Tax Law Commons^™

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

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No abstract provided.

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

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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 …

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

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No abstract provided.

Home Concrete: After The Cheering, Problems, Steve R. Johnson

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No abstract provided.

Obamacare And The 'What Is A Tax?' Issue – Part Ii, Steve R. Johnson

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We are engaged in a two-part exploration. The previous installment of our column reviewed the perennial question of whether a given state or local exaction should be classified as a tax or something else. It rehearsed the contexts in which the issue has arisen in state and local tax controversies, the practical stakes involved in those controversies, and the criteria courts have developed to distinguish between truces and other types of governmental levies.

The previous installment also said that a new source of guidance as to the “what constitutes a tax?” question is developing: litigation over the individual mandate and …

Obamacare And The 'What Is A Tax?' Issue – Part I, Steve R. Johnson

Scholarly Publications

One of the hardiest perennials in the garden of state and local tax issues is the question whether particular revenue measures should be classified as taxes or some other type of exaction. The issue has been dispositive in numerous state and local tax cases and, befitting that significance, has been the topic of many reports in this journal.

Given the frequency of the decisions and commentary, authorities cited on the issue constantly evolve. State courts, omnivorous in their search for precedents and rationales, often cite federal cases. Recognizing this, a recent article in State Tax Notes examined decisions of the …

The Anti-Injunction Act And The Individual Mandate, Steve R. Johnson

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The Supreme Court will soon consider challenges to constitutionality of the so-called individual mandate portion of the Patient Protection and Affordable Care Act of 2010 (PPACA). It is important for the nation that the Court render a decision on the merits. This could be derailed, however, were the Court to dispose of the case by holding that the Anti-Injunction Act (AIA) and the Declaratory Judgment Act (DJA) preclude pre-enforcement review. Disposition on those grounds would subject the federal government, states, businesses, and individuals to years of additional uncertainty, inconvenience, and expense.

Fortunately, that threat to resolution on the merits can …

Taxes, Free Expression, And Adult Entertainment, Steve R. Johnson

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The interaction of morality and money produces interesting results. One manifestation is legislation in some states and proposals in others to impose higher taxes on “gentlemen’s show lounges” (OK, I mean strip clubs) and other venues of adult entertainment.

In 2010 and 2011 two state supreme courts passed on the legality of different forms of those taxes, upholding them against challenges that they infringed on free speech/free expression rights protected by the First Amendment of the U.S. Constitution. This installment of the column considers those two decisions: the February 2010 Utah decision in Bushco v. Utah State Tax Commi …

Cohen: Hard Case Makes (Semi) Bad Law, Steve R. Johnson

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The first Justice Harlan famously cautioned that hard cases can lead to bad law. United States v. Clark, 96 U.S. 37, 49 (1878) (dissenting opinion). This aphorism captures the reality that, when confronted with litigating equities strongly favoring one party, judges tend to massage doctrine to support judgment for that party.

The Unaffordable Health Act: A Response To Professors Bagley And Horwitz, Jeffrey H. Kahn, Douglas A. Kahn

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No abstract provided.

New Light On Auer/Seminole Rock Deference, Steve R. Johnson

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We have been engaged in an extended exploration of doctrines under which courts may defer to positions and interpretations by state and local tax agencies. The immediately prior installment of this column discusses such deference under state equivalents of what is known as the Auer or Seminole Rock principle, under which courts usually defer to agency interpretations of the agencies’ own ambiguous regulations.

About two weeks after the publication of that installment, the U.S. Supreme Court handed down a major new decision on the Auer principle: Talk America, Inc. v. Michigan Bell Telephone Co. Talk America bids fair to be …

The Operation Of The Individual Mandate, Jeffrey H. Kahn

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In this article, Kahn describes the technical operation of omportion portions of the individual healthcare mandate, including the application of the penalty provision. Kahn finds that there are problems with the technical drafting of that provision and that serious gaps and ambiguities abound.

