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Monday, December 1, 2014

The IRS Scandal, Day 571

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

TaxProf Blog Holiday Weekend Roundup

Sunday, November 30, 2014

Tax and Proverbs 6:30-31

Martin v. Her Majesty the Queen, 2014 TCC 200 (2014):

ProverbsAfter filing his 2010 tax return, M. Martin sought to claim $14,000,000 of disposition costs for his former clientele and increase his capital loss by a like amount – from $800,000 to $14,800,000. M. Martin arrived at his $14,000,000 disposition costs number as follows. He estimated that $2,000,000 was the value of his property seized or lost as a result of the loss of his clientele and the revenue generated thereby. This included the value of his home, his country property, his collection of vehicles, his library, and all of his other collections and belongings. As mentioned, these properties were seized as a consequence of his resulting financial difficulties. M. Martin then multiplied the $2,000,000 value of his lost property by seven, relying upon the proverbial exhortation to thieves to pay back sevenfold what they stole.1

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November 30, 2014 in Tax | Permalink | Comments (2)

The Research Productivity of New PhDs in Economics: The Surprisingly High Non-success of the Successful

John P. Conley (Vanderbilt) & Ali Sina Önder (Bayreuth), The Research Productivity of New PhDs in Economics: The Surprisingly High Non-success of the Successful:

We study the research productivity of new graduates from North American PhD programs in economics from 1986 to 2000. We find that research productivity drops off very quickly with class rank at all departments, and that the rank of the graduate departments themselves provides a surprisingly poor prediction of future research success. For example, at the top ten departments as a group, the median graduate has fewer than 0.03 American Economic Review (AER)-equivalent publications at year six after graduation, an untenurable record almost anywhere. We also find that PhD graduates of equal percentile rank from certain lower-ranked departments have stronger publication records than their counterparts at higher-ranked departments. In our data, for example, Carnegie Mellon's graduates at the 85th percentile of year-six research productivity outperform 85th percentile graduates of the University of Chicago, the University of Pennsylvania, Stanford, and Berkeley. These results suggest that even the top departments are not doing a very good job of training the great majority of their students to be successful research economists. Hiring committees may find these results helpful when trying to balance class rank and place of graduate in evaluating job candidates, and current graduate students may wish to re-evaluate their academic strategies in light of these findings.

Table 2

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November 30, 2014 in Legal Education, Scholarship, Tax | Permalink | Comments (2)

Top 5 Tax Paper Downloads

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads on SSRN is the same as last week's list.  The #1 paper is now #115 in all-time downloads among 10,535 tax papers:

  1. [1176 Downloads]  A Compendium of Private Equity Tax Games, by Gregg D. Polsky (North Carolina)
  2. [390 Downloads]  Obama Care Fails the Origination Clause: Why Sissel and Hotze Should Be Reversed, by Steven J. WIllis (Florida) & Hans G. Tanzler (Florida)
  3. [372 Downloads]  Trying Times 2014: Important Lessons to Be Learned from Recent Federal Tax Cases, by Nancy A. McLaughlin (Utah) & Steven J. Small (Law Office of Stephen J. Small, Newton, MA)
  4. [240 Downloads]  A World Turned Upside Down: Reflections on the 'New Wave' Inversions and Notice 2014-52, by Reuven S. Avi-Yonah (Michigan)
  5. [229 Downloads]  A White Paper on Executive Action to Restore Trust in the Internal Revenue Service by Rebuilding Field Operations, by Frank Wolpe (Bentley)

November 30, 2014 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 570

IRS Logo 2Breitbart:  Obama: Not Legitimate for Future Presidents to Lower Taxes via Executive Action:

After unilaterally granting temporary amnesty and work permits to millions of illegal immigrants last week, President Barack Obama said it would not be legitimate for a future president to unilaterally lower tax rates. 

When asked on ABC's This Week if his successor could unilaterally act to lower taxes if Congress does not, Obama replied, "absolutely not."

Obama, despite the IRS's targeting of conservative and Tea Party organizations, also said that his administration only audits "folks who are most likely to be cheating" and said that even though the IRS does not "audit every single person... we still expect that people are going to go ahead and follow the law."

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November 30, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Saturday, November 29, 2014

Moneyball for Government

MoneyballMoneyball for Government (Jim Nussle & Peter Orszag, eds.) (Nov. 10, 2014) (website):

Data and evidence don’t lie—but for too long, our policy makers haven’t paid them nearly enough attention. In this refreshing collaboration, an all-star team of leaders and thinkers from across the political spectrum lays out an exciting and achievable vision for the country — one where policy makers base decisions not on politics or expedience, but on the hard evidence of what really works. For anyone who believes that government must do better for America’s children and their families, Moneyball for Government is a home run.

The Atlantic:  Can Government Play Moneyball, by John Bridgeland & Peter Orszag:

Based on our rough calculations, less than $1 out of every $100 of government spending is backed by even the most basic evidence that the money is being spent wisely. As former officials in the administrations of Barack Obama (Peter Orszag) and George W. Bush (John Bridgeland), we were flabbergasted by how blindly the federal government spends. In other types of American enterprise, spending decisions are usually quite sophisticated, and are rapidly becoming more so: baseball’s transformation into “moneyball” is one example. But the federal government—where spending decisions are largely based on good intentions, inertia, hunches, partisan politics, and personal relationships—has missed this wave. ...

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November 29, 2014 in Book Club, Tax | Permalink | Comments (10)

Miami: The Cradle of TV Judges

Miami LogoMiami New Times Blog, University of Miami Is Tops in Churning Out TV Judges:

Just three years ago, mega-attorney Roy Black wrote in a candid blog post: "The UM Law School is in a death spiral; we have plummeted in the law school rankings, falling to 77th, while UF is 47 and FSU is 50. This is more than a little embarrassing."

[FIU is hot on our tail and at a cheaper price. So the question is, what do we do about it? In my opinion, it is time to question long-held beliefs about legal education. It maybe uncomfortable, but the winds of change are upon us. We either bend and survive or break and die.

My solution is to radically reform the curriculum. I suggest we become the MIT of litigation. After the first year of required courses, we create a program designed to intensely train trial lawyers. Not with the usual clinical courses, or useless apprenticeships, but with rigorous courses, taught by experienced professionals, using mock trials and moot courts, to teach students how to litigate. This will make the UM law degree more valuable in the marketplace. When a law firm needs young litigators, we will be the first place they look.]

[No other law school does this; it is time for a new brand at UM. We should advertise as the school to learn trials. The vision should be a school go-to for the finest litigation education and experience.]

Yes, the University of Miami law school is not held in the highest of regards.

But there is no denying that UM does something really, really well compared to all other programs: turning out graduates who go on to become TV judges. Seriously, the University of Miami has more alumni who have gone on to host their own daytime courtroom show than any other school. ... [C]onsidering that the Wikipedia category for television judges has only 23 entries, we figured that about 17 percent of prominent TV judges have a UM law degree. That's still a lot. Here's the rundown on the proud syndicate of UM's TV judges.

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November 29, 2014 in Legal Education | Permalink | Comments (1)

Burk: The Evolving Market for New Lawyers in the 21st Century

Bernard A. Burk (North Carolina), What's New About the New Normal: The Evolving Market for New Lawyers in the 21st Century, 41 Fla. St. U. L. Rev. 541 (2014):

Everyone agrees that job prospects for many new law graduates have been poor for the last several years; there is rather less consensus on whether, when, how or why that may change. This article analyzes historical and current trends in the job market for new lawyers in an effort to predict how that market may evolve.

