TaxProf Blog

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

Monday, January 8, 2018

Former IRS Ethics Attorney (And Georgetown Tax Adjunct) Pleads Guilty To Conspiracy To Distribute 500 Grams Of Meth

Jack VitayanonNew York Law Journal, Former IRS Attorney Pleads Guilty to Drug Conspiracy:

A former attorney with the IRS’ Office of Professional Responsibility pleaded guilty in the U.S. District Court for the Eastern District of New York to conspiracy to distribute over 500 grams of methamphetamine, the U.S. Attorney’s Office announced Friday.

Jack Vitayanon was arrested in February in Washington, D.C., on charges he conspired with people in Arizona and Long Island to distribute meth over a number of years.

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January 8, 2018 in IRS News, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, January 7, 2018

The IRS Scandal, Days 1601-1700

January 7, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

This Week's Ten Most Popular TaxProf Blog Posts

NY Times: As Flow Of Foreign Students Wanes, U.S. Universities Feel The Sting

New York Times, As Flow of Foreign Students Wanes, U.S. Universities Feel the Sting:

Just as many universities believed that the financial wreckage left by the 2008 recession was behind them, campuses across the country have been forced to make new rounds of cuts, this time brought on, in large part, by a loss of international students.

Schools in the Midwest have been particularly hard hit — many of them non-flagship public universities that had come to rely heavily on tuition from foreign students, who generally pay more than in-state students.

The downturn follows a decade of explosive growth in foreign student enrollment, which now tops 1 million at United States colleges and educational training programs, and supplies $39 billion in revenue. International enrollment began to flatten in 2016, partly because of changing conditions abroad and the increasing lure of schools in Canada, Australia and other English-speaking countries.

And since President Trump was elected, college administrators say, his rhetoric and more restrictive views on immigration have made the United States even less attractive to international students. The Trump administration is more closely scrutinizing visa applications, indefinitely banning travel from some countries and making it harder for foreign students to remain in the United States after graduation.

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January 7, 2018 in Legal Education | Permalink | Comments (4)

Some Taxpayers Forgo Benefits Of Itemizing Due to Filing Costs

Youssef Benzarti (UCLA), How Taxing Is Tax Filing? Using Revealed Preferences to Estimate Compliance Costs (NBER Working Paper No. 23903):

This paper uses a quasi-experimental design and a novel identification strategy to estimate the cost of filing income taxes. First, using U.S. income tax returns, I observe how taxpayers choose between itemizing deductions and claiming the standard deduction. Taxpayers forgo tax savings to avoid compliance costs, which provides a revealed preference estimate of the compliance cost of itemizing. I find that this cost increases with income, consistent with a higher opportunity cost of time for richer house- holds. Second, using my estimates and estimates of the time required to file other schedules, I estimate the cost of filing federal income taxes. I find that this cost has been increasing since the 1980’s and has reached 1.2% of GDP in the most recent years.


NBER Digest, Some Taxpayers Forgo Benefits of Itemizing Due to Filing Costs:

The total cost of taxpayers' compliance with the U.S. tax system may exceed 1 percent of GDP.

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January 7, 2018 in Scholarship, Tax | Permalink | Comments (0)

TaxProf Baby

My favorite photo at #AALS2018:  Eva Rana-Gamage:

Tax Prof Baby

January 7, 2018 in Legal Education, Tax | Permalink | Comments (1)

Saturday, January 6, 2018

Polsky: The New Libel Tax

Gregg Polsky (Georgia), The Libel Tax: The New Law Taxes People for Winning Defamation Claims:

President Donald Trump’s new tax law has been roundly criticized for spending $1.5 trillion largely for the benefit of big corporations and extremely wealthy individuals, for further complicating the tax code, and for lacking intellectual or policy coherence. Lost in all of this valid criticism has been scrutiny of the large number of technical flaws in the law that will haunt innocent and unsuspecting taxpayers for years to come while simultaneously providing windfalls for more sophisticated taxpayers and their advisors.

One ironic example of such a technical flaw is a change that will punish people like Summer Zervos. The former Apprentice contestant has sued Trump for defamation, based on his claim that she was lying when she accused him of making unwanted sexual advances.

The new tax bill denies defamation plaintiffs like Zervos any deductions for their attorney’s fees and costs, even when their claims succeed. The result is likely to be extremely high tax rates on defamation awards. In fact, this new tax burden on defamation plaintiffs would in some cases make it more expensive to sue someone who has defamed you than to just ignore them. ...

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January 6, 2018 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (3)

Proposed Changes To Student Loans Worry New AALS President Wendy Perdue

AALS (2018), Proposed Changes to Student Loans Worry Law School Association's New President:

We caught up with incoming AALS President Wendy Perdue, dean at the University of Richmond School of Law, to discuss her goals for the association, the apparent boost in law school applicants this year, and whether the closure of some schools is good for legal education. ...

How is the mood at the annual meeting? Are deans and faculty optimistic that legal education is poised to rebound?

You can’t be a dean without being optimistic. Among deans, we are always hopeful about the future. I think the concern right now is the pending education bill that would dramatically limit access to loan funds for graduate students. The house bill, at the moment, caps graduate borrowing at $28,500 and would eliminate public service loan forgiveness, that’s of great concern to all law deans. ...

Is the closure of some law schools a good or bad thing for legal education as a whole?

