Tax Law Commons^™

Crime And Punishment In Taxation: Deceit, Deterrence, And The Self-Adjusting Penalty, Alex Raskolnikov

Faculty Scholarship

Avoidance and evasion continue to frustrate the government's efforts to collect much-needed tax revenues. This Article articulates one of the reasons for this lack of success and proposes a new type of penalty that would strengthen tax enforcement while improving efficiency. Economic analysis of deterrence suggests that rational taxpayers choose avoidance and evasion strategies based on expected rather than nominal sanctions. I argue that many taxpayers do just that. Because the probability of detection varies dramatically among different items on a tax return while nominal penalties do not take the likelihood of detection into account, expected penalties for inconspicuous noncompliance …

Towards Equity And Efficiency In Partnership Allocations, Darryll K. Jones

Journal Publications

The primary goal of any tax system is to raise sufficient revenue for government. More precisely, taxation is the means by which government supplies necessary things not available from the private market. Taxation allows society to cure distributional imperfections in the market. It is appropriate, therefore, only to the extent that the market cannot provide goods and services for which there is public demand; if private markets equitably supplied food, shelter, health care, education, and common defense, taxes could be greatly reduced if not completely eliminated. The revenue raising goal is thwarted to the extent the taxing system is either …

The Failure Of Innocent Spouse Reform, Richard C.E. Beck

NYLS Law Review

No abstract provided.

The Tax Code As Nationality Law, Michael S. Kirsch

Journal Articles

This article questions the frequently-asserted axiom that Congress's taxing power knows no bounds. It does so in the context of recently-enacted legislation that creates a special definition of citizenship that applies only for tax purposes. Historically, a person was treated as a citizen for tax purposes (and therefore taxed on her worldwide income and estate) if, and only if, she was a citizen under the nationality law. As a result of the new statute, in certain circumstances a person might be treated as a citizen for tax purposes (and therefore taxed on her worldwide income and estate) for years or …

Accountants, Privilege, And The Problem Of Working Papers, Paul Paton

Dalhousie Law Journal

Full and frank disclosure between corporate issuers and their auditors and accounting advisors is critical for maintaining access to the information required for audits and public confidence in the capital markets. While tax authorities in the United States, Australia, New Zealand and the United Kingdom have the power to make broad requests for working papers, in all four jurisdictions, legislation or administrative practice reflects the determination that the best approach for balancing tax and capital markets requirements is for the revenue authorities to seek working papers only in exceptional circumstances. Additionally, limited forms of privilege for accountants have been recognized …

Digital Vat And Development: D-Vat And D-Velopment, Richard Thompson Ainsworth

Faculty Scholarship

This article suggests that the time is right for developing countries to consider adopting a comprehensive, fully digital VAT, (complete with certified software and trusted third party intermediaries who could assume all of the taxpayer's VAT responsibilities) within the limited group of enterprises encompassed by the large taxpayer group.

Since the e-commerce revolution began in the 1990's, tax policy discussions in developed economies have enlisted "e-solutions" to streamline consumption tax administration, as well as to resolve technical problems.

Inspiration came from the marketplace. Policy-makers observed widespread, business-initiated e-solutions to consumption tax compliance problems in a wide spectrum of jurisdiction. There …

Stormwater Utility Fees: Considerations & Options For Interlocal Stormwater Working Group (Iswg), New England Environmental Finance Center

Economics and Finance

Stormwater utilities are a concept whose time seems to have arrived. Established by relatively few communities in the 1970s as a method of funding flood control measures, stormwater utilities now exist in over 400 municipalities and counties throughout the United States. During the next 10 years, their numbers are expected to swell dramatically – by one estimate to over 2,000 by the year 2014.