The article derives quantitative measurements of the proportion of law graduates over the last thirty years who have obtained initial employment for which law school serves as rational substantive preparation (“Law Jobs”). In comparing entry-level hiring patterns since 2008 with those in earlier periods, a significant development emerges: While other sectors of the market for new lawyers have changed only modestly during the Great Recession, one sector — the larger private law firms colloquially known as “BigLaw” — has contracted six times as much as all the others. Though BigLaw hiring has historically accounted for only 10%-20% of each graduating class, it is responsible for over half the entry-level Law Jobs lost since 2008.

While some observers predict a return to business as usual as the economy recovers, this article is skeptical of that account. The article identifies significant structural changes in the way that the services traditionally provided by BigLaw are being produced, staffed and priced that diminish BigLaw’s need for junior lawyers both immediately and in the longer term. These observations suggest that entry-level BigLaw hiring, and thus the market for new lawyers overall, will remain depressed below pre-recession levels well after demand for the services BigLaw has traditionally provided recovers. At the same time, new lawyers’ job prospects may nevertheless improve as the contraction in the legal academy now underway reduces the number of new graduates competing for work.

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November 29, 2014 in Legal Education, Scholarship | Permalink | Comments (2)

The IRS Scandal, Day 569

IRS Logo 2Forbes:  In 'Lost' Trove Of IRS Emails, 2,500 May Link White House To Confidential Taxpayer Data, by Robert W. Wood:

The recent news that the lost or destroyed Lois Lerner emails were actually not lost or destroyed surprised some people. That they will now be sorted, cataloged and released provokes mixed reactions. It has some Republicans upset that more wasn’t done and more transparently. It has some Democrats upset that more money is being spent on what some see as a witch hunt that reveals not even a smidgen of corruption. Despite the 18 months of dissembling about who did what and when, the latter reaction may be premature.

The Treasury Inspector General for Tax Administration has confirmed that, on top of the backed-up email horde, there are also nearly 2,500 documents relating to investigations of the improper disclosure of confidential taxpayer information by the IRS to the White House. Yes, the White House.

Why should the White House be getting confidential taxpayer information? That is a good question. If the facts show such data was transmitted, even under the most charitable interpretation, you would think every American would want to know what happened.

The Inspector General for Tax Administration has seemed to be a white knight in the sometimes tawdry (and often inflammatory) email and targeting scandal that has roiled the IRS over 18 months. Yet on this particular issue, the Inspector General is being questioned too. An advocacy group called Cause of Action sued the Inspector General under the Freedom of Information Act for information about communications between the White House and the IRS.

Eventually, the court ordered that office to reveal whether the documents existed. Finally, the Obama administration has agreed to release the documents. A key question is whether any officials at the White House have ever asked anyone over at the IRS to transmit private taxpayer information to the White House in violation of law. Another question, regardless of whether the White House asked for any taxpayer information, is whether the IRS ever transmitted any.

With talk of targeting for more than 18 months, those of fair questions. The Obama administration consistently resisted responding, but has finally had to relent. In an email to Cause of Action, the Department of Justice has proposed deadlines for turning over documents next month. The DOJ states that it anticipates delivering some of the documents December 1st, and the remainder by December 15th.

The data may seem unimportant, and hopefully it will turn out to be. Still, the privacy protections for taxpayer data held by the IRS are among the most sensitive parts of the tax law. That makes any alleged transgressions of these rules serious. It makes this topic arguably the worst part of the IRS scandal so far.

According to the U.S. Supreme Court in a decision reaching back to 1819, the power to tax includes the power to destroy. The current administration’s pooh-poohing, including its ‘no smidgen of corruption’ remark to Fox News in February, does little to help. We have been feted to multiple mixed explanations of what happened, to multiple participants who may or may not have said or done something, to multiple refusals by one of the key players to testify. Such shifting sands leave us wondering.

The defiance and hubris from at least some at the IRS itself has been as disturbing. It has hardly seemed to be the kind of “we’re here to serve” attitude one might reasonably have expected. Some are even wondering about that whole separation of powers thing we learned about in civics or history class. American taxpayers should want to know what happened.

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November 29, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, November 28, 2014

Lewis Black Hammers Black Friday 'Tax' as 'Most Anti-American Thing I've Ever Heard'

News Busters, Lewis Black Hammers Black Friday 'Tax' as 'Most Anti-American Thing I've Ever Heard':

Black FridayDuring Wednesday evening's edition of The Daily Show on the Comedy Central cable network, comedian Lewis Black devoted his “Back in Black” segment to slamming the tradition of Black Friday, the day after Thanksgiving and a time when stores open early and shoppers arrive before the sun comes up to buy items at huge discounts.

Black claimed that even worse than the rush to get tremendous bargains is the practice of “taxing” stores in malls that stay closed so their employees can spend the time with their families. “That’s the most anti-American thing I’ve ever heard!” Black exclaimed. “It’s like Sharia law for capitalism!”

“Next week is my favorite day of the year,” Black stated, but he wasn't talking about Thanksgiving. Instead, it's Black Friday because if you “trample a guy on a Tuesday afternoon, you get charged with assault. But do it in a Walmart on Black Friday, you get a PS4. But this year,” he noted, “something about Black Friday is twisting everyone's panties.” ...

The most disturbing clip came from Steve Doocy on the Fox & Friends morning program, who quoted an email from a viewer as stating: “You have got to be kidding me. … Just go to work. You can celebrate by eating a turkey sandwich while on break. [I] did it for years and was well compensated.”

“Sure, Thanksgiving is just as good eating a cold sandwich alone in the back of a Kmart,” Black snarled. “You don't even need cranberry sauce. You can season it with your tears.”

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November 28, 2014 in Books, Celebrity Tax Lore, Tax | Permalink | Comments (1)

Weekly Tax Roundup

 

November 28, 2014 in Tax, Weekly Tax Roundup | Permalink | Comments (1)

Weekly Legal Education Roundup

November 28, 2014 in Legal Education, Weekly Legal Education Roundup | Permalink | Comments (0)

Weekly SSRN Tax Roundup

The IRS Scandal, Day 568

IRS Logo 2Wall Street Journal:  ‘Lost’ IRS Emails Found: An Investigator Locates What the Tax Agency Claimed Had Vanished:

The Democrats’ midterm shellacking was in part a referendum on competence, which leads, naturally, to the all but unreported news that the IRS never “lost” emails after all. IRS Commissioner John Koskinen is pulling off the impossible task of destroying what little credibility that bureaucracy has left.

Treasury Department Inspector General Russell George recently informed Congress that his forensic investigation has turned up as many as 30,000 emails from the account of former IRS Exempt Organizations Director Lois Lerner—emails the IRS has insisted were destroyed. The emails cover the crucial period from January 2009 through June 2011 when the IRS was ramping up its targeting of conservative nonprofits.

Mr. Koskinen—hired nearly a year ago to clean up the IRS—has been at the center of that delay. In June the IRS buried in a letter to the Senate Finance Committee the bombshell news that nearly two years of Lerner emails were missing because her hard drive had crashed. This malfunction conveniently happened about 10 days after Congress alerted the IRS that it was looking into claims the agency was harassing conservative groups.

It later emerged that Mr. Koskinen had known about these missing emails in April—but hadn’t told Congress. He informed Congress only after a court case revealed the Lerner email record was incomplete.

Mr. Koskinen claimed in June that his agency had done everything humanly possible to recover the pesky documents. ... We can only imagine Mr. Koskinen’s shock in September when the Treasury IG said it had found 760 tapes that might hold Lerner emails. Or his further surprise when it took only a few weeks to identify and extract the specific Lerner documents—out of 250 million backup emails.

And we can only imagine Mr. Koskinen’s apology for his agency’s email failure—since he hasn’t given one. In response to the emails’ miraculous reappearance, the IRS explained: “The IRS welcomes TIGTA’s independent review and expert forensic analysis. Commissioner Koskinen has said for some time he would be pleased if additional Lois Lerner emails from this time frame could be found.”

