Tax Law Commons^™

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 …

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 …

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 …

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 …

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 …

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 …

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 …

Money That Costs Too Much: Regulating Financial Incentives, Kristen Underhill

Indiana Law Journal

Money may not corrupt. But should we worry if it corrodes? Legal scholars in a range of fields have expressed concern about “motivational crowding-out,” a process by which offering financial rewards for good behavior may undermine laudable social motivations, like professionalism or civic duty. Disquiet about the motivational impacts of incentives has now extended to health law, employment law, tax, torts, contracts, criminal law, property, and beyond. In some cases, the fear of crowding-out has inspired concrete opposition to innovative policies that marshal incentives to change individual behavior. But to date, our fears about crowding-out have been unfocused and amorphous; …

Afterlife Of The Death Tax, Samuel D. Brunson

Indiana Law Journal

More than a century ago, Congress enacted the modern estate tax to help pay for World War I. Unlike previous iterations of the estate tax, though, this one outlived the war and accumulated additional goals beyond merely raising revenue. The estate tax helped ensure the progressivity of the tax system as a whole, and it limited the hereditary ability to accumulate wealth.

This modern estate tax almost instantly met with opposition, though. The opposition has never been sufficient to entirely eliminate the estate tax, but it has severely weakened its ability to raise revenue and to prevent the accumulation of …

Bc Ranch Ii V. Commissioner: A Flexible Approach To Perpetual Conservation Easements, Victoria Wolfe

Indiana Law Journal

Depending on the approach used in enforcement, there is the potential to encourage or discourage charitable donations of conservation easements. In Part I, this Note explores the federal charitable income tax deduction for conservation easements and the legislative purpose in enacting the perpetuity requirements. Part II examines the Fifth Circuit’s decision in BC Ranch II and the flexible approach to perpetuity adopted by the court. Finally, Part III considers the implications of the BC Ranch II decision, specifically authority to monitor conservation easements, valuation gaming of easements in the context of perpetuity, and congressional intent in allowing the conservation easement …

Conflicting Approaches To Addressing Ex-Offender Unemployment: The Work Opportunity Tax Credit And Ban The Box, Katherine English

Indiana Law Journal

Each year, roughly 700,000 prisoners are released from their six-by-eight-foot cells and back into society. Sadly, though, many of these ex-prisoners are not truly free. Upon returning to society, they often encounter several challenges that prevent them from resuming a normal, reintegrated lifestyle. For many, the difficulties associated with reentry prove to be too much, and within a short three years of their release, two-thirds of ex-offenders are rearrested, reconvicted, and thrown back into the familiar six-by-eight-foot cell. Recidivism might appear to be entirely the exoffenders’ fault, but ex-offenders are not solely responsible for these recidivism rates or the solution …

Cybersecurity And Tax Reform, Michael Hatfield

Indiana Law Journal

INTRODUCTION

I. THE PAST AND FUTURE OF THE IRS AS A CYBERATTACK TARGET

A. IRS AS A CYBERATTACK TARGET

B. THE FUTURE OF THE IRS AS A CYBERATTACK TARGET1. INFORMATION TECHNOLOGY

2. TAX INFORMATION

3. TYPES OF FUTURE ATTACKS

II. THE IRSWILL FAIL TO IMPLEMENT ADEQUATE CYBERSECURITY

A. VERY POOR HISTORY OF IMPROVING TECHNOLOGY

B. INADEQUATE FUNDING

C. INABILITY TO RECRUIT AND RETAIN EXPERTS

D. TOOMANY USERS

E. CYBERSECURITY IS DIFFICULT

III. BETTER DIGITAL TECHNOLOGY IS NOT THE GOAL

A. SLOWING THE USE OF DIGITAL TECHNOLOGY

B. CYBERSECURITY AND TAX REFORM

1. PAY-AS-YOU-EARN (PAYE)

2. SIMPLIFIED INCOME TAX

3. PURIFIED …

The Constitutionality Of A National Wealth Tax, Dawn Johnsen, Walter Dellinger

Indiana Law Journal

The United States needs innovative approaches to help rebuild foundational, shared understandings of American democracy, the American Dream, and opportunity and fairness. Tax policy provides one central context in which collective judgments about fundamental values help form national identity. We believe that a national wealth tax (that is, a tax on individuals’ net worth) should be among the policy options under consideration to support vital infrastructure, social service, and other governmental functions. Although not a new concept, a wealth tax may be an idea whose time has come, as inequality soars toward record highs.

