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RESTORING the LOST ANTI-INJUNCTION ACT Kristin E
COPYRIGHT © 2017 VIRGINIA LAW REVIEW ASSOCIATION RESTORING THE LOST ANTI-INJUNCTION ACT Kristin E. Hickman* & Gerald Kerska† Should Treasury regulations and IRS guidance documents be eligible for pre-enforcement judicial review? The D.C. Circuit’s 2015 decision in Florida Bankers Ass’n v. U.S. Department of the Treasury puts its interpretation of the Anti-Injunction Act at odds with both general administrative law norms in favor of pre-enforcement review of final agency action and also the Supreme Court’s interpretation of the nearly identical Tax Injunction Act. A 2017 federal district court decision in Chamber of Commerce v. IRS, appealable to the Fifth Circuit, interprets the Anti-Injunction Act differently and could lead to a circuit split regarding pre-enforcement judicial review of Treasury regulations and IRS guidance documents. Other cases interpreting the Anti-Injunction Act more generally are fragmented and inconsistent. In an effort to gain greater understanding of the Anti-Injunction Act and its role in tax administration, this Article looks back to the Anti- Injunction Act’s origin in 1867 as part of Civil War–era revenue legislation and the evolution of both tax administrative practices and Anti-Injunction Act jurisprudence since that time. INTRODUCTION .................................................................................... 1684 I. A JURISPRUDENTIAL MESS, AND WHY IT MATTERS ...................... 1688 A. Exploring the Doctrinal Tensions.......................................... 1690 1. Confused Anti-Injunction Act Jurisprudence .................. 1691 2. The Administrative Procedure Act’s Presumption of Reviewability ................................................................... 1704 3. The Tax Injunction Act .................................................... 1707 B. Why the Conflict Matters ....................................................... 1712 * Distinguished McKnight University Professor and Harlan Albert Rogers Professor in Law, University of Minnesota Law School. -
The Joint Committee on Taxation and Codification of the Tax Laws
The Joint Committee on Taxation and Codification of the Tax Laws George K. Yin Edwin S. Cohen Distinguished Professor of Law and Taxation University of Virginia Former Chief of Staff, Joint Committee on Taxation February 2016 Draft prepared for the United States Capitol Historical Society’s program on The History and Role of the Joint Committee: the Joint Committee and Tax History Comments welcome. THE UNITED STATES CAPITOL HISTORICAL SOCIETY THE JCT@90 WASHINGTON, DC FEBRUARY 25, 2016 The Joint Committee on Taxation and Codification of the Tax Laws George K. Yin* February 11, 2016 preliminary draft [Note to conference attendees and other readers: This paper describes the work of the staff of the Joint Committee on Internal Revenue Taxation (JCT)1 that led to codification of the tax laws in 1939. I hope eventually to incorporate this material into a larger project involving the “early years” of the JCT, roughly the period spanning the committee’s creation in 1926 and the retirement of Colin Stam in 1964. Stam served on the staff for virtually this entire period; he was first hired (on a temporary basis) in 1927 as assistant counsel, became staff counsel in 1929, and then served as Chief of Staff from 1938 until 1964. He is by far the longest‐serving Chief of Staff the committee has ever had. The conclusions in this draft are still preliminary as I have not yet completed my research. I welcome any comments or questions.] Possibly the most significant accomplishment of the JCT and its staff during the committee’s “early years” was the enactment of the Internal Revenue Code of 1939. -
The Federal Definition of Tax Partnership
