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AN EVALUATION OF A UNIVERSITY-BASED, PRO BONO TAX SERVICES PROGRAM FOR LOW-INCOME TAXPAYERS
The purpose of this study was to examine whether accounting students who provide pro bono representation to low-income taxpayers facing a dispute with the Internal Revenue Service (IRS) experience significant increases in motivation to offer pro bono representation of low-income taxpayers in the future and whether these students perceive an enhanced proficiency in relevant accounting clinical skills. The design for this study was a pretest/posttest, quasi-experimental research model. The treatment group (n=45) was comprised of accounting students enrolled in a service learning senior-level accounting course (federal tax procedure) where students are expected to represent low-income taxpayers facing a dispute with the IRS. The control group (n=33) was comprised of accounting students enrolled in a senior-level accounting elective course with no service learning component.
Independent samples t-test and ANCOVAs were run, comparing treatment group students and control group students, based on posttest answers to questions regarding motivations for involvement in volunteer activities (while controlling for pretest scores). Results indicated that the treatment group reported significantly higher self-perceived competence in providing tax dispute resolution services than the control group. While results indicated that the students in the service learning project seemed to have gained competence in working with low-income taxpayers in tax dispute resolutions, as well as perceived enhanced proficiency in relevant key clinical skills, no significant differences between the two groups on any of the motivations to volunteer at posttest, after controlling for pretest scores, were detected. No significant differences were found between the two groups with regard to attitudes for helping others at posttest, after controlling for pretest scores. Furthermore, no significant differences were found between the two groups regarding self-efficacy toward service at posttest, after controlling for pretest scores. The results make a significant contribution to the literature by illustrating that mere exposure to a service learning experience in the context of tax dispute resolution does not necessarily cause students to experience significant gains in motivation to offer pro bono representation of low-income taxpayers in the future.
|John M. Balian, Rafael Efrat, Scott W. Plunkett, Steven L. Jager, & Hector M. Nolasco|
PROPOSED COMPUTATIONAL FRAMEWORK FOR INTERNAL REVENUE CODE § 199A
Among the changes introduced by the Tax Cuts and Jobs Act (TCJA) is the addition of § 199A, which is effective for taxable years beginning after 2017 and before 2026. Section 199A allows individuals and certain other non-corporate taxpayers a deduction of up to 20 percent of “qualified business income” (QBI) from a partnership, sole proprietorship, or S corporation. Such taxpayers can also deduct under § 199A up to 20 percent of their aggregate qualified REIT dividends, qualified publicly traded partnership income, and qualified cooperative dividends. This deduction is intended to reduce the tax burden on flow-through business income such that the tax burden is closer to that imposed on corporate income at the reduced federal corporate income tax rate of 21 percent enacted by the TCJA. Given the numerous definitions and phase-ins and phase-outs in § 199A, however, the reduction of the tax burden comes at the cost of much complexity and uncertainty. This Article proposes a general framework, or step-by-step approach, for computation of the deduction under § 199A.
TO “NET VALUE” OR NOT TO “NET VALUE”? THAT IS THE QUESTION: A DISCUSSION OF THE PROPOSED NET VALUE REGULATIONS—THEIR PURPOSE, UTILITY, AND FUTURE
In decisions dating back to the 1940s, courts have held that certain transactions in which property exchanged does not have net positive value do not rise to the level of tax-free exchanges. On the other hand, in decisions going back almost as far, courts have blessed the character of other transactions as tax-free, despite the absence of net value in these exchanges. Over the last few decades, these apparently inconsistent rulings have led to controversial questions:
The question as to whether a transaction in any of the above situations is nontaxable arises from the fact that the underlying property in the exchange is burdened by liabilities that exceed its fair market value. Nonrecognition transactions are premised on “exchanges” that leave the taxpayer in substantially the same position as before the exchange. Courts have addressed whether a transaction in which something of net positive value is not given or received qualifies as an “exchange.”
In 2005, through proposed regulations, the Department of the Treasury and the Internal Revenue Service (IRS) took the position that transactions that do not involve exchanges of property with net positive value are not “exchanges” and thus do not qualify under nonrecognition provisions. Twelve years later, the proposed regulations were suddenly withdrawn.
This article explores court decisions on the application of corporate nonrecognition transactions involving insolvent entities and IRS rulings based on those decisions. More significantly, the article explores the proposed regulations on net value, their potential impact on various types of transactions, and the potential consequences of their withdrawal.
TAX RETURN REFORM: ENTITY-SPECIFIC FIDUCIARY INCOME TAX RETURNS WOULD BRING SUBSTANCE TO THE FORM
The Tax Cuts and Jobs Act (the Act) is Congress’ most recent attempt to simplify our tax system. Even if the Act’s catch phrase promise to “file a return on a postcard” is more hyperbole than reality, it is a rallying cry for an equally important aspect of tax reform–tax return reform. Comprehensive tax reform can only be achieved through a combination of simplifying the Internal Revenue Code and the implementing tax forms. Tax forms and instructions are often poorly designed and disorganized, rendering time-efficient and accurately prepared returns problematic. This includes Form 1041, the two-page fiduciary income tax return for nine entities accompanied by 42 pages of disjointed instructions. On all levels, the form misses the mark because (1) too many entities subject to different tax rules use the form; (2) line items and instructions are not consistently sequential; (3) relevant guidance is not easily accessible to the tax return preparer as it is often scattered illogically throughout the instructions; and (4) the information provided in the instructions is often lacking, incomplete, and misleading. To address these inadequacies, this article advocates meaningful tax return reform by which the Internal Revenue Service (IRS) replaces the “one size fits all” Form 1041 with four entity-specific forms and accompanying instructions focused on each type of entity. If the IRS adopts the forms presented in conjunction with this article (or similar versions), the improved forms would be a boon to time-efficient, accurate tax return preparation–a worthy goal of tax return reform.