Tax Law Commons^™

Reconstructing The Individual Mandate As An Escrow Account, Gregg Polsky

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This short essay in Michigan Law Review First Impressions describes how the individual mandate could be reconstructed as an escrow account. Such a restructuring would ameliorate policy concerns regarding the mandate while still deterring the opportunistic behavior that would otherwise occur as a result of the nondiscrimination rules imposed on insurers.

Saving Private Ryan's Tax Refund, Francine J. Lipman

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No abstract provided.

The Case Against Tax Incentives For Organ Transfers, Lisa Milot

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Each year some 6,700 Americans die while awaiting an organ transplant. On its face, this fact seems almost inconsequential, representing less than 3% of American deaths annually. However, for the nearly 100,000 patients on the transplant wait list (and their families), nothing could be more consequential. What is more, the demand for transplantable organs is sure to rise as (1) more diseases become subject to prevention or cure, making organ failure the first sign of medical problems; (2) the success rate for transplants increases, leading to wider use; and (3) barriers to inclusion on the wait list are removed.

In …

Time Is Of The Essence: Seize The Opportunity For Fulfillment In 2009, Francine J. Lipman

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No abstract provided.

The Commerciality Doctrine As Applied To The Charitable Tax Exemption For Homes For The Aged: State And Local Perspectives, David A. Brennen

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This essay examines the question of how state and local government officials should consider federal tax law principles, like the commerciality doctrine, when they challenge state and local property tax exemptions that rely, at least in part, on tax-exempt charitable status for federal income tax purposes. In particular, this essay uses the example of CCRCs [continuing care retirement communities] to consider tax-exempt law's commerciality doctrine in an attempt to discern distinctions between “homes for the aged” that are “charitable,” and thus entitled to exemption, and those that are too commercial, and thus not entitled to exemption. In fact, one might …

Controlling Executive Compensation Through The Tax Code, Gregg D. Polsky

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This article analyzes Internal Revenue Code § 162(m), which in general denies public companies a deduction for annual non-performance-based compensation in excess of $1,000,000 paid to senior executive officers. Congress enacted § 162(m) with the intent to reduce the overall level of executive compensation and to influence the composition of executive compensation in favor of components that are more sensitive to firm performance. Notably, § 162(m) represents the most direct Congressional effort to influence executive compensation design. In light of recent events, Congress is being called upon to once again address the perceived problem of overgenerous executive pay packages. Accordingly, …

A Tax Lawyer's Perspective On Section 527 Organizations, Gregg D. Polsky

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Proponents of campaign finance reform generally assume that, by definition, all section 527 organizations are partisan, election-driven organizations. They also believe that by self-identifying to the IRS, these organizations receive substantial tax benefits. Based on these presuppositions, reformers argue that strict regulation of 527organizations is both constitutional and normatively beneficial. In this Essay, I argue that once section 527 is carefully analyzed from a tax perspective, it becomes evident that these assumptions are flawed. Ultimately, I conclude that section 527 should not be used as a mechanism for regulating campaign finance

Shrinking Boomer Social Security Retirement Benefits, Francine J. Lipman

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No abstract provided.

Reforming The Taxation Of Deferred Compensation, Gregg D. Polsky, Ethan Yale

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Executive pay is currently a topic of significant interest for policymakers, academics, and the popular press. Just weeks ago, in reaction to widespread press reports and academic criticism of extravagant executive perquisites, the SEC proposed new regulations designed to change fundamentally the manner in which executive compensation is reported to share-holders. Despite all of this attention, one significant aspect of executive deferred compensation has gone virtually unnoticed - the federal tax rules governing this form of compensation are fundamentally flawed and must be extensively over-hauled. These rules are flawed because they often create a significant incentive for companies and their …

Is "Internal Consistency" Dead?: Reflections On An Evolving Commerce Clause Restraint On State Taxation, Walter Hellerstein

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Under the "internal consistency" doctrine articulated by the U.S. Supreme Court under the dormant Commerce Clause, a state tax must be structured so that if every state were to impose an identical tax, interstate commerce would fare no worse than intrastate commerce. Although a relatively recent addition to the Court's Commerce Clause jurisprudence, the doctrine has played a significant role as the basis for the judicial invalidation of a wide array of state and local taxes. In American Trucking Associations, Inc., v. Michigan Public Service Commission, 545 U.S. 429 (2005), however, the Court sustained an admittedly "internally inconsistent" $100 per …

A Diversity Theory Of Charitable Tax Exemption -- Beyond Efficiency, Through Critical Race Theory, Toward Diversity, David A. Brennen

