Clients to Lawyers: We Don't Understand You

A member of the ABA-TAX listserve passed along a chart that reflects the outcome of a 2006 survey of lawyers' affluent clients taken by a Prince and Associates, Inc., a group that advises professional organizations and other businesses on "strategic, profitability, and structural business issues."

The survey was a repeat of one done three years earlier, in 2003. In every instance, attorneys did worse. The percentage of respondents agreeing that "My attorney talked down to me" rose from 31.6% to 46.2%. The percentage concluding that their "Attorney didn't speak English" rose from 70.1% to 81.7%. The clients who were surveyed are described as affluent, and it would not be a wild guess to conclude that most of them are educated or highly educated, successful in their fields, and savvy about many things in life. Yet they struggle to understand what their attorneys are saying.

Although law schools do relatively good jobs teaching their students some things, it is no surprise to discover that they are not teaching their students to communicate effectively with clients. Aside from clinical programs, where the effectiveness of communication with clients ranges from barely acceptable to outstanding, law schools generally do not give their students much, if any, instruction in how to "translate" legal-ese into language that the client can understand.

It is not all that difficult to focus student attention on decongesting legal language. I try, by making it clear to the students at the beginning of the semester that one of the goals of the course is to learn how to take statutory or regulatory language, or the messages in a judicial opinion, and to express the meaning in a way that can be understood by the typical client. It is not unusual to hear me or a student begin a statement or question with the phrase, "so in other words," as we try to speak in language one is more likely to hear outside of the legal world. Yes, there are limitations, particularly when a technical word or phrase cannot be replaced with some less complicated expression. Frequently, I ask students what they would say to a client, and I expect the response to be presented in language that would be effective under the circumstances.

There are several factors that contribute to this communication gap between lawyers and clients. It ought not be difficult to make adjustments that diminish the effect of these factors.

For one thing, many students arrive in law school thinking that being a lawyer means speaking and writing in long, complex sentences using fancy words that make for good sound bites. Years ago, in assisting a student learn to read judicial opinions, I noticed that the student was highlighting in yellow the sentences in the opinion that "sounded elegant," rather than those that addressed the core issues. Students think that if they pepper their writing with "heretofore," "whomsoever," "party of the first part," and similar words and phrases, they will be considered excellent legal writers. Some effort is made to break students of this habit, but it isn't done often enough, or strongly enough.

For another thing, the people who evaluate law student writing are lawyers or other law students. Student writing is evaluated by law professors, almost all of whom at one point in their professional lives were members of a bar and many of whom dealt with clients. Student writing also is evaluated by practitioners who volunteer to judge moot court arguments and the related briefs, or, in some instances, writing competitions. Student writing is evaluated by other students charged with selected members of law journals, and by students serving in editorial positions on those journals or in reviewer positions in organizations administering moot court and other competitions. When students write client letters or memos, rarely, aside from clinics, are those documents given to a non-lawyer who is asked, "Does this make sense to you?"

Yet another challenge is the experience that students bring to law school. Many law students have spent their lives communicating with people who share, to a greater or lesser extent, their culture, language, intelligence, and experiences. Unless a law student has devoted several or more years to being a teacher, a social worker, or someone who interacts with people not accustomed to using long words, speaking in complex sentences, or juggling three or more thoughts simultaneously, the law student very likely does not understand why it is necessary to adjust one's word choice, sentence structure, and message organization to fit the comprehension and vocabulary levels of a client.

Yet another problem is the tendency of law students to think that lawyers simply regurgitate black letter law when communicating with someone else, whether client, partner, or judge. Many law school courses and examinations reinforce this counterproductive perspective. The goal of a law student is to become a teacher. As I point out in Learning to Teach and Teaching to Learn:

The lawyer who as an associate writes a memo to a partner on a particular point of law is TEACHING the partner.

The lawyer who argues a case in front of a judge or panel of judges TEACHING the judges.

The lawyer who counsels or advises client with respect to particular course of action is TEACHING the client.

The lawyer who negotiates a deal with counsel for the other party is TEACHING the other lawyer.

The lawyer who represents a client at a hearing or administrative proceeding is TEACHING the administrative law judge or other hearing officer.

When a lawyer becomes managing partner, the lawyer will be TEACHING the law firm's staff.

When a lawyer becomes a judge, the judge will be TEACHING the jury, the litigants, the attorneys representing them, and society in the opinion she writes.
When a lawyer becomes in-house counsel, the lawyer will be TEACHING the officers and directors of the corporation.

With memoranda, oral arguments, briefs, petitions and other tools of the profession, lawyers seek to explain, to convince, to demonstrate and to unravel things. Those are some of the things that teachers do. It isn't difficult to see that a good lawyer must be a good teacher.

Good teachers know how to communicate not only knowledge but also comprehension, and good teachers know how to adjust their delivery and approach to match the education and experience of their students. Whether law schools are doing enough to teach their students to be teachers is a volatile question, particularly when one considers the extent to which law school faculty are, or are not, educated to be educators.

By the time lawyers realize that their inability to communicate well with clients can cost them money, either on account of losing clients or because additional time must be invested to explain things again but in a less confusing way, it is too late for them to redo their law school education experience. Instead, they must seek continuing education of some sort, whether in a program direct towards lawyers or in communication courses at a local college or university. Few lawyers do this, in part because they don't have the time, in part because they don't see the connection between such courses and the success of their practice, in part because few such courses are offered in CLE programs, and in part because CLE credits aren't approved for taking such courses in a college or university setting. Yet this is no reason not to adjust law school curriculum so that attention is given to how law students learn to communicate with clients and not merely other professionals with law degrees.

I close with a footnote. Last week, in You Are A Genius!, TaxProf blog reported that according to the Blog Readibility Test, "the level of education necessary to understand" MauledAgain was "High School." I ran the test later that day, and it reported that the requisite level was "College (Undergrad)." In his comment to the TaxProf blog post, Martin B. Tittle explained that he, too, had run MauledAgain through the Blog Readibility Test and "to "College (Undergrad)" after today's TaxProf Blog post." Of course, I wonder if that's an upgrade, if the goal is to write in a manner that maximizes the number of people who can read and understand what I'm saying.

Tittle also ran MauledAgain through a variety of readability tests accessed through Readability.Info, a URL he acquired from Dan Solove's Concurring Opinions blog, which was the source of Paul Caron's TaxProf blog post. Here are the results obtained by Tittle:

Kincaid: 9.9
ARI: 11.1
Coleman-Liau: 11.6
Flesch Index: 62.0
Fog Index: 12.8
Lix: 44.7 = school year 8
SMOG-Grading: 11.3

I ran the same test a week later. The results?

readability grades:
Kincaid: 9.6
ARI: 10.7
Coleman-Liau: 11.3
Flesch Index: 63.6
Fog Index: 12.6
Lix: 43.5 = school year 7
SMOG-Grading: 11.1
sentence info:
37605 characters
8177 words, average length 4.60 characters = 1.44 syllables
392 sentences, average length 20.9 words
51% (201) short sentences (at most 16 words)
18% (74) long sentences (at least 31 words)
5 paragraphs, average length 78.4 sentences
11% (44) questions
45% (178) passive sentences
longest sent 146 wds at sent 384; shortest sent 1 wds at sent 33
word usage:
verb types:
to be (261) auxiliary (141)
types as % of total: conjunctions 5(419) pronouns 7(590) prepositions 11(906) nominalizations 2(167)
sentence beginnings:
pronoun (77) interrogative pronoun (18) article (57)
subordinating conjunction (19) conjunction (12) preposition (36)

According to the info page on the site, the Flesch Index uses a 1-100 scale, with "standard English documents" averaging 60-70. SMOG-Grading and Fog Index scores are school grades.

Isn't there something bizarre about the results, though? Does MauledAgain have, on average, 78-sentence paragraphs? Nonsense. Something's wrong with the measurement algorithm.

Yes, I'm proud of these results. Why? It is a challenge for me to keep my sentences short, my paragraphs brief, and my word count manageable. It is a challenge to keep all the thoughts in my brain from tumbling out in one huge and complex bundle of verbosity. My experience writing Tax Management Portfolios, which I often describe as "translating tax-ese into English that professionals can understand," has made me a better writer and has sharpened my ability to communicate.

