By: Diane Ring
Today St. Louis University School of Law hosted the Sanford E. Sarasohn Conference on Critical Issues in Comparative International Taxation II: Taxation and Migration. This event offered a much needed forum to explore the intersection between international tax law and questions of migration and refugees. Topics addressed included using the tax system to remedy migration challenges (see, for example, Matthew Lister, “A Tax-Credit Approach to Addressing Brain-Drain” suggesting a tax transfer from jurisdictions on the receiving end of a brain drain to the countries losing skilled labor; and see Cristina Trenta, “Migrants and Refugees: An EU Perspective on Upholding Human Rights Through Taxation and Public Finance” advocating an EU-wide tax to finance members’ commitments to refugee human rights). Other papers considered the burdens that tax-induced migration creates for the society the migrant leaves and for some members of the jurisdiction the migrant joins (see, for example, Allison Christians, “Buying In: Citizenship and Residence by Investment”). The full set of 15 conference papers will be published in the St. Louis University Law Journal and will provide a valuable resource on the breadth of taxation and migration questions.
Month: March 2017
Call for Papers: 18th Global Conference on Environmental Taxation (Tucson, AZ, Sept. 27-29, 2017)
Here’s another call for papers:
Please plan ahead for the 18th Global Conference on Environmental Taxation! The deadline for submitting abstracts in response to the Call for Papers is May 1, 2017 and early submissions are welcome. For information about the conference and the Call for Papers, click here.
This year the conference’s focus is: Innovation Addressing Climate Change Challenges: Local and Global Perspectives
We are in a pivotal and defining time for global discourse on public/private sector response at all levels of government (national, state, indigenous, provincial, municipal, city, and local), to the impacts of climate change. And, GCET18 is well-positioned in its role as the leading global forum for innovative exchanges on principles, practices, and policies with respect to environmental taxation and market-based instruments.
The conference will explore various topics :
- Climate change policy, biodiversity protection, environmental stewardship, pollution control, water conservation, land degradation, renewable energy, mining and rehabilitation
- Market instruments such as carbon pricing, emissions trading schemes, other environmental taxes, subsidies, direct action or spending programs and tax concessions both positive and perverse.
Selected papers from the Global Conferences are published in Critical Issues in Environmental Taxation.
The conference this year will be hosted by the University of Arizona, James E. Rogers College of Law, and the Conference Chair is Mona Hymel. If you have questions, please contact her at law-gcet18@list.arizona.edu.
We hope to see you in Tucson!
Prof. Janet E. Milne
Director, Environmental Tax Policy Institute
Co-editor, Handbook of Research on Environmental Taxation
Vermont Law School, USA
AALS Call for Papers on The Challenges and Opportunities of Exotic Hybrids
By: Leandra Lederman
At the 2018 AALS annual meeting (San Diego, Jan. 3-6, 2018), the Section on Agency, Partnerships LLCs, and Unincorporated Associations will be co-sponsoring a program with the AALS Sections on Taxation, Securities Regulation, and Business Associations on “The Challenges and Opportunities of Exotic Hybrids—Series LLCs, Up-C’s and Master Limited Partnerships.” In addition to featuring invited speakers, speakers (and papers) will be selected from a call for papers located at this link. The submission deadline is June 15, 2017.
PROMESAs, PROMESAs?
Shu-Yi Oei
After swearing up and down that I would blog more about Puerto Rico’s 70 billion dollar debt crisis, I of course was remiss and did not. But a new paper by Mitu Gulati and Robert Rasmussen, “Puerto Rico and the Netherworld of Sovereign Debt Restructuring” has provided me the impetus to dive into this topic again.