Brooklyn Law School BrooklynWorks Faculty Scholarship Winter 2006 The edeF ral Definition of Tax Partnership Bradley T. Borden [email protected] Follow this and additional works at: https://brooklynworks.brooklaw.edu/faculty Part of the Other Law Commons, Taxation-Federal Commons, and the Tax Law Commons Recommended Citation 43 Hous. L. Rev. 925 (2006-2007) This Article is brought to you for free and open access by BrooklynWorks. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of BrooklynWorks. ARTICLE THE FEDERAL DEFINITION OF TAX PARTNERSHIP Bradley T. Borden* TABLE OF CONTENTS I. INTRODU CTION ...................................................................... 927 II. THE DEFINITIONS OF MULTIMEMBER TAx ENTITIES ............ 933 A. The EstablishedDefinitions .......................................... 933 B. The Open Definition: Tax Partnership......................... 936 III. HISTORY AND PURPOSE OF PARTNERSHIP TAXATION ............ 941 A. The Effort to Disregard................................................. 941 B. The Imposition of Tax Reporting Requirements ........... 943 C. The Statutory Definition of Tax Partnership............... 946 D. The 1954 Code: An Amalgam of the Entity and Aggregate Theories........................................................ 948 E. The Section 704(b) Allocation Rules and Assignment of Incom e ....................................................................... 951 F. The Anti-Abuse Rules .................................................... 956 * Associate Professor of Law, Washburn University School of Law, Topeka, Kansas; LL.M. and J.D., University of Florida Levin College of Law; M.B.A. and B.B.A., Idaho State University. I thank Steven A. Bank, Stanley L. Blend, Terrence F. Cuff, Steven Dean, Alex Glashausser, Christopher Hanna, Brant J. Hellwig, Dennis R. Honabach, Erik M. Jensen, L. Ali Khan, Martin J. McMahon, Jr., Stephen W. Mazza, William G. Merkel, Robert J. Rhee, William Rich, and Ira B. -
International Tax Policy for the 21St Century
NFTC1a Volume1_part2Chap1-5.qxd 12/17/01 4:23 PM Page 147 The NFTC Foreign Income Project: International Tax Policy for the 21st Century Part Two Relief of International Double Taxation NFTC1a Volume1_part2Chap1-5.qxd 12/17/01 4:23 PM Page 148 NFTC1a Volume1_part2Chap1-5.qxd 12/17/01 4:23 PM Page 149 Origins of the Foreign Tax Credit Chapter 1 Origins of the Foreign Tax Credit I. Introduction The United States’ current system for taxing international income was creat- ed during the period from 1918 through 1928.1 From the introduction of 149 the income tax (in 1913 for individuals and in 1909 for corporations) until 1918, foreign taxes were deducted in the same way as any other business expense.2 In 1918, the United States enacted the foreign tax credit,3 a unilat- eral step taken fundamentally to redress the unfairness of “double taxation” of foreign-source income. By way of contrast, until the 1940s, the United Kingdom allowed a credit only for foreign taxes paid within the British 1 For further description and analysis of this formative period of U.S. international income tax policy, see Michael J. Graetz & Michael M. O’Hear, The ‘Original Intent’ of U.S. International Taxation, 46 DUKE L.J. 1021, 1026 (1997) [hereinafter “Graetz & O’Hear”]. The material in this chapter is largely taken from this source. 2 The reasoning behind the international tax aspects of the 1913 Act is difficult to discern from the historical sources. One scholar has concluded “it is quite likely that Congress gave little or no thought to the effect of the Revenue Act of 1913 on the foreign income of U.S. -
The Revenue Act of 1934
March, 1935 THE REVENUE ACT OF 1934 GEORGE GRAYSON TYLER t AND JOHN P. OHL X Congress, probably inspired by the disclosures of the investigations of the Banking and Currency Committee, passed House Resolution 183, on June 9, 1933, thereby authorizing the Ways and Means Committee to in- vestigate methods of preventing the evasion and avoidance of taxes, means of simplifying the revenue laws and possible new sources of revenue. Pur- suant to this Resolution, a Subcommittee of the Committee on \Ways and Means conducted an inquiry prior to the convening of the second session of the 73d Congress. The Subcommittee filed "A Preliminary Report" ' on December 4, 1933, upon the subjects, of tax avoidance, evasion and sim- plification. In response to the Subcommittee's recommendations, the then Acting Secretary of the Treasury, Henry Morgenthau, Jr., issued a state- ment 2 differing in many important particulars from the conclusions reached by the Subcommittee. As a result of the above investigations, H. R. 7835 was introduced in the House and referred to the Committee on Ways and Means. After extensive hearings 3 the bill was reported out with amendments by the Com- 4 mittee and a report was submitted thereon. On February 21, 1934, the House passed the bill with minor committee amendments. 5 Then, having been introduced in the Senate, the bill was referred to the Finance Com- mittee, which, after further hearings,0 reported it 7 with substantial amend- ments. Further material changes were made on the floor of the Senate s before passage. Thereafter, the Conference Committee on the disagreeing votes of the two Houses made its recommendations reconciling the differ- j- Formerly assistant to Professor Roswell Magill, former assistant to the Secretary of the Treasury; member of the New York Bar. -