Now, if someone wants to have fun, they can test the articles and other documents I have written in Latin, French, and Italian. There, we might have something of a communication challenge.

A Few Tax Courses Do Not a Tax Program Make

On Monday I received a letter from the folks at U.S. News and World Reports, asking me why I had not returned the rankings survey they had sent several weeks ago. The answer to that question is simple. I had not received a survey during the past year. I did receive one last year, and the year before that, and I'm beginning to think about changing my response strategy.

The survey is intended to provide information on U.S. News rankings for law school tax programs. One of the categories for which the magazine ranks law schools is "Law Specialties: Tax Law". The survey refers to tax programs.

Here's one of my peeves with the survey, aside from the general futility of trying to rank tax law programs the way people try to rank major league pitchers, college football teams, or "beautiful people" for other magazines. The survey includes every law school in the country. It does not limit the choices to law schools with tax programs. Why does that matter? It matters because many law schools do not have tax programs. They simply offer one, two, or perhaps three or four, tax courses to their J.D. students. In a few instances the courses are taught by adjunct faculty rather than members of the full-time faculty. Yet because the school's name is famous, the school ends up getting votes for a program that does not exist. The appearance of a few tax courses in a J.D. curriculum does not make a tax program.

What I have been doing is eliminating from contention any law school without an LL.M. (Taxation) Program. Then I select 6, rather than the requested 15, schools. Why 6? Because there are 6 that I consider to be top-notch, though admittedly with some differences among them. The U.S. News survey does not ask me to rank my choices. That, too, is a deficiency in its survey process, and contributes to my decision to limit my selections.

I wrote a note to U.S. News when I returned the survey. I wrote it on the letter that I received. I pointed out that I had not received a previous request and thus ought not to be presumed a laggard in responding. I also pointed out, in fewer words, what I'm sharing in this post. Fewer words? Yes. As thorough an explanation? No.

But now I'm beginning to think that I will no longer fill out the survey. I will return it, so that the folks at U.S. News understand that I'm not being an ignorant, unresponsive fool. I will probably send along a copy of this post. If I am asked to do a survey for the general law school rankings, which has happened once in my teaching career, I'm thinking I will do the same thing, though I'd send along copies of other posts that deal more directly with law school rankings generally.

It reminds me of an old joke that includes this line, "So, who do you think is going to win the World Series this year, the Yankees, the Dodgers, or the Celtics?" Something like that. I can't remember the punch line. But I think U.S. News has come up with an even better joke. Hey, any chance of me being on the NFL Pro Bowl ballot?

When Congress Can't Do Things On Time

It's the time of the year when I begin preparing my spring semester courses. That's a long story in and of itself, which someday I will tell so that those who think it's a matter of assigning readings from a book can understand that there is much, much more to the process. My checklist for one of the spring 2008 semester tax courses has 26 major steps to process.

One of the things that must be done is to download relevant tax forms so that they can be made available to students. I provide the forms not for the purpose of teaching students how to fill them out, but to give them a sense of how complex tax provisions are reflected in complex forms. I want them to see what happens when conceptual and theoretical ideas enter the tax law and then need to be translated into something useful to taxpayers and tax administrators.

The spring 2008 tax course materials should include the 2007 forms. When I went to the IRS web site, I discovered that the 2007 forms are not ready. I didn't expect that they would be, but I figured I'd check just in case they were. No matter, I'll check again in a few weeks. My guess is that the forms will appear just as the school is closing for the semester break. The finalization of the course materials will wait until mere days before classes begin.

Or perhaps the forms won't be ready in time for the beginning of classes. This year, as has happened more than occasionally in the past, the IRS is in a conundrum. To have forms ready for mailing and other distribution at the start of tax season, the design process must begin in the fall, and the form proofs must be ready for the printer by mid-November. The IRS must crank out hundreds of different forms, thanks to the many complexities that Congress has jammed into the tax law. So it's not as though all of the forms can go to the printer on the same day. In a well-managed system, forms are generated and sent to the production side of things in a steady sequence of incremental steps.

According to a letter from the Treasury to several Senators, if forms are not finalized by November 16, whatever forms have been printed must be "pulped, pulped, re-printed, and re-mailed at a substantial cost to the taxpayers." One might ask why any forms are printed until the Congress finishes its legislative tinkering, and the answer is that under such an approach the printing of forms could not begin until January, assuming Congress does not return for a special session. It is totally inefficient for the Congress to wait until the last minute to deal with tax changes that affect form design and printing, but in its defense, Congress is acting as do most Americans and most students, namely, adhering to the principle that things should be done at the last minute. As one might guess, I'm not that sort of person. I learned early in life that if one plans to prepare for a Tuesday class on Monday, something will happen on Monday to prevent the preparation. That doesn't bode well for the Tuesday class, and because I owe it to my students to be prepared, I think ahead and give myself some "cushion" time.

When Congress delays tax legislation until very late in the year to which it applies, or even until early in the following year, it does more than just wreak havoc for the IRS forms designers and producers. It makes tax planning impossible. It causes the risk of noncompliance to grow. It increases the odds that a taxpayer will pay more tax than the taxpayer ought to pay. In short, it causes chaos.

Defenders of the status quo claim that this is how the system works, that people have learned to cope with it, that members of Congress have so much to do that it is unrealistic to think that they could do any better than they are. This is nonsense. Nothing in the law requires this sort of bad planning and retroactive tinkering. Unfortunately, nothing in the law requires competent planning, thoughtful consideration of late legislative actions on citizens and federal agencies, or efficient time management and project planning.

It is tempting to propose a Constitutional amendment that restricts legislation to prospective application. There are two flaws in such an approach. One is that it shuts the door to genuine emergencies when, for example, an increase or decrease in revenue needs to take effect for the current or preceding year in response to an economic or military crisis. The other is that a change to a flawed provision ought not be limited to future years simply because it took time for the flaw to be discovered, for the remedy drafted, and for the advocates for repair to find sufficient votes. It is frustrating, of course, that almost every lobbyist-generated tax law change is marketed to the Congress as a response to a genuine emergency when, in fact, it's nothing of the sort.

The latest uncertainty arises from the inability of the Congress to fix the alternative minimum tax. Or, more precisely, it arises from the inability of the Congress to turn its attention in a timely way to the question. The problems with the AMT are not new and did not surface yesterday. The problems have been growing during the past few years, and they were predicted by tax experts even earlier. The need to repair the AMT is not an emergency like the devastation of a hurricane. It is not sudden and unexpected. It is not the product of uncontrollable nature but the result of bad planning and design by the very institution, the Congress, that now stumbles to clean up its own failures.

Could a "prospective only" rule be crafted that allowed for retroactive legislation under specified circumstances? Probably, though the lobbyists again would try to define those circumstances so as to preserve their opportunities to push through retroactive legislation.

Would such a rule work? I doubt it. Such a rule doesn't address the underlying problem. Unless there were some provision prohibiting the election to Congress of procrastinators, people lacking in time management skills, folks who are inconsiderate of others, and individuals who put the interests of specialized groups above the interests of the nation, the problem facing the IRS and taxpayers as the 2007 tax return filing season approaches will continue to trouble the country for a long time.

A prospective only rule would make the AMT problem worse. It would prevent the Congress from fixing the problem in time for the 2007 tax year. So perhaps a different sort of rule is required. Perhaps the Constitution ought to provide that until the Congress finishes its work, no member is permitted to return home to campaign or to engage in campaign fund-raising. Members of Congress need to learn that they were elected to serve, not to devote substantial amounts of energy to preparing for, and seeking, another term. If they want another term, then they can earn it by doing their job in a timely and competent way, for which a reward can be re-election. Voters, though, need to stop re-electing members of Congress because of yet more promises likely to go unfulfilled or because of favors granted. Perhaps a practice used in many other organizations would make sense, namely, after serving a term (or perhaps two in the House), a member must stand down for one or two terms before being again eligible to return. That sort of rule might encourage members of Congress to focus on their legislative work.

It's not just the tax law that is affected, though that is the area with which I am most familiar. It's a problem that affects every area of federal law, and that has manifested itself on several occasions in the partial shut-down of the federal government. It's a problem that makes one wonder where Congress has its scheduling priorities.

So don't panic when you cannot find tax forms later this year or even in January. Do, however, be certain that you have the most recent version. And then hope that the forms aren't changed yet again after you file your 2007 return. Yes, that has happened. Yes, it can happen again.