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January 6, 2018 in Legal Education | Permalink | Comments (3)

AALS Tax Section Panel: Tax Legislation In The 115th Congress

Tax Panel
The AALS Section on Taxation put on a fantastic program yesterday on Tax Legislation in the 115th Congress:

  • Lily L. Batchelder (NYU)
  • Victor Fleischer (San Diego)
  • Susan Morse (Texas)
  • George K. Yin (Virginia)
  • Lawrence A. Zelenak (Duke)

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January 6, 2018 in Conferences, Legal Education, Tax | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN LogoThere is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #5. The #1 paper is #1 among 13,282 tax papers in all-time downloads:

  1. [42,622 Downloads]  The Games They Will Play: Tax Games, Roadblocks, and Glitches Under the New Legislation, by Ari Glogower (Ohio State), David Kamin (NYU), Rebecca Kysar (Brooklyn) & Darien Shanske (UC-Davis) et al.
  2. [541 Downloads]  The Senate Introduced a Pragmatic and Geopolitically Savvy Inbound Base Erosion Rule, by Itai Grinberg (Georgetown)
  3. [519 Downloads]  Tax Reform: Process Failures, Loopholes and Wealth Windfalls , by Stephen Shay (Harvard)
  4. [358 Downloads]  Once More, with Feeling: The 'Tax Cuts and Jobs' Act and the Original Intent of Subpart F, by Reuven Avi-Yonah (Michigan) & Nir Fishbien (S.J.D. 2018, Michigan)
  5. [152 Downloads]  Macroeconomic Modeling of Tax Policy: A Comparison of Current Methodologies, by Alan Auerbach (UC-Berkeley), Itai Grinberg (Georgetown), Thomas Barthold (Joint Committee on Taxation), Nicholas Bull (Joint Committee on Taxation), Gavin Elkins (Tax Foundation), Pamela Moomau (Joint Committee on Taxation), Rachel Moore (Joint Committee on Taxation), Benjamin Page (Tax Policy Center), Brandon Pecoraro (Joint Committee on Taxation) & Kyle Pomerleau (Tax Foundation)

January 6, 2018 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, January 5, 2018

Weekly SSRN Tax Article Review And Roundup: Mazur Reviews Barry's Taxation, Innovation, And The Sharing Economy

This week, Orly Mazur (SMU) reviews a new work by Jordan Barry (San Diego), Taxation and Innovation: The Sharing Economy as a Case Study.

Mazur (2017-2)Innovation drives economic growth. Thus, encouraging innovation is a worthwhile and necessary endeavor. However, the tools we currently use to promote innovation are not always effective at reaching this desired result. So what can we do to improve the growth of innovation in the United States? Jordan Barry’s new work contributes to the existing literature on this important topic by considering the relationship between the U.S. federal income tax system and innovation.

Barry uses the sharing economy as the focal point of his paper to demonstrate that tax policy is a questionable tool for encouraging innovation. As Barry explains, the growth of our current economy relies significantly on the research and development activities of relatively small and new companies. But the majority of these companies do not take advantage of tax policies that are designed to achieve the goal of encouraging innovation. (For another recent work that uses empirical evidence to demonstrate this phenomenon, see Susan Morse and Eric Allen’s, Innovation and Taxation at Start-Up Firms, 69 Tax L. Rev. 357 (2016)). Moreover, these tax incentives often can lead to unexpected results that may not align with sound policy.

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January 5, 2018 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

More On State Resistance To The New Federal Tax Law

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

Kaplow And Shavell And The Priority Of Income Taxation And Transfer

David Blankfein-Tabachnick (Michigan State) & Kevin A. Kordana (Virginia),  Kaplow and Shavell and the Priority of Income Taxation and Transfer, 69 Hastings L.J. 1 (2017):

This Article rejects a central claim of taxation and private law theory, namely, Kaplow and Shavell’s prominent thesis that egalitarian social goals are most efficiently achieved through income taxation and transfer, as opposed to egalitarian alterations in private law rules. Kaplow and Shavell compare the efficiency of rules of tort to rules of tax and transfer in meeting egalitarian goals, concluding that taxation and transfer is always more efficient than other private law legal rules. We argue that Kaplow and Shavell reach this conclusion only through inattention to the body of private law that informs the very basis of their discussion: underlying property entitlements.

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January 5, 2018 in Scholarship, Tax | Permalink | Comments (0)

Invitation: Pepperdine Law School Reception Tonight At AALS

Pepperdine AALS

Pepperdine Law School invites law professors and deans to a reception
hosted by our new dean, Paul Caron, at the 2018 AALS Annual Meeting in San Diego:

Friday, Jan. 5, 5:30 - 7:30 p.m.
Del Mar Room | South Tower, Level 3
Marriott Marquis San Diego Marina
Please join us for hors d'oeuvres, a hosted bar, and some tunes from Hamilton!

January 5, 2018 in Legal Education, Tax | Permalink | Comments (1)

Sexual Harassment At Annual Academic Meetings

Inside Higher Ed, Harassment at Annual Meetings:

A "sizable" minority of women and a smaller but still notable share of men have experienced harassment or other inappropriate behavior at the annual meeting of the American Political Science Association, according to a survey of members that the association has just released.

A solid majority (63 percent) of the 2,424 members who responded to the survey indicated that they had never been harassed or treated inappropriately at the meeting. But the figures were different for men (74 percent) and women (51 percent).


