Taxation-Federal Commons^™

Conservation Easements: Design Flaws, Enforcement Challenges, And Reform, Roger Colinvaux

Scholarly Articles

The charitable deduction for conservation easements promises a conservation benefit, lasting forever. Millions of acres have been protected by deductible conservation easements. On average over $1.5 billion are claimed in easement contributions each year, not including corporate contributions. The deduction, however, has serious problems. As use of the incentive has grown, doubts about the public benefit conveyed by conservation easements and significant enforcement difficulties have led to increased scrutiny of land trusts and to a growing chorus of calls for reform of the tax benefit and state laws governing easements. This Essay argues that it is because the tax incentive …

The Cost Of Progress: Enduring The Tax Deductibility Of International Corporate Social Responsibility Initiatives, Wayne C. Wood

Global Business Law Review

Until the end of the twentieth century, the predominant view in America was that a corporation’s sole duty was to supply wealth to its shareholders. The idea that a corporation owes a broader duty to all of its stakeholders has gained ground based largely on the emerging international recognition of human rights norms. Increasingly American MNCs have opted to voluntarily create and implement CSR policies for moral, economic, and political reasons. While charitable donations made to exempt organizations are expressly deductible under section 170 of the Internal Revenue Code, the same might not be true for a given CSR expenditure. …

The Tax Import Of The Fasb/Iasb Proposal On Lease Accounting, George Mundstock

Articles

No abstract provided.

Recent Irs Guidance Provides A Degree Of Certainty For 403(B) Plans, Gregory L. Needles, Christina Payne-Tsoupros

Journal Articles

The IRS has released long-awaited guidance expanding the availability of self correction for 403(b) plans and opening the pre-approved plan program. On Dec 12, 2012, the IRS released Rev. Proc. 2013-12, 2013-4 IRB 313, which expanded its self-correction program -- the Employee Plans Compliance Resolution System (EPCRS) -- for 403(b) plans. On 3/28/13, the IRS issued Rev. Proc. 2013-22, 2013-18 IRB 985, opening its 403(b) pre-approved plan program. The broader scope of correction under Rev. Proc. 2013-12 is a welcome relief to 403(b) plan sponsors, who may now take advantage of EPCRS to remedy mistakes and avoid plan disqualification in …

Give Taxpayers A Break: Putting The Reliance Element Back Into The Reasonable Reliance And Good Faith Defense, 28 Akron Tax J. 123 (2013), Ronald Z. Domsky

UIC Law Open Access Faculty Scholarship

This Article considers the present law regarding the accuracy related penalties pursuant to I.R.C § 6662 and the reasonable reliance and good faith defense provided for in I.R.C § 6664 using Canal as a prime example of how the courts have treated and penalized taxpayers for relying on tax advisors in planning proposed transactions and in taking positions on returns and proposes a new analysis of a taxpayer's good faith and reasonable reliance. Section II of this Article discusses the current state of the law regarding the Section 6662 penalties, the function and regulations imposed on tax attorneys in advising …

Jurisdiction To Tax Corporations, Omri Y. Marian

UF Law Faculty Publications

Corporate tax residence is fundamental to our federal income tax system. Whether a corporation is classified as “domestic” or “foreign” for U.S. federal income tax purposes determines the extent of tax jurisdiction the United States has over the corporation and its affiliates. Unfortunately, tax scholars seem to agree that the concept of corporate tax residence is “meaningless.” Underlying this perception are the ideas that corporations cannot have “real” residence because they are imaginary entities and because taxpayers can easily manipulate corporate tax residence tests. Commentators try to deal with the perceived meaninglessness by either trying to identify a normative basis …

Recent Developments In Federal Income Taxation: The Year 2012, Martin J. Mcmahon Jr., Ira B. Shepard, Daniel L. Simmons

UF Law Faculty Publications

This recent developments outline discusses, and provides context to understand the significance of, the most important judicial decisions and administrative rulings and regulations promulgated by the Internal Revenue Service and Treasury Department during the most recent twelve months - and sometimes a little farther back in time if we find the item particularly humorous or outrageous. Most Treasury Regulations, however, are so complex that they cannot be discussed in detail and, anyway, only a devout masochist would read them all the way through; just the basic topic and fundamental principles are highlighted - unless one of us decides to go …

On The Future Of Tax Salience Scholarship: Operative Mechanisms And Limiting Factors, David Gamage

Articles by Maurer Faculty

This Essay — written for Florida State University’s symposium on the 100th anniversary of the U.S. federal income tax — evaluates how the literature on tax salience should be advanced in order for it to better guide tax policy over the coming decades. The literature on tax salience analyzes how taxpayers account for the costs imposed by taxation when the taxpayers make decisions or judgments, both in the taxpayers’ roles as voters and as market participants. This Essay evaluates both possible operative mechanisms that might underlie observed tax salience effects and limiting factors that might prevent tax salience effects from …

Enforcement As Substance In Tax Compliance, Leandra Lederman, Ted Sichelman

Articles by Maurer Faculty

It is well known that the government's complete failure to enforce a law can nullify that law. But what are the effects of partial enforcement? This Article shows that imperfect enforcement can alter the de facto content of the written law in predictable and beneficial ways. Specifically, in the tax compliance context, even if perfect enforcement were costless, it would not always be socially optimal. When improving the substantive law is infeasible, the enforcement agency can effect beneficial changes in the law by adopting a probabilistic enforcement scheme that varies according to the category of taxpayer and type of transaction. …

Auer/Seminole Rock Deference In The Tax Court, Steve R. Johnson

Scholarly Publications

No abstract provided.