Recall that unlike U.S. municipalities (such as Detroit), Puerto Rico bodies and utilities aren’t considered debtors for purposes of Chapter 9 of the U.S. Bankruptcy Code and therefore don’t have access to the municipal bankruptcy process. See 11 U.S.C. § 101(52). Puerto Rico attempted to address its fiscal woes by enacting the 2014 Puerto Rico Public Corporation Debt Enforcement and Recovery Act, which created a debt restructuring mechanism analogous to Chapter 9 municipal bankruptcy. However, the U.S. Supreme Court ruled on June 13, 2016 that the Act was preempted by Section 903(1) of the U.S. Bankruptcy Code. Puerto Rico v. Franklin California Tax-Free Trust, 136 S. Ct. 1938 (2016). [Fn. 1]
After the Franklin Trust decision, Congress stepped in and passed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) legislation on June 30, 2016, to allow Puerto Rico to restructure without filing for Chapter 9 bankruptcy. Briefly, PROMESA establishes an independent oversight board, provides for a bankruptcy-like debt restructuring process, and requires submission of a Fiscal Plan by Puerto Rico. Puerto Rico’s required Fiscal Plan was approved by the Oversight Board on March 13, 2017; however, that plan has come under criticism from bondholders.
This all begs the question, however, of what would have happened had Congress NOT passed the PROMESA legislation. Puerto Rico would have been left in a bind in which it had no access to the U.S. municipal bankruptcy process but was preempted from enacting any analogous debt restructuring mechanism by Section 903(1) of that same Bankruptcy Code, per Franklin California Tax-Free Trust. [Fn. 2]
Gulati and Rasmussen’s paper focuses on this question, arguing that, as a constitutional matter, the United States may not prohibit Puerto Rico from enacting its own bankruptcy-like restructuring process while offering no alternative mechanism. This leaves Puerto Rico in an untenable “netherworld,” in which it has the power to issue debt without the mechanisms for dealing with financial distress on the back end.
Chuck Berry, Cash, and Taxes
By Sam Brunson
In the aftermath of Chuck Berry’s death on March 18, I learned that I’m way more familiar with his music than I had realized. I’ll confess that I never spent a lot of time thinking about Chuck Berry, but his songs (it turns out) were an accidental soundtrack to my growing up. My dad had two or three oldies stations programmed into the radio, and Berry’s music was ubiquitous on their playlists. And many songs I’m partial to have turned out to be his. (I’m thinking particularly of Nina Simone’s cover of “Brown-Eyed Handsome Man.”)
Still, I’m not a big enough fan to try to write about Berry on a tax blog. Or, rather, I wasn’t until last night, at the gym. As I listened to Sound Opinions, I learned that, like so many musicians, Berry had a run-in with the IRS. Continue reading “Chuck Berry, Cash, and Taxes”
ACTC Letter Requesting a Variance for Tax Guidance
By: Leandra Lederman
Sam Brunson previously blogged about President Trump’s Executive Order of January 30, 2017, “Reducing Regulation and Controlling Regulatory Cost,” which requires an agency to identify two regulations to eliminate for every new regulation it issues. (Sam also has related posts here and here). As Sam stated, the Executive Order burdens taxpayers, who benefit from the public guidance Treasury regulations provide.
On March 23, the American College of Tax Counsel (ACTC) sent a letter to the Secretary of Treasury, Hon. Steven Mnuchin, and the Director of the Office of Management and Budget, Hon. Mick Mulvaney, “respectfully request[ing] that the Administration consider the unique role that the tax law plays in the lives of every American and provide the Treasury Department and the IRS with appropriate flexibility in issuing guidance that taxpayers and their advisors need in order to comply with the tax law.” The letter explains in part:
“By limiting the flexibility of Treasury and the IRS to issue such guidance, the Executive Order risks shifting the interpretive burden onto taxpayers, who must hire accountants, lawyers, and other advisors to guide them. . . . Moreover, by requiring Treasury and the IRS to identify two ‘deregulatory’ actions for each new guidance item, the Executive Order risks imposing additional burdens on taxpayers if it results in the elimination of existing rules that taxpayers and their advisors have come to rely on.”