Do Profitable Companies Need Tax Breaks?

When legislators start tinkering with tax laws to provide special breaks to a few individuals or businesses that fit narrow definitions, they introduce or exacerbate the fundamental unfairness inherent in these sorts of provisions. On Thursday, Governor Corzine of New Jersey vetoed legislation that would have tripled the tax credit available to companies based in New Jersey for creating digital content. According to this story, the tax savings would have benefitted, and was the subject of lobbying by, outfits such as Cisco Systems, NBC Universal, and the Walt Disney Co.

The governor's rationale for the veto is that the state's huge budget deficit ought not be increased by this sort of tax break. In New Jersey, a governor's veto can be conditional, so the legislature can accept the governor's proposed change to the credit without doing anything to the other provisions in the legislation. Whether the veto is overridden by the legislature remains to be seen.

The sponsor of the bill expressed disappointment and argued for a veto override. He characterized the provision as a "strong case" for rejecting the governor's objections. If this is the best "strong case" that the legislator can identify, something is terribly amiss in how the New Jersey legislature crafts tax laws. But, in all fairness, if it's using the federal Congress as a role model, it's no surprise.

Technically, the vetoed bill would make a tax credit currently available to film production companies available to businesses that create digital media. I have two questions. First, why are the film companies getting this tax break? Second, why should the tax break be extended to companies that create digital media?

This isn't the first time that I've questioned the wisdom, fairness, and appropriateness of tossing tax breaks at individual companies or industries. In Tax Breaks, Politician Takes, I pointed out that legislators often cave in to threats by businesses to go elsewhere, even when those threats aren't much more than negotiating bluffs. My objections to the insertion into the tax law (or any other law) of tax breaks targeted at one or a few taxpayers are well known. The reasons for my objections are magnified when one considers that at least most of these provisions are drafted by lobbyists paid by these taxpayers to "persuade" a legislature to enact them.

Tax breaks targeted to large groups of taxpayers whose need for the tax break arises from situations beyond their control can be defended. The casualty loss deduction, extensions for disaster victims of the due date for tax returns and other items that must be filed with a revenue agency, and similar breaks are wise, fair, and appropriate. In contrast, reducing the tax bills of large corporations that are making significant amounts of money makes sense only if one thinks that the rich should get richer while public revenues are reduced, causing cutbacks in services, larger deficits to be paid by upcoming generations, some combination thereof, or foreclosure by other nations and investors in other nations who are supplying the dollars used to finance the deficits generated in part by the awarding of tax breaks to profitable companies. A disaster victim might starve without a casualty loss deduction, but the Walt Disney company isn't going to go bankrupt because it doesn't get a tax break from New Jersey. My guess is that the tax departments of corporations, called to generate net income as are the operating departments, have adopted a money-seeking plan that involves getting each state and the federal government to reduce its taxes. Because corporations do their profit computations annually, they will come back, year in and year out, seeking yet more in the way of public handouts.

If the New Jersey legislature overrides the governor's conditional veto, perhaps he will have the good sense to veto the bill straight up. In doing so, he ought to make it clear to the citizens of New Jersey why he has done so, and what the legislature is doing. I can't imagine that more than a few New Jerseyians are in favor of higher taxes on themselves, reduced services, increased deficits, or financial surrender so that a few digital media companies can enlarge their post-tax bottom lines.

How to Fix a Broken Tax System: Speed It Up?

According to a Philadelphia Inquirer story on Tuesday, the Philadelphia Board of Revision of Taxes has reacted to the fuss about the $250,000 assessment on state senator Vincent Fumo's mansion listed for sale at $7,000,000 by deciding it "would more quickly reassess Fumo's house and other similar properties." The acceleration means that the assessors would begin their work in January rather than in the spring.

The disarray afflicting the Philadelphia real property tax assessment process has been the subject of four previous posts: An Unconstitutional Tax Assessment System; Property Tax Assessments: Really That Difficult?; Real Property Tax Assessment System: Broken and Begging for Repair; and Philadelphia Real Property Taxes: Pay Up or Lose It. Perhaps five is the magic number.

The Board has identified about 100 properties that have not been reassessed because its computer program cannot find comparable properties to use for valuation purposes. Its assessors will do the valuation manually. Ought that not have been done some time ago? A spokesperson for the Board indicated that no decision had yet been made on disclosure of the addresses of the roughly 100 properties, because that might violate the owners' privacy. How? The existence of the properties, their addresses, the names of the owners, the assessed value, the history of previous sale prices, and the amount of debt secured by mortgages on the properties are a matter of public record. I don't see an invasion of privacy if these properties are identified. If nothing else, it will assist those trying to fix the assessment system by revealing patterns of inadequate assessment practices.

The spokesperson for the Board admitted that the acceleration "would have little practical effect." With or without the acceleration, the earliest that a reassessment on Fumo's property can go into effect is 2009. In Real Property Tax Assessment System: Broken and Begging for Repair, I pointed out why Fumo's property ought not be reassessed on the basis of an asking price, because asking prices are just that, namely, indications of desire and not necessarily of value. So my question is this: How does speeding up the process, broken as it is, solve the underlying problem? If an automobile has a broken part, does it make sense to drive it faster? If a person sprains an ankle while running, is the solution to run faster?

It makes sense to accelerate the process of fixing the broken tax assessment process. It makes little sense to accelerate use of the broken process. At best, the latter course of action makes it appear to the uninitiated and uninformed that "something is being done." If the something that is being done doesn't solve the problem, those doing it ought not get credit as problem solvers. If anything, the acceleration of the use of the broken process makes it even more difficult to get people to focus on what needs to be done, which is a repair or replacement of the ineffective and inefficient tax assessment process in Philadelphia.

The Philadelphia Inquirer story that broke the news about the Board's decision to accelerate the process comes with this headline: Fumo home tax leads to change. I'm guessing that there were space restraints, because the headline should read: Fumo home tax leads to meaningless change.

Congress and Tax Audits: Criticizing Others for Its Own Mess

It has taken a few months, but the IRS announcement in June that it was restarting its compliance audit program is now getting attention, as taxpayers begin to receive letters telling them that they have the honor of being selected for what I tell my students is the nightmare of all audits. According to tax lawyer Ian Comisky, quoted in this Philadelphia Inquirer story, and referring to the 13,000 taxpayers selected for the process, "You don't want to be one of those 13,000." Indeed. It is gratifying to learn that a practitioner has the same perspective that I have and that I share with my students.

Most IRS audits are reactive. The IRS computer system or a human reacts to a discrepancy between two items on a return or between the return and external information such as a W-2 or Form 1099. One need not be a tax expert to wonder about a return that shows $30,000 in gross income, $15,000 in charitable contribution deductions, $10,000 in mortgage interest deductions, and $10,000 in state and local income and property taxes. It could turn out to be fine, because the taxpayer might have $300,000 of tax-exempt interest income. Or it could turn out not to be fine. The point is that returns selected in this manner usually do have problems, at a rate high enough to make it worthwhile for the IRS computer or a human to flag them for audit.

In a compliance audit, the IRS isn't reacting to a possible problem on a return. Instead, the IRS is trying to get a picture of how well the return filing process is working, and, to a lesser extent, how well its own audit process is faring in identifying the markers for flagging returns. Thus, the IRS does not restrict its attention to returns with possible problems, but to a representative cross-section of tax returns, including those that are in perfectly good shape. What the IRS is trying to determine is what percentage of returns have errors with respect to each of the many thousands of different items that can show up on an income tax return. As the results from compliance returns filter in, the IRS adjusts its flagging process so that more attention is paid to returns that report items with high error rates and less attention is paid to returns that report items with low error rates.

What is so different about a compliance audit? First, the odds of being selected don't depend on the extent a return flouts the tax law, shows obvious errors, or is likely to generate additional revenue after examination. Second, the IRS requires the taxpayer to provide documentary proof of every item on the return, starting with the taxpayer's name and social security number, through the names and taxpayer identification numbers of dependents, all the way to each item of income or deduction reported on the return. Third, according to tax professionals who have handled compliance audits, they are far more stressful and intimidating than regular audits. Fourth, the process takes time. A lot of time. Unlike an audit that zooms in on one or two items and that can be finished in 30 minutes, an hour or even half a day, a compliance audit can take a week or even two weeks, or as many as six months if the return shows many items. Fifth, the compliance audit, being an event to which a taxpayer ought not go alone unless he or she is a tax master, requires the expenditure of several thousand dollars or more to retain a tax advisor to assist during the process.