Deference To Tax Agencies' Interpretation Of Their Regulations, Steve R. Johnson

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This installment closes a loop begun in the last installment of this column. We have been exploring the degrees of deference accorded by the courts to interpretations and positions taken by state and local revenue agencies. The last installment examined conditional deference doctrines, that is, deference specific to particular situations or conditioned on the existence of particular conditions. That installment noted one line of conditional deference, applying to cases in which agencies are interpreting their own regulations. This is often called Auer deference, after one of the most prominent cases of the line. Because of the richness of the Auer …

Conditional Deference To Tax Authorities, Steve R. Johnson

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Recent installments of this column have explored an important point of intersection between administrative law and tax law: the degree of deference that courts accord to rules, regulations, and statutory interpretation positions of state and -local revenue agencies. This column continues that exploration. It examines what I call “conditional deference,” that is, according deference to the agency only when particular, defined conditions are present.

The first part below sets the context by describing Skidmore and Mead, two leading federal conditional deference cases. The second part contrasts state conditional deference doctrines, with particular emphasis on the operation of those doctrines in …

Do Treasury And The Irs Have To Explain Their Choices?, Steve R. Johnson

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The validity of tax regulations has been challenged by taxpayers almost as long as there have been tax regulations. Now, however, we are in a period of unusually high activity on this front. The Supreme Court recently upheld the validity of a regulation under section 3121 in Mayo Foundation for Medical Ed. and Research v. United States, 131 S. Ct. 704 (2011); many cases are testing the validity of regulations extending the six-year statute of limitations under section 6501(e) to basis overstatements (or, as the Service would put it, clarifying the law in this regard); and many cases are …

Mayo And The Future Of Tax Regulations, Steve R. Johnson

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Of the heady early days of the French Revolution, Wordsworth wrote: “Bliss it was in that dawn to be alive. But to be young was very heaven.” Those of us interested in the intersection of tax law and administrative law may be excused if we feel similar exhilaration about the time in which we live.

In terms of the intersection, this is the most exciting moment in the tax history of the United States. Recent cases have tested – and cases still in progress continue to test –- the validity of several Treasury regulations:

1. On January 11 the Supreme …

Chevron Deference To State Tax Agencies, Steve R. Johnson

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The last installment of this column inaugurated a multi-installment project examining judicial doctrines of deference to interpretations and positions taken by state and local tax agencies. We noted that in the various states, these doctrines fall into about a half dozen categories.

This installment explores one of those categories. A major deference rule in federal administrative law (including tax law) emanates from the U.S. Supreme Court’s famous Chevron case. This installment considers the extent to which Chevron and similar approaches are applied in state and local tax cases.

The first part be low briefly describes C …

Following The Apa Will Not Eliminate Useful Guidance, Steve R. Johnson

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No abstract provided.

Keeping Republics Republican, Rob Atkinson

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No abstract provided.

Free Rider: A Justification For Mandatory Medical Insurance Under Health Care Reform?, Jeffrey H. Kahn, Douglas A. Kahn

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Section 1501 of the Patient Protection and Affordable Care Act added section 5000A to the Internal Revenue Code to require most individuals in the United States, beginning in the year 2014, to purchase an established minimum level of medical insurance. This requirement, which is enforced by a penalty imposed on those who fail to comply, is sometimes referred to as the “individual mandate.” The individual mandate is one element of a vast change to the provision of medical care that Congress implemented in 2010. The individual mandate has proved to be controversial and has been the subject of a number …

Tilted Versus Reasonable Interpretation Of Tax Law, Steve R. Johnson

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In part, Interpretation Matters is about the craft of advocacy, how statutory interpretation arguments can be effectively made – and effectively countered – in state and local tax cases. For example, when one’s opponent in such a case invokes one or another of the canons of construction, how is that canon to be blunted?

One strategy we often have explored is fighting fire with fire – that is, identifying and asserting another recognized canon that leads to an opposite conclusion. One of the most famous articles on statutory interpretation arrayed dozens of pairs of canons that seemingly contradict each other. …

The Judicial Instinct To Harmonize Statutes, Steve R. Johnson

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Judges like to reach results that harmonize statutory meanings, both meanings within given statutes and meanings among statutes. That inclination applies as fully in tax cases as in nontax cases, and in state and local tax cases as well as in federal tax cases. Effective advocates in state-local tax controversies recognize that judicial tropism and use it, whenever possible, in their clients’ interests.

Part I discusses the harmonization instinct generally. Part II illustrates application of the harmonization approach in state and local cases. Part III notes some limitations on and unsettled questions regarding the harmonization.