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January 5, 2018 in Legal Education | Permalink | Comments (1)

From Business Tax Theory To Practice In Law School Clinics

Alina S. Ball (UC-Hastings) & Manoj Viswanathan (UC-Hastings), From Business Tax Theory to Practice, 24 Clinical L. Rev. 27 (2017):

The past decade has seen a dramatic increase in the number of business law clinics in legal academia. This increase in clinical transactional courses has not, however, resulted in a proliferation of transactional tax clinical offerings. Although tax issues, including federal, state, and local tax matters, are an integral consideration of nearly every business transaction, most business law clinics explicitly exclude tax representation from their client services. For clients of business law clinics that are social enterprises — companies that combine market-based business strategies and social mission — this lack of tax-focused representation is problematic for two reasons.

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January 5, 2018 in Legal Education, Scholarship, Tax, Teaching | Permalink | Comments (0)

Dan Markel's Family Is In 'Agony' Over Delays In Murder Trials

Markel 3Seattle Times, Family of Slain Professor in ‘Agony’ Over Trial Delays:

The family of a slain law professor is speaking out the delay of the trial of a woman charged in the killing.

An attorney representing the parents of Dan Markel said Wednesday they “remain in agony” due to the delay. Markel was shot in his garage in the summer of 2014. Police said that killing was sparked by a bitter divorce and family squabbles.

Media outlets reported a judge agreed to push back the trial of Katherine Magbanua until October. She is one of three people charged in the slaying of the Florida State University professor and Toronto native.

Magbanua has pleaded not guilty to charges that she helped orchestrate the plot. Sigfredo Garcia is scheduled to stand trial in July. Luis Rivera has already pleaded guilty to second-degree murder.

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January 5, 2018 in Legal Education | Permalink | Comments (2)

Thursday, January 4, 2018

Davidson Reviews Wendel's Wills Act Compliance And The Harmless Error Approach

Jotwell (T&E)Camille Davidson (Wake Forest), Strict Compliance and Wills Act Formalities (JOTWELL) (reviewing Peter T. Wendel (Pepperdine), Wills Act Compliance and the Harmless Error Approach: Flawed Narrative Equals Flawed Analysis?, 95 Or. L. Rev. 337 (2017)):

In the law of Wills, the testator’s intent is of upmost importance. If there is clear and convincing evidence of a testator’s intent, then a document intended to be his or her will should be probated, right? Not so fast—according to Professor John Langbein, in a jurisdiction that has adopted the strict compliance approach to Wills Act formalities a document will not constitute a validly executed will if all of the statutory requirements are not met, even when evidence shows that the testator intended the document to be his or her will. Langbein penned substantial compliance and harmless error proposals as alternatives to strict compliance. In Wills Act Compliance and the Harmless Error Approach: Flawed Narrative Equals Flawed Analysis?Professor Peter T. Wendel asserts that Professor Langbein has not framed the narrative correctly and therefore the analysis of the issue is flawed. He rephrases the narrative so that the debate can continue in a less simplistic manner. ...

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January 4, 2018 in Scholarship, Tax | Permalink | Comments (0)

The Growth Of Law School Online Master's Programs

2U Pepperdine 2Following up on my previous posts:

ExtensionEngine Blog, Online Master's Programs at Law Schools: Why Online Learning?:

The growth and acceptance of online learning over the last decade have been mostly in undergraduate, business, and technical education. Despite the report that the American Bar Association (ABA) rejected Syracuse College of Law's initial application to develop a partially online hybrid Juris Doctor (J.D.) degree, I believe the next area of growth and acceptance will be with legal education.

While the ABA has yet to approve any 100% online J.D. programs, one fascinating but not often discussed aspect of online legal education is the recent growth in the number of 100% online Master of Legal Studies (MLS) degrees and post J.D. Master of Laws (LL.M.) degrees offered by ABA-approved law schools. These graduate degrees may appeal to a variety of working professionals, including but not limited to compliance specialists, risk management professionals, professionals in the tax industry, or other business professionals who would like or need to learn more about the law.

For example, 100% online Master of Legal Studies degrees, which require only a Bachelor's degree, are now offered at ASU, Northeastern, Wake Forest, and Seton Hall [and Pepperdine].

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January 4, 2018 | Permalink | Comments (0)

Colon: ETFs And In-Kind Redemptions

Jeffrey M. Colon (Fordham), The Great ETF Tax Swindle: The Taxation of In-Kind Redemptions, 122 Penn St. L. Rev. 1  (2017):

Since the repeal of the General Utilities doctrine over 30 years ago, corporations must recognize gain when distributing appreciated property to their shareholders. Regulated investment companies (RICs), which generally must be organized as domestic corporations, are exempt from this rule when distributing property in kind to a redeeming shareholder.

In-kind redemptions, while rare for mutual funds, are a fundamental feature of exchange-traded funds (ETFs). Because fund managers decide which securities to distribute, they distribute assets with unrealized gains and thereby significantly reduce the future tax burdens of their current and future shareholders. Many ETFs have morphed into investment vehicles that offer better after-tax returns than IRAs funded with after-tax contributions.

