Law Commons^™

Taxation Of Intellectual Property Litigation, Chitra A. Ram

IP Theory

In the field of intellectual property law, few attorneys consider the tax implications of legal proceedings prior to undertaking litigation. In studying the interdisciplinary space between intellectual property law, litigation, and taxation practices, this Article hopes to further expand existing research on the scope and incentives behind intellectual property protection in the United States, the policies underlying the system of federal income taxation adopted by the United States, and the precedents upheld by courts in deciding matters at the nexus of intellectual property litigation costs, expenses, and taxation.

Why States Should Conform To The New Corporate Amt, David Gamage, Darien Shanske

Articles by Maurer Faculty

In 2022, as a key component of the Inflation Reduction Act, Congress enacted a new corporate alternative minimum tax (CAMT). With the possible exception of Alaska, states with corporate income taxes will not automatically conform to this change. But should they? Although states may not currently be seeking additional tax revenue, seasons change quickly when it comes to revenue needs. Further, there is increasing reason to believe that the corporate income tax is a progressive tax, and if so, a state might consider conforming to the CAMT as part of a revenue-neutral change to make its tax system more progressive. …

Volunteer Income Tax Assistance Available To Local Community Members Through March 28, James Owsley Boyd

Keep Up With the Latest News from the Law School (blog)

With tax season now in full-swing through April 18, a dedicated group of volunteers is making the filing process easier—and cheaper—for many local community members. Local taxpayers with an annual income under $57,000 are eligible for free tax preparation help from students at the Indiana University Maurer School of Law’s Volunteer Income Tax Assistance site on Monday and Tuesday evenings from 6 to 9 p.m. beginning January 30.

Purchasing Population Growth, Edward W. De Barbieri

Indiana Law Journal

State and local lawmakers compete to attract new populations of workers to purchase homes, grow the tax base, and develop local economies. Even before the pandemic, lawmakers used a variety of tax incentives and other legal levers to attract new residents. Increasingly, in some cases bolstered by the Coronavirus Aid, Relief, and Economic Security (CARES) Act funds, local governments are attracting high-paid, well-skilled, remote workers with cash gifts and other direct economic benefits.

Although cash incentives for remote workers have been increasing in popularity, they remain unproven with respect to intended outcomes and have yet to face legal challenge. The …

State Workarounds To The Irc's Salt Cap: The Past, The Present, And Building For The Future, Richard Stephenson Mcewan

Indiana Law Journal

Recently, Congress has debated measures to provide some relief to taxpayers negatively impacted by the Internal Revenue Code’s State and Local Tax (SALT) deductibility limit. Although Congress has not yet budged on whether to adjust this cap, many states have taken it upon themselves to find creative workarounds to provide relief for their constituent taxpayers. In the face of an uncertain future for the current SALT cap, crucial questions exist for these state workarounds and those still to come. This Note carefully lays out the individual income tax issue posed by the SALT cap, before analyzing the core elements of …

Avoiding Scandals Through Tax Rulings Transparency, Leandra Lederman

Articles by Maurer Faculty

In 2014, the International Consortium of Investigative Journalists broke the “LuxLeaks” scandal, revealing numerous tax rulings that the press termed “sweetheart deals” granted to multinational companies. Many countries offer tax rulings because they provide certainty to taxpayers and the government on the tax consequences of a planned transaction. Yet, secrecy that is followed by leaks and criticism is a recurring aspect of these rulings, both in the United States and Europe. LuxLeaks, which revealed secret rulings from the small European country of Luxembourg, was international headline news. It helped trigger widespread reforms. Tax authorities, including those of European countries and …

Tax Complexity And Technology, David I. Walker

Indiana Law Journal

The Federal Income Tax Code has become increasingly complex over time with the implication that many taxpayers no longer understand the connection between their life decisions and their taxes. Some commentators have suggested that increasing computational complexity may be attributable in part to the proliferation of tax preparation software that renders such complexity manageable at filing time, but otherwise does nothing to mitigate the “black box” nature of the tax system. While such complexity and opacity undercut explicit incentives embedded in the Code, make planning more difficult, and undermine political accountability for taxes, they may also reduce the inefficient distortion …

Phased Mark-To-Market For Billionaire Income Tax Reforms, David Gamage, Darien Shanske

Articles by Maurer Faculty

In this installment of Academic Perspectives on SALT, Gamage and Shanske advocate for phased mark-to-market as a mechanism for reforming the taxation of investment gains of billionaires and megamillionaires.

