBUTORS TO SECTION 501(c) ORGANIZATIONS BE INCLUDED ON ANNUAL RETURNS (SEC. 32 OF THE BILL AND SEC. 6033 OF THE CODE)

PRESENT LAW

In general, organizations exempt from taxation under section 501(a) are required to file an annual return (Form 990 series), stating specifically the items of gross income, receipts, disbursements, and such other information as the Secretary may prescribe. An organization that is required to file an information return, but that has gross receipts of less than $200,000 during its taxable year, and total assets of less than $500,000 at the end of its taxable year, may file Form 990–EZ. Section 501(c)(3) private foundations are required to file Form 990–PF rather than Form 990. An organization that has not received a determination of its tax-exempt status, but that claims tax-exempt status under section 501(a), is subject to the same annual reporting requirements and exceptions as organizations that have received a tax-exemption determination.

On the applicable annual information return, organizations are required to report their gross income, information on their finances, functional expenses, compensation, activities, and other information required by the IRS in order to review the organization’s activities and operations during the previous taxable year and to review whether the organization continues to meet the statutory requirements for exemption. Examples of the information required by Form 990 include: (1) a statement of program accomplishments; (2) a description of the relationship of the organization’s activities to the accomplishment of the organization’s exempt purposes; (3) a description of payments to individuals, including compensation to officers and directors, highly paid employees and contractors, grants, and certain insider transactions and loans; and (4) disclosure of certain activities, such as expenses of conferences and conventions, political expenditures, compliance with public inspection requirements, and lobbying activities.

Form 990–PF requires, among other things, reporting of: the foundation’s gross income for the year; expenses attributable to such income; disbursements for exempt purposes; total contributions and gifts received and the names of all substantial contributors; names, addresses, and compensation of officers and directors; an itemized statement of securities and other assets held at the close of the year; an itemized statement of all grants made or approved; and information about whether the organization has complied with the restrictions applicable to private foundations (secs. 4941 through 4945).

An organization that files Form 990, Form 990–EZ, or Form 990– PF and receives during the year $5,000 or more (in money or property) from any one contributor generally must report such contributions on Schedule B (‘‘Schedule of Contributors’’). The Schedule B is open to public inspection for an organization that files Form 990–PF (private foundations) or a section 527 political organization that files Form 990 or Form 990–EZ. For all other Form 990 and Form 990–EZ filers, the names and addresses of contributors are not required to be made available for public inspection. All other information, including the amount of contributions, the description of noncash contributions, and any other information, is required to be made available for public inspection unless it clearly identifies the contributor. As a matter of practice, the IRS does not include Schedule B on the CD sets or any other form of media made available to the public. Instead, on a case-by-case basis, when an individual makes a request for a specific organization’s Schedule B, the IRS reviews and redacts the schedule in an effort to avoid divulging information that would identify any contributor. 

The requirement that an exempt organization file an annual information return (Form 990 or Form 990–EZ) does not apply to certain exempt organizations, including organizations (other than private foundations) the gross receipts of which in each taxable year normally are not more than $50,000. Organizations that are excused from filing an information return by reason of normally having gross receipts below such amount must furnish to the Secretary an annual notice (Form 990–N), in electronic form, containing certain basic information about the organization.

Other organizations exempt from the annual information return requirement include: churches, their integrated auxiliaries, and conventions or associations of churches; the exclusively religious activities of any religious order; certain State institutions whose income is excluded from gross income under section 115; an interchurch organization of local units of a church; certain mission societies; certain church-affiliated elementary and high schools; and certain other organizations, including some that the IRS has relieved from the filing requirement pursuant to its statutory discretionary authority.6

REASONS FOR CHANGE

The Committee is concerned that the IRS is collecting sensitive information about donors who contribute to tax-exempt organizations. Although the IRS is required by law to maintain the confidentiality this information, the Committee is aware of instances in which the information was released to third parties. Furthermore, the Committee is concerned that the IRS might use donor information to penalize tax-exempt organizations or donors based on their political beliefs. By limiting the contribution information taxexempt organizations report to the IRS, the provision will protect taxpayers’ identities and help prevent inappropriate political targeting by the IRS. In addition, the Committee believes the Schedule B provides little administrative benefit to the IRS. In fact, senior leadership of the IRS’s Exempt Organizations Division has stated recently that the IRS is considering eliminating the Schedule B filing requirement.