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January 4, 2018 in Scholarship, Tax | Permalink | Comments (0)

Kuehn: Clinical Faculty Demographic And Salary Data

KuehnTax Prof Blog op-ed:  Clinical Faculty — Who Are You? Who, Who, Who, Who?, by Robert Kuehn (Associate Dean for Clinical Education, Washington University):

Though clinical faculty have largely moved out of the proverbial basement, they remain a distinct sub-group within most law faculties. Often labeled as something other than law professors (“clinicians”) because of their teaching methods and goals, faculty that teach law clinic and externship courses also differ as a group by gender, race, employment status, and salary from “podium” faculty teaching doctrinal courses. And unlike the movement out of the basement, it’s not clear that clinical and doctrinal faculty are moving closer to each other on those attributes.

So who are the faculty who teach law clinic and externship courses? Predominantly female, and more so today than in the past. In the latest survey by the Center for the Study of Applied Legal Education (CSALE) of over 1000 faculty who teach in a law clinic or externship course, 62% identified as female. Externship courses are more heavily taught by female faculty than law clinics, as 75% of full-time externship teachers are female. As the graph below shows, over the last decade an increasing proportion of clinical faculty are female.

Graph of Clinic Faculty make up by Gender

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January 4, 2018 in Legal Education | Permalink | Comments (2)

A Simple Tech Upgrade At The IRS Could Transform The Economy

IRS Logo 2Tech Crunch, How a Simple Tech Upgrade at the IRS Could Transform the Economy:

Our credit system runs on the power of data. A simple IT upgrade at the IRS would put more of this power in your hands. ...

The IRS Data Verification Modernization Act of 2017, recently introduced in Congress by Rep. Patrick McHenry (R-NC) and Sen. Cory Booker (D-NJ), would set up an application programming interface (API) at the IRS.

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January 4, 2018 in Tax | Permalink | Comments (0)

Missouri, Pepperdine 1Ls Play Division I Basketball

Aldridge 4St. Louis Post-Dispatch, Juggling Basketball, Law School Is Quite a Feat:

Even Wonder Woman wonders how she does it.

Lauren Aldridge is the starting point guard for Mizzou’s women’s basketball team.

Lauren Aldridge is a first-year student at Mizzou’s law school.

It’s mind-boggling to think she has the energy to do both of these, considering people push themselves to unfathomable limits to succeed at just one of them. But there’s a superhuman in Columbia, practicing on the court and for court, while showing young people that when someone says “follow your dreams,” it really can be plural. ...

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January 4, 2018 in Legal Education | Permalink | Comments (0)

Manns & Todd: The Tax Lifecycle Of A Single Member LLC

F. Philip Manns Jr. (Liberty) & Timothy M. Todd (Liberty), The Tax Lifecycle of a Single Member LLC, 36 Va. Tax Rev. 323 (2017):

The single-member LLC (SMLLC) is ubiquitous. Despite its ubiquity, the Internal Revenue Code (Code) does not squarely address its tax consequences nor even contemplate its existence. This article examines the tax lifecycle of an SMLLC through its formation, operation, and exit event (e.g., sale, gift, or deathtime transfer).

This article identifies and isolates a tax asymmetry that arises from the U.S. Tax Court’s decision in Pierre v. Commissioner. Despite the check-the-box regulations, which disregard the SMLLC, Pierre regards the SMLLC for federal gift tax purposes. This asymmetry has several tax consequences, including a potential prophylactic immunization of transfers to SMLLCs against application of section 2036 — which claws back into the federal gross estate transfers when the transferor retains an interest — in the family partnership context.

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January 4, 2018 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, January 3, 2018

Goldman Sachs Takes $5 Billion Hit From New Tax Law

Goldman (2017)Bloomberg, Goldman Takes One-Time $5 Billion Hit From New U.S. Tax Law:

Goldman Sachs Group said the U.S. tax reform will cut profit this year by about $5 billion, mainly because of a tax targeting earnings held abroad.

About two-thirds of the hit comes from the repatriation tax, while writing down U.S. deferred tax assets also contributed, the company said in a filing on Friday. The bank also accelerated the delivery of previously granted stock awards to many of its top executives to lower its taxable profit subject to this year’s higher rates.

While bank stocks have rallied on the tax bill’s lower corporate rates, the new law requires charges in the near-term as foreign earnings face taxation and the value of deferred tax assets declines. Citigroup Inc. said it expects a hit of as much as $20 billion, while Bank of America Corp. will take a $3 billion charge and Credit Suisse Group AG is at risk of posting a third consecutive annual loss.

Wall Street Journal, Goldman to Take a Big Charge Related to U.S. Tax Overhaul:

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January 3, 2018 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

Mitchell-Hamline Hybrid-J.D. Program To Graduate Its First Class

Mitchell Hamline (2018)Twin Cities Pioneer Press, Online Law School? Mitchell-Hamline’s Unique Program Will Graduate Its First Attorneys:

Mitchell-Hamline School of Law’s first-in-the-country “hybrid” juris doctor program [is] [n]ow entering its fourth year. [T]he fully accredited program enrolls more than 80 students per year to complete law school through “e-learning,” on top of one or two weeks of on-campus coursework per semester. ...

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January 3, 2018 in Legal Education | Permalink | Comments (0)

Barry: Taxation And Innovation — The Sharing Economy As A Case Study

Jordan M. Barry (San Diego), Taxation and Innovation: The Sharing Economy as a Case Study, in Cambridge Handbook on Law and Regulation of the Sharing Economy (Nestor Davidson, Michèle Finck & John Infranca, eds., Cambridge University Press 2018):

This chapter considers the relationship between the U.S. federal income tax system and innovation, using the sharing economy as a focal point for analysis. It makes two main points.