This is an extraordinary statement, in that it suggests the only way an agency can be held accountable for producing subpoenaed documents is if an outsider tosses the joint. Either the IRS didn’t bother to investigate these tapes or, more alarming, it did and chose not to produce the results.

The IG is turning over the emails to the IRS, which is supposed to redact sensitive tax information before sending them to Congress. Mr. Koskinen needs to end the IRS stonewalling and turn the records over with dispatch without covering up incriminating evidence.

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November 28, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, November 27, 2014

What Tax Profs Are Thankful For

Thanksgiving
  • Jordan Barry (San Diego):  "I have so much to be thankful for. I am thankful for my brilliant and beautiful wife Emily, my loving family, and my wonderful friends. I’m also thankful for my job—and for tenure, which I received this past year. "
  • Paul Caron (Pepperdine):  "I am thankful for my beautiful wife, daughter, son, and dog, and that three of them are gainfully employed."
  • Mirit Eyal-Cohen (Alabama):  "This year I am grateful for the colleagues I have had in the past few years and my new colleagues at the present."
  • Bridget Crawford (Pace):  "Democracy, the right to peaceful protest, and university presses."
  • Cliff Fleming (BYU):  "In August 2011 my wife Linda learned that she had aggressive uterine cancer and that if she proved to be in the wrong tail of the bell curve, she would pass within 12 months. So we consider ourselves very blessed that we were able to celebrate our 50th wedding anniversary in June 2014 and that Linda is well enough to have traveled to Europe twice with me in 2014 and now to be preparing for a full-bore, big family Thanksgiving dinner. We live on the bubble between quarterly MRIs but are grateful for each additional day."
  • Victoria Haneman (Concordia):  "I am thankful for so many things in 2014: publication of Making Tax Law with co-author Dan Berman, a new position at a school with incredibly engaged students and a great selection of farm-to-table restaurants, and a baby girl on the way."
  • David Hasen (Colorado):  "I give thanks that a holy God (Isaiah 6:3-5) provides a way of salvation for us in His Son (Romans 10:9)."
  • Stephanie Hoffer (Ohio State):  "I am so grateful for my wonderful colleagues and my happy little family!"
  • Sagit Leviner (Ono):  "I am thankful for my little pumpkin."
  • Francine Lipman (UNLV):  "Thankful to be at UNLV, where we embrace diversity and understand that education is the key, door, path, and answer."
  • Ed Lyons (Oklahoma City):  "I am thankful because the more I focus my mind on the goods and the good people that surround me, the more they seem to multiply: 'For to every one who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away' (Matthew 25:29)."
  • Jim Maule (Villanova):  [See here.]
  • John Plecnik (Cleveland State):  "I am thankful for the chance to serve my students at Cleveland State as their professor, and my neighbors in Willoughby Hills as their Councilman."
  • Richard Winchester (Thomas Jefferson):  "I am thankful for the students who appreciate the work that I do."

November 27, 2014 in Legal Education, Tax | Permalink | Comments (0)

WSJ: Law School Deans Question Sharp Drop in Bar Exam Scores

Following up on my previous posts:

Wall Street Journal, Law School Deans Question Sharp Drop in Bar Exam Scores:

Law schools are turning up the heat on the nation’s leading bar exam group over what they say is an inexplicable drop in student scores on the most recent test.

Dozens of law school deans across the country attached their names to a letter sent to the National Conference of Bar Examiners on Tuesday demanding a “thorough investigation of the administration and scoring” of the July 2014 bar exam. ...

The NCBE, the Wisconsin-based non-profit that prepares widely used standardized portions of the bar exam, says the results of the July test are troubling, but says the tests aren’t to blame. The group says students this year just didn’t do as well as previous years’ cohorts.

Law schools — many of which are straining to keep up enrollment in a time of sagging demand for law degrees — have bristled at the response.

The letter signed by roughly 80 deans hailing mostly from middle-ranked and public institutions, wants the NCBE to back up its claim with another review and disclosure of its methodology. ...

“We take this very seriously,” the longtime president of the National Conference of Bar Examiners, Erica Moeser, told Law Blog on Wednesday. “It calls for an institutional response, which, of course, I’ll supply.” Ms. Moeser said her group has checked and rechecked its data and has found nothing awry on its end. ...

Deans from University of Connecticut, Case Western, Wake Forest, University of California-Hastings, and University of Washington were among those who added their names. [Although Deans of 40% of American law schools signed the letter, only 14% of the Deans at Top 50 law schools did so (BYU, Colorado, Fordham, Texas, and Utah, in addition to Washington and Wake Forest) -- none of the T14, and only one of the Top 20].

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November 27, 2014 in Legal Education | Permalink | Comments (5)

Taxing Two Thanksgiving Day Gentlemen

TwoForbes:  Taxing Two Thanksgiving Day Gentlemen, by Robert W. Wood:

A central theme of the Bible is that it is better to give than to receive, even when you give up a great deal. Two Thanksgiving Day Gentlemen, a short story masterpiece by O. Henry, gives this theme a twist. A vagabond—today we would call him homeless—is feted each Thanksgiving Day to a grand dinner in a posh New York eatery by a successful businessman. But on this Thanksgiving Day, each man hides his true circumstances.

The businessman is down on his luck so starves for two days in order not to disappoint the vagabond. Ironically, the vagabond is flush, his stomach bursting from two other holiday meals from other well-wishers. Forcing down each bite, he plays along knowing how important this ritual is to his kindly rich benefactor. Only O. Henry could make us feel what each feels as we smile ruefully at the comedy playing out.

In this crowdfunding era, individual acts of kindness still count, even if they don’t produce a tax break. That’s right, the charity the two Thanksgiving gentlemen exchange isn’t tax deductible, since you can’t give directly and get a deduction.

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November 27, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

The IRS Scandal, Day 567

IRS Logo 2CP Politics:  IRS Scandal a Priority for New House Oversight Committee Chair:

Rep. Jason Chaffetz, R-Utah, will focus on the IRS scandal as the House's new head executive watchdog. He was appointed as the next chairman of the House Oversight and Government Reform Committee on Tuesday.

Replacing the term-limited Rep. Darrell Issa, R-Calif., the 47-year-old Chaffetz will now chair the committee that has been a leading force behind the House investigation into the scandal involving the Internal Revenue Service's targeting of conservative and Christian groups. ...

Chaffetz' appointment could spell continued trouble for the IRS. Fox News reported that Chaffetz "vowed" to make the probe into the IRS's practice of stalling 501(c) tax-exempt applications of conservative and religious political action groups the "centerpiece of his chairmanship."

Along with Issa's leadership, Chaffetz has been an influential part of the Committee's IRS investigation. In the Spring, Chaffetz called for an independent special prosecutor when the IRS announced that emails from IRS Director of Exempt Organizations Unit, Lois Lerner, had been lost in a 2011 hard drive and no backup copies were made to turn over for review.

Chaffetz said he sees a pattern in the coincidental loss of evidence when it comes to federal agencies turning over documents when pressed in investigations.

"This is a recurring theme, from Fast and Furious, right down to Benghazi and now this IRS. It's the same basic drumbeat," Chaffetz told Sean Hannity earlier this year. "I think they are trying to play out the clock."

Numerous conservative political groups have accused the IRS of stalling their tax-exempt applications for political reasons. When a political action group does not receive tax-exempt status, potential donors can not be guaranteed that their donations will be eligible for tax write-offs. The IRS' stalling of the applications has cost groups thousands in donations and grants, while other groups have have not been able to survive. A communications director for a Texas-based conservative group told the Christian Post in October that the IRS's stalling cost his group $80,000 in donations and grants.

"The IRS, more than anybody else, cannot be a political organization. But is what it looks like it is has been like lately," Chaffetz told Fox News' Sunday Morning Futures with Maria Bartiromo in June. ...