Taxnotes® Volume 152, Number 3 July 18, 2016 C a Nlss21.Alrgt Eevd a Nlssde O Li Oyih Naypbi Oano Hr at Content
taxnotes® Volume 152, Number 3 July 18, 2016 (C) Tax Analysts 2016. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content. Debt-Equity Controversy Echoes Entity Classification Debate By David F. Levy, Nickolas P. Gianou, and Kevin M. Jones Reprinted from Tax Notes, July 18, 2016, p. 363 SPECIAL REPORT (C) Tax Analysts 2016. All rights reserved. does not claim copyright in any public domain or third party content. tax notes™ Debt-Equity Controversy Echoes Although folks far more talented and influential than the three of us will undoubtedly write on Entity Classification Debate weighty topics such as the regulations’ validity, by David F. Levy, Nickolas P. Gianou, and their arbitrary nature, and so on, we thought it Kevin M. Jones might be interesting to explore one aspect of the proposed regulations not yet discussed: the para- llels between Treasury’s current approach on debt- equity classification and its initial approach (beginning in the 1920s) on entity classification. Although the questions may at first blush seem completely unrelated, whether a particular corpo- rate financial instrument is classified for tax pur- poses as debt or equity and whether a particular business entity is classified for tax purposes as a corporation or a passthrough are, from the perspec- David F. Levy Nickolas P. Gianou Kevin M. Jones tive of corporate tax policy, two sides of the same David F. Levy is a partner, and Nickolas P. coin. And given that Treasury’s initial pre-check- Gianou and Kevin M. Jones are tax associates, with the-box approach to entity classification proved to Skadden, Arps, Slate, Meagher & Flom LLP. -
The Dangers of Symbolic Legislation: Perceptions and Realities of the New Burden-Of-Proof Rules
Florida State University College of Law Scholarship Repository Scholarly Publications 3-1999 The Dangers of Symbolic Legislation: Perceptions and Realities of the New Burden-of-Proof Rules Steve R. Johnson Florida State University College of Law Follow this and additional works at: https://ir.law.fsu.edu/articles Part of the Law Commons Recommended Citation Steve R. Johnson, The Dangers of Symbolic Legislation: Perceptions and Realities of the New Burden-of- Proof Rules, 84 IOWA LAW REVIEW 413 (1999), Available at: https://ir.law.fsu.edu/articles/253 This Article is brought to you for free and open access by Scholarship Repository. It has been accepted for inclusion in Scholarly Publications by an authorized administrator of Scholarship Repository. For more information, please contact [email protected]. The Dangers of Symbolic Legislation: Perceptions and Realities of the New Burden-of-Proof Rules Steve R. Johnson* There is a growing political science and legal literature on the use of symbolism in the political and legislative process.' Tax law is a natural arena for such inquiry as tax law touches virtually every type of human in- teraction, is heavily value-driven, and is a perennial political battleground.' This article examines a recent tax law change-the enactment of new bur- den-of-proof rules in the summer of 1998--concluding that it is a perni- cious exercise in symbolic legislation. Burden-of-proof rules determine how much evidence a party must in- troduce at trial in order to prevail. In theory, a dispute-resolution system could operate without established burden-of-proof rules, but such a system would impose greater demands of perspicacity on its triers of fact and likely would be less predictable as to its outcomes? Thus, discussion and debate about what burden-of-proof rules should prevail have been part of our legal *Associate Professor of Law, Indiana University School of Law-Bloomington. -
Political Hot Potato: How Closing Loopholes Can Get Policymakers Cooked Stephanie Hunter Mcmahon
