Law Commons^™

Nullifying The Debt Ceiling Threat Once And For All: Why The President Should Embrace The Least Unconstitutional Option, Neil H. Buchanan, Michael C. Dorf

Cornell Law Faculty Publications

In August 2011, Congress and the President narrowly averted economic and political catastrophe, agreeing at the last possible moment to authorize a series of increases in the national debt ceiling. This respite, unfortunately, was merely temporary. The amounts of the increases in the debt ceiling that Congress authorized in 2011 were only sufficient to accommodate the additional borrowing that would be necessary through the end of 2012. In an economy that continued to show chronic weakness -- weakness that continues to this day -- the federal government would predictably continue to collect lower-than-normal tax revenues and to make higher-than-normal expenditures, …

Vat Triangulation With A Us Middleman Vstr, C-587/10, Richard Thompson Ainsworth

Faculty Scholarship

It is not every day that an American firm finds itself in the middle of an EU VAT controversy that significantly develops the law. However, the September 27, 2012 decision of the European Court of Justice (ECJ) does just that. The case is Vogtländische Straβen-,Tief- und Rohrleitungsbau GmbH Rodewisch (VSTR) v. Finanzamt Plauen.

In November 1998 Atlantic International Trading Company (AIT), an American company established in New York, NY, purchased two stone-crushers from VSTR, a firm established in Germany. AIT quickly re-sold the stone-crushers to an end user established in Finland. The VSTR/AIT contract was “ex works,” that is AIT …

Vat Fraud & Triangulation, Richard Thompson Ainsworth

Faculty Scholarship

Missing trader intra-community (MTIC) fraud has received a lot of domestic enforcement attention. True cross border enforcement (joint or coordinated multi-Member State audit) has been limited. There are signs that this is changing as the Member States become more aggressive in their search for revenue.

Along with this shift in enforcement focus, triangulation analysis has moved from being an interesting aspect of the MTIC fraud structure to the central element in a larger understanding of how a fraudster thinks and how he carries out his fraud. We are coming to understand that triangulations are not only the mechanism of how …

Neither Rules Nor Standards, Steven A. Dean

Faculty Scholarship

No abstract provided.

School Of Risk Control Excellence: Responsibilities In Tax Practice And Malpractice Risks, Diane S. Wainwright

William & Mary Annual Tax Conference

No abstract provided.

Partnership Tax Planning Without Falling Into The Canal (Slides), Andrea M. Whiteway

William & Mary Annual Tax Conference

No abstract provided.

Introduction To M&A Tax: Due Diligence Traps In S Corp Acquisitions (Slides), Robert G. Mcelroy, William M. Richardson

William & Mary Annual Tax Conference

No abstract provided.

Partnership Tax Planning Without Falling Into The Canal (Outline), Andrea M. Whiteway

William & Mary Annual Tax Conference

No abstract provided.

Objections To Taxing Resale Of Residential Property Under A Vat, Wei Cui

All Faculty Publications

The “pre-collection” of tax on imputed consumption generated by owner-occupied housing plays a crucial role in both consumption tax theory and real-world tax regimes. However, even under current VAT systems with the widest tax bases, the taxation of imputed housing consumption is incomplete because pre-existing housing stock is typically not taxed when the VAT is introduced, and because housing value may appreciate after initial sale. In response, some have recommended taxing residential re-sale to capture previously untaxed consumption value. This paper argues that because the incidence of any properly-designed tax on resale will fall only on economic rent and existing …

Back From The Abyss: Real Estate Tax Planning From The Bottom Up (Slides), Steven M. Friedman

William & Mary Annual Tax Conference

No abstract provided.

Double Or Nothing: A Tax Treaty For The 21st Century, Reuven S. Avi-Yonah, Oz Halabi

Law & Economics Working Papers

The current tax treaty network was developed in the 1920s and 1930s in order to prevent double residence/source taxation. This kind of double taxation rarely exists any more because most countries have adopted either an exemption system or a foreign tax credit regime in their domestic (non‐treaty) law, which effectively prevents residence/source double taxation even in the absence of a treaty. Instead, as Tsilly Dagan has pointed out, the current treaties serve mostly to transfer revenue from the source country to the residence country. This suggests that treaties may be unnecessary because exemption from withholding taxes by source countries can …

Financial Disability For All, T. Keith Fogg

Working Paper Series

The Internal Revenue Code has four discreet sections that allow late filing of claims and other documents under the circumstances described in those sections. The IRS has promulgated a procedural regulation that allows it to permit late elections under prescribed circumstances. Neither the Code sections nor the Regulation cover all of the circumstances in which taxpayers have a good excuse for missing a time frame. The current provisions have developed in an ad hoc manner. More ad hoc development of this area is possible as equitable tolling litigation seeks to open up time frames under the Code despite the efforts …

The Tax Expenditure Budget Is A Zombie Accountant, Steven A. Dean

Faculty Scholarship

No abstract provided.

