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Those Who Know, Those Who Don't, And Those Who Know Better: Balancing Complexity, Sophistication, And Accuracy On Tax Returns, Michelle Lyon Drumbl Jan 2013

Those Who Know, Those Who Don't, And Those Who Know Better: Balancing Complexity, Sophistication, And Accuracy On Tax Returns, Michelle Lyon Drumbl

Scholarly Articles

Refundable credits, particularly the earned income tax credit (EITC) and the child tax credit, serve an important anti-poverty measure for low-income taxpayers. Annually, millions of taxpayers who do not owe any federal income tax must file a tax return in order to claim these credits that are in the nature of social benefits. The eligibility requirements for refundable credits are complex, and these returns are particularly prone to audit: EITC audits comprise one-third of all individual income tax audits. Because of the large dollar amounts at stake, a taxpayer’s mistaken understanding of the eligibility requirements for these refundable credits can …


Conservation Easements: Design Flaws, Enforcement Challenges, And Reform, Roger Colinvaux Jan 2013

Conservation Easements: Design Flaws, Enforcement Challenges, And Reform, Roger Colinvaux

Scholarly Articles

The charitable deduction for conservation easements promises a conservation benefit, lasting forever. Millions of acres have been protected by deductible conservation easements. On average over $1.5 billion are claimed in easement contributions each year, not including corporate contributions. The deduction, however, has serious problems. As use of the incentive has grown, doubts about the public benefit conveyed by conservation easements and significant enforcement difficulties have led to increased scrutiny of land trusts and to a growing chorus of calls for reform of the tax benefit and state laws governing easements. This Essay argues that it is because the tax incentive …


Charitable Contributions Of Property: A Broken System Reimagined, Roger Colinvaux Jan 2013

Charitable Contributions Of Property: A Broken System Reimagined, Roger Colinvaux

Scholarly Articles

On average, nearly $46 billion of property is given to charitable organizations each year, about twenty-five percent of the total charitable deduction. This makes the charitable contribution deduction for property a tax expenditure within a tax expenditure, yet it is rarely analyzed as such. It emerged as part of a noble effort to encourage contributions to worthy organizations. But the deduction for property has never worked well. The general rule allowing a deduction based on the fair market value of the property may have some intuitive appeal, but its implementation has yielded numerous exceptions and immense complexity. The Article argues …


Rationale And Changing The Charitable Deduction, Roger Colinvaux Jan 2013

Rationale And Changing The Charitable Deduction, Roger Colinvaux

Scholarly Articles

There are two principal rationales for the charitable deduction. Depending upon choice of rationale, some tax reform changes are suggested and others are not. A base measurement rationale suggests eliminating the deduction for unrealized appreciation, keeping the benefit as a deduction and not a credit, not adopting caps or a nonitemizer deduction, and protecting the tax base by narrowing the class of organizations eligible to receive deductible contributions. A subsidy rationale, depending upon which strand is emphasized, might favor a more equitable tax benefit in the form of a credit or through caps or a nonitemizer deduction, and could lead …