On July 22-23, Washington and Lee School of Law hosted a round table discussion of tax professors from the mid-Atlantic region. Professors from area law schools presented works-in-progress for comment and critique.
Participants included, Eric Chason (William and Mary), Michael Doran (University of Virginia), Michelle Drumbl (W&L), Brant Hellwig (W&L), Ruth Mason (University of Virginia), Gregg Polsky (University of North Carolina), and Ethan Yale (University of Virginia).
The event was sponsored by the Frances Lewis Law Center at W&L.
At the recent ABA Tax Section Mid-Year Meeting Washington & Lee Law Professor Michelle Drumbl participated in two distinguished panels.
The first panel, hosted by the Tax Policy & Simplification Committee on Friday January 24th, was entitled “The Role of the IRS in the Administration of Social Welfare Policy”. Professor Drumbl’s remarks focused on the administration of refundable credits and their unduly punitive impact on those taxpayers who make inadvertent errors when claiming these social benefits on their tax return.
The second panel was hosted by the Pro Bono & Tax Clinics Committee on Saturday January 25th. The panel was entitled “Eliminating Errors and Penalties in Tax Return Preparation” and Professor Drumbl addressed the erroneous refund penalty as well as the potential impact of the recently decided Rand v. Commissioner case on low-income taxpayers.
Learn more about Professor Drumbl’s scholarship here.
Prof. Michelle Drumbl of Washington & Lee has recently made available on SSRN her forthcoming article Those Who Know, Those Who Don’t, and Those Who Know Better: Balancing Complexity, Sophistication, and Accuracy on Tax Returns, 11 Pitt. Tax Rev. ___ (2014). Here is the abstract:
Refundable credits, particularly the earned income tax credit (EITC) and the child tax credit, serve an important anti-poverty measure for low-income taxpayers. Annually, millions of taxpayers who do not owe any federal income tax must file a tax return in order to claim these credits that are in the nature of social benefits. The eligibility requirements for refundable credits are complex, and these returns are particularly prone to audit: EITC audits comprise one-third of all individual income tax audits. Because of the large dollar amounts at stake, a taxpayer’s mistaken understanding of the eligibility requirements for these refundable credits can often result in a deficiency of several thousand dollars. Though studies indicate that taxpayer error is more commonly inadvertent than intentional, the section 6662 20% accuracy-related penalty applies once the deficiency reaches a statutory “understatement” threshold; it is imposed computationally and without regard to the taxpayer’s intent.
By statute, taxpayers have the right to contest the accuracy-related penalty by demonstrating that there was reasonable cause for the underlying error and the taxpayer acted in good faith. Treasury regulations provide that such a circumstance might include “an honest misunderstanding of fact or law that is reasonable in light of all the facts and circumstances, including the experience, knowledge, and education of the taxpayer”. Yet for all of these reasons – lack of experience, lack of knowledge, and relative lack of education – the taxpayer is unlikely to have the knowledge or resources to raise the very defense that is meant to protect an unsophisticated taxpayer.
Drawing comparisons between refundable tax credits and social programs administered by other agencies, this article calls upon the IRS to better differentiate between inadvertent error (“those who don’t know”) and intentional or fraudulent error (“those who know better”). The article argues that the current accuracy-related penalty approach is unduly punitive. It concludes by proposing solutions that the IRS might consider in light of Congress’s desire for the Service to administer these social benefits through the Internal Revenue Code.
On Oct. 4, Washington and Lee law professor and Tax Clinic director Michelle Drumbl presented her research into low-income/unsophisticated taxpayers and the return preparer industry at a symposium at the University of Washington. The title of her presentation was “When Helpers Hurt: Protecting Taxpayers from their Return Preparers.”
She addressed a similar topic in an article that is forthcoming in a symposium volume of the Pittsburgh Tax Review. The article is titled “Those Who Know, Those Who Don’t, and Those Who Won’t: Balancing Complexity, Sophistication, and Accuracy on Tax Returns” and focuses on unsophisticated taxpayers and refundable tax credits.
In addition, Prof. Drumbl participated in the Villanova Law Review symposium on Sept. 27. Her panel discussed concerns with the return preparer industry, the IRS’s efforts to regulate tax return preparers, and the legal challenge brought in the Loving v. Commissioner case, now on appeal in the DC circuit.
Washington and Lee School of Law Dean Nora Demleitner has announced the recipients of a number of annual faculty fellowships that recognize excellence in teaching and scholarship.
Prof. Michelle Drumbl directs the Tax Clinic and also teaches courses in Federal Income Tax. She received the Jessine Monaghan Faculty Fellowship for Teaching awarded to “recognize stellar teaching in the third year.”
Prof. Jill Fraley has taught Environmental Law, a new Environmental Practicum, a seminar on Law and Geography, and a small section of Property. She is the recipient of the John W. Elrod Law Alumni Fellowship in Teaching Excellence.
Prof. Brant Hellwig teaches a number of introductory and upper-level specialized tax courses. He is the recipient of a Law Alumni Faculty Fellowship for Teaching.
Christopher Bruner’s book Corporate Governance in the Common-Law World: The Political Foundations of Shareholder Power, published this spring by Cambridge University Press, examines shareholder influence and power that challenges popular wisdom and provides fascinating insights into the uniqueness of U.S. corporate governance. He is the recipient of the Ethan Allen Faculty Fellowship for Scholarship.
Jim Moliterno published his book A Profession in Crisis (Oxford) to great acclaim and also put out a new Civil Procedure book with West, designed to provide a new approach to the teaching of civil procedure in law school. He is the recipient of a Law Alumni Faculty Fellowship for Scholarship.
Ben Spencer continues to be a prolific scholar despite his new duties as director of the Lewis Law Center and Associate Dean for Research. His scholarly work on civil procedure has received increasing acclaim, and his latest article “Class Actions, Heightened Commonality, and Declining Access to Justice” appeared in the Boston University Law Review. He also authored an insightful commentary on the state of legal education in his magnum opus on The Law School Critique in Historical Perspective. He is the recipient of the Law Alumni Faculty Fellowship for Scholarship.
Tax Clinic: Making Peace with the IRS
Many Virginians are heaving a sigh of relief after getting tax returns done and in the mail, but for some the challenge of paying taxes as just begun.
They’re the ones who get notices from the IRS. At the very least, that’s an annoyance, and for some it’s a nightmare, but free help could be a phone call away.
Every state has at least one federally-funded office to help people having trouble with the Internal Revenue Service. In Virginia there are two: the Community Tax Law Project in Richmond and the Tax Clinic at Washington and Lee’s School of Law.
The clinic provides services at no charge to anyone who qualifies.
To hear WVTF’s report on the clinic, click here.
Every year, the faculty at W&L Law convene to share current scholarship and provide feedback to one another. Last week, seven faculty presented their papers and invited discussions, criticism, and suggestions for improvement. The presenters were as follows:
- Josh Fairfield: “Virtual Currency: How to Print Money for Fun and Profit”
- Aaron Haas: “The Marginalization of Religious Persecution in U.S. Asylum Law”
- James Moliterno: “Lawyer Regulation and Innovation”
- Robin Wilson: “Calculus of Accomodation”
- Doug Rendleman: “The Last Tour of Calabresi and Melamed’s Cathedral You Need to Take”
- Michelle Drumbl: “Decoupling Marriage and Taxes: Beyond Innocence and Income Splitting”
- Tim Jost: “The Affordable Care Act Litigation”