Questions The Irs Will Not Answer, Emily L. Cauble

Indiana Law Journal

When a taxpayer plans to undertake a transaction and its tax consequences are unclear, the taxpayer can request a letter ruling from the IRS. The IRS issues numerous letter rulings each year. In 2020, for instance, the IRS issued 777 letter rulings. The IRS refrains from issuing letter rulings on certain topics. At the beginning of each year, the IRS publishes an updated list of the topics on which it will not rule. Many of the topics on which it will not rule arise in areas of tax law governed by standards where the tax outcome depends heavily on each …

Using The Internal Revenue Code To Limit Coaching Salaries: A Proposal To Bring Amateurism Back Into College Football, Blaire Mikesell

Indiana Law Journal

Since formal collegiate athletic competitions began in 1852, they have gained popularity and become a mainstay in American culture. This rise in popularity coupled with increased media coverage allowed college athletics, and particularly college football, to grow into a successful business that generates billions of dollars in revenue each year. Colleges and institutions earn this athletic revenue as tax-free income due to their tax-exempt status under the Internal Revenue Code § 501(c)(3) tax-exemption statute. The basic policy underlying this statute is as follows: colleges and universities provide an important benefit to the public by providing education, and in exchange for …

Tax Now Or Tax Never: Political Optionality And The Case For Current-Assessment Tax Reform, David Gamage, John R. Brooks

Articles by Maurer Faculty

The U.S. income tax system is broken. Due to the realization doctrine and taxpayers’ consequent ability to defer taxation of gains, taxpayers can easily minimize or avoid the taxation of investment income, a failure that is magnified many times over when considering the ultra-wealthy. As a result, this small group of taxpayers commands an enormous share of national wealth yet pays paltry taxes relative to the economic income their wealth produces—a predicament that this Article condemns as being economically, politically, and socially harmful.

The conventional view among tax law experts has assumed that the problems created by the realization doctrine …

Weathering State And Local Budget Storms: Fiscal Federalism With An Uncooperative Congress, David Gamage, Darien Shanske, Gladriel Shobe, Adam Thimmesch

Articles by Maurer Faculty

Throughout most of 2020, state and local governments faced severe budget crises as a result of the COVID-19 pandemic. Increased demand for state welfare services and rising state expenses related to controlling the spread of COVID-19 stretched state and local budgets to their breaking points. At the same time, layoffs, business closures, and social distancing measures reduced states’ primary sources of tax revenues. The traditional practice of American fiscal federalism is for the federal government to step in to provide aid during a national emergency of this magnitude, because state and local governments lack the federal government’s monetary and fiscal …

Gamage, Lederman Sign Letter Of Support For Billionaires Income Tax, James Owsley Boyd

Keep Up With the Latest News from the Law School (blog)

No abstract provided.

Maryland’S Digital Tax And The Itfa’S Catch-22, David Gamage, Darien Shanske, Christopher Moran

Articles by Maurer Faculty

In this installment of Academic Perspectives on SALT, the authors examine whether statelevel taxes on digital advertising — like Maryland’s new tax — are barred by the Internet Tax Freedom Act and discuss how the act’s prohibition against “discriminatory” taxes on electronic commerce should be construed narrowly.

No Teacher Left Behind: Reforming The Educators Expense Deduction, Mary Morris

Indiana Law Journal

American educators are notoriously overworked and underpaid. With high performance demands and near-stagnant pay, teachers tend to burn out quickly, which in turn negatively affects the quality of education that their students receive. This effect is most evident in Title I schools, public schools with low funding allocation and high concentrations of low-income students.

One of the benefits that teachers do receive is the Educators Expense Deduction, a federal income tax deduction permitting teachers to write off up to $250 of unreimbursed supplies purchased for the classroom. This deduction was codified in 2002 and has not been amended since, in …

Is New York’S Mark-To-Market Act Unconstitutionally Retroactive?, Reuven S. Avi-Yonah, David Gamage, Kirk J. Stark, Darien Shanske

Articles by Maurer Faculty

It is well known in tax literature that rudimentary tax planning strategies enable wealthy individuals to avoid state and federal income tax on much of their true economic income. Indeed, the existing income tax has been described as being effectively optional for those who derive their income chiefly from the ownership of assets rather than the provision of services. The reason is — except for a few relatively narrowly tailored deemed-realization rules — both state and federal income taxes rely on the realization principle. Under realization accounting, taxpayers generally do not owe tax on economic gains until they sell their …

