Update on the GOP Bill’s Tax on Graduate Tuition Waivers

Patrick W. Thomas
Professor of the Practice, Notre Dame Law School

Following up on my post on the taxation of graduate student tuition waivers in the GOP tax bill, there have been a few new developments. (By the way, my fellow Hoosier from the opposite end of the state, Michael Austin, along with Sam Brunson, have a great post on the proposed repeal of section 117(d) as it affects university employees and their dependents.)

First, it’s been confirmed that the intent of the House bill (if not necessarily the effect, per my post) is to tax graduate student tuition waivers, for those graduate students who work in a research or teaching assistant role. According to an article in The Verge, a spokesperson from the Ways and Means Committee explicitly indicated as much in an email. While Congressman Brady did release an amendment to the bill Monday (text here) and a subsequent amendment on Thursday (text here), none of the education provisions were affected. Additionally, the bill (incorporating Congressman Brady’s amendments) was reported out of Ways and Means on a party line vote on Thursday. Continue reading “Update on the GOP Bill’s Tax on Graduate Tuition Waivers”

GOP Raises Taxes on Graduate Students … Or Does It?

Patrick W. Thomas
Professor of the Practice, Notre Dame Law School

We’ve all been poring over the GOP tax bill, released last week. On my initial read, I mainly looked at those provisions that affect my own practice in a Low Income Taxpayer Clinic: the expansion/restriction of the Child Tax Credit; the elimination of the dependency exemption; and the lack of any expansion in the Earned Income Tax Credit (paging Paul Ryan…). Selfishly, I also calculated the bill’s effect on my own taxes: a nearly 3% tax cut that I do not need!

Or so I thought. You see, my wife is a Ph.D. student in computer science who, like most students at the University of Notre Dame, receives a full tuition waiver, in addition to a stipend from the university. As I returned home on Friday, ready to put the tax bill out of mind for a couple hours, I saw a tweet from Claus Wilke, professor of integrative biology at the University of Texas:

Uh oh. Back to tax policy on a Friday night, it seems. And, perhaps, so long to that tax cut. Continue reading “GOP Raises Taxes on Graduate Students … Or Does It?”

The Johnson Amendment Under GOP Plan

By: David Herzig

Back in May, I continued to track President Trump’s promise to end the Johnson Amendment.  At that time he promised during a National Prayer Breakfast that he would “get rid of and totally destroy” the Johnson Amendment and promised to issue an executive order (which he signed May 4).

But, a significant problem with legislating via Executive Order is that executives change and with the change so goes the Executive Orders.  What works much better is legislation. Enter, the Tax Cuts and Job Act, where there is a proposal to end the Johnson Amendment.

What is the Johnson Amendment? In 1954, without explanation, Lyndon Johnson  Continue reading “The Johnson Amendment Under GOP Plan”

Parsonage Allowance Update 1: Briefing Remedies

By Sam Brunson

So #TaxWeek isn’t going quite the way we expected;[fn1] the House is now expecting to release its tax bill tomorrow. (Or maybe not.) Which means we’re not bringing any coverage of the tax bill today.

But that’s okay! It gives me room to slot it some follow-up to last month’s decision that section 107(2) violated the Establishment Clause. Remember, Judge Crabb found it unconstitutional, but ordered the parties to provide supplementary briefing about the appropriate remedies. Should she enjoin the IRS from providing benefits under section 107(2)? Or should she expand the set of taxpayers who could benefit from section 107(2)? Or something else entirely?

The initial briefs were due (and were filed) Monday. And, unsurprisingly, they all agreed on a lot: Continue reading “Parsonage Allowance Update 1: Briefing Remedies”

IRS ‘Targeted’ Liberal Organizations and After All These Years TIGTA is Still Wrong

darts-2349444_1920By: Philip Hackney

The Treasury Inspector General for Tax Administration (TIGTA) just issued a new report four years and five months after rebuking the IRS for using “inappropriate” criteria to select applications for tax exempt status for scrutiny. In the first report, TIGTA rebuked the IRS for pulling the applications of conservative leaning organizations for greater scrutiny.

This time it considers the fact that the IRS over a period of 10 years used liberal leaning names such as ACORN, Emerge, and Progressive as criteria for pulling applications for greater scrutiny. This resulted in the IRS applying greater scrutiny to these organizations. Some might say the IRS targeted these organizations. Those organizations appear to have faced long wait times as well, and sometimes some questions of limited merit.

