Tax Law Commons^™

Resolving Unfairness In A Fair Way: How The Grantor Trust Rules Should Be Reformed, Aaron T. Anderson

BYU Law Review

Affluent taxpayers often create one or more grantor trusts to achieve significant tax savings. By leveraging mismatches in the rules between the income and estate tax systems, these taxpayers avoid the compressed income tax brackets of trusts while minimizing the property that is included in their estates for estate tax purposes. Some commentators have argued that reform is needed to remove such mismatches. Yet, trusts that rely on the current grantor trust rules abound.

This Note (1) provides a background and history of the rules and use of grantor trusts, (2) argues that harmonizing the estate and income tax systems …

Taxing Data, Omri Marian

BYU Law Review

The Article offers a new theory of tax on data collection and transmission as a primary source of government revenue. This tax does not depend on the monetary value of data. This "data tax" can supplement, and in some instances replace, income taxes. The data tax can (1) mitigate some of the failures of income taxes in a globalized data based economy, and (2) serve to alleviate some of the externalities of a data based economy. The Article advances the following four arguments. First, current challenges to tax systems stem largely from the fact that traditional models of taxation were …

Is Trade Sexist? How “Pink” Tariff Policies’ Harmful Effects Can Be Curtailed Through Litigation And Legislation, Miranda Hatch

BYU Law Review

No abstract provided.

A Memorial And Remonstrance Against Taxation Of Churches, Reece Barker

BYU Law Review

No abstract provided.

Wealth Transfer Tax Planning After The Tax Cuts And Jobs Act, John A. Miller, Jeffrey A. Maine

BYU Law Review

On December 17, 2017, Congress passed the Tax Cuts and Jobs Act (TCJA). Among its many impacts, the TCJA increased the inflation-adjusted estate tax basic exclusion amount to $10,000,000 on a temporary basis. This has dramatic implications for many existing and future estate plans, including a major crossover impact on income tax planning. In this Article, we explain the operation of the federal wealth transfer taxes (the estate tax, the gift tax, and the generation skipping transfer tax) in the wake of the TCJA and dissect the basic tax planning techniques for wealth transmission. The overall design of this Article …

Taxing Parents: Welfarist Theories, Shannon Weeks Mccormack

BYU Law Review

The Internal Revenue Code (the "Code") taxes parents inequitably. Couples with a sole earner are undertaxed compared to couples with dual earners and to single parents. Legal tax scholarship (including my own) has identified the many inequities that result from this sole-earner bias and have called for its elimination. But while these arguments have been sufficient for some, they do remain susceptible to the criticism that they are theoretically incomplete.

That critique might proceed as follows. Simply establishing that an inequity exists does not create a full argument for legal reform. After all, it might be argued, the Code plays …

Information Matters In Tax Enforcement, Leandra Lederman, Joseph C. Dugan

BYU Law Review

Most scholars recognize both that the government needs information about taxpayers’ transactions to determine whether their reporting is honest, and that third third-party reporting helps the government obtain that information. Given governments’ reliance on tax collections, it would be risky to think that information or third third-party reporting is not needed by tax agencies. However, a recent article by Professor Wei Cui asserts that “modern governments can practice ‘taxation without information.’” Professor Cui’s argument rests on two claims: (1) “giving governments effective access to taxpayer information through third parties does not explain the success of modern tax administration” because, he …

Nonprofit College Crash: Enforcing Board Fiduciaries Through Increased Accountability And Transparency In The Irs Form 990 Procedure, Patrick R. Baker, Paula Hearn Moore, Kaleb Paul Byars

Brigham Young University Education and Law Journal

No abstract provided.

Mormon Profit: Brigham Young, Tithing, And The Bureau Of Internal Revenue, Samuel D. Brunson

BYU Law Review

No abstract provided.

