bluuebunny/crossref_metadata_2025 huggingface dataset:
Taxing the Business of Sports
Authors: Holo Robert , Talansky Jonathan
Published: May 2022

“The rising value of American professional franchises, together with league expansions and more sale transactions, has caused the Internal Revenue Service to take interest.”Major professional sports in America, according to several estimates, is a $225 billion industry. While fan interest may wax and wane as athletes and organizations are beset by scandal and, even worse, mediocrity, the enterprise of sports continues to thrive and to occupy a disproportionate share of the public consciousness. Sports leagues today are immensely profitable businesses – more interested, perhaps, in the bottom line than the box score. Yet, somewhat anomalously, the purveyors of sport claim to be providing a public service – to the fans and to the communities in which they play. Sports leagues and franchises routinely assert that they, more so than most private enterprise, are entitled to a sizable share of the public fisc to finance their expansion. State and local governments have responded in unprecedented ways; during the 1990s alone, taxpayers shelled out approximately $11 billion to fund new sports facilities for the owners of major American sports franchises.
Tax My Ride: Taxing Commuters in Our National Economy
Authors: Holcomb Morgan L.
Published: May 2022

Located on the scenic St. Croix River, Hudson, Wisconsin is just a half-hour drive from the major metropolitan area of Minneapolis and St. Paul - "the Twin Cities" of Minnesota. Hudson is, therefore, a popular "bedroom" community for Twin Cities' workers. Those commuters, the Wisconsin residents who work in Minnesota, face taxation by two sovereign states: They are taxed by the state of Wisconsin on the basis of their residency in Wisconsin, and they face taxation by Minnesota on the income that was "sourced" or earned, in Minnesota. It is well-settled that both states are entitled to tax at least some portion of our Wisconsin commuters' incomes. What is less settled is the  constitutional limit of the "double" taxation that can occur when two states claim to be the source of income, a situation that is happening with increasing frequency in our increasingly mobile, and telecommuting, population. If, for example, a Wisconsin resident worked for a Minnesota employer, but occasionally worked from home, both Wisconsin and Minnesota could claim to be the source of the income. If both states claim to be the source of the income, the commuter will be taxed twice on that portion of her income, a result that doubtless seems markedly unfair to our commuter. The question this article explores is becoming increasingly pressing. Demographic and work place trends, along with increasingly aggressive state revenue collection practices, combine to predict that the question of fair apportionment of individual taxation will only grow in importance.The article begins with a comparison of state taxation of individual and business income. Part II proceeds to explore the relevant constitutional norms: the dormant Commerce Clause and the Privileges and Immunities Clauses of both Article IV and the 14th Amendment. Part III synthesizes these Constitutional norms and their application to commuters. Part IV concludes with a discussion of the growing importance of this question and the avenues for possible resolution.
The Virtual Tax Library: A Comparison of Five Electronic Tax Research Platforms
Authors: Pratt Katherine , Kowal Jennifer , Martin Daniel
Published: May 2022

Improved LexisNexis and Westlaw tax research platforms and new electronic tax research platforms offered by BNA (BNA Tax Management Library), CCH (CCH Tax Research NetWork), and RIA (RIA Checkpoint) constitute a virtual tax library that offers tax researchers much of the content and functionality of a physical tax library, as well as some useful functionality features (e.g., direct linking of primary and secondary sources) a physical tax library cannot provide. The new virtual tax library offers tax researchers numerous benefits, including the convenience of a portable library, more reliable and current research results, and increased research efficiency. Many tax researchers have not adapted their tax research techniques to effectively utilize the virtual tax library, however, because they are unfamiliar with the new and improved electronic tax research platforms.To reduce tax researchers’ costs of evaluating and comparing the five electronic platforms, this Article provides detailed comparisons of the content and functionality features offered by the platforms. This Article also explains how to access various types of primary and secondary tax sources on the platforms and provides detailed “search pathways” that will enable tax researchers to navigate around the electronic platforms. Part I of this Article provides background information regarding the development of the new electronic tax research platforms and explains our project and methodology. Part II compares the primary and secondary source content offered on the five electronic platforms and compares various types of free tax information that are available on the internet. Part III compares the various functionality features offered on the five electronic platforms. Part IV illustrates the differences in search results obtained by using the various electronic platforms to research a topical tax research question. Part V discusses the factors that are relevant when designing an electronic tax research system and makes recommendations about combining the electronic tax research platforms to create a workable virtual tax library.A chart in Appendix A provides a side-by-side comparison of the primary source content available on the five electronic tax research platforms. The chart includes search pathways and date restrictions for each type of content. A chart in Appendix B provides a side-by-side comparison of the functionality features offered by each platform. The chart includes quick reference guides for initiating various types of searches, as well as user support information for each platform.
Corporate Expatriation: A Case Analysis
Authors: Goldman Steven H.
Published: May 2022

