Overlawyered » taxes http://overlawyered.com Chronicling the high cost of our legal system Mon, 01 Sep 2014 15:27:00 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.2 Tax flight: King seeks protection of Queen http://overlawyered.com/2014/08/tax-flight-king-seeks-protection-queen/?utm_source=rss&utm_medium=rss&utm_campaign=tax-flight-king-seeks-protection-queen http://overlawyered.com/2014/08/tax-flight-king-seeks-protection-queen/#comments Tue, 26 Aug 2014 04:15:08 +0000 http://overlawyered.com/?p=47853 Remember when Canada was regarded as the high-tax, big-government country, and we weren’t? How times have changed. Burger King is considering becoming Canadian through a tax inversion deal with donut chain Tim Horton’s, aware that north of the border “corporate tax rates are as much as 15 percentage points lower than in the United States,” […]

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CanadaQueenStampRemember when Canada was regarded as the high-tax, big-government country, and we weren’t? How times have changed. Burger King is considering becoming Canadian through a tax inversion deal with donut chain Tim Horton’s, aware that north of the border “corporate tax rates are as much as 15 percentage points lower than in the United States,” in the words of Daniel Ikenson at Cato, who writes: “If the acquisition comes to fruition and ultimately involves a corporate ‘inversion,’ consider it not a problem, but a symptom of a problem. The real problem is that U.S. policymakers inadequately grasp BurgerStamp that we live in a globalized economy, where capital is mobile and products and services can be produced and delivered almost anywhere in the world, and where value is created by efficiently combining inputs and processes from multiple countries. Globalization means that public policies are on trial and that policymakers have to get off their duffs and compete with most every other country in the world to attract investment, which flows to the jurisdictions where it is most productive and, crucially, most welcome to be put to productive use.” And the fact is that the United States, once the domicile of choice for international business, has slipped badly down the ratings of how difficult it is to do business in various countries. Policymakers “should repair the incentives that drive capital away from the United States.” Full post here. More: Stephen Bainbridge.

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New at Reason: Bigger bounties for tax tipsters http://overlawyered.com/2014/08/tax-tipsters-2/?utm_source=rss&utm_medium=rss&utm_campaign=tax-tipsters-2 http://overlawyered.com/2014/08/tax-tipsters-2/#comments Mon, 11 Aug 2014 14:48:57 +0000 http://overlawyered.com/?p=47552 [cross-posted and slightly adapted from Cato at Liberty] I’ve got a guest post up at Reason on how bounty-seeking informants are bypassing the Internal Revenue Service tipster-reward program in favor of selected state False Claims Acts, such as New York’s, which enable richer recoveries for disloyal employees and others who charge defendants with underpaying taxes. Excerpt: Will the […]

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[cross-posted and slightly adapted from Cato at Liberty]

I’ve got a guest post up at Reason on how bounty-seeking informants are bypassing the Internal Revenue Service tipster-reward program in favor of selected state False Claims Acts, such as New York’s, which enable richer recoveries for disloyal employees and others who charge defendants with underpaying taxes. Excerpt:

Will the spread of a culture of informants sow distrust and disloyalty in the workplace, while encouraging dissident executives and their lawyers to shake settlements out of risk- and publicity-averse targets by seizing on doubtful, gray-area legal theories? That’s part of the game too. Lately hedge funds and litigation finance firms have moved in to bankroll the filing of likely “whistleblower” cases. …

…by getting pro-plaintiff laws through the legislature in just a few states—New York liberalized its law four years ago—advocates can set the stage for a nationwide informant push.

In Illinois, a single Chicago lawyer was reported in 2012 to have used that state’s whistleblower law to file at least 238 lawsuits against retailers, pocketing millions in settlements, over alleged failure to charge sales tax on shipping-and-handling.

Whole thing here.

