Law Commons^™

Covid-19 Relief For Opportunity Zone Funds And Investors, Adam Wallwork, Gary Hecimovich

Cleveland State Law Review

This Article describes how temporary changes to the qualified opportunity zone (QOZ) tax incentive, combined with new reliance regulations that clarify the requirements for qualified opportunity zone businesses (QOZBs) to modify their written plans to expend working capital in response to the ongoing coronavirus emergency, will make more individuals and entities eligible for federal tax stimulus by increasing flexibility for the qualified opportunity funds (QOFs) and QOZBs in which they invest to redeploy their capital into qualifying business development projects in a QOZ.

Ending The Economic War Among States, Nathan Altstadt

Cleveland State Law Review

The United States is under siege; however, the cause is not a foreign adversary. Rather, infighting among states to attract and retain big businesses is jeopardizing the Nation’s economic prosperity.

States compete for businesses, using tax incentives, hoping to capitalize on the benefits these businesses represent. Benefits include improved job growth numbers, a future increase in tax revenue, or, simply, elevated political clout. While competition can lead to a more efficient use of resources, unregulated competition between states for businesses does not illustrate this theory. A national auction for a business, where states are blind to rival offers, may, and …

Replacing Havoc: Creating Rules For Sovereign Default, Edward J. Kelley

Cleveland State Law Review

Sovereign debt is an ongoing threat to a State’s economic stability and its citizens’ standard of living. A single occurrence of default begins a cycle in which it becomes increasingly more difficult for an indebted State to pay its debts and ensure the survival of its citizens. Because central banking systems and direct spending are often inadequate methods to boost an indebted State’s economy, a more expansive solution to sovereign debt is required. The initial solution to the growing problem of sovereign debt is an international treaty that will allow the world economy to establish monitoring mechanisms to prevent debt …

A Market For Tax Compliance, W. Edward Afield

Cleveland State Law Review

This piece seeks to lay the framework for how such a voluntary compliance certification program would work and to discuss the benefits of such a system that are currently not being realized through the IRS’s current regulation of paid preparers. Part II summarizes in brief the current regulatory landscape for paid preparers and illustrates that the current environment falls short in providing a mechanism to allow the government to better direct its enforcement resources and to incentivize a culture of compliance among tax preparers and their clients. Part III describes in general terms how a voluntary compliance certification system should …

Section 7433'S Statute Of Limitations: How Courts Have Wrongly Turned A Taxpayer's Exclusive Sword Into The Irs's Shield Against Damages , Diana Leyden

Cleveland State Law Review

Congress expressly authorized taxpayers to bring a private cause of action against the United States for economic damages caused by “unauthorized collection.” Codified as section 7433 of the Internal Revenue Code, this statute provides taxpayers with the exclusive remedy for abuses by IRS employees in connection with the collection of taxes. ... Despite the importance of section 7433 to check government unauthorized tortious collection activity, federal courts have turned section 7433 into a shield against excessive or unsupported IRS collection action, rather than maintain it as the small, but important, sword that Congress intended to give taxpayer. This Article contributes …

Avoiding Misuse Of Donor Advised Funds, Michael J. Hussey

Cleveland State Law Review

This Article presents a proposal for further modifying donor advised funds to retain most of their hallmark flexibility and ease of use while drawing them into line with other charitable giving vehicles that put contributed funds to use for active charitable purposes. This Article argues that using individual retirement accounts as an underlying legal model for donor advised funds will address Congress's concerns regarding the appropriateness of the income tax deductions for contributions to donor advised funds while allowing donor advised funds to retain much of their hallmark flexibility and ease of operation.

Question Of Purpose: Early Retirement Payments To Tenured Professors Constitute Wages Subject To Fica Taxation, Stephen Scott Wick

Cleveland State Law Review

Currently, there is a circuit split on the issue of whether early retirement payments (ERPs) made to tenured faculty constitute wages subject to Federal Insurance Contribution Act (FICA) taxation. In North Dakota State University v. United States, the Eighth Circuit held that ERPs made to tenured faculty do not constitute FICA wages because such payments are made to purchase the constitutionally protected property interest that tenured faculty hold in their tenure rights. However, the Sixth and Third Circuits, in Appoloni v. United States and University of Pittsburgh v. United States respectively, held that such payments do constitute FICA wages because …