The Nonprofit Sector's Uncertain Future In A Post-Tcja America, Jt Alston

BYU Law Review

The tax deduction for charitable contributions has existed in the Internal Revenue Code in some form since the early 1900s. While the charitable deduction has been preserved in the U.S. tax code for more than 100 years, the Tax Cuts and Jobs Act (TCJA) of December 2017 threatens charities by removing the tax incentive to donate to charity from all but the wealthiest taxpayers. Both charities and nonprofits play a vital role in the U.S. economy by providing some goods and services more efficiently than the public or private sectors. In this Note I explore the role of nonprofits in …

Does Enforcement Reduce Voluntary Tax Compliance?, Leandra Lederman

BYU Law Review

Governments generally use enforcement methods, such as audits and the imposition of penalties, to deter noncompliance with tax laws. Although this approach is consistent with most economic modeling of tax compliance, some scholars caution that enforcement may backfire, “crowding out” taxpayers’ intrinsic motivations to pay taxes to such an extent that they reduce their tax payments. This Article analyzes the existing evidence to determine if this occurs. In fact, field studies suggest that enforcement tools, such as audits, are very effective deterrents. A few recent studies have found that audits have a negative effect on the subsequent tax payments of …

Per Se Economic Substance, Jesse P. Houchens

BYU Law Review

The economic substance doctrine is used by the IRS and courts to distinguish legal tax avoidance from tax evasion. More specifically, executive and judicial bodies use this doctrine to revoke statutorily compliant tax benefits that arise from transactions that lack, beyond such tax benefits, both a subjective business purpose and an objective economic effect. The most common tool for measuring the objective economic effect of a transaction is the pre-tax profit test. However, disagreement among courts and scholars applying this test has led to taxpayer uncertainty and accusations of reverse-engineered opinions. In this Comment, I reevaluate and propose an alternative, …

Clark Memorandum: Fall 2017, J. Reuben Clark Law School, Byu Law School Alumni Association, J. Reuben Clark Law Society

The Clark Memorandum

• Ascending the Mountain: A Story of the People of the Great Hill (Michalyn Steele)
• Unlocking Potential: How a Law Degree Amplifies Your Ability to Bless the World (Jane Mitchell)
• The EU Apple Case: Who Has a Dog in the Fight? (J. Clifton Fleming, Jr.)

The Other Eighty Percent: Private Investment Funds, International Tax Avoidance, And Tax-Exempt Investors, Omri Marian

BYU Law Review

The taxation of private equity managers’ share of funds’ profits—the twenty percent “carried interest”—received much attention in academic literature and popular discourse. Much has been said and written about the fact that fund managers’ profits are taxed at preferred rates. But what about the other eighty percent of funds’ profits? This Article theorizes that the bulk of such profits are never taxed. This is a result of a combination of three factors: First, private equity, venture capital, and hedge funds (collectively, Private Investment Funds, or “PIFs”) are major actors in cross-border investment activity. This enables PIFs to take advantage of …

Defending Worldwide Taxation With A Shareholder-Based Definition Of Corporate Residence, J. Clifton Fleming Jr., Robert J. Peroni, Stephen E. Shay

BYU Law Review

This Article argues that a principled, efficient, and practical definition of corporate residence is necessary even if some form of corporate integration is adopted, and that such a definition is a key element in designing either a real worldwide or a territorial income tax system as well as a potential restraint on the inversion phenomenon. The Article proposes that the United States adopt a shareholder-based definition of corporate residence that is structured as follows: 1. A foreign corporation is a U.S. tax resident for any year if fifty percent or more of its shares, determined by vote or value, was …

Developing Countries In An Age Of Transparency And Disclosure, Diane Ring

BYU Law Review

No abstract provided.

The Foreign Tax Credit War, Bret Wells

BYU Law Review

The government has been involved in a sustained war against objectionable foreign tax credit transactions. This war has caused the U.S. foreign tax credit regime to be riddled with complexity that spawns incoherent outcomes. The complexity contained in section 901 was created due to a legitimate concern: the threats posed by objectionable transactions that artificially generate excess foreign tax credits represent real policy problems. Since at least 1975, Congress and the Treasury Department have been convinced that the cross-crediting of excess foreign tax credits arising from “objectionable transactions” required a response in addition to simply relying on section 904. Thus, …

R&D Tax Incentives--Growth Panacea Or Budget Trojan Horse?, Stephen E. Shay, J. Clifton Fleming Jr., Robert J. Peroni

Faculty Scholarship

No abstract provided.

