Tax Law Commons^™

The Hidden Tax Game, Doron Narotzki

William & Mary Business Law Review

Taxation is not just a legal duty; it is a game, and the best players always win. While governments rely on laws and penalties to enforce compliance, corporations, high-net-worth individuals, and elite tax strategists exploit loopholes, turning complexity into opportunity. This Article argues that tax avoidance is not a flaw in the system, but an expected outcome. Modern tax law does not just permit avoidance; it actively encourages it. The more intricate the rules, the more valuable it becomes to manipulate them.

Using game theory as an analytical lens, this Article reframes taxation as a high-stakes competition, where strategic players …

Aligning Reparations And Taxation, Katherine Pratt

William & Mary Journal of Race, Gender, and Social Justice

Rehabilitative reparation remedies advance the important normative goals of intergenerational restorative justice and racial reconciliation. This Article fills a gap in the reparations literature by exploring a critical missing piece of reparations—nontaxation of reparation remedies. Historical examples of reparation remedies show how, in the past, a patchwork of tax rules prevented taxation of reparations and advanced the rehabilitative goals of reparation remedies and procedural fairness in tax administration. Conversely, contemporary examples show how current tax law taxes the receipt of reparation remedies, thereby undermining the rehabilitative goals of reparations and procedural fairness.

This Article proposes a new statutory tax exclusion …

Inequality As Market Failure, Erick J. Sam

William & Mary Bill of Rights Journal

This Article explores economic, philosophical, and legal relationships between economic inequality and market failure, and it draws on these linkages to develop an innovative normative justification and alternative constitutional basis for a levy on wealth.

The Article’s central analytic result is that several general mechanisms responsible for common market failures can also systematically produce economic inequalities whenever preferences against extreme inequality are fairly widespread. Because these mechanisms satisfy both the ‘process-based’ and ‘outcome-based’ criteria of market failure, redistributive transfers designed to reduce these inequalities would be normatively justified under the widely accepted market failure theory of government action. On this …

Unauthorized Disclosure Of Tax Return Information: When Is The United States Liable For Actions Of The Irs?, Tammy W. Cowart, Roger Lirely, Alex Brandt

William & Mary Business Law Review

The June 2021 ProPublica report “The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax” revealed tax return data of many of the wealthiest people in America. However, the tax information about these individuals is not public information. As part of the Tax Reform Act of 1976, Congress removed tax returns and return information from the realm of public documents and protected them under federal law. Congress also provided criminal and civil sanctions for the unauthorized disclosure of tax returns and return information. Over forty-five years later, there have been hundreds of cases adjudicated, but …

Crypto Assets And The Problem Of Tax Classifications, Eric D. Chason

Faculty Publications

To date, Internal Revenue Service (I.R.S.) guidance on cryptocurrencies has been thin. When the I.R.S. has issued guidance, it occasionally mishandles the technical details (such as confusing air drops and hard forks). More personnel (and personnel with greater technical expertise) would allow the I.R.S. to keep pace with the explosive growth of cryptocurrency. Nevertheless, the I.R.S. could better leverage its existing resources by focusing on select issues and seeking enabling legislation from Congress. Specifically, the I.R.S. should focus on crypto issues occurring on a system-wide basis and not requiring taxpayer-specific considerations.

For example, determining whether Bitcoin is a “security” under …

Automated Government For Vulnerable Citizens: Intermediating Rights, Sofia Ranchordás, Luisa Scarcella

William & Mary Bill of Rights Journal

Filing tax returns or applying for unemployment benefits are some of the most common government transactions. Yet interacting with tax and social security authorities is for many a source of government anxiety. Bureaucracy, regulatory delays, and the complexity of the administrative legal system have been regarded for decades as the key reasons for this problem. Digital government promised a solution in the shape of simplified forms, electronic filing, and better communication with citizens. In the United States, privately developed software systems such as TurboTax and MiDAS emerged as intermediaries between citizens and digital government, selling convenience and efficiency. These systems …

Thoughts Regarding The Application Of The Step Transaction Doctrine To The Section 351 Control Requirement And Complex Media, Inc. V. Commissioner, Philip G. Cohen

William & Mary Business Law Review

Over thirty years ago, Professor Ronald H. Jensen authored an article in the Virginia Tax Review, titled “Of Form and Substance: Tax Free Incorporations and Other Transactions Under Section 351.” Professor Jensen asserted that it was inappropriate to utilize the step transaction doctrine to determine whether the control requirement was met in a purported section 351 transaction, involving a disposition of some, or all, of the transferor’s shares even if effected by a binding contract made prior to the contribution.