P.S. More recent coverage of the runaway False Claims Act train: “Repeat whistleblowers reap millions of dollars in false-claims suits” [ABA Journal] David Ogden testifies for the U.S. Chamber on what needs to happen with the federal FCA [House Judiciary] “UK Commission Takes A Pass On U.S.-Style Whistleblower Bounties” [Daniel Fisher, Forbes]

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Banking and finance roundup http://overlawyered.com/2014/07/banking-finance-roundup-19/?utm_source=rss&utm_medium=rss&utm_campaign=banking-finance-roundup-19 http://overlawyered.com/2014/07/banking-finance-roundup-19/#comments Wed, 30 Jul 2014 04:05:06 +0000 http://overlawyered.com/?p=47075 Federally run consumer complaint database at CPSC has been unfair and unreliable mess, so naturally CFPB wants one of its own [Kevin Funnell] Los Angeles, Miami, Providence, and Cook County among municipalities piling on lenders with mortgage and disparate-impact suits [same] “Just one way to stop corporate tax inversions: cut taxes” [Chris Edwards, NYT/Cato; more] […]

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  • Federally run consumer complaint database at CPSC has been unfair and unreliable mess, so naturally CFPB wants one of its own [Kevin Funnell]
  • Los Angeles, Miami, Providence, and Cook County among municipalities piling on lenders with mortgage and disparate-impact suits [same]
  • “Just one way to stop corporate tax inversions: cut taxes” [Chris Edwards, NYT/Cato; more]
  • “The IPO is dying. Marc Andreessen explains why.” [Timothy Lee, Vox via Tyler Cowen]
  • No mercy for the Swiss: feds’ “fierce campaign” on overseas tax compliance “doing more harm than good” [The Economist; Doreen Carvajal, New York Times]
  • “Pretty much everything George Dvorsky says at io9 about corporate personhood is wrong” [Bainbridge] Dodd-Frank turns four, alas [same]
  • “There was no evidence, period.” Preet Bharara loses one as jury acquits in insider trading case [Ira Stoll, Future of Capitalism]
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    D.C. Circuit: IRS can’t rewrite ObamaCare. Fourth: Oh, yes it can http://overlawyered.com/2014/07/d-c-circuit-irs-cant-rewrite-obamacare-fourth-oh-yes-can/?utm_source=rss&utm_medium=rss&utm_campaign=d-c-circuit-irs-cant-rewrite-obamacare-fourth-oh-yes-can http://overlawyered.com/2014/07/d-c-circuit-irs-cant-rewrite-obamacare-fourth-oh-yes-can/#comments Tue, 22 Jul 2014 19:22:44 +0000 http://overlawyered.com/?p=47232 A panel of the D.C. Circuit ruled today that the IRS is not free to rewrite the ObamaCare statute to extend tax credits from users of state-run health exchanges, as per the law’s language, to users of the federal exchange as well, because the federal government is not a “State.” [Halbig v. Burwell; Ilya Shapiro, […]

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    A panel of the D.C. Circuit ruled today that the IRS is not free to rewrite the ObamaCare statute to extend tax credits from users of state-run health exchanges, as per the law’s language, to users of the federal exchange as well, because the federal government is not a “State.” [Halbig v. Burwell; Ilya Shapiro, Cato] Later today, a panel of the Fourth Circuit ruled that yes, it’s free to do so. [King v. Burwell] Given the instant one-day circuit split and the importance of the issue, further court consideration is inevitable, and the Obama administration has already indicated that it will seek en banc consideration by the full D.C. Circuit, packed with its own recent appointees. More: The work of my Cato colleague Michael Cannon and Case Western lawprof Jonathan Adler helped undergird the suit; Cannon has commentary here and here and Adler here and here.

