Law Commons^™

Keep Charitable Oversight In The Irs, Philip Hackney

Articles

Critics are increasingly calling for Congress to remove charity regulation from the IRS. The critics are wrong. Congress should maintain charity regulation in the IRS. What is at stake is balancing power between the state, charity as civil society, and the economic order. In a well-balanced democracy, civil society maintains its independence from the state and the economic order. Removing charitable jurisdiction from the IRS would blind the IRS to dollars placed in charitable solution increasing tax and political shelters and wealthy dominance of charities as civil society. A new agency without understanding of, or jurisdiction over, tax cannot act …

A More Capacious Concept Of Church, Philip Hackney, Samuel D. Brunson

Articles

United States tax law provides churches with extra benefits and robust protection from IRS enforcement actions. Churches and religious organizations are automatically exempt from the income tax without needing to apply to be so recognized and without needing to file a tax return. Beyond that, churches are protected from audit by stringent procedures. There are good reasons to consider providing a distance between church and state, including the state tax authority. In many instances, Congress granted churches preferential tax treatment to try to avoid excess entanglement between church and state, though that preferential treatment often just shifts the locus of …

Taxes, Administrative Law, And Agency Expertise: Questioning The Orthodoxy, Scott Schumacher

Articles

One of the foundations of administrative law is that federal agencies and their employees are experts in their respective fields. In addition, the many judgments and decisions made by these experts are based on a thorough record after extensive factfinding. As a result, so the theory goes, courts, particularly courts of general jurisdiction like the United States District Courts, should give deference to the determinations made by these experts. But what if the facts underpinning this foundation are not true in all cases? Should courts nevertheless provide deference to decisions by agencies when it is evident that an agency's determinations …

Fighting The Tax Gap: A Prime And Recent Example Of The Value Of Gao Oversight & Reporting, Josh Bill

Upper Level Writing Requirement Research Papers

No abstract provided.

Fixing The Johnson Amendment Without Totally Destroying It, Benjamin Leff

Articles in Law Reviews & Other Academic Journals

The so-called Johnson Amendment is that portion of Section 501(c)(3) of the Internal Revenue Code that prohibits charities from "intervening" in electoral campaigns. The intervention has long been understood to include both contributing charitable funds to campaign coffers and communicating the charity's views about candidates' qualifications for office. The breadth of the Johnson Amendment potentially brings two important values into conflict: the government's interest in preventing tax-deductible contributions to be used for electoral purposes (called "nonsubvention") and the speech rights or interest of charities.

For many years, the IRS has taken the position that the Johnson Amendment's prohibition on electoral …

Tax Attorneys As Defenders Of Taxpayer Rights, Michelle Lyon Drumbl

Scholarly Articles

What is the modern role of a tax practitioner, in particular a tax attorney, in the United States? In an era in which the Internal Revenue Service (IRS) is underfunded, understaffed, and struggles to address its mission, tax attorneys play an important role as advocates for taxpayer rights.

Tax attorneys act as advocates who represent ordinary individual taxpayers in controversies with the IRS. These controversies include post-filing disputes, such as audits, as well as issues arising with the collection of assessed taxes. Many of these cases are resolved at the administrative level; those that cannot be resolved are litigated, most …

The Promises And Perils Of Using Big Data To Regulate Nonprofits, Lloyd Histoshi Mayer

Journal Articles

For the optimist, government use of “Big Data” involves the careful collection of information from numerous sources. The government then engages in expert analysis of those data to reveal previously undiscovered patterns. Discovering patterns revolutionizes the regulation of criminal behavior, education, health care, and many other areas. For the pessimist, government use of Big Data involves the haphazard seizure of information to generate massive databases. Those databases render privacy an illusion and result in arbitrary and discriminatory computer-generated decisions. The reality is, of course, more complicated. On one hand, government use of Big Data may lead to greater efficiency, effectiveness, …