The House Ways and Means Committee, which is also involved in the IRS investigation, will also have a new chair as Rep. Paul Ryan, R-Wis., was appointed as the committee's chairman on Tuesday. In a statement, Ryan said his committee will work to "hold the IRS accountable."

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November 27, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, November 26, 2014

Law Professor Blogs Network in ABA Blawg 100 and ABA Blawg Hall of Fame

ABA Blog 100Kudos to our Law Professor Blogs Network bloggers named to the 2014 ABA Blawg 100 -- "the 100 best Web sites by lawyers, for lawyers, as chosen by the editors of the ABA Journal":

  • EvidenceProf Blog, edited by Colin Miller (South Carolina):  "Every weekday, law professors—primarily the University of South Carolina's Colin Miller—post on the very latest rulings regarding the admissibility of evidence in criminal cases and what sorts of lines of questioning should be permitted at criminal trials. He also notes differences between the federal rules of evidence and the rules of various states. Occasionally, he will comment on whether he thinks courts have reached the right outcomes in these evidence cases or note fishy behavior by prosecutors."
  • Wills, Trusts & Estates Prof Blog, edited by Gerry W. Beyer (Texas Tech):  "Death and taxes are certainties for which we may plan. But quite a few of life's uncertainties can be faced with equanimity as well, if we just make some prudent preparations, Texas Tech law professor Gerry W. Beyer tells us. His blog provides useful advice on doing so, along with book and article summaries and thoughtful news analysis. Entries are concise and accessible, even to those who are unversed in estate law topics."

Hall of Fame 2Two Law Professor Blog Network blogs are in the ABA Blawg 100 Hall of Fame:

In 2012, we established the Blawg 100 Hall of Fame for those blogs which had consistently been outstanding throughout multiple Blawg 100 lists. The inaugural list contained 10 inductees; this year, we added 10 more, bringing the total to 30.

  • Legal Profession Blog, by Alan Childress (Tulane), Michael Frisch (Georgetown), and Jeff Lipshaw (Suffolk):  "The posts here often have us wondering, 'What were they thinking?' If a lawyer strays from ethical boundaries, the professors who blog here are quick to pick up on the trail of any discipline with to-the-point, snark-free dispatches."
  • TaxProf Blog, edited by Paul Caron (Pepperdine): "Paul Caron, a professor at Pepperdine University School of Law, covers tax reform in the news and scholarship related to U.S. tax law, and he notes celebrity tax disasters. But we like TaxProf at least as much for Caron’s exhaustive coverage of news and debates covering legal education. He became the sole owner of the Law Professor Blogs Network and a makeover of that group of blogs soon followed."

November 26, 2014 in Legal Education | Permalink | Comments (0)

Are You a Jerk at Work?

Columbia Press Release,  Are You Seen as a Jerk at Work? A New Study Reveals That Many People Are Oblivious to How They Come Across to Counterparts and Colleagues:

The JerkWhen Jill Abramson was ousted from her position as the executive editor of The New York Times, it was reported that she was, among other things, too “pushy.” But did Abramson—who has also been described by the media as “polarizing” and “brusque”—know during the course of her tenure that others viewed her as being overly assertive? A new study from the Columbia Business School suggests that there’s a great chance she didn’t.

“Finding the middle ground between being pushy and being a pushover is a basic challenge in social life and the workplace. We’ve now found that the challenge is compounded by the fact that people often don’t know how others see their assertiveness,” said Daniel Ames, professor of management at Columbia Business School and co-author of the new study. “In the language of Goldilocks, many people are serving up porridge that others see as too hot or too cold, but they mistakenly think the temperature comes across as just right—that their assertiveness is seen as appropriate. To our surprise, we also found that many people whose porridge was actually seen as just right mistakenly thought their porridge came off as too hot. That is, they were asserting themselves appropriately in the eyes of others, but they incorrectly thought they were pushing too hard.”

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November 26, 2014 in Legal Education, Tax | Permalink | Comments (1)

Hoenig: What's Wrong With Trafficking in NOLs?

Tax Analysys Logo (2013)Mark Hoenig (Weil, Gotshal & Manges, New York), Trafficking in Net Operating Losses: What's So Bad?, 145 Tax Notes 919 (Nov. 24, 2014):

Hoenig examines the almost century-long history of Congress’s efforts to allow tax losses and limit their transfer. He explores the rationale for those efforts, assesses the system now in place, and asks whether an alternative set of rules might better serve policy and the economy.

November 26, 2014 in Scholarship, Tax, Tax Analysts | Permalink | Comments (0)

The IRS Scandal, Day 566

IRS Logo 2Washington Examiner:  2,500 New Documents ID'd in White House-IRS Taxpayer Harassment Cases:

In a shocking revelation, the Treasury Inspector General has identified some 2,500 documents that “potentially” show taxpayer information held by the Internal Revenue Service being shared with President Obama’s White House.

The discovery was revealed to the group Cause of Action, which has sued for access to any of the documents. It charges that the IRS and White House have harassed taxpayers.

In an email from the Justice Department’s tax office, an official revealed the high number of documents, suggesting that the White House was hip deep in probes of taxpayers, likely including conservatives and Tea Party groups associated with the IRS scandal.

Power Line:  The IRS Scandal Rears Its Head:

The Obama Administration’s IRS scandal is multi-faceted. In addition to the persecution of conservative non-profits by Lois Lerner et al., the question has been percolating for some years whether Obama’s IRS has transferred confidential taxpayer information to Obama’s White House in violation of federal criminal laws. The issue first arose when Austin Goolsbee of the president’s Council of Economic Advisers told reporters that he had information about Koch Industries that could only have come, illegally, from confidential IRS files. When questions were asked, the administration immediately clammed up.

Years later, the judicial system may be poised to expose another layer of Obama corruption. A group called Cause of Action began a Freedom of Information Act lawsuit against the Department of the Treasury, and for several years, your taxpayer dollars have funded the administration’s cover-up.

But nothing lasts forever, and a federal court in Washington, D.C. has finally overruled the Treasury Department’s frivolous objections, and ordered Treasury to respond to Cause of Action’s request for documents. That request relates to the Department’s Inspector General’s investigation–which began a long time ago, and probably has long been concluded–and asks for “[a]ll documents pertaining to any investigation by [TIGTA] into the unauthorized disclosure of [26 U.S.C.] §6103 ‘return information’ to anyone in the Executive Office of the President.”

That is an extraordinarily narrow request for documents which, one would think, could have been responded to in a few hours. But the administration’s evasion has gone on for years. Now that the court has ordered the administration to respond, its lawyers have asked for more time

Cause of Action:  Press Release:

Monday the Treasury Inspector General for Tax Administration (TIGTA) informed Cause of Action that there exist nearly 2,500 potentially responsive documents relating to investigations of improper disclosures of confidential taxpayer information by the IRS to the White House. This disclosure, coming only after Cause of Action sued TIGTA over its refusal to acknowledge whether such investigations took place, and after the Court ordered TIGTA to reveal whether or not documents existed, signals that the White House may have made significant efforts to obtain taxpayers’ personal information. This disclosure, following on the heels of TIGTA’s admission that it recovered 30,000 “lost” Lois Lerner emails, renews Cause of Action’s concerns about the decaying professionalism of, and apparent slip into partisanship by, IRS’s senior leadership.

Cause of Action will continue to pursue the truth and to work for IRS accountability.