I hope that Secretary Mnuchin and Director Mulvaney are receptive. As the ACTC’s letter states, even while simplification efforts are underway, “it is critical for taxpayers and their advisors to have the guidance needed to comply with the tax law as currently in effect.”
Tax Professors on Twitter
By David J. Herzig
By David Herzig
I am trying to keep this updated quarterly. So, please find the most updated list. There are a number of new names on the updated list as tax professors continue to enter the twitterverse. I did update the list to be in alphabetical order. As always, if I am missing someone, please let me know.
Starting with the SurlySubgroup (@surlysubgroup)
Jennifer Bird-Pollan (@jbirdpollan)
Sam Brunson (@smbrnsn)
Phil Hackney (@EOTaxProf)
David Herzig (@professortax)
Stephanie Hoffer (@Profhoffer)
Leandra Lederman (@leandra2848)
Ben Leff (@benmosesleff)
Francine Lipman (@Narfnampil)
Diane Ring (@ringdi_dr)
Shu-Yi Oei (@shuyioei)
Other United States/Canadian Tax Professor (in alphabetical order):
Update on the Future of Treasury Regulations
By Sam Brunson
I previously wrote about the fact that Treasury and the IRS were going to essentially stop issuing guidance in light of the Trump administration’s one-in-two-out rule for regulations.[fn1]
There seems to be some movement on this front. Yesterday, Commissioner Koskinen announced that the IRS was set to begin issuing “subregulatory” guidance again. He didn’t define what he meant by subregulatory, but it probably includes revenue procedures, notices, and revenue rulings, at least. (Interestingly enough, the Tax Notes reporting doesn’t mention revenue rulings,[fn2] while the BNA reporting does. I don’t know if that difference is accidental, or if the two organizations are interpreting differently what Commissioner Koskinen means by subregulatory.) Continue reading “Update on the Future of Treasury Regulations”
Satan, Tea Parties, and the IRS
By Sam Brunson
Did you hear that the IRS granted a Satanic cult tax-exempt status in ten days?!? Meanwhile, Tea Party groups’ exemption applications languished for months or even years?!?
I know, it sounds pure conspiracy theory: the IRS loves Satan and hates conservatives. But it’s true! Or, at least, kind of! But it needs to be contextualized, because comparing the exemption application of Reason Alliance, Ltd. (the putative Satanic cult) and Tea Party groups is inapposite.[fn1] Continue reading “Satan, Tea Parties, and the IRS”
Did Rachel Maddow Break the Law? #TrumpTaxReturns
By Sam Brunson
Last night, Rachel Maddow dropped a bombshell: reporter David Cay Johnston had a leaked copy of Donald Trump’s 2005 tax return, and he shared it on her show.
Okay, maybe it wasn’t entirely a bombshell; in our leak–happy environment, it was almost inevitable that we’d eventually see some of Trump’s returns. And this barely counts as a return: it’s just his Form 1040 from 2005 (that is, the first two pages of a return). When I grade voluntary presidential candidate tax disclosures, one year’s Form 1040 realistically gets you a D+; the 1040 says how much you ultimately paid in taxes, but very little more than that. (For example, you can see that Trump had itemized deductions of just over $17 million, but you can’t tell what itemized deductions he took. I mean, is it mortgage interest? state and local taxes? charitable contributions? some combination? Without the full return, we have no way of knowing.) Continue reading “Did Rachel Maddow Break the Law? #TrumpTaxReturns”
When a Tax Strategy Benefits a Subnational Government
By: Leandra Lederman
Usually we think of tax shelters and other tax strategies as the province of private parties. These shelters may involve accommodation parties, even foreign government infrastructure, such as transportation systems, but we tend to think of private parties as getting the tax benefits. We may not think as often about a subnational government bolstering its tax revenues at the expense of the national government, particularly via a cooperating private party’s transaction structure. But that’s what happened a few years ago in Spain.