Intermountain And The Growing Importance Of Administrative Law In Tax Law, Steve R. Johnson

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On September 29, 2009, Treasury issued regulations retroactively extending the six-year limitations period for income tax deficiencies resulting from basis overstatements. In its May 6 Intermountain decision, the Tax Court unanimously invalidated those regulations, but on divided rationales. The government has appealed.

lntermountain is a must-read for tax academics and practitioners. It is among the richest decisions on the procedural and substantive validity of tax regulations. Moreover, the opinions in the case, subsequent cases on the issue, .and commentary on these opinions and cases present genuine opportunity for improvement of the law.

This report has five sections. Section I sketches …

When General Statutes And Specific Statutes Conflict, Steve R. Johnson

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It’s no secret that the pace of lawmaking in the United States has accelerated dramatically in recent decades. So much so that one may be forgiven for thinking that the best law reform would be a moratorium on further law reform – - to give citizens, their legal representatives, and government officials the opportunity to catch up with the laws we already have made.

Legislatures, agencies, and courts all have made their contributions to the torrent of lawmaking. The phenomenon has been attributed to various causes, including growing populations, greater population densities as a result of urbanization, rapid technological changes, …

Tax Court Invalidates New Section 6501(E) Regulations, Steve R. Johnson

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The title of an article of mine in the Fall 2009 issue of the NewsQuarterly asked “What’s Next in the Section 6501(e) Overstated Basis Controversy?” The Tax Court answered that question on May 6, 2010, in its decision Intermountain Insurance Service of Vail, LLC v. Commissioner, 134 T.C. No. 11. In that decision, the court invalidated two temporary regulations that had been issued on September 24, 2009: sections 301.6229(c)(2)-IT and 301.6501(e)-IT.

Is Lost Tax Revenue Property Under Rico?, Steve R. Johnson

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The last installment of this column began an examination of the use of the federal civil RICO Act in state and local tax administration controversies. This installment closes the loop by answering questions posed, but not resolved, last time. This column explores whether uncollected tax revenue - or loss of the opportunity to collect tax revenue - constitutes “business or property” under the civil RICO statute. This exploration also takes up the related question whether tax authorities will be able to overcome judicial reluctance to turning RICO into a tax collection statute.

Part I of this column reprises how RICO …

An Irs Duty Of Consistency: The Failure Of Common Law Making And A Proposed Statutory Solution, Steve R. Johnson

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The IRS should endeavor to treat similarly-situated taxpayers similarly, but does this aspiration rise to the level of a judicially enforceable duty? If the IRS takes a position on Taxpayer B that is correct under the law but is inconsistent with a position the IRS took on similarly-situated Taxpayer A, should the IRS’s position on Taxpayer B fail simply because of the inconsistency? These questions implicate important themes, such as fairness, the rule of law, separation of powers, administrative exigencies, the role of common law making in a highly positivistic system, and the sustainability of legal regimes.

A constitutional standard …

Civil Rico And State And Local Taxes, Steve R. Johnson

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Vast is the garden of state and local taxation, and exotic are some of the blossoms to be found there. This installment of Interpretation Matters will consider one of those curious blooms: use of the civil RICO statute directly or collaterally in state-local tax administration. The U.S. Supreme Court has addressed the state-local tax implications of civil RICO three times in recent years: in the Anza case in 2006, Bridge in 2008, and Hemi, decided on January 25, 2010.

The first section below sketches civil actions under the Racketeer Influenced and Corrupt Organizations Act. The next three sections describe Anza, …

Sparks Nugget: State Tax Exemption Of Food Used By Casinos For Comped Meals, Steve R. Johnson

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No abstract provided.

Tax Shelters: Up Off The Canvas?, Steve R. Johnson

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Recently, taxpayers prevailed at trial in two federal tax shelter cases: TIFD III-E Inc. v. United States, 2009 WL 3208650 (D. Conn. Oct. 7, 2009) (“Castle Harbour III”) and Consolidated Edison Co. v. United States, 2009 WL 3418533 (Fed. Cl. Oct. 21, 2009) (“Con Ed”). Doing full justice to these cases would require detailed descriptions of their facts, the arguments presented and the rationales in the opinions. I leave this work to the inevitable parsing and spinning in briefs in tax shelter cases to come and to more length commentary. See, e.g., Lee A. Sheppard, Con Ed’s Night of the …