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Part I of the article presents Robin Paul Malloy's Law and Market Economy Theory (“LMT”) as an example of the basis for a normative explanation of the charitable tax exemption. LMT addresses the relationship among law, markets, and culture. Thus, using LMT, this part demonstrates how traditional law and economic analysis, premised on self-interest and wealth maximization, simply does not capture the essence of the many values that impact the marketplace and the market exchange process. Instead, LMT approaches legal analysis in a broader market context and is premised on the need to promote a process of sustainable wealth formation …

The Taxation Of Undocumented Immigrants: Separate, Unequal, And Without Representation, Francine J. Lipman

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No abstract provided.

Relief From The Rubble: Tax Assistance For Victims Of The 2005 Hurricane Season, Francine J. Lipman

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No abstract provided.

Celebrating Life And Taxes, Francine J. Lipman

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No abstract provided.

Cuno And Congress: An Analysis Of Proposed Federal Legislation Authorizing State Economic Development Incentives, Walter Hellerstein

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If anything is clear about Cuno and the controversy the opinion has spawned, it is that Congress has the last word on the matter. Whether Congress will speak to the issues Cuno has raised is currently an open question, although in one narrow respect Congress already has. Broader legislation, however, has been introduced into Congress as the "Economic Development Act of 2005," and debate over the efficacy and wisdom of this proposal is as intense as the debate over the defensibility of Cuno itself. My purpose here is not to join that debate, although I am already on record as …

Federal Constitutional Restraints On Tax Competition Among The American States, Walter Hellerstein

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This article examines the judicially developed rules limiting interstate tax competition in the United States and the constitutional framework out of which they arise.

Regulating Section 527 Organizations, Gregg D. Polsky, Guy-Uriel E. Charles

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In this Essay, we consider whether the Federal Election Commission (FEC) has the authority to regulate independent 527 organizations (e.g., Swiftboat Veterans for Truth, Moveon.org, etc.) as political committees under the Federal Election Campaign Act. This issue, which was hotly debated during the last election cycle when it was considered and ultimately tabled by the FEC, is an extremely complex one that requires a deep understanding of election, tax, administrative, and constitutional law. After considering how these areas of law intersect, we conclude that the FEC lacks the authority to regulate independent 527 organizations as political committees.

International Income Allocation In The Twenty-First Century: The Case For Formulary Apportionment, Walter Hellerstein

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From an international perspective, formulary apportionment has traditionally been viewed as little more than transfer pricing’s “poor relation” as a division-of-income methodology. It receives only grudging recognition as a method of attributing the profits to a permanent establishment under Article 7 of the OECD Model Tax Convention; it receives no mention at all in Article 9 as a method for distributing the profits of associated enterprises among the contracting states in which they conduct their activities; and it was assailed by the international business community and by the EU Member States as out of step with internationally excepted norms in …

Taxing The Promise To Pay, Gregg D. Polsky, Brant J. Hellwig

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The IRS recently disclosed that it has identified more than 100 executives at 42 leading public corporations that participated in a tax shelter designed to defer the recognition of income from the exercise of stock options. While the agency thus far has identified approximately $700 million in unreported gains from these shelters, it predicts that the revenue loss to the government will ultimately exceed $1 billion. Compared to most tax shelters, this particular transaction (commonly known as the "Executive Compensation Strategy" or "ECS") is remarkably simple. Rather than exercise the options individually, a participating executive instead transfers the options to …

Anatomy Of A Disaster Under The Internal Revenue Code, Francine J. Lipman

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No abstract provided.

Employment Discrimination Remedies And Tax Gross Ups, Gregg D. Polsky, Stephen F. Befort

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This article considers whether a successful employment discrimination plaintiff may be entitled, under current law, to receive an augmented award (a gross up) to neutralize certain adverse federal income tax consequences. The question of whether such a gross up is allowed, the resolution of which can have drastic effects on litigants, has received almost no attention from practitioners, judges, and academics. Because of the potentially enormous impact of the alternative minimum tax (AMT) on discrimination lawsuit recoveries, however, the gross up issue is now beginning to appear in reported cases.

The three principal federal anti-discrimination statutes - Title VII, the …

Race And Equality Across The Law School Curriculum: The Law Of Tax Exemption, David A. Brennen

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What is the relevance of race to tax law? The race issues are apparent when one studies a subject like constitutional law. The Constitution concerns itself explicitly with such matters as defining rights of citizenship, allocating powers of government, and determining rights with respect to property. Given the history of our country -- with slavery followed by periods of de jure and de facto racial discrimination -- these constitutional law matters obviously must have racial dimensions.