The Tax Expenditure Budget Is A Zombie Accountant, Steven Dean

Faculty Scholarship

Like a student blocking his access to the internet to help him study, governments across the globe rely on commitment devices to generate fiscal discipline. From the collapse of the Congressional Supercommittee in the United States to the near-cataclysmic failure of a mechanism designed to prevent the European Union debt crisis, the evidence suggests that faith in such commitment devices is misplaced. This Article focuses on one such device that stubbornly refuses to stay dead: the tax expenditure budget. Created to guard against abuse by publicizing the costs of tax subsidies then resurrected as a bean counter, the tax expenditure …

Real-Time Collection Of The Value-Added Tax: Some Business And Legal Implications, Richard Thompson Ainsworth, Boryana Madzharova

Faculty Scholarship

Recent estimates of the level of VAT fraud in the EU are commensurate with the EU budget. With the Green paper on the future of VAT, the European Commission stressed the urgency and necessity of comprehensive VAT reforms. This paper analyses the business and legal implications of the recently proposed split-payment mechanism, which, if implemented, would move VAT’s method of collection to real-time. The discussion is positioned in the context of two increasingly visible trends in the EU – the general shift towards greater reliance on indirect taxation and the growing popularity of electronic payment instruments. The potential implementation of …

Brief Of Benjamin N. Cardozo School Of Law Tax Clinic As Amicus Curiae In Support Of The Respondents, Carlton M. Smith

Amicus Briefs

The Cardozo Tax Clinic represents, for free, low-income taxpayers with respect to their federal income tax matters – both before the Internal Revenue Service and in the federal courts. Occasionally, the Clinic’s assistance has been sought after those individuals, on their own, filed a document late – either with the IRS or the courts -- under a time deadline set out in the Internal Revenue Code or in a regulation promulgated thereunder. Usually, no extraordinary equitable reasons occurred that might excuse such late filing. See, e.g., Iljazi v. Commissioner, T.C. Summary Op. 2010-59 (client simply filed administrative claim for …

Not All Defined Value Clauses Are Equal, Wendy G. Gerzog

All Faculty Scholarship

Defined value clauses used to value nonmarketable family limited partnership (FLP) interests create valuation distortions and other public policy issues. This paper describes these abuses and proposes the employment of restrictions similar to those applied to pecuniary formula marital deduction clauses.

The article explains how pecuniary formula marital deduction provisions created valuation distortions by allowing for undervaluation of the marital share that were remedied by the IRS’s Rev. Proc. 64-19 and the enactment of section 2056(b)(10). The article analyzes recent case law expanding the use of defined value clauses into the FLP area and criticizes the courts for not applying …

It's Not A Tax (Statutorily), But It Is A Tax (Constitutionally), Steve R. Johnson

Scholarly Publications

No abstract provided.

Preserving Fairness In Tax Administration In The Mayo Era, Steve R. Johnson

Scholarly Publications

One of the dominant themes in contemporary federal taxation is bringing tax administration within the fold of general administrative law. In 2011, the United States Supreme Court unambiguously embraced this movement in the landmark case Mayo Foundation for Medical Education & Research v. United States, in which the Court held that challenges to the validity of Treasury regulations generally are governed by the Chevron standard to the same extent as are regulations issued by other administrative agencies.

There was an immediate and strong hostile reaction to Mayo in tax circles. Many fear that Mayo dramatically tips the balance in favor …

Putting State Courts In The Constitutional Driver's Seat: State Taxpayer Standing After Cuno And Winn, Edward A. Zelinsky

Articles

This article explores the implications of the U.S. Supreme Court’s decisions in DaimlerChrysler Corp. v. Cuno and Arizona Christian School Tuition Organization v. Winn. In Cuno and Winn, the Court held that state taxpayers lacked standing in the federal courts. Because the states have more liberal taxpayer standing rules than do the federal courts, Cuno and Winn will not terminate taxpayers’ constitutional challenges to state taxes and expenditures, but will instead channel such challenges from the federal courts (where taxpayers do not have standing) to the state courts (where they do). Moreover, municipal taxpayer standing in the federal courts, which …

How To Choose The Least Unconstitutional Option: Lessons For The President (And Others) From The Debt Ceiling Standoff, Neil H. Buchanan, Michael C. Dorf

Cornell Law Faculty Publications

The federal statute known as the “debt ceiling” limits total borrowing by the United States. Congress has repeatedly raised the ceiling to authorize necessary borrowing, but a political standoff in 2011 nearly made it impossible to borrow funds to meet obligations that Congress had affirmed earlier that very year. Some commentators urged President Obama to ignore the debt ceiling, while others responded that such borrowing would violate the separation of powers and therefore that the president should refuse to spend appropriated funds.