In short, compliance audits are a royal pain. But they are necessary, because there is no other practical and more efficient way to gather the information that the IRS needs to select returns for regular audits. Next year, even more taxpayers will be chosen for this ordeal.

It has been a long time since the IRS conducted full-scale compliance audits. Responding to taxpayer complaints, the Congress suspended the audits. Experts predicted that IRS regular audits would become less effective, because the IRS would be designing audits with outdated information. Years of increasing audit inefficiency and bloated federal budget deficits persuaded the Congress to let the IRS resume the compliance audit program.

The chief reason that the compliance audit is a time-consuming, aggravating, expensive, pervasive, and totally annoying experience is that the IRS has thousands of different items to sample and analyze. Each time the geniuses in the Congress add another credit or deduction to appease some special interest group or to reward some constituency, it adds another opportunity for tax cheats, con artists, and tax shelter designers, who are not the intended beneficiaries of this legislative largesse, to siphon tax revenue from the system. Since the IRS last conducted full-fledged compliance audits, Congress has added dozens, if not hundreds, of new deductions, new credits, modified deductions and credits, limitations on deductions and credits, gross income exclusions, and other "goodies" to the tax law. As bad as compliance audits once were, these will be worse. And yet the Congress, which created the things that make compliance audits necessary, continues to make them worse while all the while pointing fingers at the IRS and asking why the IRS can't make things better. Advice for the Congress: borrow some mirrors and look into them.

To all who are selected for a compliance audit, I extend my sympathy. And I invite all who are selected for a compliance audit to join in the effort to simplify the tax law, and to subscribe to the notion that the tax law mess is primarily the responsibility of the Congress and not the IRS. For whatever blunders the IRS has committed, they pale in comparison to the atrocious legislation spewing from the Congress during the past 20 years.

Philadelphia Real Property Taxes: Pay Up or Lose It

Real estate property taxes have grabbed the spotlight in Philadelphia and it doesn't appear as though they are willing to exit anytime soon. I tackled the issue in An Unconstitutional Tax Assessment System, again in Property Tax Assessments: Really That Difficult?, and yet again in Real Property Tax Assessment System: Broken and Begging for Repair. Now, according to this Philadelphia Inquirer story, the City of Philadelphia has commenced litigation against property owners who are in arrears on their real property tax bills. The total amount claimed to be owed exceeds $3,600,000.

The list of people being sued by the City of Philadelphia includes some familiar names. One, former heavyweight champion Joe Frazier, is known throughout the world. The gym he runs, according to the Board of Revision of Taxes, owes almost $130,000. Even more is said to be owed by The Wynnefield Community Resource Center, which is being sued for more than $300,000.

There are attorneys on the city's list of delinquent taxpayers. One is accused of owing more than $80,000 and another, who ten years ago confessed to embezzling more than $100,000 in federal funds, reportedly owes more than $75,000.

The city plans to bring more lawsuits. There are more than 23,000 taxpayers on the delinquency rolls. More than $235,000,000 in unpaid taxes await collection, possibly by foreclosure if the funds don't show up in the city's bank accounts soon enough. Of that amount, $126,000,000 would go to the School District, which has struggled financially for a long time.

Why do taxes go unpaid? In some instances, taxpayers encounter financial difficulties. In other instances, it could be mismanagement, which is what spokespersons for Frazier and his gym offer as the explanation. In some situations, taxpayers play the "wait until and if they find me" game, hoping that the city's record keeping system loses track of them. There are situations in which properties decline in value to so small an amount that it makes sense to some owners to walk away and let the city take the property.

The situation in Philadelphia makes it so obvious why society suffers when taxes are unpaid. Public school education in Philadelphia has more problems than it can handle, and surely the spending cuts that the district is compelled to make each year are attributable to some extent to the unpaid taxes. The same can be said of the services cuts that the city has had to implement because its revenue stream is constricted by the failure of taxpayers to pay the taxes. Making matters worse, time and resources that could be directed to fixing the broken system are instead diverted to chasing down tax delinquents. It's a cycle that must be broken, for if more and more taxpayers decide not to pay because they resent nonpayment by others or think they, too, can win at the "let them find me" game, it won't be long before the city's revenues dwindle so much that it cannot operate in any meaningful way. Why it took so long for the city to crack down is yet another question that needs to be answered, lest it happen yet again.

Real Property Tax Assessment System: Broken and Begging for Repair

In two earlier posts, An Unconstitutional Tax Assessment System and Property Tax Assessments: Really That Difficult?, I noted that "[a]t the root of the [real property tax] problem is the manner in which real property is assessed a value for purposes of the real property tax," that "[t]he system needs to be fixed," and that "I have a sense things will become more complicated and frenetic before they are resolved."

Proof that the real property assessment system is a mess, that things have become more complicated, and that the entire system needs to be fixed popped up last week when it was revealed that the Philadelphia Board of Revision of Taxes voted, by a 4 to 3 margin, not to reassess state senator Vincent Fumo's 27-room mansion. According to this Philadelphia Inquirer story, Fumo put his home on the market for an asking price of $7,000,000. The home currently is assessed for real property taxes as though it was worth $250,000. Fumo might not get $7,000,000 for his house, but he surely will get far more than $250,000. Fumo paid $175,000 for the property in 1994, and has invested substantial sums fixing it up. Perhaps the basement shooting range contributes to the perceived value reflected in the asking price. Clouding the picture is an accusation by prosecutors in Fumo's corruption case that the improvements were supervised by a taxpayer-paid member of Fumo's staff.

To ask how his property has such a low assessment is to ask an easily-answered question. The assessment process is broken. Assessments are not changed as market values increase. A closer look at the problem can be found in An Unconstitutional Tax Assessment System and Property Tax Assessments: Really That Difficult?. There are homeowners in Philadelphia whose homes are assessed at the equivalent of $250,000 who would probably get no more than 10 percent of $7,000,000 if they were to sell their homes.

The decision not to change the assessment on Fumo's home might appear wrong, and it might bother some people, but, unfortunately, it is the correct result under current law. First, the assessment law prohibits assessors from doing reassessments on a random, sporadic, or ad hoc bass. These so-called "spot assessments" provide too many opportunities for dishing out rewards and punishments in unjustifiable ways. Second, the fact that an asking price is put on a property is scant evidence of its value. Granted, this second reason is temporary, because when the property does sell, the selling price cannot be dismissed in the same manner. Third, the asking price includes furnishings, the value of which are not part of the value that can be taxed under a real property tax.

What makes the story juicy is that two members of the Board who voted against increasing the assessment included, according to the Philadelphia Inquirer story, both the president of a charity involved in a corruption investigation of Fumo, and a real estate broker who has a business relationship with Fumo and who has contributed to Fumo's campaign fund-raising. One of the Board members voting for an increase was once a political ally of Fumo but has since parted ways.

The Board intends to reassess the property when it does a general reassessment for 2009. Fumo's house wasn't reassessed for 2007 because the city's computer system did not find comparable properties to match Fumo's house. Isn't that further proof that the system is so broken that, as I have argued, the legislature needs to put aside the tinkering and bickering and overhaul it?

Halloween Brings Out the Lunacy

Please, CNN, let this story be a Halloween gag, you know, an October's Fool joke. Please?

The revenue folks in Iowa, a state I've always considered in the forefront of good education, to say nothing of sensible people, have come out with Nightmare in Des Moines, a ruling that pumpkins are not food and thus are subject to the sales tax. Pumpkins, according to the revenue officials, are not food because they are used primarily for Halloween decorations. According to those making this decision, "We made the change because we wanted the sales tax law to match what we thought the predominant use was. We thought the predominant use was for decorations or jack-o'-lanterns." The sales tax applies if the pumpkins are advertised for use as jack-o-lanterns or decorations.

Yes, I have relatives in Iowa. There's a very capable and witty fellow tax blogger there. So it seems so uncharacteristic of Iowa and Iowans, at least from my perspective, to conjure up this mischief. The questions race through my brain:

1. Is there empirical evidence that pumpkins are used "primarily" for decorations or that the predominant use is for jack-o-lanterns? In a few weeks, there will be pumpkin pie every which way I turn, and when I turn back, someone will put some pumpkin bread into my hands.