The reasons for this growth are multifold. Federal stormwater regulations passed in the 1980s (Phase I of the National Pollutant Discharge Elimination System Program, or NPDES), motivated many larger communities to seek alternative funding sources and …

The High School Attainment Credit: A Tax Credit Encouraging Students To Graduate From High School, David Richard Hansen

ExpressO

High school dropouts are a serious problem facing America today. High school dropouts are more likely to be unemployed, earn less money when employed, place a larger burden on the government by requiring public assistance (welfare), and are more likely to be prone to a life of crime and violence than high school completers. While government at all levels continues to focus on schools and teachers in solving the dropout problem, this paper shows how parents are where the focus should lie. This paper proposes a revolutionary tax credit, the High School Attainment Credit (“HSAC”), which would cost-effectively eradicate the …

The Missing Preferred Return, Victor Fleischer

ExpressO

Managers of buyout funds typically offer their investors an 8% preferred return on their investment before they take a share of any additional profits. Venture capitalists, on the other hand, rarely offer a preferred return. Instead, VCs take their cut from the first dollar of nominal profits. This disparity between venture funds and buyout funds is especially striking because the contracts that determine fund organization and compensation are otherwise very similar. The missing preferred return might suggest that agency costs pose a larger problem in venture capital than previously thought. Is the missing preferred return evidence, perhaps, that VCs are …

Integration In An Integrating World, Yariv Brauner

UF Law Faculty Publications

During the second half of the last century, many countries gradually replaced their so-called classical corporate tax regimes, under which corporate earnings were taxed twice -- once in the hands of the corporation, and again when distributed to corporate shareholders as dividends -- with an integrated regime (imputation), which taxed such earnings only once. The driving force behind this trend was the expectation of significant efficiency gains. This clear and gradual trend has been abruptly reversed with the turn of the century. The phenomenon we call globalization, and in particular the proliferation of cross-border business and investment, has materially contributed …

International Trade And Tax Agreements May Be Coordinated, But Not Reconciled, Yariv Brauner

UF Law Faculty Publications

A recent WTO case held the U.S.' export tax subsidies illegal. Despite strong political resistance, which fed a long and costly legislative process, the U.S. recently repealed these subsidies. This case and the U.S. reaction revealed that although the U.S. is the single super economic power, it is not as dominant a player as some portray it. The case also shed light on the tension between the present international trade and tax regimes and the difficulty of applying WTO law to income tax measures. This tension did not escalate earlier mainly because countries tended not to use their income tax …

Special Allocations And Preferential Distributions In Joint Ventures Involving Taxable And Tax Exempt Entities, Darryll K. Jones

Journal Publications

Joint ventures involving taxable and tax-exempt organizations, referred to in this article as "taxable-tax exempt joint ventures," engender conflict between the doctrinal requirements pertaining to tax exemption and the flexibility afforded joint ventures in Subchapter K.' The nonprofit partner must exercise ultimate governing control over the joint venture so that charitable goals take precedence over profit-seeking goals if the nonprofit's share of income is to remain tax exempt. On the other hand, a for-profit partner is entitled and indeed expected to pursue profit but its lack of control over the joint venture exposes the for-profit partner to greater risk of …

Cancellation Of Debt And Other Incidental Items Of Income: Puritan Tax Rules In The U.S., Richard C.E. Beck

NYLS Law Review

No abstract provided.

The Congressional Response To Corporate Expatriations: The Tension Between Symbols And Substance In The Taxation Of Multinational Corporations, Michael S. Kirsch

Journal Articles

During the past few years, several high-profile U.S.-based multinational corporations have changed their tax residence from the United States to Bermuda or some other tax haven. They have accomplished these expatriations, and the resulting millions of dollars of annual tax savings, merely by changing the place of incorporation of their corporate parent, without the need to make any substantive changes to their business operations or their U.S.-based management structure. Congress and the media have focused significant attention on this phenomenon. Despite this attention, Congress initially enacted only a non-tax provision targeting corporate expatriations - a purported ban on expatriated companies …

The $4 Billion Question: An Analysis Of Congressional Responses To The Fsc/Eti Dispute Under Wto Export Subsidy Standards, William Chou