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November 26, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, November 25, 2014

Alarie Presents Policy Preferences and Expertise in Canadian Tax Adjudication Today at Columbia

AlarieBenjamin Alarie (Toronto) presents Policy Preferences and Expertise in Canadian Tax Adjudication, 62 Canadian Tax J. ___ (2014) (with Andrew Green (Toronto)), at Columbia today as part of its Tax Policy Colloquium Series hosted by Alex RaskolnikovDavid Schizer, and Wojciech Kopczuk:

Both taxpayers and governments struggle to stay on top of the various complex sources of tax law and to apply them in a myriad of different contexts. Given the potential for confusion and disagreement (not to mention the sometimes very large financial stakes involved) it would make sense to have a process for taxpayers to appeal government decisions to an expert body that can provide authoritative, reasoned and rational solutions to tax disputes. For this reason Canada, like the United States, has a specialized tax court dedicated to hearing appeals from decisions of the tax administration. Yet there is some evidence in both Canada and the US that judges in tax cases may be influenced by their own personal policy preferences or other factors extraneous to the “true” legal merits in deciding appeals from decisions of the tax administration. This paper examines in more detail appeals from tax assessments in Canada to understand the relative influence of judicial tax expertise and the policy preferences of judges on appeals to the Tax Court of Canada and the Federal Court of Appeal.

Our analysis reveals three main results: (1) policy preferences of judges matter, but not that much; (2) resources matter — a lot; and (3) there are dynamics relating to affirmation of appeals that are difficult to explain, although a desire to avoid the apprehension of bias is possible.

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November 25, 2014 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

TIGTA: IRS Still Has Not Taken Necessary Steps to Prevent Billion Dollar Prisoner Tax Fraud

TIGTA The Treasury Inspector General for Tax Administration today released Prisoner Tax Refund Fraud: Delays Continue in Completing Agreements to Share Information With Prisons, and Reports to Congress Are Not Timely or Complete (2014-40-091):

Refund fraud associated with prisoner Social Security Numbers remains a significant problem for tax administration. The number of fraudulent tax returns filed using a prisoner’s Social Security Number that were identified by the IRS increased from more than 37,000 tax returns in Calendar Year 2007 to more than 137,000 tax returns in Calendar Year 2012. The refunds claimed on these tax returns increased from $166 million to $1 billion. ...

TIGTA found that the IRS has not yet shared fraudulent prisoner tax return information with Federal or State prison officials. TIGTA also found that the required annual prisoner fraud reports to Congress are not timely and that the reports do not address the extent to which prisoners may be filing fraudulent tax returns using a different individual’s SSN. TIGTA also followed up on a condition identified in a past review and found that IRS processes still do not ensure that all tax returns filed using a prisoner Social Security Number are assigned a prisoner indicator.

Figure 1

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November 25, 2014 in IRS News, Tax | Permalink | Comments (0)

Ranking of School Does Not Affect Quality of Teaching

Chronicle of Higher Education, Colleges’ Prestige Doesn’t Guarantee a Top-Flight Learning Experience:

NSSE Logo[T]his year’s National Survey of Student Engagement [Nessie], which was released on Thursday, ... took a stab at identifying educational quality on the institutional level, an attribute that is as important to higher education as it is hard to define. The survey collected data from 355,000 freshmen and seniors at 622 institutions in the spring.

Nessie researchers, who are based at Indiana University at Bloomington, created two indicators for quality. One, student-faculty interaction, asked students how often they talked with faculty members about career plans, course topics, or other ideas outside class, among other questions. The other measure, effective teaching practices, distilled student perceptions of how often their instructors clearly explained course goals and requirements, taught in an organized way, used examples to illustrate difficult points, or provided feedback.

The results were surprising, especially when they were grouped based on how selective a college is. ... [R]esearchers analyzed the measures of interaction and teaching according to selectivity, as defined by Barron’s Profiles of American Colleges.

The average student, the researchers found, experienced widely different degrees of educational quality in different colleges within the same category of prestige. And, in all but a few cases, the categories of selectivity had no meaningful relationship to the indicators of teaching and interaction. ...

"Conventional wisdom says that the more selective an institution is, the better it is going to be," Alexander C. McCormick, director of Nessie, said in an interview. "That’s not systematically true with these two measures." ...

NSSE

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November 25, 2014 in Law School Rankings, Legal Education | Permalink | Comments (2)

Who Pays for Employee Perks at High-Tech Companies?

CBS Moneywatch, Who Pays for Employee Perks at High-Tech Companies?:

Google MealBeginning in the 1990s, the high-tech industry has gained a reputation for offering employees not only generous pay, but also lavish, and even outlandish, perks. Massages, free food and even napping pods were but a few of the benefits companies lavished on engineers in hopes of retaining their talents.

Despite the dot-com bust and the Great Recession, financial crises that ushered in new age of austerity -- and massive layoffs -- in many sectors, tech companies today are showing even more largess with engineers and other key workers. In fact, there's a new job category: people in charge of devising newer and more effective treats for these elites. ...

The copious benefits tech players are bestowing is starting to raise questions about who foots the bill for the perks. The IRS, for one, has ruled that free food for employees represents a taxable benefit. A Wall Street Journal analysis concludes that workers who get two meals a day courtesy of their company could be on the hook for an additional $4,000 to $5,000 in taxes.

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November 25, 2014 in Tax | Permalink | Comments (0)

Crowd-Sourced Interview of Judge Richard Posner

PosnerRonald K.L. Collins (University of Washington), The Maverick – A Biographical Sketch of Judge Richard Posner: Part I:

Below is the first installment in a multi-part series of posts on Seventh Circuit Judge Richard Posner. The first two installments consist of an unconventional biographical profile of the Judge. These posts will be followed by a series of posts consisting of the Judge’s candid and often unexpected responses to numerous questions I posed to him along with those of 24 noted legal figures. In the process, Judge Posner bursts into the breach with frankness about his views on privacy, the exclusionary rule, NYT v. Sullivan, intellectual property rights, law and economics, constitutional interpretation, legal education and scholarship, and the politicization of the judiciary. With Posnerian resolve, he also speaks of his own life, his onetime thoughts on being a Supreme Court Justice, his cherished feline, and even his favorite rock stars. Given all that, we selected “Posner on Posner” as the title for this series.

November 25, 2014 in Legal Education | Permalink | Comments (0)

Legal Services Sector Shrank 2.9% in 2013

Matt Leichter, Commerce Dept.: Legal Services Sector Contracts (Again) in 2013:

Earlier this month the Commerce Department’s Bureau of Economic Analysis (BEA) updated its GDP by industry data. The chief finding for law-watchers is that in 2013 the legal services industry shrank by 2.9 percent. Ouch. The legal services industry includes all private law firms, and it employs about half of all lawyers. Meanwhile GDP grew by 2.2 percent, meaning that once again, the shriveling legal sector is being outdone by the rest of the economy.

Percent Change Real Value Added by Industry

November 25, 2014 in Legal Education | Permalink | Comments (3)

IRS Hires Outside Law Firm to Audit Microsoft

MicrosoftBloomberg, Microsoft Sues IRS Over Law Firm Contract Tied to Audits:

Microsoft sued the IRS seeking information about its contract with a law firm tied to audits of the software maker’s transactions with subsidiaries.

Microsoft wants the complete government contract between the IRS and Quinn Emanuel Urquhart & Sullivan LLP, the firm assisting the agency in examining federal income tax returns for 2004 through 2009, according to the complaint filed today under the Freedom of Information Act in federal court in Washington. The IRS “unlawfully withheld” the information, Microsoft said.

Microsoft submitted a public records request on Sept. 22 seeking information on the contract entered in May for $2.2 million, according to the filing. To date, the IRS hasn’t disclosed the records, Microsoft said. ...

The agency is examining Microsoft’s “transfer pricing,” transactions between the company and its offshore subsidiaries, according to the complaint.

