Law Commons^™

Tax Reporting As Regulation Of Digital Financial Markets, Young Ran (Christine) Kim

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FTX’s recent collapse highlights the overall instability that blockchain assets and digital financial markets face. While the use of blockchain technology and crypto assets is widely prevalent, the associated market is still largely unregulated, and the future of digital asset regulation is also unclear. The lack of clarity and regulation has led to public distrust and has called for more dedicated regulation of digital assets. Among those regulatory efforts, tax policy plays an important role. This Essay introduces comprehensive regulatory frameworks for blockchain-based assets that have been introduced globally and domestically, and it shows that tax reporting is the key …

The Historical Origins And Current Prospects Of The Multilateral Tax Convention, Reuven S. Avi-Yonah, Eran Lempert

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This article has three aims. First, it surveys the pre-BEPS efforts to create a multilateral tax convention (MTC) from the 19th century onward, and explains why these efforts have failed, leading to an international tax regime dominated by unilateralism and bilateralism. Second, it contrasts the success of multilateralism in investment and trade law. Third, it examines the BEPS era efforts to create an MTC and suggests that, while there has been more convergence of the tax laws of countries, a fundamental divergence of interests persists that will likely doom any such efforts to failure. The article concludes that, at this …

Whirlpool’S Subpart F Position Was Inconsistent With Congressional Intent, Jeffery M. Kadet

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I believe that Whirlpool took an untenable position on allocation in its 2009 tax filings. The Tax Court in its Whirlpool decision corrected this position using a reasonable approach that used the taxpayer’s own accounting. Now, in their article, Yoder et al. have labeled the Tax Court’s approach a “fundamental flaw” while championing Whirlpool’s position. Considering this situation, it is critical that Treasury and the IRS add appropriate guidance to reg. section 1.954-3. This would clarify that in the case of sales to related or unrelated persons, with no locally based sales personnel and where group personnel in other locations …

The Commerciality Of Non-Profit Hospitals Requires Them To Be Taxed: Bringing The Debate To A Conclusion, Edward A. Zelinsky

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It is now time to conclude our prolonged debate about the tax-exempt status of nonprofit hospitals. The contemporary nonprofit hospital is a commercial enterprise, materially indistinguishable for tax purposes from its profit-making, taxed competitor. The federal income tax and the states’ income, sales and property taxes should treat all hospitals alike, regardless of whether such hospitals are nonprofit or for-profit enterprises. In the interests of equity and efficiency, these similar institutions should be taxed similarly.

As a political matter, nonprofit hospitals will continue to defend their tax-exempt status. Like any other lucrative, vested interest, nonprofit hospitals will continue to fight …

Taxing Digital Platforms, Andrew Hayashi, Young Ran (Christine) Kim

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The proliferation of digital services taxes (DSTs) in Europe is generally understood as a way for those countries to claim taxing rights over the profits of large digital platforms such as Google, Facebook, and Amazon. Under prevailing norms of international income taxation, these businesses had been able to avoid paying taxes in countries where they had no physical presence, even if they had many users in those countries. But the rise of big tech has generated a set of regulatory and political challenges, and tax is only one of these. The adoption of DSTs is not only about the fair …

Too Good To Be True: Private Placement Life Insurance Policies, Luís C. Calderón Gómez

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In this article, Calderón Gómez examines a tax avoidance scheme involving private placement life insurance policies — large policies that potentially allow wealthy taxpayers to move their traditionally tax-inefficient investments in private equity and hedge funds into a life insurance policy and accumulate, borrow against, and pass on those investment gains effectively tax free — and sketches some possible alternatives to stop the abuse of these policies.

The (Tax) Policy Entrepreneur, Mirit Eyal-Cohen

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No abstract provided.

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

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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 …

A New Framework For Taxing Cryptocurrencies, Reuven S. Avi-Yonah, Mohanad Salaimi

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This Article explores the tax law challenges associated with the taxation of cryptocurrencies and offers proposals to address such challenges. The Article addresses the proper tax treatment of different cryptocurrency transactions and activities. It examines various aspects associated with the taxation of cryptocurrency through its life cycle, starting from earning cryptocurrency, through its disposal or exchange. The Article also examines the tax treatment of two special crypto events, hard forks and airdrops. Specifically, this Article describes a proposal to tax cryptocurrencies based on their unique features. It argues that various ways of earning or receiving crypto tokens (for example, mining …

Constitutional Review Of Federal Tax Legislation, Reuven S. Avi-Yonah, Yoseph M. Edrey

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What does the Constitution mean when it says that “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States” (U.S. Const. Article I, Section 8, Clause 1)?

The definition of “tax” for constitutional purposes has become important considering the Supreme Court’s 2012 decision in National Federation of Independent Business v. Sebelius (“NFIB”), in which Chief Justice Roberts for the Court upheld the constitutionality of the individual mandate of the Patient Protection and Affordable Care Act (“ACA”) under the taxing …

Public Good Through Charter Schools?, Philip Hackney

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Should nonprofit charter schools be considered “charitable” under § 501(c)(3) of the Internal Revenue Code and be entitled to the benefits that go with that designation (income tax exemption, charitable contribution deduction, etc.)? Current tax law treats them as such; the question is whether there is a good rationale for this treatment. In addition to efficiency and equity, I consider political justice as a value in evaluating tax policy. By political justice, I mean a democratic system that prioritizes the opportunity for more people to have a voice in collective decisions (political voice equality or PVE). Thus, a tax policy …

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

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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 …

What Would Surrey Say? The Long Reach Of Stanley S. Surrey, Reuven Avi-Yonah, Nir Fishbien

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Stanley S. Surrey died in 1984, two years before the enactment of the Tax Reform Act of 1986, which gave us the Internal Revenue Code of 1986 as amended. Historians have recently discovered Surrey’s work through his memoirs, published in 2022, and several articles based on the memoir and on the unpublished Surrey papers at Harvard Law School. There is no doubt that Surrey was a towering historical figure during his “Half-Century with the Internal Revenue Code.” As his protégé Donald Lubick, who served as Assistant Secretary for Tax Policy in both the Carter and the Clinton Administrations, stated, Surrey …