During the 1990s and early 2000s, several large U.S. companies reincorporated abroad. Corporate expatriations can take many different forms. One form is a stock inversion.In an inversion, a U.S.-based multinational corporate group forms a foreign subsidiary, typically in a country that imposes little or no corporate income tax. Then the group reorganizes. The new foreign subsidiary becomes the parent of the group, and the existing U.S. parent becomes a subsidiary. As the term suggests, the corporate structure inverts. The parent’s place of incorporation changes to a foreign country.An inversion involves only a change in the group’s legal structure. It has little or no effect on the company’s operations. The group does not need to move its headquarters or its other business operations.This article describes a typical stock inversion, using the 2001 Ingersoll-Rand reorganization as a model. The article examines how, under the law at that time, the transaction saved substantial taxes, immediately and into the future.
Slouching Towards a Consumption Tax and the End of Retirement Income Security
Authors: Stein Norman
Published: May 2022

I presented a version of this paper at a 2003 symposium on public policy for retirement security at the Ohio State Moritz College of Law.In 2003, the Bush Administration proposed two ideas that I (and others) feared would undermine the retirement income security of millions of Americans. The first idea was to create two new tax-favored personal savings vehicles: the retirement savings account and the lifetime savings account. These tax-benefited accounts, which would have existed outside the employer-based retirement system and replace individual retirement accounts, would each have permitted annual contributions of $7,500 each, or $15,000 in the aggregate. (An individual could also have set up lifetime savings accounts for family members without earned income, into which he could contribute $7,500 annually.) The contributions were to be made on an after-tax basis, but the earnings would be exempt from income tax, a schemata based on the Roth IRA. The RSA would impose penalties on pre-retirement withdrawals; the LSA would not. These ideas did not find favor in the Congress and were generally opposed by the business community, organized labor, and liberal think tanks, for reasons I will summarize shortly. Nevertheless, the White House and members of Congress have introduced similar proposals in 2004, 2005, 2006, 2007, and 2008, and the President’s Advisory Panel on Federal Tax Reform adopted retirement and lifetime savings accounts as part of its blueprint for reform, which was released in late 2005. Thus, the idea of these new accounts retains political and intellectual currency, like the proverbial bad nickel, and they, or variations on them, are almost certainly to survive the end of the Bush presidency.
The Pension Protection Act of 2006: A Misguided Attack on Donor-Advised Funds and Supporting Organizations
Authors: Knoepfle Terry W.
Published: May 2022

In 2006, with the passage of the Pension Protection Act (PPA), Congress provided the tools for the Internal Revenue Service (IRS) to launch a full-scale attack on tax-exempt, charitable organizations, particularly sponsoring organizations of donor-advised funds, donor-advised funds, and supporting organizations, as well as their donors and advisors. In fact, the IRS already had every tool it needed to monitor, regulate, and sanction donor-advised funds and supporting organizations. The legislation was primarily enacted as a message to the IRS to go after donor-advised funds and supporting organizations. As an incentive, Congress passed Draconian penalty excise taxes that apply only to donor-advised funds and supporting organizations, and not to other public charitable organizations. The impact of this legislation has been to dissuade donors from creating donor-advised funds and, as a result, to negatively impact the ability of public charities to provide the types of assistance and support that communities across the United States have relied on for decades. The PPA’s amendments impacting sponsoring organizations, donoradvised funds, and supporting organizations has added incomprehensible complexity to the Code that flies directly in the face of recommendations from the Treasury Department. Moreover, these amendments open the door to the types of IRS abuses discussed in this article. Tragically, the economic costs to these charitable organizations will result in less revenue being expended for vital community needs.
Congressional Unilaterla Tax Treaty Overrides: The "Latter in Time Doctrine" is Out of Time!
Authors: Wolff Professor Mark J.
Published: May 2022