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    The IRS scandal: who are the saucer believers? http://overlawyered.com/2014/06/irs-scandal-now/?utm_source=rss&utm_medium=rss&utm_campaign=irs-scandal-now http://overlawyered.com/2014/06/irs-scandal-now/#comments Fri, 27 Jun 2014 04:15:58 +0000 http://overlawyered.com/?p=46726 Some figures on the left have aggressively sought to dismiss the seriousness of the renewed IRS scandal. Rep. Lloyd Doggett (D-Tex.) captured this mood at one recent Capitol Hill hearing when he suggested that after voicing suspicions that the loss of emails might not be accidental, his GOP colleagues might go on next to quiz […]

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    Some figures on the left have aggressively sought to dismiss the seriousness of the renewed IRS scandal. Rep. Lloyd Doggett (D-Tex.) captured this mood at one recent Capitol Hill hearing when he suggested that after voicing suspicions that the loss of emails might not be accidental, his GOP colleagues might go on next to quiz the Service’s leadership about the president’s birth certificate and space aliens in Roswell, N.M. It’s not a “serious inquiry,” Rep. Doggett said: “I believe it’s an endless conspiracy theory here.”

    And yet many Americans who do not believe in space aliens do question the IRS’s account of what has happened. While we covered the story a year ago as well as more recently, this might make a good time to recapitulate why.

    The IRS grants 501 (c)(4) nonprofit status (less favorable than (c)(3) status, which affords charitable tax deductibility to donors) to a wide array of “social welfare” organizations, many, like the ACLU, with a definite ideological valence. In recent years the status has been sought and obtained by groups whose missions are closely related to campaign and electoral politics, most notably Organizing for America, whose role on the national scene is to support President Obama’s messaging. Not surprisingly this has excited controversy about whether the eligibility rules for (c)(4) status are being drawn in the right place. Most advocates however profess to believe that whatever the right set of rules, they should apply alike to both sides in our political life.

    By March 2012 the Associated Press was reporting on a flurry of bizarre and seemingly unprecedented IRS demands that some (c)(4) applicants of a right-of-center valence provide extraordinarily burdensome and intrusive documentation of their activities — things like copies of all books and literature distributed to participants, transcripts of leaders’ radio appearances and live speeches, printouts of all Facebook and Twitter output, and so forth, along with donor lists and names of family members. The Service was also delaying groups’ approval for long periods, in fact seemingly indefinitely, without explanation or a firm denial that could be appealed to a court. Defenders of the agency subsequently put out a search for left-of-center groups that might have run into similar treatment, and although they did manage to turn up a few tales of bureaucratic red tape and rigmarole, they were unable to come up with anything remotely comparable.

    IRS nonprofit chief Lois Lerner at first denied any targeting, then sought to blame rogue employees at the IRS Cincinnati office for it. But emails soon emerged clearly indicating guidance by high-level IRS managers in Washington. Lerner then declined to testify, asserting her Fifth Amendment privilege against admissions exposing herself to criminal liability.

    Through the ensuing scandal, there was little hard proof that Lerner and other IRS insiders had coordinated the targeting with political actors outside the agency — on Capitol Hill, say, or in party organizations, or the White House — although a number of details on the record, such as frequent White House visits by agency insiders and coordination with outside figures on press messaging, made for suggestive circumstantial evidence. To establish that political operatives or officials outside the agency were aware of targeting at the time, or even perhaps instigated or directed it, would be to blow the scandal wide-open, perhaps threatening the careers of well-known public figures. If any email documentation of such coordination is to be found, it would most likely be in the “external” (outside the agency) emails of Lois Lerner and other key players in the IRS targeting effort.

    Those are the same emails that have now mysteriously vanished due to a reported crash of Lerner’s computer, a crash that happened ten days after the House Ways & Means Committee wrote her to inquire about (c)(4) tax exemption denials*. Emails of six other key IRS employees are also said to have vanished in a series of coincidental crashes.

    This week, as if to confirm that shabby treatment of politically disliked adversaries was not unheard-of at the Lerner-era IRS, the agency agreed to pay $50,000 to the National Organization for Marriage over an episode in which persons unknown leaked its confidential return and donor list to its ideological adversary, the Human Rights Campaign, which proceeded to have it published. And the Ways & Means Committee has just released an email indicating that when an invitation intended for a Congressional opponent wound up by mistake in the hands of Lois Lerner, her immediate reaction was to wonder whether it might be used to generate an IRS investigation embarrassing to him.