First, the tax system is currently a questionable tool for encouraging innovation. Regulators are understandably concerned that taxpayers will use tax incentive provisions in unanticipated ways, and thus are inclined to tightly limit such provisions’ scope. This reduces incentive provisions’ net benefit to taxpayers, and can even cause such provisions to miss their marks entirely. Moreover, small and new companies are key drivers of innovation, and evidence suggests that they are relatively unresponsive to tax incentives.

Second, innovation can help improve the tax system. To fix a problem, one must first identify it; innovation provides opportunities to see where tax law is achieving its goals and where it is falling short. The sharing economy experience suggests some strengths, such as the tax system’s definition of income, as well as weaknesses, such as the dividing line between independent contractors and employees.

January 3, 2018 in Scholarship, Tax | Permalink | Comments (0)

IRS Issues Tax Rate Guidance For Stockpiled Foreign Income

Bloomberg:  IRS Issues Tax Rate Guidance for Stockpiled Foreign Income, by Lynnley Browning:

The Internal Revenue Service and Treasury Department will generally allow existing loans and other related-party transactions involving the overseas affiliates of multinational corporations to be taxed at the lower of two preferential rates, according to an official notice [Notice 2018-07].

The notice, released Friday afternoon, says the IRS and Treasury “intend to issue” new regulations clarifying how multinational companies must compute tax bills on the foreign earnings they have accumulated to date.

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January 3, 2018 | Permalink | Comments (0)

Tamanaha: 14 Law Schools With Attrition Rates >20% May Fail Accreditation Standard 501(b) (Admitting Students Capable Of Passing The Bar)

Tamanaha (2017)TaxProf Blog op-ed:  14 Law Schools With Attrition Rates >20% May Not Be In Compliance With Accreditation Standard 501(b) Because They Are Admitting Students Who Are Not Capable Of Passing The Bar, by Brian Tamanaha (Washington University):  

ABA Accreditation Standard 501(b):
A law school shall only admit applicants who appear capable of satisfactorily completing its program of legal education and being admitted to the bar.

Interpretation 501-3:
A law school having a cumulative non-transfer attrition rate above 20 percent for a class creates a rebuttable presumption that the law school is not in compliance with the Standard.

This interpretation was adopted to prevent schools from admitting large numbers of unqualified students, collecting tuition, then failing them out. In particular, the concern motivating the new interpretation was that law schools in danger of violating bar passage standard 316 might protect their bar pass rate by dismissing students they perceive to be a high risk of failing the bar. The term “cumulative non-transfer attrition” means schools must keep track of each admitted class and count every student who is dismissed at any time thereafter (including the second and third year).

The 509 reports indicate that 14 law schools have run afoul of interpretation 501-3, thus incurring a presumption that they have violated Standard 501(b):

2017 ABA 509 Reports

Law School

% 1L Attrition

# Students

# Minority Students

Minority Student
% 1L Attrition











John Marshall (Atlanta)





Lincoln Memorial





Western State




















Florida Coastal





Arizona Summit





Golden Gate










Thomas Jefferson





N. Carolina Central





To put these numbers in context, consider the attrition rates at most law schools:  at 50 law schools attrition is between 0% and 2%; at 47 law schools attrition is between 2% and 5.1%; and at 50 law schools attrition is between 5.1% and 9.9%.

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January 3, 2018 in Legal Education | Permalink | Comments (9)

NY Times: Democrats In High-Tax States Plot To Blunt Impact Of New Tax Law

New York Times, Democrats in High-Tax States Plot to Blunt Impact of New Tax Law:

Democrats in high-cost, high-tax states are plotting ways to do what their states’ representatives in Congress could not: blunt the impact of the newly passed Republican tax overhaul.

Governors and legislative leaders in New York, California and other states are considering legal challenges to elements of the law that they say unfairly single out parts of the country. They are looking at ways of raising revenue that aren’t penalized by the new law. And they are considering changing their state tax codes to allow residents to take advantage of other federal tax breaks — in effect, restoring deductions that the tax law scaled back.

One proposal would replace state income taxes, which are no longer fully deductible under the new law, with payroll taxes on employers, which are deductible. Another idea would be to allow residents to replace their state income tax payments with tax-deductible charitable contributions to their state governments.

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January 3, 2018 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (8)

Tax Profs Weigh In On Potential State Lawsuits To Block Repeal Of The State & Local Tax Deduction

Reuters, U.S. Tax Bill May Face Lawsuits With Long Odds But Political Payoffs:

Democratic-leaning states may take legal action to challenge the cap on deductions of state and local taxes under the sweeping overhaul of the U.S. tax code, and even though such lawsuits would face long odds they could help galvanize Democrats for next year’s mid-term election. ...

Law professors said legal challenges would likely rest on arguing that the provision interferes with the protection of states’ rights under the U.S. Constitution. ...

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January 3, 2018 in Tax Policy in the Trump Administration | Permalink | Comments (5)

Will Dan Markel Get Justice In 2018?

Markel 3XTL, High-profile Big Bend Cases to Watch in 2018:

More than three years after FSU professor Dan Markel was murdered, the search for justice continues. Alleged triggerman Sigfredo Garcia has been in and out of court more than a dozen times.

His trial was supposed to start this month, but it's been pushed back six more months. Prosecutors explained in June why this trial is taking a while to happen.

"Murder cases frequently get continued, so there's lots of reasons that can happen," said Georgia Cappleman, the deputy assistant state attorney. "This is an ungangly beast that we're trying to wrangle."