The current form of globalization has resulted in greater global economic integration and liberalization, political openness, and cultural and social acceptance. As the world economy continues to weaken national economic orders, and as nations become more dependent upon international trade, good relations between nations may provide greater global wealth and political stability. Global integration requires a “cooperative multilateralist” approach, encouraging international alliances, partnerships and institutions. The current global shift, however, finds the United States in a period of protectionism. As a result of 9/11, the United States has begun a strategy of preemption, one triggered at creating measures aimed at preventing substantial casualties to the U.S., whether military or economic. The actions taken in furtherance of this strategy, such as the invasion of Iraq without the consent of the Security Council, altered the perception of the United States around the world. Furthermore, these actions were in direct contradiction of Secretary of State Condoleezza Rice’s pledge to “support and uphold the system of international rules and treaties that allow us to take advantage of our freedom.”
Understanding the OECD Model of Tax Convention: The Lesson of History
Authors: Avery Jones, CBE John F.
Published: May 2022

An important recent development in international taxation is the publication of the OEEC (the forerunner of the OECD when it was a purely European organization, although representatives from the United States and Canada were also present at the discussions on tax treaties) archives on the development of tax treaties in a website http://www.taxtreatieshistory.org/ organized by the Institute for Austrian and International Tax Law, Vienna, IBFD, Universith Cattolica del Sacro Cuore, Piacenza, Italy, IFA Canadian Branch and the Canadian Tax Foundation. While this may sound like a rarefied topic, the OEEC period from 1956 to 1961 is the story of the making of the current OECD Model. Previously there was a gap in the published sources after the end of the League of Nations Mexico and London Models of 1943 and 1946, which suffered from the wartime domination by the South Americans of the Mexico Model, and the Europeans doing what they could in the London Model to reverse some of the worst excesses. By the time of the OEEC it was accepted that this was not the way of the future. After the London Model there was previously a complete gap in the history until the publication of the 1963 OECD Draft, which is essentially the OECD Model as we have it today. True there have been many changes in the meantime, particularly to the Commentary, but when compared to the whole edifice these are merely tinkering. The 1963 OECD Draft seemed to have arrived from nowhere and one wondered how this arose. Now, with the publication of the OEEC archives, we know. It was the work of (ultimately) 15 Working Parties (plus another dealing with estate taxes) of the Fiscal Committee each comprising delegates from two countries working on a separate article of the Model and reporting to the other countries at regular meetings of the Fiscal Committee. The results were most impressive and one can trace how the articles developed. The minutes are available as transcribed versions in English and French together with a pdf file of the original minutes so that, for example, alterations can be seen. A few of the current problems can be traced to the technique of working on each article separately with, for example, the definitions article being started late and not being published in any of the Fiscal Committee's four reports. In that respect the League of Nations method of working was superior. For example, the other income article, which is effectively the general rule that had come first in the original League of Nations drafts, appears at the end because Working Party 14 started much later. I believe that we still have a mutual agreement provision in the tie-breaker for individuals because that article was drafted before the mutual agreement article. In addition some of the less obvious overlaps were not considered.
The New OECD Approach on Profit Allocation: A Step Forward Towards Neutral Treatment of Permanent Establishments and Subsidiaries
Authors: Burgers Professor Dr. Irene J.J.
Published: May 2022

One of the vexing questions in tax law is whether or not the legal form should make a difference in taxing companies. This question arises amongst others when companies do business outside their country of residence.Companies may set up a subsidiary. The subsidiary, being a separate legal person, will in most countries be taxed as a resident company in the state of incorporation and/or in the state in which it has its effective management. It will be taxed as if it acts on an arm's length basis with the parent company and other associated companies. In case the taxpayer performs its foreign activities without setting up a subsidiary the income derived from these foreign activities may also be taxed in the country where the activity is performed. Most countries tax non-residents on income derived from sources in their country including income derived from permanent establishments situated in that country. These countries generally use the concept of permanent establishment both in their domestic law and in tax treaties. A permanent establishment generally is defined as a fixed place of business through which the business of an enterprise is wholly or partly carried on. PE-profits are determined on the basis of the separate enterprise theory for allocating profits to permanent establishments: the PE-state taxes the profits which the permanent establishment might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. Important exception is the United States. In its tax treaties the United States uses the PE-concept. However, in its domestic law the United States uses the fixed place of business concept in combination with the "income effectively connected with a trade of business" rule.
International Corporate Income Tax Reform: Issues and Proposals
Authors: Gravelle Jane G.
Published: May 2022