I write this piece to make two points: (1) had this information been in the initial report, I don’t think we would have had the “scandal” that shook the IRS and the political world of the time; and (2) the TIGTA report built its primary claim on a garbled faux legal postulate. The original report did terrible damage to the IRS and individuals by failing on both of these fronts. Continue reading “IRS ‘Targeted’ Liberal Organizations and After All These Years TIGTA is Still Wrong”

FY 2018 Appropriations Bill and the IRS

Last Thursday, the House passed an appropriations bill by a vote of 211 to 198. At this point, it’s anybody’s guess how much of the appropriations bill will survive the Senate, but, just in case, it’s worth taking a look at it. And, it turns out, the House really wants to use the appropriations bill to regulate the IRS. Some of the provisions strike me as warranted. Some innocuous. Some strike me as bizarre, payback, perhaps, for long-held grudges. And some strike me as downright insidious. In this post I’m going to focus on the last two categories because frankly, they’re more fun to write about.

The provisions that regulate IRS behavior can be found in sections 101-116 of the appropriations bill. And what provisions are bizarre payback or downright insidious? Continue reading “FY 2018 Appropriations Bill and the IRS”

Responding to the SPLC “Exposé”

By Sam Brunson

Last week, the Free Beacon ran an exposé of the Southern Poverty Law Center, making four principal claims. First, the Free Beacon said, the SPLC was keeping literally tons of money in offshore tax haven investment funds and bank accounts. Second, it spends too much on fundraising. Third, it overpays its executives. Fourth, it underspends on its mission.

The problem with the exposé? At best it misunderstands what’s going on, and at worst, it is flagrantly wrong.

I’m usually not interested in doing fact-check-style responses, but I’m going to nonetheless. The accusations Schoffstall levels sound plausible, so it’s worth explaining why and how they’re wrong.[fn1] Continue reading “Responding to the SPLC “Exposé””

House Appropriations Bill

By: David Herzig

With all the diversions this week, it was easy to miss that the House Committee on Appropriations posted on June 28th the Appropriations Bill for FY 2018.  The bill seems to include a couple items that not many were expecting.  So, I thought I would highlight some of the key provisions.  Since it is Friday before a Holiday weekend, I’ll keep it short for now.  There are four main provisions I will address: (1) IRS Targeting/Johnson Amendment; (2) ACA Penalties; (3) Conservation Easements; and (4) 2704 (Estate/Gift Tax).

I. IRS Targeting/Death of Johnson Amendment

First, is a clear response to the “targeting” of groups from the Lois Lerner Administration. In three separate sections (107, 108 and 116), the bill attempts to regulate the IRS, not Continue reading “House Appropriations Bill”

About the ACLU’s [Update: FFRF’s] Challenge to the Promoting Free Speech and Religious Liberty EO

By Sam Brunson

Trump signed his Promoting Free Speech and Religious Liberty executive order earlier today. The EO was expected to order the IRS to stop enforcing the so-called Johnson Amendment against religious organizations. As Ben explained, by its language, it may have done significantly less—it appears to merely reaffirm the status quo for enforcement. Whatever its substantive effects, though, the existence of the order is no surprise, and, as has happened with any number of Trump’s previous EOs, the ACLU Freedom From Religion Foundation has already announced that it will challenge the EO in court. [Update: the ACLU looked at the EO and agreed with Ben that there was nothing there, and decided not to sue. The FFRF, otoh, decided to sue. So it’s the FFRF that will face these procedural hurdles before it has to face the substantive (or rather, lack of substance) ones.]

Leaving aside the question of whether this EO actually does anything substantive, it’s worth remembering that any judicial challenge to the executive order faces two significant hurdles: standing and administrative discretion.[fn1] It’s also possible that the Trump administration inadvertently made those hurdles easier to pass. Continue reading “About the ACLU’s [Update: FFRF’s] Challenge to the Promoting Free Speech and Religious Liberty EO”

Trump’s Johnson Amendment Executive Order Does Not Say What He Said it Said

By Benjamin Leff

Trump issued an Executive Order (EO) today, the text of which was a complete shock (at least to naive little me). I had written a thousand-word blog post based on reporting before the release of the EO that Trump would direct the Internal Revenue Service to “exercise maximum enforcement discretion to alleviate the burden of the Johnson amendment which prohibits religious leaders from speaking about politics and candidate from the pulpit[.]” Then I watched the whole signing ceremony and Trump confirmed that he was planning to clearly open the door for religious leaders to communicate their views on candidates from the pulpits of their houses of worship.

The pre-prepared post argued that the IRS should issue some guidance explaining how it would enforce the Johnson Amendment in light of the EO, especially (1) whether it would create a “safe harbor” only for the speech of the organization, or also for the organization’s money and (2) whether it would extend the “safe harbor” to all 501(c)(3) organizations, or just houses of worship. The general consensus among advocates of changing the Johnson Amendment is that any liberalization of the rule should apply equally to all 501(c)(3) organizations and that it should permit speech but not spending.

Then, after a couple of hours, the White House released the actual text of the Executive Order. Unless I’m blind, what it says is literally nothing like what the Trump Administration said it would say, and even less like what Trump said it said when he signed it in the Rose Garden ceremony just a few hours ago. Continue reading “Trump’s Johnson Amendment Executive Order Does Not Say What He Said it Said”