2. Does the phrase "We thought" suggest that the process did not involve something that would generate the phrase "From our empirical studies, we concluded...."?

3. Considering that every sensible retailer in the state, namely all of them, will simply remove any reference to decorations from their advertising, what's the point? Since when does the hype of an advertisement determine the substance of the product?

It gets better. Way better.

People who purchase pumpkins in Iowa and intend to eat them can get a tax exemption if they fill out a form.

Are you kidding me? This is a joke, yes? Please?

I suppose the form would be known as the Pumpking My Stomach and Not My Porch form?

What happens if someone fills out the form but fails to eat the pumpkin because their son or daughter takes a knife to it and shoves a candle down its throat (or through its dismembered skull)? AHA, a recapture tax, yes? How would they know? Easy. They will hire pumpkin consumption auditors. How does one prove that he or she ate the pumpkin (or at least its innards, as the skin isn't very tasty and don't ask me how I know that)? Cell phone photos? Perhaps auditors will drive through neighborhoods counting the number of pumpkins used as decorations?

What's next, a sales tax on candy and other ingredients used to build inedible gingerbread houses? A sales tax on rice thrown at weddings? Wait, perhaps a sales tax on eggs tossed onto houses and cars on mischief night? OK, ladies, if you're bathing in milk, go back to the store and pay a sales tax.

Sorry, Iowa Department of Revenue, this ruling is a puking Pumpkin portent. Put it in its grave now.

Well, at least I found another "tax and Halloween" story. It's no wonder. Two frightening things meet and we had best stop there, yes?

Tricky Treating: Teaching Tax Trumps Tasty Tidbit Transfers

It's Halloween. Somehow, without intending it, I have developed a MauledAgain tradition of focusing on this holiday each year that it rolls around. So I'm going to treat my readers yet again to some spooky thoughts. I might not have a ghost of a chance to amuse anyone or to make them laugh, but perhaps I can trick people into reading til the end.

In 2004, I looked at the idea of Taxing "Snack" or "Junk" Food. Those proposals seem to have melted away into the shadows of outright bans enacted by local governments on the use of trans-fats and other injurious food ingredients. But not seeing a ban on candy, I will let this issue settle in for a vampire's sleep. Please, someone, insert a stake through the heart of the dormant candy tax project. Let us not forget, chocolate is medicinal, and most state sales tax statutes exempt medicines from taxation.

In 2005, I had some fun with Halloween and Tax: Scared Yet?. Between trying to use every word associated with Halloween, and trying to find connections between various taxes and the tradition of dishing out candy, I managed not so much to scare people but to make them sick to their stomach, as if they had ingested 15 or 20 non-chocolate candy items.

In 2006, I simply lamented my inability to find four-pack versions of Reese's Peanut Butter Cups. In Happy Halloween: Chocolate Math and Tax Arithmetic, I noted that 2 double-packs isn't quite the same thing. It was a very short post. Imagine that! Perhaps the disappointment in my search for the ideal Halloween hand-out left me at a loss for words.

The recurring theme of chocolate, candy, and taxes has become the underlying skeleton on which different flesh is arranged each year in my Halloween post. Rather gory to picture, but each of us gets to build our monsters in our own peculiar way.

This year brings a double whammy. Once again, I failed to find four-pack versions of Reese's Peanut Butter Cups. I wonder if this is a shortage not unlike the ones in steel and cement, somehow triggered by consumption in developing nations. Is there some magic ingredient that is difficult to find? Was there a complaint filed by the manufacturers of those woefully small plastic Halloween pumpkin buckets carted by the smaller trick-or-treaters that noted the impossibility of fitting a Reese's four-pack into the child's candy accumulation device?

This year, for the first time since 2001, Halloween falls on a Wednesday. I won't be home when the first wave of treat-seekers arrives, because I will be teaching a tax course in the Graduate Tax Program. By the time I get home, most of the costumed characters will have passed through the neighborhood. Only a few sugar-starved college students from the university and some high school students holding on to one of the better experiences of childhood will show up after 8:15. But have no fear, ouch. I've left Reese's Peanut Butter two-packs with my neighbors, who will once again act as surrogate candy distributors for me. I simply need to remember to put up the signs that tell the masqueraders that a double treat awaits them across the street. In an almost unprecedented feat of memory, I not only remembered that I had signs from 2001, had saved them, and had put them in a particular spot but I also found them in that spot. I know I impressed at least one person with that eerie mental performance, and I even received free advice on how to affix one sign to the lamp post (something I'm sure I did 6 years ago but could not remember precisely how I had done so).

So now I wait to see if I purchased a sufficient number of two-packs. I live in fear that a youngster would be turned away by me because the inventory ran out. Horrors! Blessed with my mother's belief that no one should ever leave hungry, I purchase in bulk, adding 20 percent to the previous year's visitor count to determine how many to buy. I'd rather have some left over than to run out. Next year, I will try to remember to explain the demographics and the candy hunting styles of the groups that arrive at my door on Halloween. Perhaps by then I'll figure out what the tax issue is.

Taxing Our Way Out of Congestion

Drivers in Philadelphia, like those in other American cities, cope with increasingly slower traffic, growing congestion, longer travel times, more frequent back-ups due to accidents and break-downs, and a headlong rush into a looming permanent state of gridlock. The cause is simple. It's a combination of increased vehicle volume and inadequate highways. The conceptual solution is just as simple. Design some combination of decreased vehicle volume and increased highway capacity.

Decreasing vehicle volume requires a focus on one of the two causes of the increase. One cause, population increases, isn't very easy to change. It might be well nigh impossible. The other cause, an increase in vehicle miles, can be reversed through a careful mix of more attractive alternatives and stronger impediments to vehicle use. All elements of that mix would cost money to design and implement.

Increasing highway capacity also costs money to design and implement. Whether it involves building new highways, widening existing highways, fixing traffic signal timing, restructuring intersections, or changing traffic flow patterns through one-way street designations, elimination of on-street parking, or repaving, nothing much can be done without an infusion of cash.

So the congestion problem, no matter how it is alleviated or even solved, presents yet another instance in the long list of social problems that require us to answer the question, "So where do we get the money?"

Thus, it is not a surprise to read a story in Friday's Philadelphia Inquirer, one whose headline says it all: One Solution to Congestion: Local Taxes. The story explains that the Delaware Valley Regional Planning Commission released a study in which in concluded that a viable way to ease congestion would be to impose local taxes or fees. The Commission looked at 23 different taxes and fees, including a sales tax on fuel, cigarette taxes, liquor taxes, earned income taxes, general sales taxes, vehicle sales taxes, property taxes, tire taxes, hotel taxes, parking taxes, real estate transfer taxes, rental car taxes, leased vehicle taxes, vehicle property taxes, vehicle registration fees, vehicle title fees, access fees on commercial buildings near transit stops or highway exits, fees on all impervious surfaces, fees on rising property assessments in specific local districts, mass transit fare increases, tolls on local interstates and limited access highways, increases in existing turnpike and bridge tolls, and a vehicle-mile fee. The last one appears to be not unlike the mileage fee on which I most recently commented in Mileage-Based Road Fees, Again.

As a practical matter, the local governments in the Delaware Valley have little power to enact fees and taxes. The state legislature imposes all sorts of limitations on what the localities can do.

As an advocate of user fees, and as a supporter of the mileage-based road fee, I consider most of the fund-raising taxes and fees studied by the Commission to be inappropriate. There are all sorts of reasons for society to tax cigarettes, but financing travel is not one. The same can be said of earned income taxes, real estate taxes, hotel taxes, and general sales taxes. Some of the taxes and fees that appear more closely connected with highway use, such as vehicle title fees, vehicle sales taxes, tire taxes, and parking taxes, are unlikely to reach all highway users and would generate distortions in the financing of road use. Arguments can be made for new tolls and increases in existing tolls, but if a better alternative exists, why not use it? It makes far more sense to make the cost proportional to each vehicle's use of the road, and that is something the mileage-based road fee does.