While details have changed from time to time, the basic treatment of foreign source income in the United States tax code has remained essentially the same as that in 1918, when the foreign tax credit was introduced. All worldwide income is currently taxed, with a credit for foreign taxes paid, but income of subsidiaries incorporated in foreign jurisdictions is not considered part of that worldwide income until it is repatriated. As a result of a revision in 1962, certain passive income of foreign subsidiaries is subject to current taxation under Subpart F of the Internal Revenue Code. This system produces a number of economic distortions as well as opportunities for tax avoidance. Those continuing issues, along with the increasing integration of the global economy, have led to proposals for reform. These proposals fall roughly into four categories: narrow proposals aimed at tax avoidance concerns, proposals to move the system towards a pure territorial (or source-based) system, proposals to move the system in the opposite direction towards a current world-wide tax system, or proposals to retain the current system but lower the corporate tax rate with revenue offsets.In evaluating these proposed tax changes, two issues, which are related but nevertheless not identical, should be considered. The first is the real effects of current law and of a revision on economic activity. When investment responds to tax differentials, it affects the allocation of capital which in turn has implications for efficiency and income distribution (the extent to which the tax burden falls on capital versus labor incomes). In a closed economy with a fixed capital stock, the burden of the corporate tax falls on capital income in general. If the U.S. corporate tax does not apply in the foreign jurisdiction, capital can flow abroad with the result that some of the burden on the tax falls on labor (depending on the mobility of capital).3 Thus, the international tax system has implications for the overall welfare of the United States, and the world, and for the division of that welfare between those with primarily labor income, who tend to have lower incomes, and those with primarily capital income, who tend to have higher incomes.
Recent Developments in Federal Income Taxation: The Year 2009
Authors: McMahon, Jr. Martin J. , Shepard Ira B. , Simmons Daniel L.
Published: May 2022

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 nuts and spend several pages writing it up. This is the reason that the outline is getting to be as long as it is. Amendments to the Internal Revenue Code generally are not discussed except to the extent that (1) they are of major significance, (2) they have led to administrative rulings and regulations, (3) they have affected previously issued rulings and regulations otherwise covered by the outline, or (4) they provide Dan and Marty the opportunity to mock our elected representatives; again, sometimes at least one of us goes nuts and writes up the most trivial of legislative changes. The outline focuses primarily on topics of broad general interest (to the three of us, at least) – income tax accounting rules, determination of gross income, allowable deductions, treatment of capital gains and losses, corporate and partnership taxation, exempt organizations, and procedure and penalties. It deals summarily with qualified pension and profit sharing plans, and generally does not deal with international taxation or specialized industries, such as banking, insurance, and financial services. Please read this outline at your own risk; we take no responsibility for any misinformation in it, whether occasioned by our advancing ages or our increasing indifference as to whether we get any particular item right. Any and all of the many mistakes in this outline are Marty’s responsibility; any political bias or offensive language is Ira’s; and any useful information is Dan’s.
A Proposal for an Elective Tax Benefits Transfer System
Authors: Blasi Professor Ronald W.
Published: May 2022

This article proposes an elective tax benefit transfer system to be available to lessors of property who use that property in their trade or business. It describes why the current linkage of tax benefits to property ownership is economically inefficient, causing it to have several significant disadvantages to the parties and to the economy, as a whole. The article discusses how the current system reduces a firm's cash flow and reported earnings, diminishes the intended effect of tax incentive legislation, distorts competition and decision making, and inhibits investment in efficient business assets. It is submitted that the proposed system corrects all of the shortcomings, while not violating any tenet of taxation and being consistent with Congressional attempts to limit tax avoidance.
The Coming(?) Inflation and the Income Tax: Lessons from the Past, Lessons for the Future
Authors: Gliksberg David
Published: May 2022