November 25, 2014 in IRS News | Permalink | Comments (0)

2014 Moot Court Rankings

Moot Court2014 Moot Court Rankings:

1.  Florida Coastal
2.  Georgetown
3.  UC-Hastings
4.  South Texas
4.  Texas Tech
6.  Georgia
7.  Chicago-Kent
8.  Seton Hall
9.  Miami
10. Loyola-Chicago
11.Oklahoma
12. Stetson
13. Houston
14. Mississippi
15. Faulkner
16. Emory
17. George Washington
18. Wisconsin
18. Regent
20. San Diego
20. Georgia State
22. Hawaii
23. St. John's
23. William Mitchell
25. Pepperdine

November 25, 2014 in Law School Rankings, Legal Education | Permalink | Comments (0)

Tax Farming: Experimental Evidence on Performance Pay for Tax Collectors

Adnan Q. Khan (London School of Economics), Asim I. Khwaja (Harvard) & Benjamin A. Olken (MIT), Tax Farming Redux: Experimental Evidence on Performance Pay for Tax Collectors:

Performance pay for tax collectors has the potential to raise revenues, but might come at a cost if taxpayers face undue pressure from collectors. We report the first large-scale field experiment on these issues, where we experimentally allocated 482 property tax units in Punjab, Pakistan into one of three performance-pay schemes or a control. After two years, incentivized units had 9.3 log points higher revenue than controls, which translates to a 46 percent higher growth rate. The scheme that rewarded purely on revenue did best, increasing revenue by 12.8 log points (62 percent higher growth rate), with little penalty for customer satisfaction and assessment accuracy compared to the two other schemes that explicitly also rewarded these dimensions. Further analysis reveals that these revenue gains accrue from a small number of properties becoming taxed at their true value, which is substantially more than they had been taxed at previously. The majority of properties in incentivized areas in fact pay no more taxes, but do report higher bribes. The results are consistent with a collusive setting in which performance pay increases collector's bargaining power over taxpayers, who either have to pay higher bribes to avoid being reassessed, or pay substantially higher taxes if collusion breaks down.

(Hat Tip: Bruce Bartlett.)

November 25, 2014 in Scholarship, Tax | Permalink | Comments (1)

The IRS Scandal, Day 565

IRS Logo 2Glenn Reynolds (Tennessee), More on Those 'Found' Emails From Lois Lerner:

I’m cynical enough to suspect that they’ve been found for a long time, and the delay was to (1) get past the midterms; and (2) allow someone to vacuum the archives of any truly incriminating material.

American Thinker:  The Zelig Presidency:

For those familiar with Woody Allen movies, one of his more unusual ones was Zelig, a movie done in a black & white, semi-documentary form about a man played by Woody Allen who has a rare chameleon-like disorder where he takes on the physical and personality traits of those who he is in close proximity. The movie stands out for its uniqueness but is also a commentary on personality, how a person gets one and how it is defined, and is it even possible to be original anymore, especially when it comes to political, artistic and intellectual greatness.

In the case of Obama, he seems to be the Zelig president. He's been taking on the characteristics and actions of past presidents while displaying no originality. He is Nixon using the IRS to target his political enemies. Here he succeeded where Nixon did not. Nixon's IRS director refused to carry out his orders when instructed to do his bidding but Lois Lerner perfected political targeting to an art. (Her problem was that she got caught.)

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November 25, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, November 24, 2014

Akron Tax Journal Publishes New Issue

Akron LogoThe Akron Tax Journal has published Volume 29 (2014):

November 24, 2014 in Scholarship, Tax | Permalink | Comments (0)

Krawiec: Selling The Starred Footnote

Kimberly D. Krawiec (Duke), Selling The Starred Footnote:

I’m late to the game in blogging about this, but I just found out about it on Friday at a conference on the Ethical Limits of Markets hosted by the Institute For The Study of Markets and Ethics at Georgetown University’s McDonough School of Business (about which I’ll have more to say later). Jason Brennan and Peter Jaworski are selling acknowledgements in the preface of their book Markets without Limits, which will be published by Routledge Press, most likely in late 2015 or early 2016.

The book answers the question “Are there some things which you permissibly may possess, use, and give away, but which are wrong to buy and sell?” in the negative, in contrast to the numerous books already written on the topic which take the contrary position. Brennan and Jaworski are selling three tiers of acknowledgements: Silvermint Tier, Platinum Tier, and Gold Tier (The Silvermint Tier is so named because philosophy and women’s studies professor Daniel Silvermint is paying to have the highest tier named after him.)

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November 24, 2014 in Legal Education | Permalink | Comments (0)

NY Times: A Push for Legal Aid in Civil Cases Finds Its Advocates

New York Times, A Push for Legal Aid in Civil Cases Finds Its Advocates:

ShriveFree legal assistance in noncriminal cases is rare and growing rarer. A recent study in Massachusetts found that two-thirds of low-income residents who seek legal help are turned away. Nationally, important civil legal needs are met only about 20 percent of the time for low-income Americans, according to James J. Sandman, president of the Legal Services Corporation, a federal agency that finances legal aid groups. ...

Established in 2011, the [Eviction Asistance Center in Los Angeles] is part of an experiment by the California courts on the benefits of providing more lawyers and legal advice to low-income people in civil cases such as child custody, protective orders against abusers, guardianship and, most commonly, evictions. 

“We’re trying to level the playing field,” said Neal S. Dudovitz, the executive director of Neighborhood Legal Services of Los Angeles County, a group that manages the eviction center in the downtown courthouse. With funds from the Shriver project, as the experiment is known, supporting about 16 lawyers from four legal aid groups, the center is providing full or partial assistance to one-third of the 15,000 tenants who face evictions each year in this courthouse alone.

The California initiative and similar projects in New York, Massachusetts and elsewhere aim not only to help more needy clients but also to improve guidelines for the unavoidable and often painful legal triage: In a sea of unmet needs, who most needs a lawyer, who can do with some “self-help” direction? What happens to those who must be turned away?

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November 24, 2014 | Permalink | Comments (0)

Grewal: How King v. Burwell Jeopardizes the 2014-15 ACA Enrollment Season

Andy Grewal (Iowa), How King v. Burwell Jeopardizes the 2014-2015 ACA Enrollment Season:

Commentators have expressed concern that a government loss in King v. Burwell, which addresses whether taxpayers can enjoy tax credits for policies purchased on federal exchanges, will lead to a "death spiral." Because consumers will no longer enjoy tax credits, they would stay away from the federal exchanges, which would lead to higher prices, which would discourage more consumers, and so on.

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November 24, 2014 in Scholarship, Tax | Permalink | Comments (0)

Young Lawyers Seek to Shake Up Legal Profession With Mobile Apps

Boston Globe, Young Lawyers Seek to Shake Up Legal Profession With Mobile Apps:

AppsWilliam Palin is a 32-year-old lawyer who passed the bar exam in 2013. But it didn’t take him long to wonder why, when the rest of the world is increasingly conducting business on cellphones and tablets, the legal profession is so tied to paper, desktop computers, and e-mailed Microsoft Word documents.

So as a child of the digital age, he decided to act, joining a growing group of young, tech-savvy lawyers dedicated to developing technology to deliver legal services more efficiently.

Palin taught himself how to write code for mobile applications. He built two apps to speed up how lawyers work with each other and their clients. And in December he’s launching a Boston-Cambridge branch of a nationwide group called Legal Hackers, young lawyers focused on creating and adopting technological tools. ...

While many attorneys see mobile technology as a way to better serve existing clients and recruit new ones, the partners at major law firms play a big role in how aggressively the law business will adapt. And those established practitioners may be leery of adopting some new technologies for fear that will lead to breaches of confidentiality.

Legal Hackers hopes to bridge that generational divide — and the group seems to be making progress. In August, at the American Bar Association’s annual meeting, one panel was titled “Cracking the Code: Everything You Wanted to Know About Coding, Open Data & More But Were Afraid to Ask.” ...