Our aim in this Essay is …

How Federal Tax Law Rewards Housing Segregation, Michelle D. Layser

Indiana Law Journal

INTRODUCTION

I. THE SPATIAL DISTRIBUTION OF TAX-BASED HOUSING SUBSIDIES

A.WHY THE SPATIAL DISTRIBUTION OF TAX-BASED HOUSING SUBSIDIES MATTERS

B. THE LOCATION OF TAX-SUBSIDIZED HOUSING IN AMERICA

1. THE SPATIAL DISTRIBUTION OF MORTGAGE INTEREST DEDUCTION BENEFITS

2. THE SPATIAL DISTRIBUTION OF LOW-INCOME HOUSING TAX CREDIT PROJECTS

II. VISUALIZING THE SPATIAL DISTRIBUTION OF TAX-BASED HOUSING SUBSIDIES

A. THE BIG PICTURE: MAPPING TAX-BASED HOUSING SUBSIDIES

B. A CLOSER LOOK: DESCRIBING TAX-SUBSIDIZED NEIGHBORHOODS

1. NEIGHBORHOODS WITH HIGH SHARES OF MORTGAGE INTEREST DEDUCTION BENEFITS AND FEW LIHTC PROPERTIES

2. NEIGHBORHOODS WITH HIGH NUMBERS OF LIHTC PROPERTIES AND LITTLE MORTGAGE INTEREST DEDUCTION BENEFIT

3. NEIGHBORHOODS IN …

User-Friendly Taxpaying, Kathleen Delaney Thomas

Indiana Law Journal

Technology is revolutionizing our lives. With the touch of a button or a simple voice command, we can instantly order groceries, get directions, or find the nearest sushi restaurant. Sensibly, the private sector has capitalized on these recent innovations to drive up profits. To sell more laundry detergent, Amazon now enables consumers to order refills by simply pressing the “dash button” mounted above their laundry machines. Starbucks lures more customers by allowing them to pre-order online and have their drink waiting when they arrive at the store. The theory behind this approach is simple: if you want someone to use …

A Diachronic Approach To Bob Jones: Religious Tax Exemptions After Obergefell, Samuel D. Brunson, David J. Herzig

Indiana Law Journal

In Bob Jones University v. United States, the Supreme Court held that an entity may lose its tax exemption if it violates a fundamental public policy, even where religious beliefs demand that violation. In that case, the Court held that racial discrimination violated fundamental public policy. Could the determination to exclude same-sex in-dividuals from marriage or attending a college also be considered a violation of fundamental public policy? There is uncertainty in the answer. In the re-cent Obergefell v. Hodges case that legalized same-sex marriage, the Court asserted that LGBT individuals are entitled to “equal dignity in the eyes of …

Charitable Giving And Utilitarianism: Problems And Priorities, Miranda Perry Fleischer

Indiana Law Journal

Charitable giving is redistributive at heart. It is thus surprising that scholarship on the charitable tax subsidies focuses on the efficient and pluralistic production of public goods while largely ignoring distributive justice concerns. Existing scholarship and current law leave crucial questions unanswered: How should we prioritize among charities? Should subsidized groups be required to help the poor? Are criticisms that charities do too little to help the poor valid? This Article is part of a series that examines how each common theory of distributive justice would answer these questions.

More specifically, this Article explores utilitarianism and the charitable tax subsidies …

The Medical Device Excise Tax: An Unfair Burden, Elizabeth M. Bolka

Indiana Law Journal

No abstract provided.