Is The United States Tax Court Exempt From Administrative Law Jurisprudence When Acting As A Reviewing Court , Diane L. Fahey

Cleveland State Law Review

Commentators have argued that the Tax Court should fill in the gaps in its statutory authority for collection due process appeals by turning to traditional administrative law jurisprudence, including the APA, which suggestion the Tax Court has resisted despite the fact that the federal district court did so. The majority of the Tax Court insists that it has never been subject to administrative law jurisprudence or the APA, nor could it be. Most of the courts of appeals that have considered the issue have held that the Tax Court is bound by the APA and traditional administrative law jurisprudence when …

The Irs' Classification Settlement Program: Is It An Adequate Tool To Relieve Taxpayer Burden For Small Businesses That Have Misclassified Workers As Independent Contractors, Judson D. Stelter

Cleveland State Law Review

This Note argues that the timely filing of informational tax forms should not be a condition of an IRS Classification Settlement Program (CSP) settlement offer; the CSP should incorporate more settlement options; and the CSP should make settlement offers mandatory. Part II of this Note will discuss the legal history behind worker classification. Part III will demonstrate the unique situation of the small business owner in classifying workers. Part IV will explain § 530, a safe harbor provision for small business owners who have incorrectly classified workers. Part V will introduce the CSP in detail and explain its applications. Part …

Money From Heaven: Should Qualified Air Rights Donations Be Characterized As Interests In Land Or Buildings - Why Does It Matter , Daniel Markey

Cleveland State Law Review

Currently, the Internal Revenue Service (hereinafter I.R.S.) and the federal courts do not offer specific positive authority as to whether large amounts of easement value from donated air rights can be allocated against the capital account of "land" as opposed to a "building" on a given tract of real estate. A lack of authority in this area creates uncertainty in the real estate market. This uncertainty is not only with the payment of federal income, estate, and gift taxes, but it also has a ripple effect with the assessment of local property taxes. Most importantly, if a deal is on …

United States V. Kpmg: Does Section 6103 Allow The Irs To Put Taxpayer Names On The Front Page Of The Wall Street Journal, Beckett G. Cantley

Cleveland State Law Review

Section 7431 provides redress for taxpayers in which such confidential taxpayer information is improperly disclosed. Although the IRS disclosure of confidential taxpayer names appears to meet the general rule giving rise to a cause of action, it is unlikely that the named taxpayers would recover damages because the United States is likely to meet the exception where the disclosing party has a good faith, but erroneous, interpretation of section 6103. The United States would meet this exception by showing that a reasonable IRS agent would have believed that the agent could disclose the information. For purposes of this Article, it …

When Indian Law And Tax Law Collide: How Pull-Tab Games Got To The Supreme Court , John Burgess

Cleveland State Law Review

This Note will explore the reasons why two identical cases can turn out with completely different results. To do so, consideration will be given to the statutes involved and the varying interpretations of these statutes. Another important consideration is the policy behind these statutes, especially the IGRA. Part II will describe what the pull-tab games are, the statutes at issue, the conflicting cases, and the statutory interpretation issue. Part III will describe how the tenets of Indian Law can affect the analysis. Part IV will contain an analysis of the statutes and compare it to how the courts analyzed them. …

Change Is Needed: The Taxation Of Alimony And Child Support, Laura Bigler

Cleveland State Law Review

When a marriage dissolves there are tax consequences for everything from distribution of property to custody of the couple's children. The current tax system for alimony and child support strengthens the possibility of financial devastation. Under the present system, alimony and child support have opposite tax treatment. Many complicated rules have been added to distinguish between alimony and child support, which will be discussed later in this paper. There must be a simplification of the present law so that the average divorced taxpayer will be able to understand and implement the rules with or without sophisticated tax counsel or an …

Death Taxes: A Critique From The Margin, Patricia A. Cain

Cleveland State Law Review

The proper taxation of the family under both the income tax and the estate tax has been debated for ages. It is an old issue. My purpose, however, is to consider the issue from a perspective somewhat different from that of those who have debated the issue over the years. My perspective is the perspective of the marginalized taxpayer. I critique from this perspective to see if it can tell us anything new about the old debate and to ensure that the ultimate tax treatment is just as to all taxpayers. The estate tax is supposed to be a tax …