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November 24, 2014 in Legal Education | Permalink | Comments (0)

Stop Bullying Old Professors

BullyingFollowing up on Tuesday's post, The Forever Professors: Academics Who Don’t Retire Are Greedy, Selfish, and Bad For Students:  Slate, Quit Picking on Old Professors: Bullying Boomers Into Retirement Won’t Help the Sad State of Higher Education in This Country, by Rebecca Schuman:

This week, academia is in a frenzy—well, an erudite tizzy—over an op-ed in the Chronicle of Higher Education by recently retired art professor Laurie Fendrich. In the piece, Fendrich, who’s 66, lauds her own decision to leave her position at Hofstra—and characterizes her aging colleagues as doddering dinosaurs who are clogging up the academic pipeline.

As in other professions, baby boomers “hanging on” past retirement age is a hot-button issue in higher education—and it’s easy to see why. In the university, the over-65s are the final generation for whom teaching college has provided a stable, (somewhat) respected, remunerative middle-class existence. They’ve had benefits and job security for longer than most of their younger colleagues have been alive. And they didn’t have to work nearly as hard to get all that—back in the ’60s and ’70s, when most of them began their careers, requirements for hiring and tenure were a fraction of what they are now. ...

Here’s where [Fendrich's] (or, at 66, almost dead) wrong. Students may benefit more from a sagacious senior than they do from many a thirsty, young tenure-track careerist. After all, the Old, with his tenure firmly in hand and few concerns about his future, actually has time for his students; that 33-year-old is on the terminal brink of nervous collapse under the weight of too much research expectation. Perpetually on the market for a more prestigious job, she’s been counseled over and over again not to “waste” too much time on teaching. ...

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November 24, 2014 in Legal Education | Permalink | Comments (5)

TIGTA: 50% of IRS Employees With Outside Jobs Do Not Obtain Required Approval; 93% of Employee Computer Records Are Out of Date

TIGTA The Treasury Inspector General for Tax Administration has released Controls Over Outside Employment Are Not Sufficient to Prevent or Detect Conflicts of Interest (2014-10-073):

Generally, IRS employees are allowed to engage in outside employment or business activities after obtaining written approval. Effective controls over outside employment can reduce the risk of conflicts of interest that could result in decisions that are not in the best interest of American taxpayers. ...

IRS records indicate that, in Calendar Year 2011, nearly 3,000 of the more than 6,000 active, full-time IRS employees who held jobs or participated in business activities outside the IRS did not obtain documented approval, as required by Department of the Treasury regulations and IRS policies. IRS Human Capital Office management was generally not aware of the number of employees with unapproved outside employment because responsibility has not been assigned for overseeing the overall outside employment process. In addition, the IRS stated that it does not have authorization to use taxpayer information (e.g., Form W-2, Wage and Tax Statement) to identify employees with unapproved outside income because Internal Revenue Code Section 6103 does not clearly provide that tax data can be used for this purpose.

It will be difficult for the IRS to monitor outside employment because 93 percent of the existing records in the database used to compile outside employment requests are out of date. Moreover, approval of outside employment requests is not always documented on the database or in Official Personnel Folders, in part because of confusing and incomplete guidance.

Improving controls will be important because TIGTA identified current and former IRS employees with both actual and potential conflicts of interest. One employee pled guilty to engaging in a criminal conflict of interest for accessing taxpayer information for the purpose of conducting a private tax and accounting business, 44 IRS employees prepared tax returns for compensation (a prohibited practice), and TIGTA’s analysis identified 20 employees with a high risk of potential conflicts of interest who received outside income without documented approval. For example, four employees operated businesses with annual gross receipts ranging from more than $500,000 to more than $7 million, and six employees had wages of more than $50,000 from outside of the IRS. Significant outside income could impact the employee’s effectiveness on the job.

November 24, 2014 in IRS News, Tax | Permalink | Comments (2)

'These [Law] Jobs are Going Boys and They Ain’t Coming Back'

SpringsteenDavid Barnhizer (Cleveland State), “These Jobs are Going Boys and They Ain’t Coming Back” [Bruce Springsteen, My Hometown]:

Lawyers and law schools reflect the needs of society and the power and structure of our economic system. At this point lawyers and law schools need to adapt the ways in which they “do business” or become uncompetitive. Lawyers and law schools are faced with economic and technological “tsunamis” in the nature of Joseph Schumpeter’s concept of “creative destruction” or Nikolai Kondratiev’s periodic “waves” of fundamental change. These transformational “events” generate non-linear shifts in form, process and needs that fundamentally alter how the system works. These dynamic forces are now destroying some traditionally organized institutions while empowering others and forcing the invention of new institutions and altered forms of traditional ones.

Projections of the future employment opportunities of lawyers tend to be both linear and crude, relying primarily on taking “what is” or what “has been” and assuming that some variation of that model will be what occurs in the future after what has been described as the “lawyer surplus” has been absorbed. Such assumptions and projections provide a degree of comfort to those whose livelihoods and careers depend on the stability of existing institutions and patterns of organization. Unfortunately, in the situation we now inhabit the assumptions are false and the projections inaccurate. The most recent “tweaking” of lawyer employment projections by the Bureau of Labor Statistics that raised its own estimates from around 23,000 to 40,000 will make many people feel better for a few moments but the fact is that it is almost certainly wrong.

Matt Leichter recently offered an analysis on whether the employment situation was getting better or worse. Unfortunately the answer Leichter offered was summed up in his report that the situation was becoming considerably worse rather than improving. In linking to Leichter’s report Paul Caron noted that the surplus was worsening and that there would be three new lawyers chasing each available job by 2022.

The fact is that the worlds of lawyers and law schools are “spinning on their axes” and undergoing transformations that are penetrating the very core of the activity. Dramatic effects are already being felt but even more striking changes are in store. One individual employed by a company seeking to understand (and capitalize) on the shifting context of law practice began his assessment with an observation of the current state of the legal profession. He described it as one in which: “The current state of the legal services industry is one of fear, denial, distrust and unmet expectations. Lawyers are asking if they ever thought law practice would reveal such fault lines in purpose, mission and economic opportunity. … Massive job losses, significant declines in legal service revenues and increased hostility toward the business model on which legal services are based are mere warning signs of a tsunami of change rapidly approaching the shore. What remains beyond debate is that the business of law has lost its luster and the legal industry landscape is littered with unmet expectations on the part of clients and lawyers alike.” Pretty dismal. ...

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November 24, 2014 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 564

IRS Logo 2Daily Caller:  How to Ensure The IRS Never Abuses Its Powers Again:

It is not so much whether or when or why the IRS abused its authority by targeting Tea Party and conservative groups. We know by now the answers are: of course, over a period of year, and to aid the re-election of President Obama.

Going forward, the most important question is: How can we prevent it from happening again? The answer may be more complicated than we think. ...

The evidence proves the IRS was used as an abusive political tool to hobble or destroy as many organizations as possible that opposed President Obama’s agenda. The partisan media may continue to suppress this fact, but the denial that it happened at all is growing more absurd by the day. Journalists raised to never trust anyone over the age of 30 now seem to accept any excuse – no matter how implausible – to explain away the scandal.

Once the problem came to light, the director of the IRS Exempt Organizations Division claimed to have “lost” her emails. At the same time, the IRS was known to sanction individuals for not maintaining seven years of receipts. Would the New York Times have accepted this excuse from the Koch Brothers? ...

[W]hat the IRS did to Tea Party organizations is tyranny personified and it cannot be ignored or forgiven, because it can happen to anyone who opposes the policies of the powerful. ...

This controversy presents us with an opportunity to remove the Internal Revenue Service from political influence altogether. Anyone who respects the separation of powers, regardless of whether they are conservative, liberal, moderate, libertarian or anything else, ought to see the wisdom in separating IRS enforcement and presidential appointments.