The concerns about inflation as a result of the current financial crisis and the U.S. budget deficit challenge the social order, including taxation. Based on the historical U.S. experience and discourse on this issue, the article focuses on the relationships between adjusting the tax system for inflation and the general attitude towards adjustment for inflation in the social order. The article offers a new insight which is very different from the current research. The nominalism/adjustism culture that dominates the social order is placed at the center of the analysis. There is “equilibrium” between the scope of adjustment in the social order and in the tax regime. Advancing adjustment of the tax regime requires that it also be promoted in the general social order. This cultural paradigm plays a significant role in the tax response to inflation, including the scope and character of that adjustment regime. This approach erodes the literature’s conservative approach arguing that classical tax policy consideration like cost-benefit analysis is the most effective factor on the adjustment issue. The article argues that adopting an adjusted tax regime is largely dependent on the existence and extent of a general culture towards the concept of “money”: Is the prevailing culture one of nominalism or adjustism?This paradigm explains the reality in the U.S. in the past with regards to adjustment for inflation. The sophisticated American discourse on adjusting the income tax regime for inflation, which first took place in the late nineteen seventies and early nineteen eighties, was unproductive from the start, and was doomed to failure because the U.S. culture of adjustism was not sufficiently ripe for justifying or permitting a “legitimate” social decision on adjusting the tax regime. The lessons from the past are that advancing adjustment of the tax regime requires promoting adjustment of the general social order. Adjusting the income tax regime without adjusting the general social order would be, culturally, a tough mission and even impossible.
Ghosts of 1932: The Lost History of Estate and Gift Taxation
Authors: Cooper Jeffrey A.
Published: May 2022

In 1932, the United States confronted a bleak economic landscape. Amid the financial carnage caused by the 1929 stock market crash and the ensuing Great Depression, economic activity had ground to a halt, tax revenues had plunged, and the nation’s debt had soared. The declining government revenues and soaring debt threatened both the viability of American industry and the stability of the nation’s credit rating. Congress took bold action that year, enacting a massive tax bill (“the Revenue Act of 1932”) designed to balance the federal budget without further stifling economic growth.As has been true through nearly a century of tax legislation, Congress included estate and gift taxes as a component of the Revenue Act of 1932. The architects of the 1932 estate and gift tax provisions made a number of crucial legislative choices that fateful year, implicating issues of tax policy that remain as relevant today as they were some eighty years ago. Yet, histories of American taxation typically devote frustratingly little analysis to the specific estate and gift tax provisions included in the Revenue Act of 1932. As a result, despite their continued relevance, the details of key decisions, and the motivations of those who made them, effectively have been lost to history.In this paper, I seek to reclaim this lost history of estate and gift taxation. While the ensuing analysis certainly will enable us to more fully appreciate the events of 1932 and evaluate the actions Congress took in that fateful year, my inquiry is not of mere historical interest. Rather, the choices made in 1932 have helped shape the fundamental structure of U.S. estate and gift taxation for nearly eight decades, including our modern estate and gift tax code. Accordingly, understanding the events of 1932 can help us to understand why our estate and gift taxes operate the way they do as well as help inform future debate about the optimal structure of our wealth transfer tax system.
Call for the Gradual Phase-Out of All Paper Tax Information Statements
Authors: Soled Jay A.
Published: May 2022

For nearly a century, tax information statements such as Form W-2s and Forms 1099 have dominated the tax administration process, ensuring taxpayer compliance and providing a mechanism for IRS oversight. The technological age of the Internet, however, has fundamentally transformed the availability of information, including critical tax data, to make it more readily accessible. On the basis of this accessibility, this analysis calls for the phase-out of paper tax information statements. Instead, tax data would be available at a secure IRS website that, with a few keystrokes, taxpayers could conveniently use to prepare their tax returns. Adoption of this proposal promises to create tremendous administrative efficiencies and greatly simplify the tax return preparation process.
The Myth of Realization: Mark-to-Market Taxation of Publicly-Traded Securities
Authors: Elkins David
Published: May 2022

In the Greco-Roman world, touching right hands as a greeting demonstrated that one was weaponless and contributed to a more convivial atmosphere. In Medieval Europe, warriors grasped the right hand of their adversaries during a truce as a precaution against treachery. Similarly, when greeting a friend, a knight would extend an ungloved right hand as a token of confidence in the peaceful intentions of his comrade. A handshake is still the traditional form of greeting. It continues to denote friendship, or at the least a lack of hostile intent, even though the circumstances in which it arose may no longer be relevant.Like the handshake, legal rules and concepts ofttimes survive the situations that fostered their adoption. Originally developed as means to contend with certain conditions, they can acquire a life of their own and be applied, out of habit or inertia, even where there is no justification for their existence. However, unlike the innocuous handshake, blindly applying rules and concepts in situations other than those with which they were developed to contend can be counterproductive.
Consolidating Foreign Affiliates
Authors: Cummings, Jr. Jasper L.
Published: May 2022