Tax law, however, does not generally concern itself explicitly with matters of race. Tax law is often thought of as completely race neutral in …

The European Commission’S Report On Company Income Taxation: What The Eu Can Learn From The Experience Of The Us States, Walter Hellerstein

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The European Union Commission has proposed using consolidated base taxation and formulary apportionment to tax the EU-source income of multinational companies. This paper examines US state experience with a similar approach. Despite some positive lessons, especially the need to consolidate income of affiliated companies, lessons are mostly negative, especially regarding the choice of apportionment formula, the use of economic criteria to define the group whose income is to be consolidated, and complexity caused by lack of uniformity. US experience says nothing about using value added to apportion income—an approach that is conceptually attractive, but subject to transfer pricing problems.

The Most Rational Branch: Guinn V. Legislature And The Judiciary's Role As Helpful Arbiter Of Conflict, Jeffrey W. Stempel

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When the Nevada Supreme Court decided Guinn v. Legislature, one would have thought from reading the popular press accounts that the court had forcibly displaced the State legislature by means of a violent coup d'etat. Newspaper accounts of the decision referred to it as a usurpation of power in violation of clear constitutional language, belittling the court in language sometimes more appropriate to the baseball bleachers than to serious editorial commentary. Following suit, politicized elements of the citizenry began a recall effort (seemingly unsuccessful as of this writing) directed at the court as well as joining the chorus of criticisms. …

The Contingent Attorney's Fee Tax Trap: Ethical, Fiduciary Duty, And Malpractice Implications, Gregg D. Polsky

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In employment and civil rights lawsuits, the alternative minimum tax may cause a plaintiff's net recovery to be taxed at rates significantly higher than the current maximum rate of 35 percent. This Essay discusses the ethical, fiduciary duty and malpractice implications for lawyers representing plaintiffs who may be affected by this tax trap.

Litigation Expenses And The Alternative Minimum Tax, Gregg D. Polsky, Brant J. Hellwig

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One of the chief features of the alternative minimum tax (the "AMT") is a broadened tax base, accomplished in part through the disallowance of deductions that are not central to measuring an individual's net income. Yet in achieving its objective of limiting deductions, the AMT casts a wide net. Thus, in certain instances, an individual can be robbed of the tax benefit of expenses that were critical to the production of the income being taxed. An extreme example of this problem is the treatment of certain litigation expenses under the AMT. If an individual incurs attorney fees and other associated …

Legislating Morality: The Duty To The Tax System Reconsidered, Watson

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Four years ago, I presented a paper at a symposium on professionalism jointly sponsored by the University of Kansas Law School and the Kansas Bar Association. That paper espoused the view (contrary to what appears to be the popular view among tax scholars) that tax lawyers owe no special duty to the "tax system" other than to abide by the law and the applicable standards of professional conduct. During the four-year interim since my last visit to Kansas, however, we have witnessed the deleterious effect of the IRS Restructuring and Reform Act of 1998 (RRA '98) on IRS enforcement and …

Jurisdiction To Tax Income And Consumption In The New Economy: A Theoretical And Comparative Perspective, Walter Hellerstein

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The collection of rules that falls under the rubric of "jurisdiction to tax" has aptly been described as "a body of law in search of a theory." Although this Article lays no claim to advancing such a theory, it does seek to provide a broad theoretical perspective on jurisdiction-to-tax issues raised by income and consumption taxation in the new economy. It is designed to suggest ways of thinking about the fundamental questions involved, questions that are often obscured by a preoccupation with the application of specific jurisdiction-to-tax rules to individualized fact patterns in particularized contexts. In short, this Article is …

Federal Taxation (2002 Eleventh Circuit Survey), David A. Brennen

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During 2002 federal courts in the United States decided nineteen cases that directly impact federal tax law in the Eleventh Circuit. These cases involve a variety of tax law matters including Federal Insurance Contributions Act ("FICA") payroll tax, estate and gift tax, IRS authority to levy and assess tax, and discharges in bankruptcy. Other tax-related matters addressed by courts in 2002 that impact tax law in the Eleventh Circuit include inventory recapture in an S-corporation conversion, attorney fees for the prevailing party in a tax dispute, and injunctions against tax preparers. By far the most important tax case decided in …

Enabling Work For People With Disabilities: A Post-Integrationist Revision Of Underutilized Tax Incentives, Francine J. Lipman

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No abstract provided.