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”

Tax Leaks: The New Normal?

By: Diane Ring

Today, the Guardian is reporting that big-four accounting firm Deloitte suffered a hack back in March, 2017. The underlying attack may have originated in the fall of 2016 and may have allowed access to Deloitte systems for several months.

Deloitte itself is not unfamiliar with cybersecurity. As stated on its website, among the services that Deloitte offers clients is Cyber Risk. However, being a victim of a hack provides a new perspective. At this point, details are scarce on exactly which clients have been affected and what specific information may have been accessed, but it has been reported that “confidential emails and plans of some of its blue-chip clients” may have been compromised. This doesn’t sound good. But it is also no surprise.

Leaks and hacks can target a wide variety of data including business plans, mergers and acquisitions, scientific developments, business forecasts, individual identities, and government records. In recent years, tax-related information has proven especially attractive to leakers and hackers. As my co-author, Shu-Yi Oei and I explored in our recent article, Leak-Drive Law studying tax leaks that have occurred over the past 10 years, tax information can be valuable and their release by leakers can have powerful impacts. Moreover, as the tax community has embraced increased reporting and transparency to the government, the number of caches of well-organized data held by corporations, tax advisers and governments increases. Such caches may be magnets for those seeking to hack into it or leak it.

As we continue to move forward in this new world, what do we know? Continue reading “Tax Leaks: The New Normal?”

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””

The Zelda Tax

Yesterday, the House Republicans posted “What Do the The Legend of Zelda and the American Tax Code Have In Common?”

Sadly, by the time I read about it on Twitter, the post had been taken down.

Why did the post come down? Probably because it was instantly and ruthlessly scorned, mostly because it claimed Nintendo had been founded in 1985 (it was founded in 1889). It has now been reposted with the dates corrected.

Unfortunately, the GOP didn’t correct the bigger flaw in the post: it promised something awesome and failed to deliver. See, what do Zelda an the Internal Revenue Code have in common? Zelda was released in 1986 and the last fundamental tax reform happened in 1986. Continue reading “The Zelda Tax”

So about that Robot Tax…

Shu-Yi Oei

I came across a couple of news stories recently about how South Korea is introducing the world’s first robot tax. But based on the press reports, it sounds like the so-called robot tax is actually just a reduction of the tax deductions available to businesses that invest in productivity-boosting automation. The news sources themselves concede that this “robot tax” not exactly a tax on robots but rather a tax benefit reduction for automation investment.

Talk of a “robot tax” has landed at the forefront of tax news since Bill Gates mentioned it in a Quartz interview back in February of 2017. But of course, scholarship about robots (not to mention robots themselves) has been around for quite a bit longer. There’s even a “We-Robot” robotics law and policy conference that’s been going on since 2012, which I keep meaning to crash, but then there’s always something else going on.

A lot of what seems to be driving the tax conversation is the fear that robots are taking over jobs, though there’s some uncertainty about the extent to which robots are to blame.

Personally, I’ve been having a hard time squaring the newly ascendant tax conversation about the robot tax with the broader legal scholarship on robots. In some of the news and other commentary discussing Robotaxation, my reaction has been something to the effect of “I’m not sure that word means what you think it means.” Turns out, there is something of an existing conversation about what constitutes a robot in the first place—see, for example, Richards and Smart (2013) for a nice discussion of some of the definitional issues. See also this “What is a Robot?” piece in The Atlantic. In defining “robot,” it might matter how a robot moves in the physical world, what kind of quasi-independent agency it seems to exercise (autonomous vs. semi-autonomous), how humans interact with it, and even what sorts of emotions it triggers in us mere humans. We might understand some automated machines to be robots but others to just be automated equipment. And these distinctions make sense, from the viewpoint of areas like tort law, privacy law, the law of principals and agents, and the more general regulation of robots (and of artificial intelligence as a subcategory of robots).

But in some of the tax discussions about robots that I’ve seen on the interwebs, it’s quite clear that the authors don’t necessarily mean Robot when they say Robot. Continue reading “So about that Robot Tax…”

The IRS vs. the KKK

By Sam Brunson

My family’s summer vacation has already given me two posts (here and here), and it still promises a couple more, including this one.

As we drove across Alabama, we stopped by the Birmingham Civil Rights Institute. The BCRI is, in large part, a museum of the civil rights movement; it is not only interesting and informative, but it is deeply powerful and affecting to see how white Americans (mis)treated African Americans, what motivated civil rights activists, and what they faced in their activism.