The Death Of The "Death Tax"?: An Introduction, Deborah A. Geier

Cleveland State Law Review

I would like to consider the question: What brings us together today to consider the possible repeal of the estate tax? We would not likely be here today if the repeal of the estate tax were not a serious political possibility, and it would not likely be a serious political possibility if many middle-class taxpayers earning the median household income of about $40,000 to $50,000 per year did not support outright repeal, rather than much needed reform. The article then explains why taxpayers support outright repeal today when they would not have done so even ten years ago. The article …

It's New But Is It Improved: The New Innocent Spouse Provision, Jessica Luby Angney

Cleveland State Law Review

This article will examine the criticisms of the previous "innocent spouse" provision and proposals for reform that aided Congress in enacting a more equitable provision. The new "innocent spouse" provision, § 6015,' will be dissected to reveal the requirements, as well as the changes from the old provision. Also provided in this article will be examples of the new provision applied to cases decided under the old "innocent spouse" provision. Completing this article will be criticisms of the new provision and I.R.S. actions regarding the new provision.

Are Frequent Flyer Benefits Really Benefits: An Analysis Of The Frequent Flyer Tax Debate And A New Theory Of Taxability For Frequent Flyer Benefts , Jennifer A. Cunningham

Cleveland State Law Review

This Note will begin with a brief history of frequent flyer programs and an explanation of how they operate, followed by a closer look at the traditional arguments for nontaxability of mileage earned on personal flights, taxability of mileage earned on business flights for an employer, and proposed theories for valuing the taxable mileage. Next, it will summarize failed attempts by both the courts and the legislature to resolve the issue. After establishing this background, the Note will explore the concept of gross income, particularly as reflected by section 61 of the Internal Revenue Code and interpreted by case law …

The Tax Status Of Ohio Property Used For Low-Income Housing, Christopher P. Conomy

Cleveland State Law Review

This Note argues that the rule denying property tax exemption to low-income housing units is improper. The rule is improper in three significant regards. First, as a matter of social and public policy, the rule is misguided, because it hinders the fulfillment of an important need in Ohio and in American society at large. Second, as a purely legal matter, the original rule denying exemption for these properties resulted as a mistaken application of the existing law regarding the definition of "charitable" use. The third, and most compelling reason, is that the legal basis underlying the original rule has undergone …

What Has The Supreme Court Done - The Home Office Deductions Is Virtually Eliminated After Soliman, Robert J. Gerlack

Cleveland State Law Review

The purpose of this comment is to discuss the relatively short history of Internal Revenue Code § 280A and to discuss the cases leading up to the United States Supreme Court decision of Commissioner v. Soliman. The scope of the discussion will be limited to I.R.C. § 280A(c)(1)(A), which provides for a home office deduction if the dwelling unit is exclusively used on a regular basis and is the principal place of business for any trade or business. As will be discussed below, the Supreme Court has developed various standards to determine whether a home office deduction will be allowed. …

Collapsible Corporations Under The Tax Reform Act Of 1986, Boris I. Bittker

Cleveland State Law Review

This article discusses collapsible corporations under §341, and explains how it was originally intended to be a narrowly applied, temporary tool for tax avoidance, but thanks to a broad statute may now be used in many other circumstances. Section I gives a brief overview of the historical applications of the collapsible corporation. Section II explains when §341 applies and parses the statute language. Section III establishes the overall framework for a collapsible corporation, starting with a definition for “collapsible corporation” comprised of three elements. Section IV discusses the rebuttable presumption of collapsibility established by §341(c). Section V then lays out …

Deductibility Of Prepaid Idc After Keller, Michael R. Donaldson

Cleveland State Law Review

In recent years, the Internal Revenue Service has succeeded in eliminating a number of tax-sheltering mechanisms by employing both changes in the tax laws and zealous-some would say overzealous-enforcement of tax law interpretations. While some of these mechanisms may have been abusive, others which were harmless and productive have also fallen victim to the wholesale assault. In July of 1982, with the Tax Court's decision in Keller v. Commissioner, one of the most widespread and traditionally favored tax-shelter vehicles, the oil and gas exploratory drilling fund, was placed on the endangered species list, its ultimate fate as yet undeterminable. Section …

Assessing Internal Revenue Service Jeopardy Procedures: Recent Legislative And Judicial Reforms, Margaret M. Armen

Cleveland State Law Review

Recent events have led thoughtful citizens, jurists, and Congressmen to question the wisdom of allowing the Internal Revenue Service (Service) to assess and collect taxes without prior judicial hearing in those instances in which the revenue is thought to be "in jeopardy." Congress and the Supreme Court have made significant reforms which strengthen a taxpayer's rights against Service intransigence or arrogance with respect to jeopardy assessments. The reforms, the abuses which prompted them, and suggestions for future congressional action are the subject of this Note.

