Tax Law Commons^™

Voip Mtic — Vat Fraud In Voice Over Internet Protocol, Richard Thompson Ainsworth

Faculty Scholarship

In the beginning, the VAT fraud known as missing trader intra-community (MTIC) fraud appeared to be a UK problem concentrated in the cell phone and computer chip markets. MTIC has mutated (to other commodities) and migrated (to other Member States). This paper describes how this fraud operates in the VoIP market, and how in this mutation it is no longer confined to the EU, but can infiltrate any VAT/GST anywhere.

Canada, Botswana, Japan, Iceland and Jamaica (to mention a few jurisdictions) have consumption taxes that are just as vulnerable as is the EU VAT to VoIP missing trader fraud. It …

Narrowing The Tax Gap Through Presumptive Taxation, Kyle D. Logue, Gustavo G. Vettori

Law & Economics Working Papers

This Article highlights the primary tax enforcement problem in the United States, that of noncompliant small and medium-sized businesses (“SMBs”), and it explores the possibility of a radical solution: shifting away from the current system, which attempts to tax the actual income of each business, and toward a system that taxes only a rough approximation (or probabilistic estimate) of business income. This sort of presumptive tax approach has been used for years in developing economies, where the problem of SMB noncompliance is even worse than in the U.S. This Article argues that the time has come to at least consider …

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

Scholarly Publications

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, …

Zappers - Retail Vat Fraud, Richard Thompson Ainsworth

Faculty Scholarship

Zappers skim cash sales at retail. Zappers are add-on programs used by merchants with electronic cash registers (ECRs) or point-of-sale (POS) systems. Zappers are smart and selective. They do not skim all sales, and they never skim credit card transactions.

Although they are present in every jurisdiction, Zappers appear to be most widely used in developed economies that combine high levels of cash sales with high rates of consumption tax. Sweden, for example, has a cash-intensive economy, one of the world’s highest VAT rates (25%), and also reports that 70% of the ECRs in the country are either “… constructed …

Check-The-Box Regs And Gift Tax Discounts, Wendy G. Gerzog

All Faculty Scholarship

This article discusses the recent Tax Court decision in Pierre and the effect for gift tax purposes of an entity’s classification made under the check-the-box regulations. The court was split on what those regulations mean when they state that an entity is to be disregarded ‘‘for federal tax purposes.’’

Court Of Federal Claims Upholds Additional Sui Credit, Danny A. Pannese

WCBT Faculty Publications

The article discusses the decision in a tax court case that plaintiffs in consolidated tax refund cases were entitled to an additional state unemployment insurance (SUI) credit against their Federal Unemployment Tax Act (FUTA) tax liabilities for years 1991-1996. The dispute in the tax court case of E.P. Talent Services LP was addressed in a year 2004 Court of Federal Claims decision. It was ruled that the SUI credit is capped at over five percent of the taxpayer's total FUTA wage base.

Co2 Mtic Fraud — Technologically Exploiting The Eu Vat (Again), Richard Thompson Ainsworth

Faculty Scholarship

On February 1, 2010 Algirdas Šemeta is expected to be confirmed as the next European commissioner for taxation, customs union, audit and anti-fraud. If his nomination passes a confirmation hearing at the European Parliament he will succeed László Kovács. At the top of Mr. Šemeta’s list of things requiring attention should be MTIC fraud in tradable CO2 permits. Political and fiscal realities make CO2 MTIC fraud a top priority.

CO2 MTIC is a technology-driven fraud that takes advantage of the same weaknesses in the EU VAT that have become well known in the cell phone and computer chip trade. The …

Quebec's Sales Recording Module (Srm): Fighting The Zapper, Phantomware, And Tax Fraud With Technology, Richard Thompson Ainsworth

Faculty Scholarship

No abstract provided.

The Political Economy Of Taxation: A Critical Review Of A Classic, Nancy Staudt

Faculty Working Papers

This book review reexamines Henry Simons famous contribution to the tax policy literature, "Personal Income Taxation: The Definition of Income as Problem in Fiscal Policy" (1938). It argues that while Professor Simons was concerned with tax fairness and the redistribution of income, he adopted a definition of income that worked to undermine the interests of many of the poor individuals in society that he sought to support.

The Judicial Power Of The Purse: How Courts Fund National Defense In Times Of Crisis (An Introduction), Nancy Staudt

Faculty Working Papers

This introduction to a forthcoming book (Spring 2011) briefly describes judges' hidden purse powers along with a theory for how and why judges will utilize these powers to keep the nation safe in times of foreign policy crisis. Ultimately, the book-length project investigates the empirical implications of the theory with both qualitative and quantitative data and finds substantial support for the idea that judges's use their financial powers differently in times of peace and in times of crisis

Tax Theory And "Mere Critique": A Reply To Professor Zelenak, Nancy Staudt

Faculty Working Papers

In this symposium essay, I briefly explore the usefulness of critical scholarship generally and then point to the manner in which this type of analysis can (and does) advance Professor Zelenak's aim of devising technical solutions to difficult policy problems. I then turn to Zelenak's critique of my article, "Taxing Housework." I argue that far from undermining my proposal to tax imputed income, Zelenak's work highlights several reasons for considering the proposal as an alternative to the existing tax structure. Importantly, I do not claim that taxing women's household labor is a perfect solution to the social and economic problems …