Journal of Legislation Volume 37 | Issue 2 Article 1 5-1-2011 Political Hot Potato: How Closing Loopholes Can Get Policymakers Cooked Stephanie Hunter McMahon Follow this and additional works at: http://scholarship.law.nd.edu/jleg Recommended Citation McMahon, Stephanie Hunter (2011) "Political Hot Potato: How Closing Loopholes Can Get Policymakers Cooked," Journal of Legislation: Vol. 37: Iss. 2, Article 1. Available at: http://scholarship.law.nd.edu/jleg/vol37/iss2/1 This Article is brought to you for free and open access by the Journal of Legislation at NDLScholarship. It has been accepted for inclusion in Journal of Legislation by an authorized administrator of NDLScholarship. For more information, please contact [email protected]. POLITICAL HOT POTATO: HOW CLOSING LOOPHOLES CAN GET POLICYMAKERS COOKED Stephanie HunterMcMahon* ABSTRACT Loopholes in the law are weaknesses that allow the law to be circumvented Once created, they prove hard to eliminate. A case study of the evolving tax unit used in the federal income tax explores policymakers' response to loopholes. The 1913 income tax created an opportunity for wealthy married couples to shift ownership of family income between spouses, then to file separately, and, as a result, to reduce their collective taxes. In 1948, Congress closed this loophole by extending the income-splitting benefit to all married taxpayers filing jointly. Congress acted only after the federal judiciary and Treasury Department pleaded for congressional reform and, receiving none, reduced their roles policing wealthy couples' tax abuse. The other branches would no longer accept the delegated power to regulate the tax unit. By examining these developments, this article explores the impact of the separation of powers on the closing of loopholes and adds to our understandingof how the government operates. -
James Couzens, Andrew Mellon, the “Greatest Tax Suit in the History of the World,” and Creation of the Joint Committee on Taxation and Its Staff
NYU/UCLA TAX SYMPOSIUM THE INTERNAL REVENUE CODE AT 100 OCTOBER 19, 2012 James Couzens, Andrew Mellon, the “Greatest Tax Suit in the History of the World,” and Creation of the Joint Committee on Taxation and Its Staff George K. Yin University of Virginia School of Law September 27, 2012 DRAFT Abstract In early 1924, James Couzens was a Republican Senator from Michigan and reportedly the richest member of Congress. Andrew Mellon was beginning his fourth year as Secretary of the Treasury — a service that would eventually span 11 years under three Republican Administrations — and one of the wealthiest persons in the entire country. This article describes how a feud between these two men, an ensuing investigation led by Couzens of the Bureau of Internal Revenue (BIR) (predecessor to the modern‐day IRS), and a tax case against Couzens that was described as the “greatest tax suit in the history of the world,” helped lead to creation of the U.S. Joint Committee on Taxation (JCT) and its staff. The events — filled with political intrigue, backstabbing (real or imagined), and unintended consequences — antagonized Congress’s relationship with the executive branch, but improved cooperation between the House and Senate, and both were instrumental in the JCT’s creation. The story also provides insight on the unique role the JCT has played in Congress for over 85 years. Finally, the article explains how creation of the JCT became entangled with two of the most contentious tax issues of the day — the publicity of tax return information and the depletion allowance for oil and gas production — and played a role in changing the law in both areas. -
Democracy in America at Work: the History of Labor's Vote in Corporate
Democracy in America at Work: The History of Labor’s Vote in Corporate Governance Ewan McGaughey* ABSTRACT Can there be democracy in America at work? The historical division between democracy in politics and hierarchy in the economy is under strain. Hierarchical interests in the economy are shifting their model of power into politics, and yet a commitment to revive the law is resurgent. Central examples are the proposed Accountable Capitalism Act, Reward Work Act, Workplace Democracy Acts, and Employees’ Pension Security Acts. They would create a right for employees to elect 40% of directors on $1 billion company boards, a right for employees to elect one-third of directors on other listed company boards and require one-half employee representation on single-employer pension plans. All challenge long held myths: that labor’s involvement in corporate governance is foreign to American tradition, that when codified in