How States Should Now Consider Expanding Sales Taxes To Services, Part 2, Grace Stephenson Nielsen, Gladriel Shobe, Darien Shanske, David Gamage

Articles by Maurer Faculty

As we explained in our prior essay, state governments are experiencing severe revenue needs because of COVID-19, and expanding state sales tax bases to include services is a promising option for state governments to manage their budget shortfalls. In this, the second essay in this series — a contribution to Project SAFE: State Action in Fiscal Emergencies — we explain some of the implementation details and options for how states might go about expanding their sales tax bases to include services. In particular, we argue that there are some incremental steps that seem to be technically and politically feasible as …

God Is My Roommate? Tax Exemptions For Parsonages Yesterday, Today, And (If Constitutional) Tomorrow, Samuel D. Brunson

Indiana Law Journal

In 2019, the Seventh Circuit decided an Establishment Clause question that had been percolating through the courts for two decades. It held that the parsonage allowance, which permits “ministers of the gospel” to receive an untaxed housing allowance, does not violate the Establishment Clause of the Constitution. It grounded its conclusion in part on the “historical significance” test the Supreme Court established in its Town of Greece v. Galloway decision.

In coming to that conclusion, the Seventh Circuit cited a 200-year unbroken history of property tax exemptions for religious property. According to the Seventh Circuit, that history demonstrated that both …

Putting Paper To Pen: Generation Juul's Case For Harm Reduction, Liz Emanuel

Indiana Law Journal

Part I of this Note soberly explores and delineates the perceived and real threats of vaping for America’s youth, concluding with an analysis of the socioeconomic and developmental health effects of nicotine addiction. Part II delves into the federal government’s response to e-cigarettes as well as the powers and limitations of federal regulation under the Food and Drug Administration’s (FDA) “Deeming Rule” and the potential effectiveness of an increase in the national tobacco purchase age or a federal ban on flavored vaping products. Part III discusses the realistic benefits of taking a harm reduction approach to youth vaping in the …

How To Measure And Value Wealth For A Federal Wealth Tax Reform, David Gamage, Ari Glogower, Kitty Richards

Articles by Maurer Faculty

Over the last several decades, wealth inequality has exploded, warping economic outcomes and limiting opportunity—for individuals and for the US at large.

Sky-high income inequality and runaway income gains for the nation’s highest earners compound that wealth inequality and are insufficiently taxed under the current tax regime.

Further, wealth in the US has always been heavily skewed by race.

Since the country’s founding, US laws and customs have prevented Black and brown people from receiving fair wages and accruing assets, thereby creating and perpetuating today’s massive racial wealth gap.

While our existing tax systems are ill-equipped to tackle these challenges, …

Valuation As A Challenge For Tax Administration, Leandra Lederman

Articles by Maurer Faculty

Valuation issues have long posed challenges for the U.S. federal tax system. This is not just because of questions about what technique will most accurately value particular types of property. A key problem for tax administration is that taxpayers have a financial incentive to claim erroneous, self-serving valuations. This Essay analyzes tax valuation through this tax compliance lens. In so doing, it highlights the importance that third parties to the taxpayer-government relationship act at arm’s length from the taxpayer. It also explains why penalties are insufficient to deter erroneous self-reported valuations. The Essay also draws on the tax compliance perspective …

Why A Federal Wealth Tax Is Constitutional, Ari Glogower, David Gamage, Kitty Richards

Articles by Maurer Faculty

The 2020 Democratic presidential primaries brought national attention to a new direction for the tax system: a federal wealth tax for the wealthiest taxpayers. During their campaigns, Senators Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) both introduced proposals to tax the wealth of multimillionaires and billionaires, and to use the revenue for public investments, including in health care and education. These reforms generated broad public support—even among many Republicans—and broadened the conversation over the future of progressive tax reform.

A well-designed, high-end wealth tax can level the playing field in an unequal society and promote shared economic prosperity.

Critics have …

The Fraud Triangle And Tax Evasion, Leandra Lederman

Articles by Maurer Faculty

The “fraud triangle”—a theory of why people commit fraud —is the preeminent framework for analyzing fraud in the accounting literature. It developed out of studies of fraudsters, including inmates convicted of embezzlement. The three components of the fraud triangle are (1) an incentive or pressure (usually financial); (2) opportunity; and (3) rationalization.