Written Testimony Of Philip Hackney For The Hearing On Oversight Of Nonprofit Organizations: A Case Study On The Clinton Foundation (House Of Representatives Committee On Oversight, December 13, 2018), Philip Hackney

Testimony

This is written testimony offered to the House Committee on Oversight's Subcommittee on Government Operations on December 13, 2018: Our nation has tasked the IRS with the large and complex responsibility for regulating the nonprofit sector, but has failed to provide the IRS with resources commensurate with that task. This is important work. Nonprofits constitute a large and growing part of our economy, and they are granted a highly preferential tax status. An organization that abuses that preferential status will obtain a significant and unfair advantage over the organizations and individuals who play by the rules. If we are to …

Securing Charitable Contribution Deductions, Paul G. Schloemer

Business Administration Faculty Publications

Issues regarding charitable contributions have been a frequent source of contention between the IRS and taxpayers - the charitable contribution deduction was identified as one of the most litigated issues in the National Taxpayer Advocate’s latest report to Congress.1 Thus, a review of the key issues taxpayers encounter in claiming this deduction is warranted.

Open Source: The Enewsletter Of Rwu Law 09-22-2017, Roger Williams University School Of Law

Life of the Law School (1993- )

No abstract provided.

Irs's Cp-2000 E-Mail Scams - Never In Dubai - Common In Canada & The Uk, Richard Thompson Ainsworth

Faculty Scholarship

On September 22, 2016 the Internal Revenue Service (IRS) and its Security Summit partners issued an alert to taxpayers and tax professionals to be on guard against fake e-mails purporting to contain a tax bill related to the Affordable Care Act. Surprisingly, this e-mail scam works. It really should not.

Modern technology is facilitating many contemporary tax scams. In recent years the US has seen false (refund) return scams, phone scammers impersonation IRS agents, and now e-mail scams with fraudulent CP-2000 notices attached to a demand for payment. The same phone and e-mail frauds have appeared in both Canada and …

Simplexity: Plain Language And The Tax Law, Joshua D. Blank, Leigh Osofsky

Articles

In recent years, federal government agencies have increasingly attempted to use plain language in written communications with the public. The Plain Writing Act of 2010, for instance, requires agencies to incorporate "clear and simple" explanations of rules and regulations into their official publications. In the tax context, as part of its "customer service" mission, the Internal Revenue Service bears a "duty to explain" the tax law to hundreds of millions of taxpayers who file tax returns each year. Proponents of the plain language movement have heralded this form of communication as leading to simplicity in tax compliance, more equitable access …

Beyond Polemics: Poverty, Taxes, And Noncompliance, Michelle Lyon Drumbl

Scholarly Articles

The earned income tax credit (EITC) is perhaps the most significant refundable credit in the U.S. tax system. Designed as an anti-poverty program, it is a social benefit administered by the Internal Revenue Service (IRS). Studies show it has a positive impact upon the children whose families receive it. Despite its many positives, however, the EITC is a program that for years has been plagued by taxpayer noncompliance. Though it is believed that the majority of EITC noncompliance may be unintentional, public reports of misconduct and fraud hurt the program’s image and fuel political rhetoric.

This article unpacks the rhetoric. …

Rejecting Charity: Why The Irs Denies Tax Exemption To 501(C)(3) Applicants, Terri Lynn Helge

Faculty Scholarship

New charitable organizations generally must file an application for exemption (Form 1023) and await approval from the Internal Revenue Service. Unfortunately, the criteria the Internal Revenue Service uses to evaluate applications has not always been transparent. If an application is approved, the Internal Revenue Service determination letter and the application for exemption are required to be made publicly available and can be requested from the Internal Revenue Service or the organization itself. Prior to 2004, in the case of denials, neither the application nor the Internal Revenue Service’s correspondence setting forth its rationale for the denial were made publicly available. …

The Perfect Process Is The Enemy Of The Good Tax: Tax's Exceptional Regulatory Process, Stephanie Mcmahon