Proposal for ChangeA:Consolidate Foreign AffiliatesCongress and the Treasury should seriously consider repealing section 1504(b)(3), thereby including as part of the consolidated filing group affiliated foreign corporations that are owned by the common parent and other members of the group. This act would expand the consolidated return to its logically proper scope and would end deferral (of U.S. taxation of active business income earned by foreign affiliates) based on the happenstance of corporate shells having been placed between them and their owners in the consolidated group. However, if the current debate over deferral, after consideration of the consolidation extension, ends in a decision to retain some sort of deferral, then consolidation of foreign affiliates still will produce a superior measurement of the entire business income without regard to legal structures. In conjunction with including foreign affiliates in the consolidated group, Congress can make a principled choice about how much of the foreign income of the group should be excluded from current (or any) taxation, based on income sourcing or some other administrable measurement.
Defining Income
Authors: Abreu Alice G. , Greenstein Richard K.
Published: May 2022

More than half a century ago in Commissioner v. Glenshaw Glass, the Supreme Court defined "income," as used in section 61 of the Internal Revenue Code, as "undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion." The Code narrows the scope of income by providing for specific exclusions but, outside of those exclusions, the Code's own, self-referential definition-"gross income means income from whatever source derived" - seems to confirm the broad scope of the definition.The breadth of the Glenshaw Glass definition appears to be nearly co-extensive with the Haig-Simons definition of income, which is widely accepted as providing the theoretical foundation for the income tax. Accordingly, many tax professionals interpret the language in section 61 and Glenshaw Glass solely in light of the economic principles reflected in the Haig-Simons definition. The analytical structure for determining what is  income appears clear and is generally treated as immutable. The analysis begins with the broad mandate of section 61 and Glenshaw Glass. As long as there is a realized accession in the economic sense within the taxpayer's dominion, Glenshaw Glass would seem to provide that there is income unless, pursuant to the very first words of section 61, there is an exclusion in the statute. From the time they are introduced to the tax law, students are taught this analytical structure, and by the time they become practitioners and then judges or scholars, it is second nature.
An Equity-Based, Multilateral Approach for Sourcing Income Among Nations
Authors: Brown Fred B.
Published: May 2022

The source of income rules used in the United States and elsewhere in large part establish the contours of income tax jurisdiction that is exercised by countries. Source rules do this by allocating a taxpayer's income for purposes of assigning countries their rights to tax such income. Thus, source rules are of critical importance in the functioning of the income tax rules that apply to cross-border business and investment activities.The source rules play a vital role in the foreign tax credit system applicable to U.S. persons with foreign investment or business activities. This is because a U.S. taxpayer is subject to an annual foreign tax credit limitation, which is generally equal to the taxpayer's average U.S. tax rate multiplied by the taxpayer's foreign source income as determined under the source rules. The source rules also play a central role in the United States' exercise of taxation over foreign persons with U.S. businesses or investments. For the most part, only U.S. source income is subject to tax under the U.S. tax regimes that apply to foreign persons. Moreover, if the United States were to move to a full or partial territorial system for taxing U.S. persons, the source rules would assume even greater importance given that they would determine whether the United States would impose any tax (as opposed to a residual tax) on the income of U.S. persons from crossborder activities. Other countries likewise use source rules or their equivalent in applying foreign tax credit or territorial systems to their residents and exercising source taxation over nonresidents.
Transparency in Private Collection of Federal Taxes
Authors: Fogg T. Keith
Published: May 2022

Most federal taxes are collected from taxpayers by business entities, held in a public trust for the United States, and then paid over to the Internal Revenue Service (the IRS). While the vast majority of business entities pay over the taxes held in trust in a timely and appropriate manner, a sizeable amount, in dollar terms, does not get paid. The amount of unpaid “collected” taxes in 2008 created a $58 billion tax gap item.Disclosure law governing federal taxes defaults to non-disclosure for most tax returns. This general rule of non-disclosure governs the returns reporting the taxes collected by business entities even though the information on these returns is information concerning a public trust. This article analyzes the federal tax disclosure laws and concludes that the amount of taxes collected on behalf of the United States and the amount of these collected taxes paid over to the IRS should be disclosed. Rather than coming under the general rule of non-disclosure which applies to income tax returns and other returns reporting the liability of an individual or entity for the payment of taxes, these returns should be treated like the returns of pension plans, which are open for the public to see.In addition to approaching the issue from the perspective of disclosure policy, the article also looks at the collection policy issues presented by the disclosure of this information. For the same policy reasons that Congress has decided compliance is enhanced by the disclosure of pension plans and the returns of exempt organizations, the article concludes that compliance would be enhanced by this proposal and the tax gap reduced.
Discretion and Deterrence in Tax Sentencing After Rita, Gall and Kimbrough–Opportunities for Alternative Sentences and Potential Abuse
Authors: Carew Marla Schwaller
Published: May 2022