This Article analyzes the choice the president nearly faced in summer 2011, and which he or a successor …

Anonymous Withholding Agreements And The Future Of International Cooperation In Taxing Foreign Financial Accounts : Testimony Before The Finance Committee Of The German Bundestag, September 24, 2012 (Statement By Associate Professor Itai Grinberg, Geo. U. L. Center), Itai Grinberg

Georgetown Law Faculty Publications and Other Works

Chairwoman Reinemund and members of the Finance Committee, this testimony will make three key points:

• Automatic information exchange is superior to anonymous withholding for the purpose of combating tax evasion involving the use of foreign financial accounts.

• German ratification of the Swiss-German anonymous tax withholding agreement would stifle the emergence of a multilateral automatic information exchange system. As a result, Germany would be less able to address its own concerns with tax evasion through foreign accounts over the medium term. By ratifying this agreement, Germany would also slow the development of a multilateral system that would allow many …

Putting Nevada In Perspective: State And Local Government Budgets In Recession And Recovery, Tracy M. Gordon

Brookings Scholar Lecture Series

Nevada, the state most affected by the Great Recession of 2008, faced one of the nation's worst state budget shortfalls in 2011. This presentation examines state budget drivers, including constitutional requirements, tax and spending limitations, federal statutes, demographics, and the resulting policy choices to evaluate how state-level decisions affect local jurisdictions that continue to cope with lower property values, foreclosures, and high unemployment. It will also discuss longer term challenges including rising health care costs and retiree pensions as well as issues surrounding implementation of the Affordable Care Act.

The 'No Surplusage' Canon In State-Local Tax Litigation, Steve R. Johnson

Scholarly Publications

Previous installments of this column have examined numerous canons or conventions of statutory interpretation in their application to state and local tax controversies. This installment considers another canon: the precept that courts should prefer interpretations that render no part of a statute superfluous. A recent treatise phrased the principle thus:

If possible, every word and every provision [of an enactment] is to be given effect. . . . None should be ignored. None should needlessly be given an interpretation that causes it to duplicate another provision or to have no consequence.

The first part below describes the canon generally. The …

Elaine Hightower Gagliardi On Treasury Transforms The Portability Election: Making The Dsue Amount A Reliable Planning Tool, Elaine H. Gagliardi

Faculty Journal Articles & Other Writings

With the issuance of temporary regulations, Treasury pulls back the cloak of uncertainty and reveals a portability election that proves to be relatively dependable and a useful planning tool. The temporary portability regulations,1 issued June 15, 2012, remove the “now you see it, now you don’t”2 quality of the deceased spousal unused exclusion (“DSUE”) amount as enacted by Congress. With a sleight of hand, Treasury rewrites the plain wording of the statute to eliminate uncertainty. The temporary regulations provide a clear path for avoiding loss of the DSUE amount on remarriage. The regulations allow donors to make gifts without fear …

"Perpetual Trusts: The Walking Dead" And "Congress Should Effectively Curb Gst Exemption For Perpetual Trusts.", Calvin H. Johnson, Lawrence W. Waggoner

Law & Economics Working Papers

In separate but complementary letters to the editor of Tax Notes, Calvin Johnson (University of Texas School of Law) and Lawrence Waggoner (University of Michigan Law School) respond to an article by Dennis Belcher and seven other practicing attorneys that defend the GST exemption for perpetual trusts. In Federal Tax Rules Should Not Be Used to Limit Trust Duration, 126 Tax Notes 832 (Aug 13, 2012), the attorneys argue that the duration of a trust is a state law issue. Their article is actually a response to a Shelf Project article: Lawrence W. Waggoner, Effectively Curbing the GST Exemption for …

Reviving National Muffler: Analyzing The Effect Of Mayo Foundation On Judicial Deference As Applied To General Tax Authority Guidance, Matthew H. Friedman

NULR Online

No abstract provided.

Tefra: No Fix Possible, Just Get Rid Of It!, Steve R. Johnson

Scholarly Publications

No abstract provided.

The Hidden Limits Of The Charitable Deduction: An Introduction To Hypersalience, Lilian Faulhaber

Faculty Scholarship

Behavioral economics introduced the concept of salience to law and economics. In the area of tax policy, salience refers to the prominence of taxes in the minds of taxpayers. This article complicates the literature on salience and taxation by introducing the concept of “hypersalience,” which is in many ways the mirror image of hidden taxation. While a revenue-raising tax provision must be hidden for taxpayers to underestimate their tax bill, a revenue-reducing tax provision – such as a deduction, exclusion, or credit – must be more than fully salient for taxpayers to underestimate their tax bill. In other words, the …

Sales Between A Partnership And Non-Partners, Douglas A. Kahn

Law & Economics Working Papers

Kahn argues that a 1986 amendment to section 707 invalidated several regulatory provisions promulgated under section 267.