Faculty Articles and Other Publications

Many courts and academics critique existing tax exceptionalism or the ability of the federal income tax to be created, applied, or interpreted differently from other laws. Critics have successfully complained that the Treasury Department, and the IRS as a bureau of the Department, issues guidance implementing the Internal Revenue Code using different processes from those required by the Administrative Procedure Act (APA). At the same time, courts are increasing the level of deference given to this guidance to conform to that given other agencies. This article responds to these critics by urging they re-focus their attention on the objectives of …

Irresponsibly Taxing Irresponsibility: The Individual Tax Penalty Under The Affordable Care Act, Francine J. Lipman, James Owens

Scholarly Works

In recent decades, Congress has used the federal income tax system increasingly to administer and deliver social benefits. This transition is consistent with the evolution of the American welfare system into workfare over the last several decades. As more and more social welfare benefits are conditioned upon work, family composition, and means-tested by income levels, the income tax system where this data is already systematically aggregated, authenticated, and processed has become the go-to administrative agency.

Nevertheless, as the National Taxpayer Advocate Nina Olson has noted there are “substantial differences between benefits agencies and enforcement agencies in terms of culture, mindset, …

Fragmented Oversight Of Nonprofits In The United States: Does It Work? Can It Work?, Lloyd Hitoshi Mayer

Journal Articles

Previously Brendan Wilson and I concluded that oversight of nonprofit governance would be most effective if it remained the responsibility of the states, although it would benefit from both a federal funding mechanism and enhanced coordination with the Internal Revenue Service.' More recently I concluded that oversight of federal tax exemption would be better served if Congress shifted the locus of that oversight to a national, self-regulatory organization working in close cooperation with the IRS given the perennial financial and other limitations faced by the IRS.2 What neither of these earlier articles addressed, however, was whether the current split of …

Comments On Proposed Treasury Regulations Defining Terms Relating To Marital Status, Anthony C. Infanti, The American Bar Association

Articles

These comments respond to proposed Treasury Regulations defining terms relating to marital status in the Internal Revenue Code following the Supreme Court's decision in the Windsor and Obergefell cases. The comments applaud the Internal Revenue Service for reading gendered terms relating to marital status in a gender-neutral fashion. For a number of reasons, however, the comments recommend that the final regulations omit the proposed rule for determining an individual’s marital status and, in its place, codify the current deference to local law in determining marital status for federal tax purposes. Most importantly, the comments further recommend that the final regulations …

A Tax Audible: Coaches And Buyouts, Jeffrey H. Kahn

Scholarly Publications

No abstract provided.

Officers Under The Appointments Clause, John Plecnik

Law Faculty Articles and Essays

Much ink has been spilled, and many keyboards worn, debating the definition of "Officers of the United States" under the Appointments Clause of Article II, Section 2, Clause 2 of the Constitution. The distinction between Officers and employees is constitutionally and practically significant, because the former must be appointed by the President, with or without the advice and consent of the Senate, Courts of Law, or Heads of Departments. In contrast, employees may be hired by anyone in any manner.

Appointments Clause controversies are triggered when a government official who was hired as an employee is accused of unconstitutionally wielding …

The Individual Mandate Tax Penalty, Jeffrey H. Kahn

Scholarly Publications

In 2010, President Obama signed legislation that significantly altered the healthcare and health insurance markets in the United States. An integral part of that reform is the individual mandate, a provision that requires individuals to purchase and maintain healthcare insurance. Failure to maintain such coverage subjects an individual to a tax penalty. The Supreme Court upheld the constitutionality of that provision under Congress’s taxing power.

Despite the Supreme Court upholding the individual mandate, fundamental questions remain. This Article addresses the question of whether the use of a tax penalty to encourage taxpayers to do something that the government desires is …

Loving And Legitimacy: Irs Regulation Of Tax Return Preparation, Steve R. Johnson

Scholarly Publications

No abstract provided.

