Tax Law Commons^™

The Digital Services Tax: A Conceptual Defense, Wei Cui

All Faculty Publications

As 2018 nears its end, a digital service tax (DST) seems imminent in Europe, yet elaborations of the DST’s motivations have so far come primarily from the European Commission and the UK Treasury: academic and practitioner commentators remain largely skeptical. This paper offers a new conceptual defense of the DST that is independent of the existing government positions. I argue that a clear case can be made for the DST as a way of taxing location-specific rent earned by digital platforms. While the DST may also be partially motivated by other, potentially conflicting visions for reforming international taxation, such as …

Tax Treaty Abuse And The Principal Purpose Test - Part I, David G. Duff

All Faculty Publications

The Multilateral Convention to Implement Tax Treaty Measures to Prevent Base Erosion and Profit Shifting (MLI) has been described as “an historical turning point in the area of international taxation” which introduces a third layer of tax rules for the taxation of cross-border transactions in addition to domestic tax law and bilateral tax treaties. Of the many provisions of the MLI, the most important are the preamble text in Article 6(1) and the so-called principal purpose test (PPT) in Article 7(1), both of which have been adopted by all signatories to the MLI in order to satisfy the OECD’s minimum …

Tax Treaty Abuse And The Principal Purpose Test: Part Ii, David G. Duff

All Faculty Publications

The Multilateral Convention to Implement Tax Treaty Measures to Prevent Base Erosion and Profit Shifting or Multilateral Instrument (MLI) has been described as “an historical turning point in the area of international taxation” which introduces a third layer of tax rules for the taxation of cross-border transactions in addition to domestic tax law and bilateral tax treaties. Of the many provisions of the MLI, the most important are the preamble text in Article 6(1) and the so-called principal purpose test (PPT) in Article 7(1), both of which have been adopted by all signatories to the MLI in order to satisfy …

Legislative Foundation Of The United States' New International Tax System, Joshua D. Harms

Seattle University Law Review

This Note begins with commentary on the United States’ former worldwide system of taxation. This system taxed multinational corporations’ offshore profits at the applicable domestic income tax rate less credits for taxes paid to foreign governments. This tax regime provided for the deferral of income tax due on the profits of multinational corporations’ overseas operations until the time of repatriation. This Note considers the issues inherent in this system and analyzes the repatriation tax holiday under the American Jobs Creation Act of 2004. This holiday has been unanimously criticized by both sides of the political aisle and led to large …

Residence-Based Formulary Apportionment: (In-)Feasibility And Implications, Wei Cui

All Faculty Publications

I examine one way of taxing international corporate income that has not previously been studied, “residence-based formulary apportionment” or RBFA. I first offer a new taxonomy of different ways of taxing corporate income by reference to individual shareholders, and distinguish what I call the “shareholder attribution” approach from integration, pass-through, and other approaches. I then argue that although traditional international legal norms had led international tax design to avoid taxing foreign corporations “unconnected” with the taxing jurisdiction (e.g. foreign corporations earning only foreign income), these legal norms have gone through substantial transformations in recent years. The exercise of jurisdiction over …

The Persistent Appeal Of S Corporations: How Tax Cuts Might Not Help Small Corporations, Manas Kumar

Michigan Business & Entrepreneurial Law Review

This Note will first review the tax preferences for entity choice under the old tax regime for the sake of context. It will then compare the tax benefits of electing to C and S corporation status under the regime created by the Act. The Note will conclude with an analysis of the factors sustaining the tax appeal of pass-through firms for lower-earning businesses with special attention to the largely unaltered state of tax law and business entity choice. It proposes that the Act did not sufficiently reform the Internal Revenue Code to close up the tax advantage that high-earning corporations …

"Works For Me": What's Next For Pennsylvania Corporate Tax Liabilities After Nextel Communications Of The Mid-Atlantic V. Commonwealth, Riley Bauer

Villanova Law Review (1956 - )

No abstract provided.