    After all these revelations, is it really those who distrust the agency’s leadership whose gullibility should be compared to that of flying saucer cultists? Or is are the credulous true believers the ones who insist that the latest jaw-dropping revelations from the Service are sure to have an innocent explanation, though the earlier ones did not? (cross-posted, with minor changes, at Cato at Liberty)

    *An earlier version of this post described the letter to Lerner as being about targeting; Glenn Kessler at the Washington Post has disputed whether that is an accurate way to describe the contents of the letter, which concerned a plan to audit conservative (c)(4) donors. Ian Tuttle responds to Kessler here.

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    The Redskins trademark and agency discretion http://overlawyered.com/2014/06/redskins-trademark-agency-discretion/?utm_source=rss&utm_medium=rss&utm_campaign=redskins-trademark-agency-discretion http://overlawyered.com/2014/06/redskins-trademark-agency-discretion/#comments Sun, 22 Jun 2014 19:45:28 +0000 http://overlawyered.com/?p=46693 Too close to the regulation of speech content, too chancy in its impact on the rule of law [Jonathan Turley, Washington Post]: Many of us recoil at the reference to skin color as a team identity. The problem is that the Redskins case is just the latest example of a federal agency going beyond its […]

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    Too close to the regulation of speech content, too chancy in its impact on the rule of law [Jonathan Turley, Washington Post]:

    Many of us recoil at the reference to skin color as a team identity. The problem is that the Redskins case is just the latest example of a federal agency going beyond its brief to inappropriately insert itself in social or political debates. …

    The Supreme Court affirmed in 1983 that the IRS could yank tax exemption whenever it decided that an organization is behaving “contrary to established public policy” — whatever that public policy may be. … There is an obvious problem when the sanctioning of free exercise of religion or speech becomes a matter of discretionary agency action. And it goes beyond trademarks and taxes.

    Earlier here and here.

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    IRS scandal: the dog wiped their emails, cont’d http://overlawyered.com/2014/06/irs-scandal-dog-wiped-emails-contd/?utm_source=rss&utm_medium=rss&utm_campaign=irs-scandal-dog-wiped-emails-contd http://overlawyered.com/2014/06/irs-scandal-dog-wiped-emails-contd/#comments Fri, 20 Jun 2014 16:34:07 +0000 http://overlawyered.com/?p=46636 I’ve got an update on the fast-developing scandal of evidence destruction at the IRS in my new Cato post (earlier). If not for reading Kim Strassel and her colleagues at the Wall Street Journal, I might not have learned that Lois Lerner’s emails got wiped from her hard drive by forces unknown about 10 days […]

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    I’ve got an update on the fast-developing scandal of evidence destruction at the IRS in my new Cato post (earlier). If not for reading Kim Strassel and her colleagues at the Wall Street Journal, I might not have learned that Lois Lerner’s emails got wiped from her hard drive by forces unknown about 10 days after the letter arrived from House Ways & Means inquiring into targeting of political opponents.

    Since the new round of disclosures in the IRS scandal broke a week ago, the WSJ has shown itself willing to dig in a way that many other prestige press institutions have not. “People used to ask how Watergate might have turned out if the press had sided with Nixon instead of against him. Thanks to the work of Strassel and her WSJ colleagues, let’s hope we never find out.”

    The Economist covers the story in this commentary. Our tag on evidence spoliation and document retention — lawyers among our readers will be familiar with how very seriously these concepts are taken in the world of litigation — is here.

    Welcome readers: Glenn Reynolds/Instapundit.