In 2007, the 3rd Circuit, on appeal, vacated and remanded the nonincarceration sentence of criminal tax defendant William Tomko Jr. in an opinion notable for its outrage and disgust at the sentencing court's order of probation and home confinement (in a luxurious home built with the proceeds of Tomko's criminal tax evasion). In 2008, the District of Columbia Circuit, on appeal, affirmed a non-incarceration sentence for criminal tax defendant Gus Gardellini, in an opinion that permitted Gardellini to serve his term of probation at his then-current home in Belgium, and noted that he had already "suffered substantially" due to his prosecution. The Tomko court was convinced that deterrence of similar tax crimes required incarceration and the Gardellini court noted with approval the sentencing court's belief that publicity was a sufficient deterrent to potential criminal tax offenders, and maintained that a focus on deterrence above all other sentencing factors was a mistake.Aside from the individual characteristics of the offenders and judges, and the passage of one year, what accounted for the dramatic turn-about in federal appellate sentencing review (and the growing number of sentencing, and sentencing appeal, opinions in 2008 sharing Gardellini's flexibility)? The answer resides in the Supreme Court's 2007 and 2008 sentencing guidance that enhanced judicial discretion and allowed for this dramatic change in sentences upheld on appeal.
Work Product Immunity for Attorney-Created Tax Accrual Workpapers?: The Aftermath of United States v. Textron
Authors: Lischer, Jr. Henry J.
Published: May 2022

United States v. Textron, Inc. has been a high-profile case involving the applicability of work product immunity to attorney-prepared documents known as "tax accrual workpapers." The Textron decision is worthy of careful analysis because it is the first decision at the Court of Appeals level to consider work product immunity for attorney-created tax accrual workpapers. The U.S. District Court ruled that work product immunity applied to the tax accrual workpapers, the First Circuit Court of Appeals ruled that work product immunity did not apply, and on May 24, 2010, the United States Supreme Court denied the certiorari petition in the case. Accordingly, the Textron decision is final, and it is appropriate to review the scope of work product immunity as it may apply to tax accrual workpapers. The denial of certiorari means that the lower federal courts must decide, without the benefit of Supreme Court guidance in Textron, whether work product immunity applies to attorney- prepared tax accrual workpapers.I conclude that attorney-prepared tax accrual workpapers technically do not and, as a matter of policy, should not qualify for protection as work product because of (1) the significant role of tax accrual workpapers in financial accounting and federal income tax reporting and (2) the specific statutory authority of section 7602 empowering the Internal Revenue Service (IRS) to collect information from taxpayers. I propose that courts embrace a doctrine of "tax exceptionalism" for purposes of work product immunity cases, and this doctrine acknowledges the unique public policy considerations that support effective tax administration. Permitting discovery of tax accrual workpapers raises significant fairness issues, but discovery of these workpapers is consistent with extant caselaw regarding work product immunity as well as with the purposes underlying work product immunity.
Exclusion from Income of Compensation for Services and Pooling of Labor Occurring in a Noncommercial Setting
Authors: Kahn Douglas A.
Published: May 2022

When cash is received for services, it typically will constitute gross income to the recipient. But what if the payments are made in a noncommercial setting such as the payment by a parent to a child for mowing the lawn or performing household chores? As discussed later in this Essay, there are reasons to conclude that such payments do not constitute income. The problem of how to treat receipts from a noncommercial activity frequently arises in the context of an exchange of services. A similar problem arises when services are provided by several persons pursuant to a pooling of labor to accomplish a common noncommercial goal.The regulations state that if a taxpayer receives services from another as payment for services rendered by the taxpayer, each party will realize gross income equal to the value of the services received from the other. If services were received as full or partial payment for property, the value of the services received would be included in the amount realized on the sale of the property. The tax problems that arise in connection with the receipt of services mostly occur when services are exchanged, and this Essay addresses that situation and will deal only incidentally with a payment of cash or other property for services.
Recent Developments in Federal Income Taxation: The Year 2010
Authors: McMahon, Jr. Martin J. , Shepard Ira B. , Simmons Daniel L.
Published: May 2022