Two Cheers For The Foreign Tax Credit, Even In The Beps Era, J. Clifton Fleming Jr., Robert J. Peroni, Stephen E. Shay

Faculty Scholarship

Reform of the U.S. international income taxation system has been a hotly debated topic for many years. The principal competing alternatives are a territorial or exemption system and a worldwide system. For reasons summarized in this article, we favor worldwide taxation if it is real worldwide taxation – i.e., a non-deferred U.S. tax is imposed on all foreign income of U.S. residents at the time the income in earned. This approach is not acceptable, however, unless the resulting double taxation is alleviated. The longstanding U.S. approach for handling the international double taxation problem is a foreign tax credit limited to …

Beps And The New International Tax Order, Allison Christians

BYU Law Review

Nations across the world are currently engaged in a coordinated international effort, ostensibly to curb excessive tax avoidance by the world’s biggest multinational companies. This Article contends, however, that the most likely impact will be to entrench a monopoly held by a small number of rich countries over the policymaking processes that created the tax avoidance problem to begin with. To examine this contention and probe possible solutions to it, the Article considers the legal and institutional components of the coordination project, by situating them historically and analyzing their multi-functionality as both norm diffusion and institutional reinforcement mechanisms. The Article …

Competitiveness, Tax Base Erosion, And The Essential Dilemma Of Corporate Tax Reform, Kimberly A. Clausing

BYU Law Review

Label contradicts reality for the U.S. international corporate tax system. The U.S. system is typically labeled as a worldwide tax system with a statutory rate of 35%, both uncommon features among our trading partners. Yet these markers of the U.S. tax system do not accurately describe reality, where multinational firms routinely face far lower effective tax rates and little, if any, tax is collected on foreign income. Understanding this discrepancy between label and reality is essential to evaluate recent policy debates surrounding corporate inversions and the competitiveness of the U.S. international tax system. Although there is an essential policy tradeoff …

Inversions, Related Party Expenditures, And Source Taxation: Changing The Paradigm For The Taxation Of Foreign And Foreign-Owned Businesses, Julie A. Roin

BYU Law Review

The disconnect between the rules for the taxation of domestic businesses and foreign and foreign-owned businesses operating in the United States both diminishes the federal treasury and distorts taxpayer and business behavior. Yet bringing the sets of rules into closer coordination is no simple task. This Article examines many of the solutions proffered in the academic literature and details the difficulties and trade-offs that each entails.

We Believe In Being Honest: Dependency Exemptions For Lds Missionaries, Annalee Hickman Moser

Brigham Young University Journal of Public Law

No abstract provided.

Designing A 21st Century Corporate Tax – An Advance U.S. Minimum Tax On Foreign Income And Other Measures To Protect The Base, Stephen E. Shay, J. Clifton Fleming Jr., Robert J. Peroni

Faculty Scholarship

The 21st Century has seen unprecedented levels of corporate tax aggressiveness and avoidance. This article continues our exploration of second best international tax reforms that would protect the U.S. corporate tax base and have some likelihood of adoption. In this case, we consider how a U.S. minimum tax on foreign income earned by a controlled foreign corporation should be designed to protect the United States against erosion of its corporate income tax base and to combat tax competition by low-tax intermediary countries. In the authors’ view, a minimum tax should be an interim levy that preserves the residual U.S. tax …

Finishing The Job On Section 356(A)(2): Closing Loopholes And Providing Consistent Treatment To Boot In Tax-Free Reorganizations, Trevor Crowley

BYU Law Review

No abstract provided.

G8 Principles: Identifying The Anonymous, Max Biedermann

Brigham Young University International Law & Management Review

No abstract provided.

Innovations In The War On Tax Evasion, Tracy A. Kaye

BYU Law Review

Offshore tax evasion is a global problem that requires a global solution. Nevertheless, the United States unilaterally responded to the offshore tax evasion problem by enacting the Foreign Account Tax Compliance Act. FATCA requires foreign banks to report information about financial accounts held by U.S. taxpayers directly to the Internal Revenue Service and imposes a thirty percent withholding tax on certain U.S. payments to any bank that will not cooperate. Yet, U.S. banks were not required to report any information on nonresident account holders (except for Canadians) to anyone. FATCA garnered worldwide attention. The European Union expressed its concerns to …

Effect Of United States V. Williams On The Offshore Voluntary Disclosure Program, Steven Ferraro

Brigham Young University International Law & Management Review

No abstract provided.

Salience And Sin: Designing Taxes In The New Sin Era, Rachelle Holmes Perkins

BYU Law Review

No abstract provided.

Unfair And Unintended: The Tax-Exempt Organization Blocker Loophole, Andrew M. Dougherty

BYU Law Review

No abstract provided.