Northwestern Journal of International Law & Business

During the decade-long relationship between the United States and the World Trade Organization (WTO), perhaps no controversy has fomented as long and bitterly as the dispute over the U.S. tax benefits for exporters. This article analyzes two competing bills before the House of Representatives, both devised to bring the United States in compliance with the WTO's ruling against the U.S. Foreign Sale Corporation (FSC) and Exterritorial Income (ETI) tax regimes as prohibited export subsidies. Hit with a $4 billion retaliatory tariff by the European Union, the House sought new tax legislation that would preserve at least some of the tax …

Attractive Complexity: Tax Deregulation, The Check-The-Box Election, And The Future Of Tax Simplification, Steven A. Dean

Faculty Scholarship

Political failure has long been the scapegoat for the increasing complexity of the income tax. Over the last few decades, confusion over the meaning of the term simplification appears to have become a second important obstacle to creating simpler tax laws. Because some tax complexity is attractive to taxpayers, relying on taxpayer preferences to identify complexity and to guide simplification efforts has produced reforms and proposals that promise simplification but instead deliver pro-taxpayer deregulation that may cause more of society's resources to be devoted to paying, minimizing and collecting taxes rather than less. The check-the-box election, which provided taxpayers with …

Tax Shelter Disclosure And Penalties: New Requirements, New Exposures, Mary A. Mcnulty, Robert D. Probasco

Faculty Scholarship

One of the primary weapons in the battle against tax shelters has been mandatory disclosure to the IRS. The American Jobs Creation Act of 2004 built on this approach by clarifying and making consistent the various disclosure requirements and strengthening penalties for non-disclosure. To uncover abusive transactions, Congress drew the boundaries of disclosure so broadly that even legitimate tax planning transactions are covered. To understand the dangers in the new rules, one must look at the broad range of transactions covered, the participants covered, and the harsh penalties for nondisclosure.

- Transactions Covered. The disclosure requirements apply to six categories …

Taxation, Craig D. Bell

University of Richmond Law Review

No abstract provided.

Will The Ninth Circuit Be Reversed In Banaitis V. Commissioner?, Richard Mason

Nevada Law Journal

No abstract provided.

Abandonments In Bankruptcy: Unifying Competing Tax And Bankruptcy Policies, Michelle A. Cecil

Faculty Publications

This Article attempts to resolve one such issue: the tax consequences of property abandonments by the bankruptcy trustee.

Supermajority Provisions, Guinn V. Legislature And A Flawed Constitutional Structure, Steve R. Johnson

Nevada Law Journal

No abstract provided.

The E.L. Wiegand Lecture: Administrability-Based Tax Simplification, Steve R. Johnson

Nevada Law Journal

The Boyd School of Law is a vibrant place, and our trajectory continues to move strongly in the right direction. One of the things that has been so important to us is the excellent support we have received from so many in and around Nevada. An example of that support brings us together tonight. The Wiegand Foundation has endowed a professorship at the Law School to support the study of tax law. I am fortunate to be the current holder of that professorship. This address is the first formal event memorializing the Wiegand Foundation's support for scholarship and for Law …

Wither Firpta, Fred B. Brown

All Faculty Scholarship

Under FIRPTA, foreign persons are subject to U.S. tax on dispositions of directly held interests in U.S. real property as well as on dispositions of stock in certain U.S. real property holding corporations. Congress enacted FIRPTA to combat several techniques used by foreign persons to avoid U.S. tax on dispositions of U.S. real estate. However, since FIRPTA's enactment, changes in the tax law would defeat these tax avoidance techniques. Consequently, this raises the issue of whether FIRPTA continues to make sense as a policy matter.