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 year 2010 — 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 nuts and spend several pages writing it up. This is the reason that the outline is getting to be as long as it is. Amendments to the Internal Revenue Code generally are not discussed except to the extent that (1) they are of major significance, (2) they have led to administrative rulings and regulations, (3) they have affected previously issued rulings and regulations otherwise covered by the outline, or (4) they provide Dan and Marty the opportunity to mock our elected representatives; again, sometimes at least one of us goes nuts and writes up the most trivial of legislative changes. The outline focuses primarily on topics of broad general interest (to the three of us, at least) – income tax accounting rules, determination of gross income, allowable deductions, treatment of capital gains and losses, corporate and partnership taxation, exempt organizations, and procedure and penalties. It deals summarily with qualified pension and profit sharing plans, and generally does not deal with international taxation or specialized industries, such as banking, insurance, and financial services. Please read this outline at your own risk; we take no responsibility for any misinformation in it, whether occasioned by our advancing ages or our increasing indifference as to whether we get any particular item right. Any mistakes in this outline are Marty’s responsibility; any political bias or offensive language is Ira’s; and any useful information is Dan’s.
Legal Ethics and Federal Taxes, 1945-1965: Patriotism, Duties, and Advice
Authors: Hatfield Michael
Published: May 2022

"We are professional men not mere hired hands."In 2013 we will celebrate (or, at least, commemorate) the century-mark of the Sixteenth Amendment and the federal income tax. We should anticipate a flow of historical reflections on this first century of income taxation. These historical reflections on the income tax should develop our understanding of what has changed in the past century, and just as importantly, what has not changed, and will give us some idea of why one change occurred rather than another in any given case. It is likely that these reflections will focus on acts of Congress, nearly acts of Congress, and acts urged on Congress by enthusiastic supporters of one persuasion or another; the ebb and flow of economic theories and fiscal policies; responses to political, business, and technological changes; and, of course, important court cases that went this way and that way and, sometimes, the right way.Yet the history of the income tax is, in large part, also the history of tax lawyers. Without these lawyers working to interpret the tax code, to advise clients on planning with the tax code, and to advocate for the rights of clients under the tax code, the income tax system would not be what it has become. The role of these lawyers, especially their own sense of right and wrong, is rarely the subject of legal histories. Economics, politics, and financial innovations may make better reading, and may be better at explaining legal histories, but legal history includes legal ethics.
Understanding Consolidated Returns
Authors: McMahon, Jr. Martin J.
Published: May 2022

Section 1501 allows all of the members of an affiliated group of corporations to elect to file a consolidated return. A consolidated return permits the includible members of an affiliated group of corporations to combine their incomes into a single return. The detailed rules for filing consolidated returns are found in regulations promulgated pursuant to a broad delegation of authority in section 1502 of the Internal Revenue Code. In general, the regulations reflect a “single entity” approach that attempts to treat the several members of a consolidated group in the same manner as divisions of a single corporation. This article explains the most important general principles governing consolidated returns and is intended to provide an overview of the consolidated return regulations for lawyers who are generally unfamiliar with the detailed rules. Among other topics, the article explains (1) the rules governing eligibility to file a consolidated return, (2) the computation of consolidated taxable income, including relevant limitations on the use of net operating losses, (3) intercompany transactions and distributions, (4) stock basis adjustments, and (5) earnings and profits calculations. It explains both the rules in the consolidated return regulations and the differences from the rules that otherwise would govern had the corporations not elected to file a consolidated return.
An Empirical Study of Innocent Spouse Relief: Do Courts Implement Congress's Legislative Intent?
Authors: McMahon Stephanie Hunter
Published: May 2022

Under existing law spouses are jointly and severally liable for taxes assessed with respect to their joint income tax returns. As a result, the IRS may pursue either spouse for any taxes owed on those returns. Because Congress was concerned that the IRS was seeking taxes from the “wrong” spouse under the joint and several liability regime, it expanded relief for “innocent” spouses in 1998. Many critics of this relief complain that, as it is applied, the statute offers too little relief to spouses, generally wives, who sign returns while being deceived or compelled by their mates. However, there has been no empirical study of whether the current relief is, in fact, what Congress intended. This article fills the void by first evaluating the provision’s legislative history to determine what relief Congress intended to provide when it acted in 1998. The article then examines the 444 cases appealing for relief under this provision in order to evaluate whether judges are deciding cases invoking the provision consistent with that congressional objective. This article’s empirical study of the success and failure of the innocent spouse provision from Congress’s perspective concludes that the courts are generally applying innocent spouse relief as Congress intended.