law, labor voice is economically inefficient; that the legitimate way to have voice in the economy is by buying stocks; or that labor voice faces insurmountable legal obstacles. This Article shows these myths are mistaken, by exploring the history and evidence from 1861. The United States has one of the world’s strongest traditions of democracy at work. Economic democracy has not been more widespread primarily because it was suppressed by law. Americans favor voice at work, while asset managers who monopolize shareholder votes with “other people’s money” enjoy no legitimacy at all. This Article concludes that, even without the federal government, and by recreating themselves as laboratories of democracy and enterprise, states can adapt the current proposals and rebuild a living law. -
1 United States District Court for the Southern District of New York State of New York, State of Connecticut, State of Maryla
Case 1:18-cv-06427 Document 1 Filed 07/17/18 Page 1 of 52 UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK STATE OF NEW YORK, STATE OF CONNECTICUT, Civil Action No. 18-cv-6427 STATE OF MARYLAND, and STATE OF NEW JERSEY, COMPLAINT FOR DECLARATORY Plaintiffs, AND INJUNCTIVE RELIEF v. JURY REQUESTED STEVEN T. MNUCHIN, in his official capacity as Secretary of the United States Department of Treasury; the UNITED STATES DEPARTMENT OF TREASURY; DAVID J. KAUTTER, in his official capacity as Acting Commissioner of the United States Internal Revenue Service; the UNITED STATES INTERNAL REVENUE SERVICE; and the UNITED STATES OF AMERICA, Defendants. INTRODUCTION 1. The States of New York, Connecticut, Maryland, and New Jersey (the “Plaintiff States”) bring this action seeking declaratory and injunctive relief to invalidate the new $10,000 cap on the federal tax deduction for state and local taxes (“SALT”). Congress has included a deduction for all or a significant portion of state and local taxes in every tax statute since the enactment of the first federal income tax in 1861. The new cap effectively eviscerates the SALT deduction, overturning more than 150 years of precedent by drastically curtailing the deduction’s 1 Case 1:18-cv-06427 Document 1 Filed 07/17/18 Page 2 of 52 scope. As the drafters of the Sixteenth Amendment1 and every subsequent Congress have understood, the SALT deduction is essential to prevent the federal tax power from interfering with the States’ sovereign authority to make their own choices about whether and how much to invest in their own residents, businesses, infrastructure, and more—authority that is guaranteed by the Tenth Amendment and foundational principles of federalism. -
Ajay K. Mehrotra Date: March 22, 2015 Re
INDIANA UNIVERSITY MAURER SCHOOL OF LAW Bloomington To: Participants of the Ostrom Workshop From: Ajay K. Mehrotra Date: March 22, 2015 Re: Workshop Paper and Presentation Thanks in advance for the opportunity to present, and get feedback on, the attached co- authored paper (with Steven Bank). This paper is an early draft of a chapter to be included in a manuscript for an edited volume on “The Corporation and American Democracy” (eds. Naomi Lamoreaux and Bill Novak). In my brief presentation time, I’ll elaborate on the larger project of which this paper is a part. One of the overarching themes of the edited volume is to explore the historical role of business corporations in the development of American democracy. As you’ll see, our paper attempts to contribute to that theme by investigating the relationship between corporate taxation and American democracy in the first half of the twentieth century. Steve and I would welcome comments and suggestions that can help us underscore the democratic aspects in the development of corporate tax laws and policies. Thanks. 211 S. Indiana Avenue Bloomington, IN 47405-7001 (812) 855-7443 Corporate Taxation and the Regulation of Early Twentieth-Century American Business Steven A. Bank UCLA School of Law Ajay K. Mehrotra Maurer School of Law & History Department Indiana University, Bloomington Please do not quote or cite without the authors’ permission. Thanks. Abstract: In the early twentieth century, the taxation of modern business corporations became increasingly important to the development of American democracy. During that time, governments at all levels began to view business corporations not only as sources of badly needed public revenue, but also as potentially dangerous wielders of concentrated economic power.