Professor Jensen concluded that the courts and the Internal Revenue Service (Service) have produced a hodgepodge of intellectually inconsistent decisions …

The Charitable Continuum, Eric Kades

Faculty Publications

There are powerful fairness and efficiency arguments for making charitable donations to soup kitchens 100% deductible. These arguments have no purchase for donations to fund opulent church organs, yet these too are 100% deductible under the current tax code. This stark dichotomy is only the tip of the iceberg. Looking at a wider sampling of charitable gifts reveals a charitable continuum. Based on sliding scales for efficiency, multiple theories of fairness, pluralism, institutional competence and social welfare dictate that charitable deductions should in most cases be fractions between zero and one. Moreover, the Central Limit Theorem strongly suggests that combining …

Zarin V. Commissioner Revisited And Some Methodologies For Determining Cod Income, Philip G. Cohen

William & Mary Business Law Review

The focus of this Article is a revisit of a very well-known and much written about Third Circuit Court of Appeals decision, Zarin v. Commissioner, concerning whether the taxpayer had COD income. Zarin dealt with whether a compulsive and unlucky gambler could avoid COD income when he settled with the casino for substantially less than what he owed. Along with a plethora of diverse third-party assessments of the case, the judges who heard the case and its appeal were also divided. The Tax Court opinion was decided by an eleven to eight vote for the Internal Revenue Service (IRS), with …

Kaestner Fails: The Way Forward, Mitchell M. Gans

William & Mary Business Law Review

This past term, the Supreme Court applied the Due Process Clause to prevent the states from closing down a tax strategy that employs out-of-state trusts. Many had hoped that the case would serve as a vehicle for the Court to overrule taxpayer-friendly precedents that make the strategy possible. But it failed. The question that emerges is whether the decision leaves the states with a path to address the strategy and thereby prevent it from being used to exacerbate issues of inequality. After examining the decision, this Article considers the options available to the states and then suggests a way forward.

Contractual Tax Reform, Michael Abramowicz, Andrew Blair-Stanek

William & Mary Law Review

One-size-fits-all taxation fails to accommodate diverse taxpayer circumstances. This Article proposes allowing taxpayers to contract into alternative tax regimes administered by private intermediaries. Participating taxpayers would make payments to the intermediaries pursuant to contract, and the intermediaries would be required to pay to the government at least as much as these taxpayers would have paid the government otherwise. That amount is determined based on the actual tax receipts of a control group, taxpayers who wish to contract with an intermediary but instead are chosen at random to continue under the status quo. These alternative tax regimes might better accommodate taxpayers’ …

Time To Prune The Flora--Procedural Due Process, The Full Payment Rule And Assessable Penalties: Larson V. United States, Frank G. Colella

William & Mary Business Law Review

In Larson v. United States, the Second Circuit Court of Appeals rejected the opportunity to limit the scope of the Flora “full payment” rule when its strict application in the instant case foreclosed judicial review of the underlying tax controversy. As a result, the decision rubberstamped the IRS’s imposition of assessable penalties without any meaningful judicial review of those actions. The Article argues that the court’s decision to blindly apply the full payment rule, without considering any form of a hardship exception, effectively denied John Larson his right to due process of law as guaranteed by the Fifth Amendment …

2019 Tax Conference Speakers

William & Mary Annual Tax Conference

No abstract provided.

2019 Tax Conference Forms

William & Mary Annual Tax Conference

No abstract provided.