Watching The Watchers: Preventing I.R.S. Abuse Of The Tax System,, Samuel D. Brunson

Faculty Publications & Other Works

As a result of broad outcries against the incompetence and aggressiveness of the LR.S., Congress reined in its behavior, requiring it to focus on treating taxpayers as customers. Congress also created oversight bodies to ensure that the I.R.S. would comply with the new mandate. Though those oversight bodies face some difficulties - most notably, the unwillingness of Congress to adequately fund them - they nonetheless have proven effective at checking the IR.S. 's misbehavior with regard to taxpayers.

Congress has not, however been as solicitous to the tax law itself The I.R.S. can act in ways that violate both the …

Mutual Funds, Fairness, And The Income Gap, Samuel D. Brunson

Faculty Publications & Other Works

The rich, it turns out, are different from the rest of us. The wealthy, for example, can assemble a diversified portfolio of securities or can invest through hedge and private equity funds. When the rest of us invest, we do so largely through mutual funds. Nearly half of American households own mutual funds, and mutual funds represent a significant portion of the financial assets held by U.S. households.

The tax rules governing mutual funds create an investment vehicle with significantly worse tax treatment than investments available to the wealthy. In particular, the tax rules governing mutual funds force shareholders to …

Taxing Polygamy, Samuel D. Brunson

Faculty Publications & Other Works

The tax law treats married and unmarried taxpayers differently in several respects. Married persons, for example, can file and pay their taxes as a unified taxpayer, with rates that are different than those that apply to unmarried taxpayers. This different treatment of married persons has elicited criticism over the years. Some of the more salient criticisms include that married persons do not necessarily function as an economic unit, that joint filing discourages women from working, and that the various exclusions from the joint filing regime—including gay couples—is unfair.

This Article looks at joint filing through the …

Access To Tax Injustice, Francine J. Lipman

Scholarly Works

No abstract provided.

Taxing Privacy, Hayes R. Holderness

Law Faculty Publications

In the United States, many low-income citizens are being held to a harsher standard than wealthier citizens — these low-income citizens are being asked to relinquish their privacy in order to obtain the public assistance they need, whereas wealthier individuals are not subjected to similar levels of public scrutiny for government benefits that they claim. Giving up privacy can have devastating effects on individuals’ lives — they may suffer various dignitary harms, may experience repressed abilities to express themselves, and may even be coerced into important life decisions by the government. This situation presents a unique problem to the neediest …

Navigating Tefra Partnership Audits In Multi-Tiered Entity Structures, Mary A. Mcnulty, Robert D. Probasco, Lee S. Meyercord

Faculty Scholarship

The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) established a unified procedure for determining the tax treatment of partnership items at the partnership level rather than the partner level. Although these rules addressed a serious and real administrative problem in the assessment of partnership level deficiencies, they also created a complex process with many new problems and potential traps. One particularly unique set of challenges arises in the context of multi-tiered entities.

Multi-tiered entities are partnerships that have a partnership or other pass-through entity as a partner. The pass-through partner is commonly referred to as a “tier,” and …

Filing Status And Today's Families, Erik Baines

University of Richmond Law Review

No abstract provided.

Section 7433'S Statute Of Limitations: How Courts Have Wrongly Turned A Taxpayer's Exclusive Sword Into The Irs's Shield Against Damages, Diana Leyden

Faculty Articles and Papers

Over twenty years ago, Congress took the extraordinary step of authorizing taxpayers to sue the Internal Revenue Service (“IRS”) for damages if the IRS engaged in “unauthorized collection action” when trying to collect a federal tax debt. For many years the IRS has generally been immune from any private action by three laws. Thus, fashioning a private cause of action against the IRS for damages was an extraordinary act. Congress expressly authorized taxpayers to bring a private cause of action against the United States for economic damages caused by “unauthorized collection.” Codified as section 7433 of the Internal Revenue Code, …

And Yet It Moves: A Tax Paradigm For The 21st Century, Reuven S. Avi-Yonah

Law & Economics Working Papers

A central premise of tax scholarship of the last thirty years has been the greater mobility of capital than labor. Recently, scholars such as Edward Kleinbard have recommended that the US adopt a variant of the 'dual income tax' model used by the Scandinavian countries, under which income from capital is subject to significantly lower rates than labor income because of its supposedly greater mobility. This article argues that the premise upon which this argument is built is mistaken, because for individual US taxpayers (as opposed to corporations), there are significant limitations on their ability to avoid tax by moving …

Embracing The Queen Of Hearts: Deference To Retroactive Tax Rules, James M. Puckett