One objection to user fees is the assumed inability of low-income and no-income individuals to pay them. The relief of poverty, though, ought not come through the disregard of user fees or the exemption of certain individuals from paying them, but through general assistance to persons who are unable to pay all sorts of expenses, not just user fees, and through increasing the employment marketability of the poor by providing qualified skills training and encouragement to enroll in that training.

In its report, the Commission asks, "Do local residents or local politicians have any appetite for new taxes and fees?" The Commission calls this a big question. Yes, indeed. A prevalent feature of postmodern culture is the notion that things can be had for free, that there is no cost, that if there are costs they should be shifted to others, and that taxes are per se evil. Some politicians have made careers out of those philosophies, and it appears not to bother them that the nation is deep in debt to other countries because of opposition to raising the revenue required to provide all of the things that voters tell their representatives they want society to provide.

The executive director of the Commission summed it up nicely. "I don't know whether people are feeling enough pain yet from traffic congestion . . . to feel that they are willing to support or fund [new transportation taxes.... In order for a larger audience to get behind it, they need to really feel the need and see that the funds are spent on local projects." In other words, taxes get public support when the public understands that the true, long-term cost of no tax or a smaller tax exceeds the cost of a new or increased tax. Sometimes, unfortunately, the realization comes too late. Hopefully that will not be the case when, one morning in the future, people find themselves stopped in traffic for eternity.

The Power of Chocolate

Yes, folks, chocolate has so many good qualities. It is medicinal. It tastes good. It has many culinary uses. And now comes news that chocolate can enhance the ratings received by a teacher on student course evaluations. According to Sweetening the Deal, an article that appeared in last week's Inside Higher Ed, a study demonstrated that higher scores on student course evaluations were attained when the students doing the evaluations were given chocolate. The title of the study, to be published in "Teaching of Psychology," is worth noting: "Fudging the Numbers: Distributing Chocolate Influences Student Evaluations of an Undergraduate Course." There's no doubt the same outcome would ensue if the study had focused on law students.

The study's authors became interested in the impact of externalities on evaluations when they were graduate students. They noticed that it was a fairly common practice for faculty to distribute candy to students when evaluation time rolled around. In the study, however, the candy was distributed by someone not otherwise connected with the course. In all three test groups, the half of the students getting the chocolate gave higher ratings on the evaluations.

The results do not surprise me. Nor am I surprised by the practice of some faculty of handing out treats. It happens. I've seen faculty have wine and cheese parties at the end of the semester, I've seen faculty bring in brownies, I've seen faculty bring in chocolate candy, and even, I, myself, once, a long time ago, when I was inexperienced and younger, brought in chocolate chip cookies that I had baked. I should not have admitted to being the baker, because students refused to eat them. It was near the beginning of the semester and I simply had made too many cookies. Perhaps they thought I was going to poison or sicken them. A tax guy making cookies? Impossible. Well, my friends and family know better even if my students don't. It's not as though students here don't like treats or object to chocolate. When, some years later, I noticed that the trays of brownies left over from the class preceding mine had been pretty much scarfed clean, I thought to myself, "Is it a gender thing? Somehow, men ought not bake, or admit to baking, chocolate chip cookies?"

It appears that in some instances the distribution of treats by law faculty is yet another attempt to soften the harsh realities of legal education, in part by persuading students that their teachers are not the ogres portrayed in Paper Chase. There is a good bit of "I want my students to like me" in all of this. Perhaps the desire to be liked is connected with a notion that the more a teacher is liked, the higher the evaluation scores. It's important, though, that a teacher be liked for the right reason, namely, that he or she is doing what needs to be done to educate the student and prepare the student for law practice. Unfortunately, much of what needs to be done to accomplish those goals doesn't create a fun-time, let's party, teacher-is-cool atmosphere in the classroom.

And that brings me back to evaluations. If, as I believe and some others do not, the task of the law professor is to prepare students for law practice, the best way of measuring the professor's teaching proficiency through student reactions is to canvass the students after they have graduated and practiced for a few years. It's amazing how much light the realities of the practice world can shed on a student's perception of a law school course. The ideal question, "Rate this professor in terms of his or her ability to prepare you for law practice," isn't one that a law student can answer, simply because a law student, even if enrolled in a clinic or externship for a few months, hasn't been immersed in law practice as a lawyer. Thus, the suggestion by one of the study's authors that evaluations be done several weeks before the end of the semester is unwise. The more of a course that a student experiences, including the final examination difficult though that may be, the more the student can appreciate what the course has or has not done for the student's learning development.

Yes, there are questions that ought to be asked of students. These are the questions designed to identify faculty who make racist comments, who throw things at students, who come to class late, who don't respond to student emails, and who otherwise are violating the terms of their contracts. It doesn't make sense to ask all the students whether there was a syllabus in the course, because the administration can figure that out for itself. The only possible reason to ask the question is to identify evaluations on which a student responds that there is no course syllabus when, in fact, there is one. Such an evaluation should be thrown out, and its responses ignored, because the answer calls into question the mental competence of the responding student. To the best of my knowledge, these evaluations are treated just as are the others. Scary, isn't it? The worst question is the "compare this professor to your other professors." Aside from turning the evaluation into a popularity contest --- does one get points for bringing in goodies?--- this question does nothing to determine the teaching competence of the faculty member as measured against a standard. The numbers available for answering that question have no meaning. Is someone getting a "2" twice as good a teacher as someone getting a "1" and does getting a "5" mean that the person is perfect? It matters because some faculty and administrators put all sorts of value on the responses. Fortunately, other administrators and faculty give these things the weight they deserve.

Speaking of weight, I wonder how many pounds of chocolate are sufficient to increase evaluation scores. And should it be packaged in brownies, cookies, candy bars, or as coffee flavoring? Should alternative treats be available for the unfortunate few who dislike chocolate or who are allergic to it? Perhaps someone will conduct follow-up studies. In the meantime, another suggestion from one of the study's authors makes sense. Treats should not be handed out with evaluations. I'd go further. They ought not be handed out during the evaluation period, and ideally, ought not be handed out at all.

Convicted Tax Evader: It's Not My Fault

Yes, it's another story of corruption and institutional mismanagement. In Seaport's Carter Asks for Leniency two Philadelphia Inquirer staff writers explain how John Carter, former head of the Independence Seaport Museum in Philadelphia, has reacted to his conviction on two counts of mail fraud and one count of tax evasion. Carter pled guilty in June.

According to theCriminal Information filed by the federal government, Carter was charged with defrauding the museum of more than $1,500,000. He caused the museum to pay for a root canal, calling it "boat supplies," to pay for a new roof, describing it as "caulking" for one of the museum's boats, to pay for jewelry and clothing, describing them as "supplies" for the boat, to pay for other clothing, describing it as "uniforms" for the crew of a museum boat, to pay for gym fees, classified as a "meetings" expense, and to pay for all sorts of other things described as connected with museum activities and property. He allegedly used museum funds to pay for a $210,000 house, a $275,000 boat, another $100,000 boat, a $6,900 bed, a $1,700 expresso machine, a $50,000 work of art, $50,000 of electronic equipment, and all other sorts of things. Apparently, the museum's oversight of its top executive was "inadequate," and Carter allegedly knew it. During the period in question, Carter received a $301,000 salary and lived in a townhouse owned by the museum, for which he paid no rent.

Recently, Carter sent a letter to the judge responsible for the sentencing, attempting to persuade the judge to go easy on him. He claims he wasn't the only museum employee doing what he did. He claims that members of the board and donors were part of what Carter's lawyer called a "culture of corruption and self-dealing." According to Carter, these people "exploited the museum for questionable tax breaks and stuck it with the bill for lucrative no-bid contracts, expensive parties and pricey boats." The chairman of the board denies Carter's allegations.

Carter justified his actions by claiming that after seeing others do the same thing, he imitated them to get "my fair share." He points out that his parents were alcoholic and abusive. He notes that his health is bad and his wife has filed for divorce. He asks why the board didn't fire him, and then answers his own question by claiming the board inadequately supervised him.

Carter filed letters written by his daughter, other relatives, friends, and business associates. They claimed to be "confounded" by what Carter did. Carter says he "can hardly believe it himself."

Carter is arguing for a sentence of no more than four years. The prosecutors take the position the sentence should be 19 years.