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    June 19 roundup http://overlawyered.com/2014/06/june-19-roundup/?utm_source=rss&utm_medium=rss&utm_campaign=june-19-roundup http://overlawyered.com/2014/06/june-19-roundup/#comments Thu, 19 Jun 2014 04:05:10 +0000 http://overlawyered.com/?p=46253 Heeding union and legacy air carriers, Congress nixes cheap flights to Europe [W.R. Mead/American Interest, Marc Scribner/CEI] Kneecapping the opposition: lawprof wants to yank trade associations’ tax exemption [CL&P] “Connecticut Supreme Court rules against man who got drunk and fell in bonfire” [Legal NewsLine] Making reform of big-city government a conservative cause [Scott Beyer] Judge: […]

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  • Heeding union and legacy air carriers, Congress nixes cheap flights to Europe [W.R. Mead/American Interest, Marc Scribner/CEI]
  • Kneecapping the opposition: lawprof wants to yank trade associations’ tax exemption [CL&P]
  • “Connecticut Supreme Court rules against man who got drunk and fell in bonfire” [Legal NewsLine]
  • Making reform of big-city government a conservative cause [Scott Beyer]
  • Judge: Pipe maker can sue qui tam law firm over press release calling products defective [Daniel Fisher, Forbes]
  • British insurer group calls for action, says fraudulent accident claims up 18% in year [Insurance Journal]
  • Long, detailed look at forces behind the madness that is the San Francisco housing market [Kim-Mai Cutler, TechCrunch in April]
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    IRS: computer crash ate two years’ worth of Lerner emails http://overlawyered.com/2014/06/irs-computer-crash-ate-two-years-worth-lerner-emails/?utm_source=rss&utm_medium=rss&utm_campaign=irs-computer-crash-ate-two-years-worth-lerner-emails http://overlawyered.com/2014/06/irs-computer-crash-ate-two-years-worth-lerner-emails/#comments Tue, 17 Jun 2014 04:15:39 +0000 http://overlawyered.com/?p=46557 Paul Caron at the justly admired TaxProf blog has been patiently documenting the IRS scandal since the start and his daily link roundups are now as relevant as they have ever been. More: CNN, John Hinderaker/PowerLine, A. Barton Hinkle (finger of responsibility points at Congress), Peter Suderman. Earlier here, etc. Update: IRS said on Tuesday […]

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    Paul Caron at the justly admired TaxProf blog has been patiently documenting the IRS scandal since the start and his daily link roundups are now as relevant as they have ever been. More: CNN, John Hinderaker/PowerLine, A. Barton Hinkle (finger of responsibility points at Congress), Peter Suderman. Earlier here, etc.

    Update: IRS said on Tuesday that computer crashes swallowed without a trace the emails of several other employees central to the nonprofit-targeting probe, and admitted it waited months to tell congressional investigators that it did not expect to produce Lois Lerner’s emails.

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    This is bound to end well: tax hikes by decree http://overlawyered.com/2014/06/bound-end-well-tax-hikes-decree/?utm_source=rss&utm_medium=rss&utm_campaign=bound-end-well-tax-hikes-decree http://overlawyered.com/2014/06/bound-end-well-tax-hikes-decree/#comments Fri, 13 Jun 2014 13:57:26 +0000 http://overlawyered.com/?p=46477 Obama urged to raise taxes unilaterally on disfavored groups by regulation if Congress won’t act: Out of deference to Congress, the Treasury Department has traditionally avoided making policy in areas where the legislative branch may act. “But when the legislative process is as broken as it has become today,” said Daniel N. Shaviro, a law […]

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    Obama urged to raise taxes unilaterally on disfavored groups by regulation if Congress won’t act:

    Out of deference to Congress, the Treasury Department has traditionally avoided making policy in areas where the legislative branch may act. “But when the legislative process is as broken as it has become today,” said Daniel N. Shaviro, a law professor at New York University, “it’s simply inevitable that administrations will care less about such comity, and be more willing to advance their policy views in controversial areas through the unilateral exercise of regulatory authority.”

    That’s the ticket. We’ll call it “simply inevitable”! [Victor Fleischer, NYT "DealBook" via TaxProf; earlier on pen-and-phone executive orders here, etc.]

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