The Practice And Tax Consequences Of Nonqualified Deferred Compensation, David I. Walker

Faculty Scholarship

Although nonqualified deferred compensation plans lack explicit tax preferences afforded qualified plans, it is well understood that nonqualified deferred compensation results in a joint tax advantage when employers earn a higher after‐tax return on deferred sums than employees could do on their own. Several commentators have proposed tax reform aimed at leveling the playing field between cash and nonqualified deferred compensation, but reform would not be easy or straightforward. This Article investigates nonqualified deferred compensation practices and shows that joint tax minimization often takes a backseat to accounting priorities and participant diversification concerns. In practice, the largest source of joint …

Section 4968 And Taxing All Charitable Endowments: A Critique And A Proposal, Edward A. Zelinsky

Articles

No abstract provided.

The Republic Of Virtue: The Republican Ideal In British And American Property Law, Maxwell M. Garnaat

Cornell International Law Journal

As the estate tax comes under increasing pressure from all sides, it is important that we determine just how rooted in American ideals such a measure truly is. On the one hand, it is true that Lockean theories of private property remain a stalwart influence on the nation, one which may be used to argue against the estate tax. On the other hand, however, the equally venerable theory of republicanism— one adopted and developed by the Framers themselves— can justify its continuation. Applying the principles of republicanism to this specific context, one can see how closely its tenets align with …

California Department Of Toxic Substances Control V. Westside Delivery, Llc, Mitch L. Werbell V

Public Land & Resources Law Review

The Ninth Circuit’s recent decision in California Department of Toxic Substances Control v. Westside Delivery, LLC reminds prospective purchasers of tax-defaulted property of their responsibility for due diligence.The case addressed the reach of the third-party defense to a CERCLA cost recovery action. The court determined that CERCLA’s third-party defense did not apply to a company which purchased a contaminated property at a tax auction because of its “contractual relationship” with the former owner-polluter and because the relevant contaminating acts occurred “in connection with” the prior polluter’s ownership of the site.

De Novo: Reviewing Tax Court Redressability Incongruities In Innocent Spouse Relief Sections 66© And 6015(F), Jason Harn

Seattle University Law Review

Part One of this Note details the historical background of joint and several liability in federal income taxation. Part Two introduces, compares, and contrasts the two statutory provisions Congress has enacted to relieve “innocent spouses” from joint and several liability. Part Three discusses the incongruent standards of review applied by the Tax Court to these—§§ 66 and 6015—two substantially similar relief provisions. Finally, Part Four suggests remedies to alleviate this incongruity.

How Shell Entities And Lack Of Ownership Transparency Facilitate Tax Evasion And Modern Policy Responses To These Problems

Marquette Law Review

The purpose of this article is to review the use and application of shell entities, as they facilitate tax evasion, impede investigations, and harm society. This article details the types and characteristics of shell entities, reviews actual cases to exhibit how shells are abused, outlines reasons shells disguise beneficial ownership, and analyzes steps taken by countries and organizations to thwart the abuse of shell entities. Many types of shell entities are used by tax evaders and are often layered in an intricate network which conceals the identity of beneficial owners. Nominees and bearer shares are used in tandem with shell …

Bleeding Women Dry: Tampon Taxes And Menstrual Inequity, Jorene Ooi

Northwestern University Law Review

In recent years, the problem of menstrual inequity has attracted increased attention. Most states impose a sales tax on menstrual hygiene products—a “tampon tax.” A burgeoning social movement has sought to end the tampon tax, and lawmakers have taken notice by introducing, and in some cases successfully passing, measures to repeal the tax by exempting menstrual hygiene products from the sales tax. This Note evaluates, from a tax policy standpoint, the pros and cons of repealing the tampon tax. It argues that although repeal is usually undesirable as a matter of tax design, the tax should nevertheless be repealed both …

The International Provisions Of The Tcja: Six Results After Six Months, Reuven S. Avi-Yonah

Law & Economics Working Papers

Over six months have passed since the enactment of the TCJA, so it is now possible to reach some preliminary conclusions on its impact. The main ones are:

1. The transition tax plus anticipated GILTI tax minus territoriality have resulted in higher GAAP effective tax rates for 2017. In some cases they approach 35% for large multinationals with a lot of offshore income. For the first six months of 2018, however, overall corporate tax revenues are sharply down because of the 21% rate plus expensing. This is the exact reverse of the situation before TCJA in which MNEs showed very …

Per Se Economic Substance, Jesse P. Houchens

BYU Law Review

The economic substance doctrine is used by the IRS and courts to distinguish legal tax avoidance from tax evasion. More specifically, executive and judicial bodies use this doctrine to revoke statutorily compliant tax benefits that arise from transactions that lack, beyond such tax benefits, both a subjective business purpose and an objective economic effect. The most common tool for measuring the objective economic effect of a transaction is the pre-tax profit test. However, disagreement among courts and scholars applying this test has led to taxpayer uncertainty and accusations of reverse-engineered opinions. In this Comment, I reevaluate and propose an alternative, …

Taxing & Zapping Marijuana: Blockchain Compliance In The Trump Administration Part 5, Richard Thompson Ainsworth, Brendan Magauran

Faculty Scholarship

This is the fifth part of a five-part series dealing with the rescission by U.S. Attorney General Jeff Sessions of the Obama-era policy that discouraged federal prosecutors from bringing charges in all but the most serious marijuana cases.

This article focuses on the back-end leakage in the state’s obligation to control both the physical flows of legalized marijuana, as well as the related fiscal flows (the proceeds of legalized marijuana sales). These flows intersect dramatically in retail-level frauds.

There are very few new proposals on how to solve the physical flow problems with consumer re-sales into the black market. Traditional …

Taxing & Zapping Marijuana: Blockchain Compliance In The Trump Administration Part 2, Richard Thompson Ainsworth, Brendan Magauran

Faculty Scholarship

Legalization of marijuana burdens the States with the responsibility of (a) monitoring the physical flows of marijuana through the supply chain (making sure the marijuana does not enter inter-state commerce; making sure it stays out of the hands of minors, etc.), and (b) monitoring the fiscal flows (making sure the proceeds of marijuana production do not end up in criminal hands).

The type of controls favored by the states are track and trace (TAT), or seed-to-sale (STS) systems. These systems are reasonably complex, as well as technology-intensive. Nevertheless, there are questions about whether they are adequate to the enforcement needs. …

Taxing & Zapping Marijuana: Blockchain Compliance In The Trump Administration Part 3, Richard Thompson Ainsworth, Brendan Magauran

Faculty Scholarship

This is the third of a five-part series dealing with the rescission by U.S. Attorney General Jeff Sessions of the Obama-era policy that discouraged federal prosecutors from bringing charges in all but the most serious marijuana cases.

This article focuses on cyber-attacks on the main commercial chain, and the use of a private blockchain using HyperLedger Fabric as a platform.

This fraud is a direct, criminal attack; an attack designed to destroy/corrupt records of marijuana inventory and plant tags throughout the supply chain. The attack allows legalized marijuana to escape the system and be sold on the black market. A …

Taxing & Zapping Marijuana: Blockchain Compliance In The Trump Administration Part 4, Richard Thompson Ainsworth, Brendan Magauran

Faculty Scholarship

This is the fourth of a five-part series dealing with the rescission by U.S. Attorney General Jeff Sessions of the Obama-era policy that discouraged federal prosecutors from bringing charges in all but the most serious marijuana cases.

This article focuses on retail-level frauds. It proposes a limited purpose crypto currency. At the retail level the MJ Freeway or METRC software essentially functions as a marijuana-industry-specific point of sale (POS) system. It is common in retail for different industry sectors (restaurants, hotels, convenience stores, or gasoline stations) to have market-specific POS systems that are molded to fit the unique characteristics of …

Front Matter (Letter From The Editor, Masthead, Etc.)

The Contemporary Tax Journal

No abstract provided.

Analysis Of The Head Of Household Filing Status, Chau Le

The Contemporary Tax Journal

No abstract provided.

Becker Cpa Exam Review

The Contemporary Tax Journal

No abstract provided.