So a fellow defrauds a non-profit organization he was hired to protect. He does not report the illegal income on his tax return as the law requires. He is caught. He pleads guilty. He expresses bewilderment at what he did. He justifies his actions on the grounds others were doing it, cites the challenges of his childhood, health, and marriage, and then suggests that somehow had the board fired him as it should have done the problem would not be so severe.

The most telling part of the entire story is this. Carter made a deliberate decision to defraud the organization in order to get "my fair share." The scheme, though not brilliant, was carefully designed to hide personal expenditures as costs properly chargeable to the non-profit organization. What I would like to know is how Carter computed his "fair share." That would help the rest of us compute ours.

Relatively Speaking, Is It That Big A Deal?

With so many of my posts devoted to tax law commentary and opinions about legal education, rarely do I give much attention to genealogy. Today, however, I consider the news that Barack Obama and Dick Cheney are related.

This revelation has sparked some surprising reactions, ranging from advice to Obama that he be "sick to [his] stomach" to "It can't be !!!!!" Why not? How is it possible that people do not understand that each and every one of us is a cousin, to some degree, to every other person who is alive today or who has ever lived. Admittedly, documentary "proof" of a specific connection sometimes is difficult or impossible to find (as is the case with one connection I'm trying to document), but DNA analysis cements a conclusion that has long been known.

One of the comments claims that the connection between Obama and Cheney means that they share only 0.39% of their genes. That computation, though, assumes that there is only one link between the two men. There is more than one link. A little bit of arithmetic tells us that each of us has 2 parents, 4 grandparents, 8 great-grandparents, and so on. Yet as we reach further back into our ancestry, computing larger and larger numbers of ancestors, the available population becomes smaller and smaller. The explanation is that all of us share a fairly limited number of ancestors, and if one subscribes to certain theologies, all of us descend from one pair. The term "human family" is more than a conceptual notion.

So what's the big deal that Obama and Cheney are related? The disbelief and disdain expressed in some of these comments suggests something more than the dawning of an intellectual revelation. Among the insults and expressions of sympathy are elements of disgust and even hate. I cannot imagine the reaction to the discovery that Obama and George W. Bush are 11th cousins.

The Obama-Cheney connection came to my attention last week when my brother-in-law emailed me a link to the story. In the email he asked, "Any chance the Maule family is related to Obama and Cheney?" The answer is, yes, we're related. And so is your family. And, hey, your family is related to my family. The more challenging question is, "Can you prove, with documents and other acceptable evidence, the actual link between a member of the Maule family and Obama or Cheney?" Knowing that I have established my specific relationship with 23 of the nation's 43 presidents, my brother-in-law probably intended to ask the latter question. As an aside, I've since discovered the links to William Clinton, so the presidential count is now at 24. Someday I'll update the web page. As another aside, my webpage showing my relationship to the presidents is cited as a source for Wikipedia's List of United States Presidents by genealogical relationship.

As for Dick Cheney, he and I share many ancestors, the closest being Gospatric, Earl of Northumberland and Dunbar, though it appears we descend from different wives or consorts of Gospatric. See Ancestry of Richard Bruce Cheney by William Addams Reitwiesner. See 26-GENERATION ALPHABETICAL ANCESTOR LIST for JAMES EDWARD MAULE, which does not show the ancestry in steps, as that part of the ahnentafel is not yet ready for the web page. What does that make us? Roughly 28th cousins. We both descend from Gospatric's great grandfather, Ethelred II, King of England.

As for Barack Obama, he and I share many ancestors, the closest being Nathaniel FitzRandolph and his wife Mary Holley (or Holloway). See Ancestry of Barack Obama, also compiled by William Addams Reitwiesner. See AHNENTAFEL FOR GENERATIONS 1 THROUGH 13 for JAMES EDWARD MAULE. What does that make us? Obama is my eighth cousin twice removed.

Before I forget, let me express my thanks to Mr. Reitwiesner. He found for me a link to Woodrow Wilson, through the FitzRandolph family, so now the presidential count is at 25. And his research shows that I am a fifth cousin four times removed to James Longstreet, the Confederate General, sixth cousin three times removed to Woodrow Wilson, eighth cousin once removed to Georgia O'Keefe (so she joins Maxfield Parrish in the cousin list), ninth cousin to Loudon Wainwright III, ninth cousin to Buster Crabbe, ninth cousin to Birch Bayh, Jr., and fifth cousin three times removed to Theodore Vail, founder of AT&T. In turn, Birch Bayh III is my ninth cousin once removed, and JonBenet Ramsey is my ninth cousin twice removed.

What fun this is. Yes, it has no end, but this post must end. It will end with one more connection between Dick Cheyney and myself.

When Dick Cheney accidentally shot Harry Whittington, he shot a man whose daughter Sally Baker Whittington had married Gordon David May. I am Gordon's sixth cousin once removed. And, no, I'm not going to try to figure out the relationship between Dick Cheney and Harry Whittington. I'll leave that to others. I need to turn back to tax law.

How Many Hours Do and Should Law Students Study?

Paul Caron's TaxProf Blog post on the ranking by the Princeton Review of law student study time inspired me to do some arithmetic. Nothing as complicated as a tax return, but some multiplication and division with a twist.

According to the rankings, Cornell law students top the list with 5.97 hours per day of study, and North Carolina Central law students rack up a mere 2.52 hours per day of study. Villanova students, I must add, were tied for fourth place, with a reported 5.5 hours per day of study. According to the Princeton Review, it obtained data from 18,000 law students at 170 law schools, which means that they polled, on average, slightly more than 100 students per school. That's a significant percentage, probably in the range of 15 to 25 percent, far, far more than the small samples used by Gallup and other pollsters that have statistical significance.

Here's the twist. Are these hours per school day, hours per week day, or hours per all days in the week? Using the most generous interpretation, Cornell students put in roughly 42 hours per week of study, whereas North Carolina Central students put in roughly 18. Villanova students invest roughly 38 hours per week.

Here is the important question. Is this enough? Rankings are fine, but don't mean as much as a measurement against a standard. Recall my comment in Yet More Reasons to Dislike Grading Curves, "the best measure is a comparison of performance against a standard." A person who studies one hour a week more than any other student might be in first place, but might still fall short of what is required.

In one of my law school newsletter columns, Time CAN Be on Your Side. Or at Least by It, I told an anecdote about the reaction of a student to my in-class explanation that a 3-credit law course required, on average, an investment of 10 hours a week of study outside class. When I wrote the column, I polled my colleagues to get a sense of what they thought, because my estimate reflected a combination of what I had been told as a student and what I had heard told to students by my colleagues in the past. Somewhat to my surprise, my colleagues reacted unanimously when they shared their perspective. Unanimity on a law faculty is not an everyday event. So it was with an even higher level of confidence that I wrote:

Put it all together and it adds up to somewhere between 2 to 4 hours of out-of-class time for a 50-minute class session. Hence the conclusion of roughly 10 hours per week for a 3-credit course. For a student enrolled in 14 credits of courses, that’s 45 hours per week outside of class. Add in the 14 hours, and it’s, what? FIFTY-NINE HOURS A WEEK? That is OUTRAGEOUS.

But is it really that outrageous? Maybe, for students accustomed to putting in far fewer hours per week in their previous educational experiences. The better comparison, though, is law practice. Ask practitioners how many hours per week they devote to their profession. For many, 59 hours would be on the lower end. If the firm demands 2,300 annual billable hours, well, you do the arithmetic. And while you’re at it, ask those practitioners if they think 50 to 60 hours per week for law school academic endeavors is unreasonable.

According to this generally accepted standard, if the average law student is carrying a 14-credit-hour course load, the ones at Cornell are pretty much investing the time that should be investing, and Villanova students aren't too far behind. But somewhere along the line law students carry more than 14 credit hours, because most schools require more than 84 credit hours for graduation. Many set the requirement in the high 80s, and a few in the low 90s. The average, therefore, appears to be closer to 15 credit hours than 14. This means none of the law schools report an average that meets the standard.

Averages, though, mean little. The determination to allocate time to law studies or to some other activity is a personal one. A student who invests a low number of hours does no less damage to his or her academic prospects simply because his or her classmates are racking up a high average. Conversely, someone at a school where the average time investment is woefully low can enhance his or her chances for academic success by finding ways to focus on law studies for more than 6 hours a day.