The Theory And Practice Of Taxing Difference, Nancy Staudt

Faculty Working Papers

This is a review essay that examines Professor Edward McCaffery's important book, "Taxing Women." It argues that while McCaffery provides a detailed and nuanced analysis of the feminist and economic issues, his work is problematic in several ways. First, it is not clear that the optimal theory of taxation leads to the policy reform he proposes-it may be both underinclusive and overinclusive. Second, even if McCaffery has identified a clear economic rationale for taxing married women at a lower rate than men and single women, feminists may object to this proposed tax structure on a number of grounds. Finally, McCaffery's …

The Hidden Costs Of The Progressivity Debate, Nancy Staudt

Faculty Working Papers

In this Article, I argue that.by reaching the agreement that the poor should have no tax liability, the contest over progressivity has centered improperly on the rights and responsibilities of relatively wealthy citizens. The wealthy are widely perceived to have valuable property that, if shared with society, will enable the smooth operation of the democratic state. At the same time, the wealthy are perceived to have liberty interests, which if violated, could lead to the ruin of the domestic economy

Although the debate over progressivity has lasted for more than a century, traditional tax theorists have limited their discussion to …

Taxing Housework, Nancy Staudt

Faculty Working Papers

This article examines the tax policy rationale for excluding non-market household labor from the tax base and argues that the conventional rationals no longer withstand scrutiny. The article goes on to argue that it is possible to include non-market household labor into the tax base, while at the same time avoiding the imposition of costs upon the (mostly) women who supply the labor. Moreover, and mort important, tax policy reform along these line would increase householder laborers' access to public retirement benefits and signal the important of the work to society generally.

All Charities Are Property-Tax Exempt, But Some Charities Are More Exempt Than Others, Evelyn Brody

All Faculty Scholarship

Attention from the media notwithstanding, the nonprofit sector continues to achieve remarkable success in state supreme courts and statehouses in defending property-tax exemptions. But budget pressures remain. While the intermediate use of “payments in lieu of taxes” has not yet become a systematic compromise solution, PILOTs are attracting growing interest from local taxing jurisdictions. This Article highlights three issues— who decides the parameters of exemption, legislatures or courts; what are the specific factors and vulnerable subsectors; and how exemption is granted or withheld in practice—and concludes with several PILOT case studies. The Appendix sets forth a fifty-one-jurisdiction review of state …

Respecting Foundation And Charity Autonomy: How Public Is Private Philanthropy? (Symposium) (With J. Tyler), Evelyn Brody

All Faculty Scholarship

Recent years have seen a disturbing increase in legal proposals by the public and government officials to interfere with the governance, missions, strategies, and decision-making of foundations and other charities. Underlying much of these debates is the premise – stated or merely presumed – that foundation and charity assets are “public money” and that such entities therefore are subject to various public mandates or standards about their structure, operations, and policies. The authors’ experiences and research reveal three “myths” that, singly or collectively, underlie claims that charitable assets are public money. The first myth conceives of charities as shadow governments …

E-Vat: An Electronically Collected Progressive Consumption Tax, Daniel S. Goldberg

Faculty Scholarship

This report proposes replacing the income tax with an electronic, progressive consumption tax that couples a credit-method VAT (modified for wages) with a progressive wage tax. I have called this proposal e-VAT (a convenient contraction for an electronic value added tax), because it is based on a business-level-credit VAT and can be collected automatically and electronically at the point of sale.

The essential advantage of e-VAT over the Hall-Rabushka flat tax is that e-VAT’s use of a credit VAT as its foundation facilitates automatic and electronic collection of the tax. A credit VAT lends itself to electronic monitoring and auditing …

Taxing Structured Settlements, Brant J. Hellwig, Gregg D. Polsky

Scholarly Articles

Congress has granted a tax subsidy to physically injured tort plaintiffs who enter into structured settlements. The subsidy allows these plaintiffs to exempt from the tax the investment yield imbedded within the structured settlement. The apparent purpose of the subsidy is to encourage physically injured plaintiffs to invest, rather than presently consume, their litigation recoveries. While the statutory subsidy by its terms is available only to physically injured tort plaintiffs, a growing structured settlement industry now contends that the same tax benefit of yield exemption is available to plaintiffs’ lawyers and non-physically injured tort plaintiffs under general, common-law tax principles. …

California Women: Trying To Use Federal Taxes To Put The 'Community' In Community Property, Stephanie H. Mcmahon

Faculty Articles and Other Publications

Community property is thought to be a more equitable marital property regime than the common law because we assume that providing each spouse with an interest in fifty percent of the family’s income also provides a substantial amount of equality between spouses. Historically, however, as the regime operated in the United States, it was not especially favorable to wives. Although the concept implied a partnership between spouses, in practice wives were denied rights a partner would expect to enjoy. This article examines how women lobbied to enlarge the protection California wives enjoyed under the state’s community property regime in the …

Economic Trends And Judicial Outcomes: A Macrotheory Of The Court, Thomas Brennan, Lee Epstein, Nancy Staudt

Faculty Working Papers

In this symposium essay, we investigate the effect of economic conditions on the voting behavior of U.S. Supreme Court Justices. We theorize that Justices are akin to voters in political elections; specifically, we posit that the Justices will view short-term and relatively minor economic downturns—recessions—as attributable to the failures of elected officials, but will consider long-term and extreme economic contractions—depressions—as the result of exogenous shocks largely beyond the control of the government. Accordingly, we predict two patterns of behavior in economic-related cases that come before the Court: (1) in typical times, when the economy cycles through both recessionary and prosperous …