2019 Schedule

William & Mary Annual Tax Conference

No abstract provided.

A Tax On The Clones: The Strange Case Of Bitcoin Cash, Eric D. Chason

Faculty Publications

No abstract provided.

Tax Lawyers As Tax Insurance, Heather M. Field

William & Mary Law Review

Transactional tax lawyers, by rendering tax opinions, provide a version of insurance to clients. This insurance is clearly incomplete, but by providing a tax opinion, a lawyer conditionally agrees to indemnify the client for at least part of the potential loss the client incurs if the favorable tax treatment described in the opinion is successfully challenged. Although insurance is not the primary function of transactional tax lawyers, and although this Article does not argue that tax opinions should be regulated as insurance, indemnification—a key element of insurance—is an important part of the economic relationship between a client and a lawyer …

Of Piketty And Perpetuities: Dynastic Wealth In The Twenty-First Century (And Beyond), Eric Kades

Faculty Publications

For the first time since independence, in a nation founded in large part on the rejection of a fixed nobility determined by birth and perpetuated by inheritance, America is paving the way for the creation of dynastic family wealth. Abolition of the Rule Against Perpetuities in over half the states along with sharp reductions in, and likely elimination of, the federal estate tax mean that there soon will be no obstacles to creating large pools of dynastic wealth insuring lavish incomes to heirs for generations without end. The timing of these legal changes could hardly be worse. Marshaling innovative economic …

Cryptocurrency Hard Forks And Revenue Ruling 2019-24, Eric D. Chason

Faculty Publications

No abstract provided.

Codification Of The Economic Substance Doctrine: Agency Response And Certain Other Unforeseen Consequences, Rebecca Rosenberg

William & Mary Business Law Review

Section 7701(o) of the Internal Revenue Code incorporates the controversial judicial doctrine of economic substance into statutory language. In other words, it “codifies” the doctrine. (The economic substance doctrine generally provides that a tax benefit that goes beyond Congressional intent can be disallowed by the courts, even if the taxpayer meets all of the literal Code and regulatory requirements for claiming the benefit.)

This codification appears to have accidentally dissuaded the relevant agency (the Internal Revenue Service, or IRS) from raising economic substance issues—an effect that is contrary to Congress’s intent in enacting the doctrine into legislation. Essentially, Congress imported …

Politics Of Tax Reform: Outline, Evan M. Migdail

William & Mary Annual Tax Conference

No abstract provided.

Choice Of Entity After Tax Reform – The New Normal (Outline), N. Pendleton Rogers

William & Mary Annual Tax Conference

No abstract provided.

Powers Of Deduction: Tax-Saving Strategies Under The Legislation Formerly Known As The Tax Cuts And Jobs Act (Powerpoint), Thomas J. Pauloski

William & Mary Annual Tax Conference

No abstract provided.

New Rules Of The Road For Interest And Depreciation Deductions And Like-Kind Exchanges After Tax Reform (Powerpoint), Robert D. Schachat

William & Mary Annual Tax Conference

No abstract provided.

Federal Tax Update (Powerpoint), Stephen L. Owen

William & Mary Annual Tax Conference

No abstract provided.

Mergers And Acquisitions Of Closely-Held Corporations (Powerpoint), Jerald D. August

William & Mary Annual Tax Conference

No abstract provided.

When Are You An Investor Versus A Dealer In Real Property? (Powerpoint), James B. Sowell, Stephen J. Giordano

William & Mary Annual Tax Conference

No abstract provided.

At A Loss: Excess Business Loss And Nol Provisions Of The Tcja (Powerpoint), Brian J. O'Connor, Stephen M. Sharkey

William & Mary Annual Tax Conference

No abstract provided.

Advising Partners And Partnerships Under The New Centralized Partnership Audit Rules: The Need To Amend Partnership And Llc Operating Agreements (Powerpoint), Jerald D. August

William & Mary Annual Tax Conference

No abstract provided.

Recent Developments In Virginia Taxation, Craig D. Bell

William & Mary Annual Tax Conference

No abstract provided.