There is a separate, extensive legal literature on tax compliance and evasion. The fraud triangle is largely absent from this legal literature, although tax evasion is a type of fraud. This Article rectifies that oversight, analyzing how using the fraud triangle as a lens can inform the legal …

Why States Should Consider Expanding Sales Taxes To Services, Part 1, Gladriel Shobe, Grace Stephenson Nielsen, Darien Shanske, David Gamage

Articles by Maurer Faculty

States are facing a severe budget crisis as a result of the coronavirus pandemic. And with the federal government unlikely to pass a relief bill to address those state budget issues,1 states will need to play a significant role in making up revenue shortfalls.

This is the first in a three-part series, which is a contribution to Project SAFE: State Action in Fiscal Emergencies. This essay will lay out the general case for why states should consider expanding their sales tax bases to more services as a response to the COVID-19 crisis. The follow-ups will discuss further mechanics and details …

Why States Should Now Consider Expanding Sales Taxes To Services, Part 1, Gladriel Shobe, Grace Stephenson Nielsen, Darien Shanske, David Gamage

Articles by Maurer Faculty

States are facing a severe budget crisis as a result of the coronavirus pandemic. And with the federal government unlikely to pass a relief bill to address those state budget issues,1 states will need to play a significant role in making up revenue shortfalls.

This is the first in a three-part series, which is a contribution to Project SAFE: State Action in Fiscal Emergencies. This essay will lay out the general case for why states should consider expanding their sales tax bases to more services as a response to the COVID-19 crisis. The follow-ups will discuss further mechanics and details …

House Oversight Hearing On Tax Avoidance And The Irs, Leandra Lederman

Public Testimony by Maurer Faculty

Professor Leandra Lederman testifimony for the House Oversight Hearing on Tax Avoidance and the IRS, October 13, 2020.

Click the "Download" button to read the text of Professor Lederman's prepared testimony, or view the video of the fulll hearing below.

To view just professor Lederman's testimony, click HERE

Mandatory Tax Penalty Insurance, Michael Abramowicz

Indiana Law Journal

In a mandatory tax penalty insurance regime, taxpayers would be required to find insurers to certify portions of their tax returns. A certifying insurer would be subject to a governmental auditing regime insurers of randomly selected filings would pay an amount equal to the inverse of the selection probability multiplied by the underpayment, or they would receive money from the government in the case of overpayment. The insurers function as private auditors with no incentive to underestimate their customers' tax liability. Such a regime will consume real resources, ultimately paid by taxpayers, and thus should not be imposed universally. But …

Consent To Student Loan Bankruptcy Discharge, John P. Hunt

Indiana Law Journal

As the Department of Education reconsiders its rules governing consent to discharge of federal student loans in bankruptcy, this Article argues for the first time that the Department should approach the problem specifically as an operator of programs to promote education and benefit students, rather than as an entity interested only in debt collection. This Article shows that the Department’s rules to date have treated whether to consent to discharge primarily as a pecuniary issue, without regard to the educational goals of the student loan programs. For example, the Department apparently has never considered whether making it difficult to discharge …

The Case For State Borrowing As A Response To The Current Crisis, David Gamage, Darien Shanske

Articles by Maurer Faculty

The coronavirus pandemic is a national emergency that requires a national response. Asking states to absorb the budgetary losses caused by the pandemic while they are tasked with providing essential frontline services is comparable to asking states during World War II to pay for the landing in Normandy.

This article is a contribution to Project SAFE: State Action in Fiscal Emergencies. We have already argued, more than once, that the federal government should borrow to prevent steep state and local budget cuts. But because the federal government will apparently not take sufficient action, we offer these ideas to states for …

Strategic Nonconformity To The Tcja, Part I: Personal Income Taxes, Darien Shanske, Adam Thimmesch, David Gamage

Articles by Maurer Faculty

The dire revenue situation that COVID-19 has created for state and local governments is a well documented and looming reality for state legislatures. We and others have explored a variety of ways that states should respond to this crisis in prior articles as a part of Project SAFE (State Action in Fiscal Emergencies), an academic effort to help states weather the fiscal crisis by providing policy recommendations backed by research. We think, as do many others, that in the absence of sufficient federal action, the states should prioritize raising revenue through targeted taxes on economic actors that are best enduring …