Garcia is expected back in court Jan. 3, the same day as Katherine Magbanua, also charged in Markel's murder. Her trial is scheduled for Jan. 22. Her attorneys have maintained the state has a weak case.

"They were just proved wrong," said Christopher DeCoste, a defense attorney. "They're making these accusations based on little pieces of information and trying to connect imaginary dots with invisible lines."

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January 3, 2018 in Legal Education | Permalink | Comments (1)

Tuesday, January 2, 2018

Blank Presents The Timing Of Tax Transparency At Hebrew University

Blank (2017)Joshua Blank (NYU, moving to UC-Irvine) presented The Timing of Tax Transparency, 90 S. Cal. L. Rev. 449 (2017) (review here), at Hebrew University in Jerusalem, Israel yesterday as part of its Tax Law Forum hosted by David Gliksberg (Hebrew U):

Fairness in the administration of the tax law is a subject of intense debate in the United States. As myriad headlines reveal, the Internal Revenue Service (“IRS”) has been accused of failing to enforce the tax law equitably in its review of tax-exempt status applications by political organizations, international tax structures of multinational corporations, and estate tax returns of millionaires, among other areas. Many have argued that greater “tax transparency” would better empower the public to hold the IRS accountable and the IRS to defend itself against accusations of malfeasance. Mandatory public disclosure of taxpayers’ tax return information is often proposed as a way to achieve greater tax transparency. Yet, in addition to concerns regarding exposure of personal and proprietary information, broad public disclosure measures pose potential threats to the taxing authority’s ability to enforce the tax law.

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January 2, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Herzig: States Pay The Price When You Buy Online

New York Times op-ed:  States Pay the Price When You Buy Online, by David Herzig (Valparaiso):

Can online retailers be compelled by law to collect a sales tax? According to the Supreme Court, no — but that could change if, in the next few weeks, it decides to take up a case challenging the current rule.

The court should reconsider the prohibition, because the law takes a hammer to the fiscal health of states, which lose out on millions, if not billions, of dollars in sales tax revenue. Staggering amounts of digital transactions occurred this year: an estimated $6.59 billion in digital transactions on Cyber Monday (which would be a record), and an estimated $100 billion for the holiday season.

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January 2, 2018 in New Cases, Tax | Permalink | Comments (0)

NY Times: What Explains The Dearth Of New Year's Babies? Taxes, Of Course

Tax Break BabiesNew York Times, To-Do List: Wrap Gifts. Have Baby.:

In the last 15 years, there has been a huge increase in the number of births that are induced with drugs or come by Caesarean section. In either case, parents or doctors can often schedule a baby’s arrival on a day of their choosing. ...

Over this same period — since the early 1990s — the federal government has been steadily increasing the tax breaks for having a child. For parents to claim the full amount of any of these breaks in a given year, a child must simply be born by 11:59 p.m. on Dec. 31. If the baby arrives a few minutes later, the parents are often more than a thousand dollars poorer.

Unless you’re a cynic, or an economist, I realize you might have trouble believing that the intricacies of the nation’s tax code would impinge on something as sacred as the birth of a child. But it appears that you would be wrong. ...

“It’s phenomenal what’s happening in late December,” said Amitabh Chandra, a Harvard economist who provided many of the numbers here. “December is not really a particularly busy time for babies to be born. So to see a spike that’s equal to September is astounding.” ...

So to see if taxes were truly the culprit, Mr. Chandra and another economist, Stacy Dickert-Conlin of Michigan State, devised some clever tests [Taxes and the Timing of Births]. They found that people who stood to gain the most from the tax breaks were also the ones who gave birth in late December most frequently. When the gains were similar, high-income parents — who, presumably, are more likely to be paying for tax advice — produced more December babies than other parents. ...

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January 2, 2018 in Tax | Permalink | Comments (0)

Dulles Airport Duty-Free Fight Moves To Supreme Court

Dulles 2Virginia's Loudoun County has filed a petition for certiorari (PDF) asking the Supreme Court to reverse a state court ruling that bars the county from imposing its gross receipts tax on duty-free sales at Dulles International Airport. From the petition:

Dulles Duty Free, LLC (“DDF”). . . operates “duty free” stores at Dulles International Airport . . . . Those stores’ sales are predominantly to travelers departing the United States . . . . Loudoun County imposes a 0.17% Business, Professional and Occupational License (“BPOL”) tax measured by the gross receipts of retail stores located in the County. Loudoun accordingly calculated the BPOL tax on DDF using gross receipts, including the portion of its total sales attributable to international travelers who purchase an item at its Dulles Airport duty free stores, and then carry that item out of the country on an international flight.

DDF argu[ed that] the County’s collection of those taxes related to “international sales” violated the Import-Export Clause. . . . The Supreme Court of Virginia . . . held that, as applied to DDF's “export goods,” the BPOL “constitutes an impermissible impost upon an export in violation of the Import-Export Clause” . . . .

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January 2, 2018 | Permalink | Comments (0)

Invitation: Pepperdine Law School Reception At AALS

Pepperdine AALS

Pepperdine Law School invites law professors and deans to a reception
hosted by our new dean, Paul Caron, at the 2018 AALS Annual Meeting in San Diego:

Friday, Jan. 5, 5:30 - 7:30 p.m.
Del Mar Room | South Tower, Level 3
Marriott Marquis San Diego Marina
Please join us for hors d'oeuvres, a hosted bar, and some tunes from Hamilton!