This article suggests that the repeal of portions of FIRPTA may be in order and …

Taxing The New Intellectual Property Right, Xuan-Thao Nguyen, Jeffrey A. Maine

Articles

Current, albeit arbitrary, rules exist governing the tax treatment of traditional forms of intellectual property, such as patents, trade secrets, copyrights, trademarks, and trade names. While tax principles exist for these traditional intellectual property and intangible rights, specific tax rules do not exist for new intellectual property rights, such as domain names, that are emerging with the arrival of global electronic commerce transactions on the Internet. This article explores the proper tax treatment of domain name registration and acquisition costs, addressing these parallel questions? Are domain names merely variations of traditional forms of intellectual property and other intangible rights to …

Market Bubbles And Wasteful Avoidance: Tax And Regulatory Constraints On Short Sales, Michael R. Powers, David M. Schizer, Martin Shubik

Faculty Scholarship

In recent years, a speculative bubble in Internet stocks has burst and several "blue chip" firms have failed amidst high profile allegations of corporate misconduct. Why did high-tech start-ups with no earnings attain such lofty valuations? Why didn't sophisticated investors keep prices at saner levels? And why didn't more sophisticated investors look past accounting gimmicks much earlier to uncover problems at Enron and other firms? More generally, why did the mechanisms of market efficiency prove inadequate? While there obviously is no single answer to these complex questions, this Article focuses on one piece of the problem: U.S. tax and regulatory …

A Good Old Habit, Or Just An Old One? Preferential Tax Treatment For Reorganizations, Yariv Brauner

UF Law Faculty Publications

This article proposes to repeal the preferential tax treatment of certain merger and acquisition transactions known as "reorganizations," and tax them like all other sales or exchanges. In the last 80 years this preference has been a cornerstone of our tax system. It is also one of the most stable rules in the tax code. Nevertheless, its normative justification is weak, and has never been rigorously debated in the legal literature. This article rejects the stated rationale for this rules - that such transactions trigger insufficient realization and therefore it is both unfair and impractical to currently tax them. It …

Executive Compensation Reform And The Limits Of Tax Policy, Michael Doran

Georgetown Law Faculty Publications and Other Works

The American Jobs Creation Act of 2004 includes a major attempt to reform the tax rules for deferred compensation arrangements covering corporate managers. This paper examines the tax policy and corporate-governance policy objectives of the reform effort, explores the shortcomings of the legislation, and outlines a different approach for future executive compensation reform.

The Neglected Role Of International Altruistic Investment In The Chinese Transition Economy, Darryll K. Jones

Journal Publications

This Article discusses the positive role of altruistic investment in any transition economy by making specific reference to altruistic investment in the Chinese economic transition. The Article discusses the social welfare hardships arising from the transition process and then discusses the U.S. and Chinese tax incentives and barriers to altruistic investment that would lessen that hardship. After that, the Article discusses the reasons why both countries might prefer to retain those barriers. Finally, the Article concludes that altruistic investment has more positive then negative consequences and makes a simple proposal to stimulate altruistic investment in China in a manner that …

Cancellation Of Debt And Other Incidential Items Of Income: Puritan Tax Rules In The U.S., Richard C.E. Beck

Articles & Chapters

This article examines some miscellaneous and incidental forms of income from a comparative point of view. It appears that U.S. law includes as income more types of incidental items than most other countries. The items briefly considered here are (in no particular order) found money and property, gambling gains, gains from a personal hobby, isolated criminal profits, prizes and awards for merit, damages from non-physical personal injury, and gains from sale of a personal residence. The article concludes with a more thorough examination of income from the cancellation of debts (COD income) of an individual. These items have in common …

Alternative Sanctions And The Federal Tax Law: Symbols, Shaming, And Social Norm Management As A Substitute For Effective Tax Policy, Michael S. Kirsch

Journal Articles

On several occasions in the past decade, when confronted with taxpayers taking advantage of the Internal Revenue Code in ways that Congress considered objectionable, Congress responded in an unusual way. Rather than merely modifying the Internal Revenue Code to alter the tax consequences of the taxpayer's actions, or imposing traditional civil or criminal penalties on the taxpayer, Congress turned to alternative sanctions. For example, in response to United States citizens who renounce citizenship to avoid taxes, Congress enacted public shaming provisions that require publication of the individuals' names in the Federal Register and modified the federal immigration laws to banish …