Faculty Scholarship

The Supreme Court’s decision in Mayo Foundation for Medical Education and Research v. United States underscored the importance of a uniform approach to judicial review of administrative action; accordingly, the Court clarified that tax administration is generally subject to the same review as other kinds of administrative action by other federal agencies. Tax guidance from the IRS and Treasury Department serves an important role in clarifying the tax law so that taxpayers may report their tax liability accurately and plan their affairs. Meanwhile, aggressive attempts by a relatively small number of taxpayers to avoid tax liability by exploiting arguable ambiguities …

The Corporate Income Tax: United States Of America Report, Henry Ordower

All Faculty Scholarship

In the context of a European project describing variations in the structure of the corporate income tax, this paper briefly describes the United States corporation income tax and contextualizes it within the broader category of business entity taxation. The paper identifies the various tax models that the United States uses for business entities and discusses the historical delinking of limited liability protection for owners and managers from traditional double taxation.

Hong Kong's Economic Freedom And Income Inequality, Emmett Choy

CMC Senior Theses

Hong Kong is considered to be the most economically free country in the world, but also has the highest amount of income inequality of any developed country. The Hong Kong government is able to sustain laissez faire policies due to its monopoly on land supply. Maintaining high property values allows the government to maximize revenue from property tax, which acts as a hidden tax. A major contributor to income inequality is the formation of oligopolies in Hong Kong that creates an anticompetitive environment. The interests of the government and oligarchs are aligned as both obtain significant portions of revenue from …

Corporate And International Tax Reform: Proposals For The Second Obama Administration (And Beyond), Reuven S. Avi-Yonah

Articles

The passage of the American Taxpayer Relief Act of 2012 (ATRA) offers an opportune moment to consider proposals for corporate and international tax reform. With the debate over individual tax rates for the income and estate tax settled for the present, the President and Congress are free to consider broader reforms. Few observers doubt that such reforms are sorely needed, for several reasons. First, the long-term budgetary outlook is unsustainable. Second, the U.S. corporate tax rate is the highest in the Organisation for Economic Co-Operation and Development (OECD). Third, the current system raises relatively little revenue and large amounts of …

Taxation, Risk, And Portfolio Choice: The Treatment Of Returns To Risk Under A Normative Income Tax, John R. Brooks

Georgetown Law Faculty Publications and Other Works

Many articles in the legal and economic literature claim that a pure Haig-Simons income tax cannot effectively tax investment income. This is because an investor can use leverage to gross up her investments in risky assets such that the increased gain (or loss) exactly offsets any income tax (or deduction) on the returns to risk-taking. This article argues, however, that while it is possible for an investor to make such portfolio shifts, she almost certainly will not because of the increased risk of doing so.

Central to any discussion of the effects of taxation on investment risk-taking is the meaning …

Tax Incentives For Innovation In A Modern Ip Ecosystem, Joshua Chao

Vanderbilt Journal of Entertainment & Technology Law

Technological innovation is a long-recognized catalyst for economic growth in the United States, and its promotion is an important feature of national economic policy, as evidenced by the presence of various tax incentives for innovation in the US Internal Revenue Code. Tax incentives are an important means by which governments can deliver subsidies to promote such innovation. To be effective, however, any system of tax incentives must be tailored for current economic conditions and competitive landscapes. In the current ecosystem of innovation in the United States, this means that, at the very least, the incentives for innovation in the US …

Costly Mistakes: Undertaxed Business Owners And Overtaxed Workers, Lily Kahng, Mary Louise Fellows

Faculty Articles

This Article advocates fundamental changes in the federal income tax base by systematically challenging conventional understandings of consumption and investment. As signaled by its title, "Costly Mistakes," this Article's thesis has to do with the disparate treatment of expenditures incurred by business owners and workers. Where the current tax law treats a business owner's expenditure as investment, the Article sometimes finds consumption and questions why the law should allow the expenditure to be deducted. Where the tax law treats a worker's expenditure as consumption, the Article sometimes finds investment and questions why the law does not allow at least a …

A Changing Federal-State Balance In Unemployment Insurance?, Christopher J. O'Leary

Employment Research Newsletter

No abstract provided.

Will The Federal Income Tax Have A Bicentennial?, Lawrence A. Zelenak

Faculty Scholarship

No abstract provided.

Tax Abuse According To Whom, Shannon Weeks Mccormack

Articles

In 1996, Congress banned the Treasury Department from enacting retroactive regulations but provided an important exception, allowing tax regulations to apply retroactively “to prevent abuse.” Congress did not, however, explicitly define abuse; nor did it designate to any specific actor the power to do so. This Article provides the first comprehensive look at the level of deference owed a Treasury regulation’s interpretation of the Internal Revenue Code’s abuse exception. Generally, a reviewing court owes some level of deference to an agency’s interpretation of the statute it is entrusted to administer. Some statutory interpretations are entitled to receive the strong standard …

Extending The Taxation-Of-Risk Model To Timing Options And Marked-To-Market Taxes, Eric D. Chason

Faculty Publications

No abstract provided.