January 2, 2018 in Legal Education, Tax | Permalink | Comments (0)

Far Fewer Law School Conditional Scholarship Programs In 2016-17 Than In 2011-12

This blog posting highlights the much smaller number of law schools with conditional scholarship programs in 2016-17 compared to 2010-11.  It also looks at the smaller number and smaller percentage of first-year students with conditional scholarships in 2016-17 compared with 2011-12, and the extent to which the number and percentage of rising second-year students whose scholarships were reduced or eliminated has changed since 2011-12.  Next, it analyzes both the prevalence of conditional scholarship programs among law schools across different rankings categories and the extent to which scholarship retention rates differ among law schools across different rankings categories.  In this regard, it notes both that there are almost no conditional scholarship programs among top-50 law schools as of 2016-17, and that the concentration of conditional scholarship programs in law schools ranked 101 and lower probably means a disproportionate number of women students and minority students are dealing with conditional scholarships. Finally, it looks at how the distribution of retention rates by decile has changed since 2011-12.

  1. Introduction

Several years ago, the Council for the Section of Legal Education and Admissions to the Bar approved revisions to Standard 509, requiring that law schools post a chart identifying the number of conditional scholarships given to incoming first years and the number of those scholarship recipients whose scholarships were reduced or eliminated at the end of the first year.  As a result, there is now a much greater universe of publicly available information about law school scholarship programs. In the summer of 2013, I posted to SSRN an article entitled Better Understanding the Scope of Conditional Scholarship Programs among American Law Schools, summarizing the first year of available data on conditional scholarship programs, covering the 2011-12 academic year.  Law schools have now published this data for six years, with data covering the 2016-17 academic year having just been released as of December 15.

  1. Number of Law Schools with Conditional Scholarship Programs Declines by 36.4%

As shown in Chart 1 below, excluding the three law schools in Puerto Rico, there were 140 fully-accredited ABA law schools with conditional scholarship programs in 2011-12. For the 2016-17 academic year, however, the number of fully-accredited ABA law schools with conditional scholarship programs had dropped to 89, a decline of over 36%.Chart 1 2017 Cond. Schol. Blog SECOND

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January 2, 2018 in Jerry Organ, Law School, Legal Education | Permalink | Comments (6)

The IRS Scandal, Day 1699: Lois Lerner And Civil Service Reform

IRS Logo 2Wall Street Journal op-ed:  A Big, Beautiful Trump 2018 Issue, by Kimberley A. Strassel:

President Trump is on the hunt for a 2018 issue—a strong follow-up to his tax-cut victory that will motivate voters and gain bipartisan support. Democrats are pushing for an infrastructure bill, inviting the president to spend with them. House GOP leaders are mulling entitlement reform—a noble goal, if unlikely in a midterm cycle.

Fortunately for the president, there’s a better idea out there that’s already a Trump theme. It’s also a sure winner with the public, so Republicans ought to be able to pressure Democrats to join.

Let 2018 be the year of civil-service reform—a root-and-branch overhaul of the government itself. Call it Operation Drain the Swamp. ...

We live in an administrative state, run by a left-leaning, self-interested governing class that is actively hostile to any president with a deregulatory or reform agenda.

It’s Lois Lerner, the IRS official who used her powers to silence conservative nonprofits. ...

More broadly, it is a federal workforce whose pay and benefits are completely out of whack with the private sector. ...

Civil-service reform’s bipartisan appeal means it has a shot in the Senate. The Chuck Schumers and Elizabeth Warrens will fight for their federal union buddies. But will Democrats like Jon Tester, Claire McCaskill, Joe Manchin and Joe Donnelly —who represent conservative or right-to-work states—go to bat for the likes of Lois Lerner?

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January 2, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

TaxProf Blog Holiday Weekend Roundup

Monday, January 1, 2018

The Top 10 Legal Education Posts Of 2017

The Top 10 Tax Posts Of 2017

The IRS Scandal, Day 1698: Fallout From Tea Party Targeting Allegations Has Neutered IRS Oversight Of Nonprofits

IRS Logo 2Washington Post editorial, Scandal Has Overwhelmed the IRS:

Conservatives who long sought to restrain the Internal Revenue Service have managed to throw a wrench into an IRS division that is supposed to regulate tax-exempt nonprofits and charities, just at a time when these groups are becoming more partisan and complex.

In a Dec. 18 article in The Post, reporter Robert O’Harrow Jr. offered a disturbing picture of the besieged Exempt Organizations division of the IRS, which regulates charities and nonprofits such as those allowed under sections 501(c)(3) and 501(c)(4) of the tax code. The former may not directly or indirectly support a political candidate, but they are allowed to participate in educational debates about the issues; the latter are social-welfare groups that can be involved in politics only so long as it is not their primary activity. The number of applications from new charities has exploded in recent years, and the law is a bit of a gray zone — vaguely written and hard to enforce.

In recent years, overwhelmed by applications, the division and its then-leader, Lois Lerner, fell into the crosshairs of the conservative tea party movement for the slow pace of approvals of tea party groups, which they claimed was due to a conspiracy by the Obama administration to target them. Subsequent investigations found mismanagement — the IRS was taking shortcuts and using keywords to deal with the mountain of applications — but not deliberate targeting.