Summaries For The 33rd Annual Tei-Sjsu High Tech Tax Institute, Silin Chen, June Hostetter, Sahdia Saiara, Jessica Wong, Cherry Zheng

The Contemporary Tax Journal

No abstract provided.

The Contemporary Tax Journal Volume 7, No. 2 – Summer 2018

The Contemporary Tax Journal

No abstract provided.

Taxing & Zapping Marijuana: Blockchain Compliance In The Trump Administration Part 1, Richard Thompson Ainsworth, Brendan Magauran

Faculty Scholarship

On January 4, 2018, the Trump Administration through Attorney General Sessions rescinded an Obama-era policy1 that discouraged federal prosecutors from bringing charges in all but the most serious marijuana cases under the federal Controlled Substances Act,2 as well as under the Bank Secrecy Act.3 Federal law is at odds with state law in the majority of states on the legalization and subsequent state taxation of marijuana.4 Twenty-eight states and the District of Columbia have at least partially legalized marijuana. Eight of these states have legalized both medicinal and recreational use.5 With limited exceptions, legalized sales of marijuana are taxed.

We …

The Beat And Treaty Overrides: A Brief Response To Rosenbloom And Shaheen, Reuven S. Avi-Yonah, Brett Wells

Law & Economics Working Papers

In a recent paper posted on SSRN, Profs. David Rosenbloom and Fadi Shaheen argue that the Base Erosion Anti-Abuse Tax (BEAT) (IRC section 59A), as enacted in 2017, is a potential violation of Articles 23 and 24 of US tax treaties. In addition, they argue that the BEAT does not override those treaties and therefore the treaties can be relied upon to overcome the effects of the BEAT. In our opinion, this conclusion is wrong, for two reasons. First, we believe that the BEAT is not a treaty violation. Second, we believe that even if the BEAT were found to …

Failed Charity: Taking State Tax Benefits Into Account For Purposes Of The Charitable Deduction, Roger Colinvaux

Buffalo Law Review

The Tax Cuts and Jobs Act (TCJA) substantially limited the ability of individuals to deduct state and local taxes (SALT) on their federal income tax returns. Some states are advancing schemes to allow taxpayers a state tax credit for contributions to a charity controlled by the state. The issue is whether state tax benefits are deductible as a charitable contribution for purposes of the federal income tax. Under a general rule of prior law—the full deduction rule—state tax benefits were ignored for purposes of the charitable deduction. If the full deduction rule is applied to the state workaround schemes, then …

Tax Expenditure And The Treatment Of Tax Incentives For Investment, Agustin Redonda, Santiago Diaz De Sarralde, Mark Hallerberg, Lise Johnson, Ariel Melamud, Ricardo Rozemberg, Jakob Schwab, Christian Von Haldenwang

Columbia Center on Sustainable Investment Staff Publications

Governments use tax expenditures to boost investment, innovation and employment. However, these schemes are largely opaque, costly and often ineffective in reaching their stated goals. They also frequently trigger unwanted side effects. In order to improve the performance of these tools, the authors present three concrete policy proposals: First, governments should increase transparency on tax benefits. G20 members should take the lead on this with frequent and comprehensive tax expenditure reports. Second, G20 governments should improve the design of tax incentives with the aim of minimizing the generation of windfall profits and negative spillover effects within and across (in particular, …

Making Sense Of The European Union's Vat Tax System: Does The European Court Of Justice's Jurisprudence Support Harmonization?, Jarrod Tudor

Global Business Law Review

The Sixth Council Directive 77/388/EEC was adopted by the European Union (EU) as a means toward harmonization of the value-added tax (VAT) system. The Framers of Directive 77/388/EEC believed that a disjointed VAT tax system that existed previously was harmful to the common market’s guarantee of free movement of goods and services that are subject to the VAT tax. The jurisprudence of the European Court of Justice (ECJ) on the subject of the Sixth Council Directive 77/388/EEC reflects four dominant patterns, including the limitation of member-states to dictate the parameters of the VAT tax, that additional administrative measures cannot be …