EXPLANATION OF PROVISION

The provision limits the contributor information that must be reported by an organization described in section 501(c) on its annual information return. Under the provision, except as described below, the Secretary may not require an organization to report the name, address, or other identifying information of any contributor to the organization with respect to any contribution, grant, bequest, devise, or gift of money or property, regardless of amount.

The provision provides two exceptions to this prohibition. First, the Secretary is not prohibited from requiring the information described in section 6033(a)(2) relating to prohibited tax shelter transactions. Second, the Secretary is not prohibited from continuing to require reporting of contributions, grants, bequests, devises, or gifts of money or property in excess of $5,000 made by an officer or director of the organization (or an individual having powers to responsibilities similar to those of officers or directors) or by a covered employee. Covered employee means any employee (including any former employee) of the organization if the employee is one of the five highest compensated employees of the organization for the taxable year. For this purpose, an employee’s compensation includes compensation from the organization as well as any compensation paid with respect to the employment of such employee by any related person or governmental entity. A person or governmental entity is treated as related to the organization if it: (1) controls or is controlled by the organization; (2) is controlled by one or more persons that control the organization; (3) is a supported organization (as defined in section 509(f)(3)) during the taxable year with respect to the organization; (4) is a supporting organization described in section 509(a)(3) with respect to the organization; or (5) in the case of an organization that is a voluntary employees’ beneficiary association described in section 501(c)(9), establishes, maintains, or makes contributions to such voluntary employees’ beneficiary association.

The provision makes a conforming amendment to section 6033(b), which describes certain information that a section 501(c)(3) organization must include on its annual information return. ...

VII. DISSENTING VIEWS

We oppose H.R. 5053, which would prohibit the Secretary of the Treasury from collecting the name, address, or other identifying information of contributors to any tax-exempt, 501(c) organization except in limited circumstances. This bill would open the floodgates for unlimited, anonymous, unaccountable money to pour into U.S. elections—including possibly from foreign sources.

Under present law, certain 501(c) organizations must attach to their annual information returns (IRS Forms 990) a list (Schedule B) of donors who contribute $5,000 or more during the year (‘‘substantial contributors’’). The Schedule B is kept confidential by the Internal Revenue Service (IRS) and is not made public.

Certain 501(c) organizations, such as social welfare organizations, are permitted to engage in political activity. These politically active 501(c)(4) organizations are required to disclose their substantial contributors to the IRS but are not required to disclose them to the public.

There has been a sharp rise in undisclosed money being spent by tax-exempt groups in federal elections since the Supreme Court issued its 2010 Citizens United decision. This bill would make it even easier for donors to anonymously funnel money in support of political candidates. Already in this election cycle, according to the Center for Responsive Politics, political spending by tax-exempt groups is five times the amount spent at this point during the 2012 election cycle.

It is no secret as to why Republicans are working to keep donors a secret: the three largest spenders from 2012—representing fully 51% of the total—include Karl Rove’s Crossroads GPS (that spent $71 million); the Koch Brothers’ Americans for Prosperity (that spent $36 million); and the Koch Brothers’ American Future Fund (that spent $25 million). It is no surprise the Koch Companies Public Sector, LLC sent a letter to Republican Members on the day of the markup urging them to support the bill. Simply put, H.R. 5053 does nothing more than solidify the secrecy around the Republicans’ big campaign efforts.

The bill also potentially opens the door for unlimited, secret money from foreign governments or individuals to be funneled into our elections. Currently, foreign money cannot be given or spent in our elections. The only real protection we have against the use of foreign money by politically active social welfare organizations is that they must disclose their substantial contributors to the IRS. This requirement means that tax-exempt, 501(c)(4) groups know they can be held accountable if they illegally spend foreign money in federal elections. Campaign finance reform groups opposing this bill warned that, if donor disclosure to the IRS is eliminated, no one will know whether a social welfare organization has received foreign funds and is illegally spending them in our elections.