Still, the charges took a toll. The division seems to have lost its will to scrutinize charities. According to Mr. O’Harrow, last year the division rejected just 37 of the 79,582 applications on which it made a final determination. He reported that charities have now begun to recognize they face little or no chance of examination or sanction. The division’s budget has declined from a peak of $102 million in 2011 to $82 million last year. The number of division employees has fallen from 889 to 642. ...

There is more than enough blame to go around in this tale. The conservative groups, their allies in Congress and the IRS itself all bear responsibility. It is clear what the result will be. Voters will have less and less knowledge of who is paying for political activity in their democracy, even as many politicians hypocritically claim to favor transparency.

(Hat Tip: Bill Turnier.)

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January 1, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (9)

Sunday, December 31, 2017

WSJ: The Most Popular People At New Year's Eve Parties? Tax Accountants

Happy New YearWall Street Journal, Who’s the Center of Attention at Holiday Parties? Your Tax Accountant:

When Mark Astrinos is asked what he does, the response is typically muted. “I’ll just say, ‘I’m a CPA,’ and the conversation will end,” said the certified public accountant and financial planner with Libra Wealth in San Francisco.

Not lately, though. Thanks to the sweeping tax-overhaul bill passed by Congress and signed this month by President Donald Trump, people now “light up and they’re so intrigued and they want to know how they’ll be affected,” he said.

In part because of the attention, Mr. Astrinos said, “It’s never been a better time to be a CPA.”

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December 31, 2017 in Tax | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list. The #1 paper is #1 among 13,276 tax papers in all-time downloads:

  1. [41,057 Downloads]  The Games They Will Play: Tax Games, Roadblocks, and Glitches Under the New Legislation, by Ari Glogower (Ohio State), David Kamin (NYU), Rebecca Kysar (Brooklyn) & Darien Shanske (UC-Davis) et al.
  2. [506 Downloads]  The Senate Introduced a Pragmatic and Geopolitically Savvy Inbound Base Erosion Rule, by Itai Grinberg (Georgetown)
  3. [478 Downloads]  Tax Reform: Process Failures, Loopholes and Wealth Windfalls , by Stephen Shay (Harvard)
  4. [331 Downloads]  Once More, with Feeling: The 'Tax Cuts and Jobs' Act and the Original Intent of Subpart F, by Reuven Avi-Yonah (Michigan) & Nir Fishbien (S.J.D. 2018, Michigan)
  5. [206 Downloads]  Heading Off a Cliff?, by Michael Graetz (Columbia)

December 31, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 1697: Budgetary Evisceration After Tea Party Targeting Allegations Has Left The IRS Incapable Of Implementing The New Tax Law

IRS Logo 2New York Times editorial, Don’t Cheer as the I.R.S. Grows Weaker:

[A]s it prepares to implement the most sweeping tax overhaul in 30 years, the I.R.S. is perhaps weaker than it has ever been. In 1986, the last time Congress passed major changes in the tax code, it included a budget increase for the agency, allowing it to hire 2,100 more employees to carry out the changes. Earlier this year, as the agency struggled to do its job with a decimated staff, a shrinking budget and decrepit computers, its commissioner pleaded with Congress to at least give it time to prepare for the big tax overhaul Republicans wanted.

That didn’t happen. Instead, Republicans rushed hastily written legislation larded with amendments through both chambers. Even before this hash hit their desks, I.R.S. officials were warning about the potential for a catastrophic breakdown that could imperil our tax system. Then, at its busiest time of year, the agency was given a week before the tax law goes into effect to translate hundreds of pages of conflicting provisions, potential loopholes and unintended consequences into coherent guidance for taxpayers. ...

Americans should reserve their rage for Republicans, who have spent years targeting the I.R.S. for political gain. Since 2010, Congress has cut the agency’s budget by nearly $1 billion, or 18 percent, adjusted for inflation, as the I.R.S. processes about 10 million more tax returns. Its work force has been whacked by 21,000, or nearly one-quarter; taxpayers who need help — often individuals preparing their own returns — have a hard time getting anyone to answer the phone. ...

There is no permanent commissioner leading the I.R.S. Its last one, John Koskinen, left in November at the expiration of his term. Mr. Koskinen had spent a big chunk of his time on Capitol Hill, being lambasted by Republicans over allegations that the Obama-era I.R.S. unfairly targeted conservative political groups seeking tax-exempt status. A report released in October by the Treasury Department’s inspector general found that the I.R.S. had also scoured left-leaning groups’ applications for tax-exempt status as part of its effort to identify groups focused on politics, not “social welfare,” as the rules for tax-exempt status require.

The agency apologized for its improper audits, and a Justice Department investigation found mismanagement but no evidence of a crime. Though the audits occurred before Mr. Koskinen came aboard, Republicans clamored for him to be impeached, an action not taken against an administration official besides the president since the 1870s. The dumb and unsuccessful effort was led by legislators like Jason Chaffetz, then a Republican congressman from Utah, who view the I.R.S. as symbolic of “big government” and think that killing it outright might be a good idea. ...

Pounding a perennial punching bag like the I.R.S. scores easy political points among Americans who associate the agency with an unpleasant April deadline. We get it. But if the agency that collects more than 90 percent of the government’s money stumbles, all Americans pay, and they can look to Congress, not just the I.R.S., in assigning the blame.

(Hat Tip: Bill Turnier.)

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December 31, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (17)

Saturday, December 30, 2017

This Week's Ten Most Popular TaxProf Blog Posts