Appointments by the president are, by and large, intended to mirror his political decisions. The IRS, however, is different. Because of its massive power and essentially unlimited authority, it must be more than fair – it must be 100 percent non-political. Even if this is unattainable, every attempt must be made.

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November 24, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, November 23, 2014

Tax-Free Buyouts of Coaches' Contracts

Following up on my previous post, The Tax Treatment of Buyouts of Coaches' Contracts:  USA Today, Schools Buying Coaches' Contracts Instead of Buying Out:

StrongIt long has been a practice for universities that want to hire a new coach to pay the "buyout" to get him out of his contract at his old school.

The question has been, who pays the taxes?

To at least a few schools, the answer is nobody. The universities of Texas, Louisville and Alabama at Birmingham have found a way to structure deals to avoid tax implications – simply pay the coach's current school for the rights to his contract, and renegotiate it.

Using that approach, the schools say, the coach does not owe a buyout for terminating his contract because he technically doesn't terminate the contract. It transfers to his new school, which reaches a new deal with the coach, just as schools routinely renegotiate such contracts.

Thus, while Louisville received $4.375 million when coach Charlie Strong left for Texas, the money did not come from Strong. Instead, with Strong's blessing, Louisville sold his contract to Texas. Texas assumed all of that deal's rights and obligations, and agreed to pay Louisville $4.375 million, the same amount as Strong's buyout. ...

It's an approach intended to avoid taxes for coaches and the schools. Under federal tax law, it is undisputed that a payment made by an employer to meet an employee's personal obligation must be treated as taxable income to the employee. But to the schools, a buyout payment is viewed as a business expense. ...

How the IRS or a tax court would view these deals is is an open question, said Jeffrey H. Kahn, a professor at Florida State's law school. Kahn and his father, Douglas A. Kahn, a professor at the University of Michigan law school, wrote a 2007 law review article about buyouts [Tax Consequences When a New Employer Bears the Cost of the Employee's Terminating a Prior Employment Relationship, 8 Fla. Tax Rev. 539 (2007)].

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November 23, 2014 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Muller: The NCBE's Role in Declining MBE Scores and Bar Pass Rates

Following up on my previous posts (here, here, here, and here):  California released its July 2014 bar exam results on Friday:  a 48.6% overall pass rate (down 7.2 percentage points from 2013) and 61.0% first-time takers pass rate (down 6.7 percentage points from 2013).  (For more, see Vikram Amar (UC-Davis) and Dan Filler (Drexel)).  Derek Muller (Pepperdine) notes that California is the 20th state (out of 34 states that have released their results thus far) with at least a 5 percentage point bar passage rate decline:

Muller

Derek argues that neither the decline in student quality or the exam soft computer malfunction can explain these declining MBE scores and bar passage rates.

November 23, 2014 in Legal Education | Permalink | Comments (2)

Top 5 Tax Paper Downloads

The IRS Scandal, Day 563

IRS Logo 2New York Post editorial:  Silence of the Schumer:

It wasn’t so long ago Chuck Schumer was obsessing over the idea that the tax code was being abused for partisan purposes.

Back in March 2012, he and six fellow Democratic senators wrote the IRS demanding more scrutiny for 501(c)4 groups who claimed they were involved in “social welfare” but were “devoted chiefly to political election activities who operate behind a facade of charity work.”

Later, the IRS started singling out conservative organizations for special treatment and delay.

But times have changed. Now we have a story in The New York Times about an individual deeply involved in politics who has a 501(c)4 that, as the Times puts it, appears to rank “among the most delinquent nonprofit organizations in the nation.”

The individual: the Rev. Al Sharpton. His organization: the National Action Network, which has failed to pay payroll taxes over the years. Sharpton says this wasn’t intentional but stemmed from a dispute on how to classify some independent contractors.

Nonetheless, Sharpton still flies first class and collects a nice salary from NAN as he zips between New York, Ferguson, Mo., and Washington, DC.

As the Times also reports, it’s the “kind of practice by nonprofit groups that the United States Treasury’s inspector general recently characterized as ‘abusive’ or ‘potentially criminal’ if the failure to turn over or collect taxes is willful.”

Considering how eager Sen. Schumer was to ensure 501(c)4’s weren’t gaming the tax system, we felt sure we would hear the senator thumping loudly for the IRS to take a hard look at the National Action Network.

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November 23, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Saturday, November 22, 2014

Top Incomes Soared as Tax Rates Fell

Al Jazeera:  Top Incomes Soared as Tax Rates Fell, by David Cay Johnston (Syracuse):

For those at the very top 2010 will be remembered as a very good year. While most Americans struggled to recover from the worst economic collapse since the Great Depression, top incomes soared while tax burdens for those incomes fell.

The 400 tax returns for those with the highest reported incomes showed 31 percent more income in 2010 than in 2009, when the recession officially ended at midyear. Soaring stock prices fueled the increase at the top. On average incomes of $265.1 million the top 400 paid 18 percent in federal income taxes, down from 19.9 percent in 2009. The lowest tax on the top 400 was 16.6 percent in 2007.

AJ1

AJ2

Bloomberg:  Top 400 U.S. Households Paid 18% Average Tax Rate in 2010, by Richard Rubin:

The top 400 taxpayers in the U.S. paid an average tax rate of 18 percent in 2010, the lowest since 2007, according to Internal Revenue Service data released today. ...

The data show the highest-income U.S. households rebounding from the recession in 2009. The minimum adjusted gross income needed for the exclusive list rose 28 percent, to $99.1 million, and the average income of those on the list reached $265 million.

The IRS data offer a glimpse into the finances of the wealthiest U.S. households, who now receive more than twice the share of national income than they did in 1995. These taxpayers had 1.31 percent of all adjusted gross income in the U.S. in 2010 and paid 2.01 percent of the income taxes, though they make up less than 0.001 percent of the population, according to the IRS.

IRS Statistics of Income Division, The 400 Individual Income Tax Returns Reporting the Largest Adjusted Gross Incomes Each Year, 1992–2010:

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November 22, 2014 in Tax | Permalink | Comments (7)

Maryann Jones, Hired as Charleston Law School President Under Renewable 3-Month Contract, Resigns After 8 Days on the Job

ICCharleston Post and Courier, New Charleston School of Law President Steps Down:

Maryann Jones has stepped down as the Charleston School of Law's president after only eight days on the job.

The law school has been embroiled in a controversy for more than a year over the possible sale to the for-profit InfiLaw System, which owns three other law schools.

Two of the school's three owners, George Kosko and Robert Carr, are in favor of the sale. But Ed Westbrook, the third owner, is pushing to form a nonprofit corporation to run the 10-year-old school, which also is for-profit.

But the owners voted unanimously Nov. 13 to hire Jones as president.

In an email sent late Thursday to Kosko, Carr and Abrams, Jones said she decided not to take the reins of the private, downtown law school, and would not sign a contract. "The level of vitriol, with all sides making me a lightning rod for an unfortunate situation that was not of my making, makes this truly a situation that I am unwilling at this stage of my life to undertake." Jones stated in the email.

Westbrook earlier Thursday had sent Jones a letter expressing his disappointment in her speaking to faculty and students in support of a sale to InfiLaw. To get his vote, Jones had agreed to be objective, and to learn more about alternatives for the school, Westbrook stated.

He also stated that he was disappointed that Jones hadn't yet met with him and his attorney Dawes Cooke to discuss the school's future. Westbrook's letter also revealed that Jones was being offered only a three-month contract.

FITS News, CSOL President Steps Down Due To Bullying By Director

Prior TaxProf Blog coverage:

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November 22, 2014 in Legal Education | Permalink | Comments (17)

USC Book Panel Discussion on Kleinbard's We Are Better Than This

Kleinbard Flyer

Prior TaxProf Blog coverage:

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November 22, 2014 in Book Club, Scholarship, Tax | Permalink | Comments (0)