We should not support efforts to reduce transparency and make it easier for donors to pour unlimited funds into political campaigns. For these reasons, we oppose this bill.

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June 13, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, June 12, 2016

The Story Of Tonight:  With Billion-Dollar Hamilton Poised To Sweep Tony Awards, Broadway Pushes For Tax Break Extension

Hamilton 2Bloomberg, As ‘Hamilton’ Enriches Backers, Broadway Wants Tax Break Extended:

Alexander Hamilton introduced the idea of federal taxes. Broadway producers enjoying a record season buoyed by his namesake musical are lobbying Congress to limit what they owe.

The industry, which will celebrate its success tonight at the Tony Awards, is fighting to keep a provision that allows live-theater backers deductions in a show’s first year. That means they’d pay tax on income only after turning a profit. The provision passed in 2015, yet needs to be extended by Congress this year to survive.

In an industry where four of five performances close without recouping startup costs, producers say such a sweetener will keep the hits coming. While the provision was tacked onto a list of tax breaks last year at the behest of Sen. Chuck Schumer, D-N.Y., there’s no guarantee it will be continued, producers and their lobbyists say. Some lawmakers don’t like the idea. Nor do advocates of tax cuts, who say such breaks make it more difficult to reduce the burden on everyone else. ...

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June 12, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

NY Times:  Messages To Graduates Of The Class Of 2016

New York Times, Message to Graduates: Times Are Tough, but You Can Make It:

Thousands of college graduates across the nation have gathered with families and friends over the past few weeks to mark not just receiving their degree, but a symbolic crossing from childhood to adulthood. Commencement speakers gave them their marching orders.

If commencement speeches reflect the times we live in, then this year’s entries suggest the times are bleak. The common themes are almost biblical. Among them are resilience, overcoming adversity, not fearing failure and taking risks.

But wait, graduates! Take heart, this year’s commencement sages go on to say. Just because you are leaving college in an uncertain job market during one of the most angry and unpredictable presidential election seasons in memory, and are quite possibly destined to return home to live with your parents, it does not mean that you will not ultimately profit from your experience of hardship and self-doubt. Do not give in to the forces of darkness and despair, the speakers urged the Class of 2016, for you will emerge stronger in the end.

The New York Times prints excerpts with links to these fifteen 2016 graduation speeches:

Hank Azaria (video), actor and Tufts alumnus
Tufts University, Medford, Mass.

Michael Bloomberg (video), business executive and former New York City mayor
University of Michigan, Ann Arbor, Mich.

John Kerry (video), Secretary of state
Northeastern University, Boston

John Lewis (video), congressman and civil rights leader
Washington University in St. Louis

Loretta Lynch (video), Attorney General
Spelman College, Atlanta

Lin-Manuel Miranda (video), creator of “Hamilton”
University of Pennsylvania, Philadelphia

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June 12, 2016 in Legal Education | Permalink | Comments (0)

The Top 5 Tax Paper Downloads

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and a new paper debuting on the list at #4:

  1. [412 Downloads]  Google's 'Alphabet Soup' in Delaware, by Bret Bogenschneider (Vienna) & Ruth Heilmeier (Cologne)
  2. [328 Downloads]  New Prominence Of Tax Basis In Estate Planning, by Paul L. Caron (Pepperdine) & Jay A. Soled (Rutgers)
  3. [241 Downloads]  Following the Money: Lessons from the Panama Papers, Part 1: Tip of the Iceberg, by Lawrence Trautman (American)
  4. [194 Downloads]  Why Does Inequality Matter? Reflections on the Political Morality of Piketty's Capital in the Twenty-First Century, by Liam Murphy (NYU)
  5. [187 Downloads]  'Death Tax' Politics, by Michael J. Graetz (Columbia)

June 12, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)