There is a Volkswagen (VW) plant in Pamplona, a city in the autonomous community of Navarra. From 2007-2011, Navarra reportedly collected approximately 1.5 billion Euros in value-added tax (VAT) from Volkswagen for its cars manufactured at the plant there. If VW-Navarra (which is a subsidiary of SEAT) had shipped the cars directly from Navarra to Germany, presumably Navarra would have had to refund that VAT. (Cars shipped to Germany leave Spain “clean of VAT”* (translation mine)).
Instead, according to an interview with Prof. Fernando de la Hucha in this El Diario article, the basic structure was that VW-Navarra sold the cars (although without physically moving them there) to a related Barcelona company, VAESA (Volkswagen-Audi España S.A.), which is located in the Catalunya region, not Navarra. VAESA then sold them to SEAT with the very low mark-up of 5 Euros per car. SEAT, which is also in Catalunya, then sold them to VW-Germany—the transfer abroad triggering entitlement to a refund. But because the cars were sold from a city outside the Navarra region, VW’s refund claim did not go to Navarra. Instead, the Spanish national government was the one that issued the refund, which is how Navarra benefitted. (Catalunya did not issue the refund because, unlike Navarra, does not have a fiscal agreement with Spain that allows it to administer and collect taxes—only Navarra and the Basque regions do). The result was that Volkswagen was refunded the taxes it paid but Navarra profited at the expense of the Spanish government. (Spain has a credit-invoice VAT. Technically, the amount that Navarra retained was the VAT that VW-Navarra paid, which was the VAT on its sales to VAESA minus the VAT its suppliers had paid.)
Here is a simple diagram of the transaction, along with a map of Spain’s regions. (Navarra is in the north, bordering France; Catalunya—that’s the Catalan spelling—is in the northeast, also bordering France.)
Continue reading “When a Tax Strategy Benefits a Subnational Government”
The Insurance Market Regulations in the Republicans’ Health Care Bill: Crippling Obamacare, or Passing a Hot Potato to State Governments?
By David Gamage
On Monday, the House Republicans finally revealed their draft bill to “repeal and replace” the Affordable Care Act (#Obamacare or #ACA). The bill is titled the American Health Care Act, and commentators have been referring to it as either the #AHCA or #Trumpcare.
To assess the bill, it is helpful to think of it as consisting of four primary buckets:
- ending many of Obamacare’s tax provisions (read: large tax cuts for the very wealthy);
- phased-in cuts to Medicaid funding and scheduled devolution of Medicaid to the states (read: eroding the health safety-net program for the poor);
- transforming Obamacare’s other major health subsidies from being based mostly on income and health costs to being based more on age (read: the implications of this are actually less straightforward than what much of the commentary suggests, but that is a topic for another day); and
- other changes to Obamacare’s insurance market regulations (the subject of today’s blog post).
In this blog post, I will focus on the fourth bucket—the changes to Obamacare’s insurance market reforms other than the changes to the subsidies. Time permitting, I hope to write future blog posts on some of the other buckets.
What is most striking about the AHCA’s insurance market changes is how they keep the vast majority of Obamacare’s reforms in place. Right-wing groups have thus taken to calling the AHCA “#ObamacareLite”. Yet I consider this a misnomer. A more accurate label would be #ObamacareCrippled.
The AHCA’s changes do not really water down Obamacare, as the intended slur of “ObamacareLite” implies. Rather, the AHCA’s changes would likely cause Obamacare‘s framework for regulating the individual market to fall apart. If the AHCA bill were to be enacted in its current form, the result would likely be adverse-selection death spirals. The only real hope for saving the individual market would be for state governments to step up with new state-level regulations for supporting insurance markets within each state.
The Taxman and Jazz Radio
By Sam Brunson
Yesterday, driving my son to swim lessons, I flipped my radio to WDCB, Chicagoland’s jazz radio station. An organ trio was playing something that sounded vaguely familiar. And then they returned to the melody, and it was the Beatles’s “Taxman.” And just like that, two of my favorite things—jazz and taxes—intersected.