Recent Irs Guidance Provides A Degree Of Certainty For 403(B) Plans, Gregory L. Needles, Christina Payne-Tsoupros

Journal Articles

The IRS has released long-awaited guidance expanding the availability of self correction for 403(b) plans and opening the pre-approved plan program. On Dec 12, 2012, the IRS released Rev. Proc. 2013-12, 2013-4 IRB 313, which expanded its self-correction program -- the Employee Plans Compliance Resolution System (EPCRS) -- for 403(b) plans. On 3/28/13, the IRS issued Rev. Proc. 2013-22, 2013-18 IRB 985, opening its 403(b) pre-approved plan program. The broader scope of correction under Rev. Proc. 2013-12 is a welcome relief to 403(b) plan sponsors, who may now take advantage of EPCRS to remedy mistakes and avoid plan disqualification in …

Justice For All: Reimagining The Internal Revenue Service, David J. Herzig

Law Faculty Publications

The ability of the Internal Revenue Service to both collect the tax and enforce the initial determination of tax liability in a neutral and fair manner has been compromised by a February 2011 pronouncement issued by the Department of Justice stating that the President and the Department of Justice believe that section 3 of the Defense of Marriage Act is unconstitutional and that the Department of Justice will no longer defend the statute in courts. The pronouncement results in a disparate treatment of similar taxpayers based solely on the forum of litigation. Through this lens, I examine whether it is …

Navigating Tefra Partnership Audits In Multi-Tiered Entity Structures, Mary A. Mcnulty, Robert D. Probasco, Lee S. Meyercord

Faculty Scholarship

The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) established a unified procedure for determining the tax treatment of partnership items at the partnership level rather than the partner level. Although these rules addressed a serious and real administrative problem in the assessment of partnership level deficiencies, they also created a complex process with many new problems and potential traps. One particularly unique set of challenges arises in the context of multi-tiered entities.

Multi-tiered entities are partnerships that have a partnership or other pass-through entity as a partner. The pass-through partner is commonly referred to as a “tier,” and …

Tax Advice For The Second Obama Administration, Michael J. Graetz

Faculty Scholarship

Delivered January 18, 2013 as the keynote address at a conference cosponsored by Pepperdine Law School and Tax Analysts.

Some Realism About Responsive Tax Administration, Leigh Osofsky

Articles

No abstract provided.

What Do Courts Have To Do With It?: The Judiciary's Role In Making Federal Tax Law, Leandra Lederman

Articles by Maurer Faculty

The Internal Revenue Code is an important source of federal tax law, but it is not the only source. The U.S. Department of the Treasury and Internal Revenue Service issue important guidance, and federal courts interpret all of these authorities. This essay provides an overview of federal tax litigation, at both the trial and appellate levels, and discusses the interplay among Congress, the Treasury, and the judiciary in developing federal tax law.

Free Rider: A Justification For Mandatory Medical Insurance Under Health Care Reform?, Jeffrey H. Kahn, Douglas A. Kahn

Scholarly Publications

Section 1501 of the Patient Protection and Affordable Care Act added section 5000A to the Internal Revenue Code to require most individuals in the United States, beginning in the year 2014, to purchase an established minimum level of medical insurance. This requirement, which is enforced by a penalty imposed on those who fail to comply, is sometimes referred to as the “individual mandate.” The individual mandate is one element of a vast change to the provision of medical care that Congress implemented in 2010. The individual mandate has proved to be controversial and has been the subject of a number …

Tefra-Partnership Refunds: Five Steps To Protect A Partner’S Rights, Mary A. Mcnulty, Robert D. Probasco, Carla C. Crapster

Faculty Scholarship

The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) established a unified procedure for determining the tax treatment of partnership items at the partnership level rather than the partner level. The TEFRA-partnership refund procedures differ from the refund claim procedures that apply to other taxpayers. For a TEFRA partnership, a refund claim is an administrative adjustment request (AAF) and a notice of deficiency is a notice of final partnership administrative adjustment (FPAA). Procedures for the assessment of additional tax attributable to partnership items have received much attention in recent years, but the procedures concerning refunds are complex and full …