Reflections On The Tax Reform Act Of 1976, Stanley S. Surrey

Cleveland State Law Review

What should be said in concluding these reflections on the 1976 Tax Reform Act? Overall the verdict must be on the plus side. The Act does achieve reforms in a number of areas and the serious setbacks are relatively few. The credit goes to the reform groups on the Tax Committees and in the Congress, the Budget Committees and the Congressional Budget Office, the Joint Committee Staff, the few public interest groups, the dogged efforts of a few tax reform-minded Representatives and Senators, and in ways not really fully fathomable, to the efforts, differently pursued, of Chairman Ullman and Chairman …

War Tax Refusal: Some Code Problems, William Louis Tabac

Cleveland State Law Review

Throughout our history, many individuals and groups have employed tax refusal to make their points. ...a protest based on tax refusal has never won a significant number of adherents in this country. There are several reasons for this, but the most pervasive seem to be the fear most people have of going to jail and the confusion that exists in their minds about the limits of the power of the Internal Revenue Service (I.R.S.), that is, what this agency can and cannot do to people who do not pay their taxes. Until some of their doubts are answered, the antiwar …

Section 303 Stock Repurchase Vs. Accumulated Earnings Tax, Mel J. Massey Jr.

Cleveland State Law Review

This article looks into the situation in which Section 303 is beign planned for use in a corporation that is over-capitalized. "Under its provisions the stockholder of a closely held corporation can look to the corporation to purchase sufficient shares of his stock in order to permit his executor to pay estate and inheritance taxes, executor's and attorney's fees and funeral expenses. The asset, his stock in the closed corporation, which has chiefly caused this stockholder's estate problem, will be used to solve it."

Tax Subchapter S Becomes Clearer, Edward M. Greenwald

Cleveland State Law Review

Since the addition of Subchapter S to the 1954 Internal Revenue Code in 1958, many articles have been written on the interpretation and application of the provisions of this Chapter to various factual situations. At the time of their publication, the final Regulations and pertinent Internal Revenue Service Rulings on the subject had not been promulgated. The subsequent promulgation and issuance of these Regulations and Rulings, therefore, had the effect of abrogating many of the proposals which had been advocated in these articles. These Regulations and Rulings did not answer all of the questions, and until such time as there …

Practice Of Taxation: Accountants Vs. Attorneys, Orville J. Weaver

Cleveland State Law Review

What constitutes the illegal or unauthorized practice of law by accountants in their tax practice? The popular conception of the practice of law is the appearance in courts by attorneys. This may be a very small part of the average attorney's law practice. he spends most of his time in determining his clients' legal problems other than in court. So the unauthorized practice of law concerns itself with activities of persons, other than lawyers, who give legal advice to clients in connection with the practice of their professions. Accountants have prepared federal income tax returns, and returns for various state …

The Analogous Development Of The Fair Trade And Tax Limitation Movements, Frank E. Packard

Cleveland State Law Review

The Fair Trade Act, or resale price maintenance, movement began in 1913. The movement to limit federal income, gift, and estate tax rates to twenty-five per cent in peacetime commenced in 1939. The fair trade act movement was spearheaded by the American Fair Trade League. The federal income, gift, and estate tax rate limitation movement is spearheaded by the Western Tax Council.

Modification Of Domiciliary State's Power To Tax Vessels Engaged In Interstate Commerce, Sam W. Baker

Cleveland State Law Review

Standard Oil Co. v. Peck, Tax Commissioner et al., 72 S. Ct. 309 (1952) Held: The ad valorem taxes levied by various states must be fairly apportioned to the commerce carried on within the taxing state. The rule permitting taxation of personal property used in interstate operations by two or more states on an apportionment basis precludes taxation on full value of all such property by the state of domicile.