Several months ago, Leandra did a great post on the history and context of “Taxman.” And her post yesterday on taxes in a series of novels got me thinking about how often tax shows up in jazz. When I posted about the musical tax canon, I mentioned Fats Waller’s “We the People,” but here, I specifically wanted to look for jazz covers of “Taxman.” And I found two: Continue reading “The Taxman and Jazz Radio”
Death, Taxes, and a Beach Read
By: Leandra Lederman
Back in December 2011, I received a targeted mailing. It was the postcard below, which I received at the office. T
hus far, I haven’t found a Maurer colleague or tax friend who received this mailing. Some marketer apparently did his or her homework and identified me as someone with an interest in both tax and chick lit! I don’t get to read novels very often anymore, but this looked like exactly the kind of book I would enjoy. I even acted on the sticker on the reverse of the postcard, which said “A book makes a great holiday gift!” “Death, Taxes, and a French Manicure” was a great start to the Christmas list request I had recently received.
I received the book for Christmas and got hooked on the series. I’ve gotten through Book 10 so far. They’re a lot of fun. It never occurred to me to blog about them, though, until I read the first page of “Death, Taxes, and Cheap Sunglasses” while on a plane, and saw a link with tax issues I frequently write about. The opening paragraph reads:
“I slid my gun into my purse, grabbed my briefcase, and headed out to my car. Yep, tax season was in full swing once again, honest people scrambling to round up their receipts, hoping for a refund or at least to break even. As a taxpayer myself, I felt for them. But as far as tax cheats were concerned, I had no sympathy. The most recent annual report indicated that American individuals and corporations had underpaid their taxes by $450 billion. Not exactly chump change. That’s where I came in.”
I had just presented my latest tax compliance article, “Does Enforcement Crowd Out Voluntary Tax Compliance?” and here were tax gap figures showing up in a novel! “Death, Taxes, and Cheap Sunglasses” was published in 2015, when the annual federal tax gap was in fact estimated at $450 billion. (The updated tax gap figures, released in April 2016, and which I blogged about previously, are available here.) Continue reading “Death, Taxes, and a Beach Read”
TaxSlayer: Technically Acceptable for VITA Returns?
Adam C. Mansfield
Staff Attorney, Legal Services for Students, University of Kansas
The first time I logged into the TaxSlayer training lab I knew that this tax season was going to be a problem. It became obvious when I typed “1040NR” into the form lookup box in the upper left corner of the TaxSlayer screen and the search came up empty. Next I tried “1042-S” and “8843.” Same result. Now I’m not some old fuddy-duddy that doesn’t like change. I love working with new gadgets, software, or operating systems—as long as it does what it is supposed to do.
I work for Legal Services for Students at the University of Kansas. The main target population for our Volunteer Income Tax Assistance (VITA) grant is nonresident alien (NRA) students and scholars. Every tax year we help hundreds of international students and researchers determine their residency status, calculate any applicable tax treaty benefits, and prepare their federal and state returns. In the past, TaxWise has worked just fine for this purpose. I had no problem preparing a return for the student from Bangladesh who had income in both Kansas and Missouri or the Chinese student who has multiple 1042-S forms for scholarships and awards but still needs to apply treaty benefits to his or her wages. This year, TaxSlayer is just not up to the task.
I feel bad for Whitley, a member of TaxSlayer’s customer support squad, who is left with the task of informing me that they are aware of the “issue” that prevents their software from properly applying and reporting a tax treaty benefit on a nonresident alien return. She proceeded to tell me that they could only handle “simple” state returns in conjunction with an NRA return. This means that I can’t make any adjustments to the state return in order to properly apportion income. They are “working diligently to iron out the wrinkles.” Not being able to prepare a pretty basic nonresident alien return is a little more than just a wrinkle. Continue reading “TaxSlayer: Technically Acceptable for VITA Returns?”
The Surly Subgroup 