Magnifying Deterrence By Prosecuting Professionals, Scott Schumacher

Indiana Law Journal

This Article examines the recent series of criminal prosecutions against tax professionals and offshore bankers. These criminal cases, brought against the largest Swiss bank (UBS), the oldest Swiss bank (Wegelin), one of the largest accounting firms in the world (KPMG), as well as numerous lawyers and accountants, represent a dramatic shift for the U.S. Department of Justice. After decades of tolerating abusive tax shelters and tax haven banks, the government changed its policy. However, rather than indicting the individuals and corporations who invested in tax shelters or hid money in offshore accounts, the Justice Department indicted the lawyers, accountants, and …

How Nations Share, Allison Christians

Indiana Law Journal

Every nation has an interest in sharing the gains they help create by participating in globalization. Citizens should be very interested in discovering how well their governments fare in claiming an adequate share of this international income stream, since a government that cannot or will not exert its taxing jurisdiction internationally is potentially missing out on a very large and very productive source of revenue. Yet it is all but impossible for citizens to observe exactly how, or how well, their governments navigate this aspect of economic globalization. The vast majority of international tax law plays out in practice through …

Saving Seaborn: Ownership Not Marriage As The Basis Of Family Taxation, Dennis J. Ventry Jr

Indiana Law Journal

One of the most famous Supreme Court tax cases celebrated its eightieth birthday last year. In Poe v. Seaborn, the Court reified two principles of the federal income tax: ownership determines tax liability and state law determines ownership. This Article affirms that family taxation continues to follow ownership, not marriage, despite the federal government’s position that the “ownership equals taxability” rule applies almost exclusively to heterosexual spouses. Verifying the vitality of this principle carries significant implications for all families, particularly nontraditional families. Under the aegis of Seaborn, the principle authorizes certain members of state-recognized relationships—marriages, domestic partnerships, civil unions—to file …

When Should Asset Appreciation Be Taxed?: The Case For A Disposition Standard Of Realization, Jeffrey L. Kwall

Indiana Law Journal

The realization requirement is one of the most basic elements of the United States income tax. Due to this requirement, any increase in the value of a person’s property is not taxed when it occurs. Rather, the tax on asset appreciation is deferred until the occurrence of a realization event; that is, until the property is transferred in exchange for money or other consideration. By contrast, all other forms of income (e.g., salary, rents) are taxed immediately.

The realization requirement is one of the most basic elements of the United States income tax. Due to this requirement, any increase in …

Retroactivity And The Fraud Enforcement And Recovery Act Of 2009, Matthew Titolo

Indiana Law Journal

This Article resolves confusion over the scope of the Fraud Enforcement and Recovery Act (FERA), which amends the False Claims Act (FCA), to clarify that it covers fraud against the taxpayers even where committed by and against other government contractors and subcontractors. I focus on a controversial retroactivity clause applying FERA’s expanded liability language to pre-enactment conduct. Ambiguity has led to inconsistent outcomes: some courts have ruled that FERA’s new language applies to pre-enactment conduct while others have reached the opposite result. Much of practical consequence rides on how we resolve this ambiguity—the Department of Justice is currently investigating over …

The Dual Subsidy Theory Of Charitable Deductions, Ilan Benshalom

Indiana Law Journal

Americans contribute billions of dollars to charities on an annual basis. Charitable contributions not only represent American generosity, they also represent a form of giving that provides donors with tax relief The current literature on charitable contributions suggests that this relief plays an important role not only in decentralizing the provision of public goods, but also in helping the nonprofit sector provide public goods more efficiently than government spending. Even if these claims were indisputable, they are insufficient to justify the current scheme's antidemocratic function. This Article argues that, at their core, tax-subsidized contributions are part of a nondemocratic mechanism …

Recasting Carried Interest: An Examination Of Recent Tax Reform Proposals, Marguerite Racher Snyder

Indiana Law Journal

No abstract provided.

Putting The Community Back In Community Benefit: Proposed State Tax Exemption Standard For Nonprofit Hospitals, Michele R. Goodman

Indiana Law Journal

No abstract provided.

Does The Constitutional Norm Of Separation Of Church And State Justify The Denial Of Tax Exemption To Churches That Engage In Partisan Political Speech, Johnny Rex Buckles

Indiana Law Journal

No abstract provided.