I didn’t go in looking for taxes, but the Institute handed them to me anyway: Continue reading “The IRS vs. the KKK”

The Front Lines of Sharing Economy Legal Debates

By: Diane Ring

Last month I blogged about new proposed legislation in Congress that sought to provide a safe harbor for gig worker classification for tax purposes. However, as I noted, the proposal implicitly favored one side of the debate by making the safe harbor one that would ensure the “easy” ability to classify a worker as an independent contractor (rather than an employee). In that post, I suggested that having tax lead the charge in this sharing economy worker classification debate perhaps allowed the tax “tail” to lead the employment relations “dog”. There are pressing nontax issues in the sharing economy that are driving litigation and dominating worker concerns – particularly employment law issues. Just last week, we saw further evidence of serious tensions in the landscape of sharing economy labor law.

On Tuesday, July 31, 207, in Chamber of Commerce of the United States, et al.,  v. The City of Seattle, a U.S. federal judge dismissed a challenge to legislation approved by the Seattle City Council in fall 2015. Pursuant to the Seattle law, businesses that hire or contract with taxi-drivers, for-hire transportation companies and “transportation network companies” must bargain with drivers if a majority want to be represented. That is, Seattle effectively allows Uber and Lyft drivers to unionize. Not surprisingly, Uber and Lyft objected to the law . . . Continue reading “The Front Lines of Sharing Economy Legal Debates”

Tax at the National Parks: Tuskegee Airmen National Historic Site Edition

By Sam Brunson

Last week, my family and I were at the Tuskegee Airmen National Historic Site. I wasn’t terribly familiar with the Tuskegee Airmen before visiting; frankly, their story is amazing, inspiring, and shocking. Basically, Army War College study from the early twentieth century claimed that African Americans lacked intelligence, ambition, and courage, and were thus unfit for the military, and especially unfit to be airmen.

The Tuskegee Institute had an airfield where it trained African American pilots; eventually the government accepted it as a training ground for military pilots. The Tuskegee Airmen proved the Army War College study wrong with a distinguished record of military service. Still, the military in the 1940s was segregated, and these Tuskegee Airmen served in segregated units and, when they returned home, they faced continued racism. Many, tired of what they experienced, went on to join the civil rights movement. And many of them share their stories, through audio, video, pictures, and artifacts, at the NHS. Continue reading “Tax at the National Parks: Tuskegee Airmen National Historic Site Edition”

The Tail, the Dog, and Gig Workers

By: Diane Ring

tail.dog

New legislation has just been introduced in the Senate that creates a “safe harbor” for independent contractor status. The proposed legislation provides that if a worker relationship satisfies certain criteria, then that worker can bypass the sometimes messy, multi-factor test for distinguishing between employees and independent contractors, and will be classified as an independent contractor for tax purposes. What prompted action now to address what has been a decades-old classification challenge for workers, businesses and the IRS alike? The gig economy. (Hence, the not-so-catchy title for the legislation: The New Economy Works to Guarantee Independence and Growth (NEW GIG) Act of 2017 (S. 1549).)

The legislation’s sponsor, Senate Finance Committee member John Thune, (R-S.D), described the impetus for the legislation as follows: “My legislation would provide clear rules so that these freelance style workers can work as independent contractors with the peace of mind that their tax status will be respected by the IRS.”

Is this really what gig workers are worrying about? . . . Continue reading “The Tail, the Dog, and Gig Workers”

What My Noisy New Hobby is Teaching Me about Tax

Shu Yi Oei

While Sam was out there visiting the National Parks, I went and acquired a noisy new hobby.

drums

So far, I’ve only had two drum lessons but am completely hooked. What took me so long to pick up the drums? If you love music, get a kick out of repetitive motion, and enjoy making a big noise, I highly recommend it.

Learning the drum set is a matter of first impression for me. [FN1] So the actual noise making aside, it’s given me an unexpected midsummer opportunity to revisit what it feels like to learn a new skill for the first time, which of course makes me think about the fundamentals of teaching and writing in tax.

Here are some newbie observations:

  1. Assembling the Drum Set

I went out and bought a cheap drum set so I could practice at home. What really surprised me was the amount I learnt about the drums simply by virtue of assembling the drum set. Things I know now that I didn’t know before:

  • That restaurant in New Orleans called the High Hat? Turns out it probably isn’t named after an actual hat.
  • Who knew you had to tune the drums? It’s almost as if it’s a musical instrument or something.
  • The crash cymbal and high hat sit much lower to the ground than I had ever imagined.
  • You can actually turn the snares on a snare drum on and off. Did I know that? Nope.

The experience of assembling my own drum set was so useful that it got me thinking about how one might get one’s tax students to do the equivalent of assembling a drum set. Continue reading “What My Noisy New Hobby is Teaching Me about Tax”