Law students, not surprisingly, complain about workloads and argue that the standard is unattainable. It's not. Quoting again from Time CAN Be on Your Side. Or at Least by It:

Time as an enemy seems more the case than time as an ally. Time, though, is neither. It simply is a resource. But it is, like most resources, finite. Like any resource, finite or otherwise, it needs to be used well. Efficient use of resources is an acquired skill. Law students are accused by practitioners of graduating with poor time management skills. Not that practitioners don’t accuse each other, and sometimes themselves, of the same deficiency.

So how do you manage time? Simple. You budget your time and then you adhere to the budget. The first part is easy, the second is difficult. It requires discipline of a sort that brings to mind the word rigor.

In Time CAN Be on Your Side. Or at Least by It, I give law students advice on how to devote 60 hours a week to their law studies, sleep 8 hours a night, and still have 8 hours a day remaining for the other activities of life. More specifically, I give them advice on how to figure out how they can attain those goals. I also explain how law faculty, over the ages, came to the conclusion that roughly 3 hours per week outside of class is appropriate study time for each credit hour of class time.

It's good that attention has been given to the issue of study time for law students. Perhaps they will read Time CAN Be on Your Side. Or at Least by Itand make adjustments. College students who are thinking of attending law school and those who have committed to attending law school should read the advice. It will be interesting to see what Princeton Review reports a year or two from now.

Tax Relief Based on Age and Income?

More than a year ago, in New Pennsylvania Tax "Reform" Doesn't Add Up, I analyzed Pennsylvania's property tax reform legislation. Although I was far from impressed with the legislation in its entirety, my comments on one aspect reflected the opposite conclusion:

Under the legislation, senior citizens currently eligible for property tax relief through income tax credits will qualify for larger credits, in other words, more property tax relief. To their number will be added more senior citizens, because the income cut-off for this relief will be increased from $15,000 to $35,000. There are many retirees earning between $15,000 and $35,000 for whom property taxes are a severe burden. This part of the legislation is a worthwhile, and even noble, objective.

The relief, as I also pointed out, would not be triggered until the state began receiving revenues from casino operations.

Now State Representative John Perzel is introducing legislation that would use casino revenues to finance real property tax relief to senior citizens. According to Perzel's news release, his Older Pennsylvanian Property Tax Elimination Act, which carries the interesting acronym of OPPTEA, would eliminate the real property tax for homeowners aged 65 or older whith incomes of $40,000 or less. Unfortunately, I have not been able to find the text of the legislation. Thus, I don't know what Perzel means by "income." Is that Pennsylvania taxable income? Federal adjusted gross income? Some sort of modified adjusted gross income that includes tax-exempt interest? There are all sorts of "incomes" and some do not truly measure a person's economic status or ability to pay real property taxes.

According to this Delco Times story, some legislators are jumping on the OPPTEA bandwagon. Others have withheld judgment, until they "see it," a comment that suggests that I am not alone in my quest for the legislative language. It would not surprise me that the legislation has not yet been drafted and that there is no language.

Perzel plans to have "eligible seniors" send their real property tax bills to the state Department of Revenue, which would send a check to the school district. That does seem a bit less complicated than having senior citizens file for refundable credits on their state income tax returns. Presumably the Department of Revenue would cross-check the applicant's eligibility by looking at state income tax returns. How, though, does one distinguish a senior citizen who has not filed a tax return because she has no taxable state income from one who has not filed because he or she forgot to file or is evading taxes?

It is not clear if the funds that Perzel wants to use for this plan are the same as, or in addition to, the funds already earmarked for general real property tax relief. The Delco Times story quotes legislators who think the former and who think the latter. Again, there is a reason that legislative proposals are easier to analyze when the text of the legislation is available. It's more likely people can figure out what the proponent really wants to do.

Several years previously, in Killing the Geese, I addressed the issue in broader terms when a since-derailed plan to replace the property tax with loca earned income taxes and increases in the real property transfer tax was being touted as the remedy:

Yes, the real property tax poses a problem for people whose incomes are fixed and whose homes continue to increase in value. Real property taxes for these folks increase while their income doesn't. But let's look more closely. Is it really such a HARDSHIP if a person pulling down $300,000 in pensions and investment income needs to cope with a $400 real property tax increase? On the other hand, someone scraping by on social security and a small pension finds a $250 increase taking a meaningful chunk out of a $15,000 annual income. And let's not forget that a significant number of elderly no longer own homes, and in some cases, never owned homes.

The cry that real property taxes hurt the elderly is as misleading as the silliness the late Rep. Claude Pepper rode to fame. His mantra that "the elderly are poor" led to a shift in government outlay allocation that has left us with a nation in which poverty is rampant among children. The simple fact is that a person's age should no more be used as a measure of their economic status as should their hair color or lack thereof. And, of course, there are people who cannot be classifed as "elderly" for whom real property tax increases are a serious burden, though most young poor don't have the opportunity to own real property.

So the relief ought to be provided to those who need it, namely, the poor. This is what has been done with the state income tax. True, the definition of "poor" can and will fuel some debate, but it can be resolved.

In some respects, the issue has come full circle.

Property taxes are a burden to some citizens of Pennsylvania but they are not an unreasonable burden to all of them. They may be disliked. They may be an aggravation. They may be used to finance school programs with which some taxpayers disagree. But they are a serious impediment to homeowners on relatively low fixed incomes, who find themselves unable to buy necessities such as food and medicine because they need to pay real property taxes to avoid losing their homes.

So one question is why people under the age of 65 who are on fixed incomes and facing the risk of losing a home when real property taxes increase are ineligible for assistance? Think of the person on a social security disability pension, or receiving a small monthly amount from a structured settlement on account of a disabling injury. Ought not they, too, be helped? What's so magical about 65? Is it not an arbitrary number holding even less correlation with reality than 16, 18 and 21? In other words, it has become increasingly apparent, from recent scientific studies, that age alone tells us little or nothing about a person's pyschological, financial, intellectual, or emotional state.

Under the current plan, which will go into effect whenever the casino revenues begin to flow into the state treasury, property tax relief is shared by all homeowners, and amounts to a small, several hundred dollar, reduction in bills that often are in four, and sometimes five, digits. Perzel and several of the legislators who support OPPTEA think it makes more sense to eliminate the tax completely for senior citizens rather than make miniscule reductions in the real property tax bills of all homeowners. I'm not certain I agree that real property taxes ought to be totally eliminated for all senior citizens with incomes of $40,000 or less. There's no reason that they ought not be charged some small amount that remains fixed. Why do I think this? One of the legislators quoted in the Delco Times article points out that real estate taxes are a burden even for some senior citizens with incomes exceeding $40,000, because in some instances the tax bill amounts to 20% or more of their income. If senior citizen homeowners were required to pay a fixed, relatively small real property tax, it would be possible for senior citizens in the $40,000 to $50,000 income range to obtain some relief.

There is another technical problem with Perzel's bill. What happens if a senior citizen with "income" of $39,500 in year one, who benefits from total elimination of the real property tax, incurs an income increase of $600 in year two? This person would now be responsible for the entire real property tax bill, perhaps as much as $3,000, $5,000, or even $10,000. Those expert in drafting tax legislation call this a "cliff" provision. One extra dollar of income and the entire benefit disappears. Would it not be better to scale the relief? For example, senior citizens with "income" of $10,000 or less would get full property tax relief, or perhaps be required to pay $100. Seniors with incomes exceeding $10,000 would receive partial relief, receiving a decreasing amount of relief, that is, a smaller check on their behalf from the Department of Revenue to the school district, as their incomes increased. Thus, a $600 increase in income might translate into a $50 or $100 decrease in property tax relief and not a total elimination of the property tax relief.

Presumably, the amount of property tax relief for a particular real property tax year would be based on the senior citizen's "income" as reflected on his or her income tax return for the previous calendar year. It is difficult to imagine how any other arrangement could be administered in a sensible way.

Until one can figure out what Perzel means by "income" it is difficult to give these suggested improvements with more specificity. So here's an invitation to John Perzel: you are welcome to share with us the legislative text of your proposal. Let's see what it is that you are proposing, in specific rather than general conceptual terms.

Waiting a Bit Longer to Learn if Snipes is Guilty of Tax Fraud

I've commented previously on the ever-changing adventures of Wesley Snipes as he responds to tax fraud accusations. I started with The Tax Fraud Environment: Sniping at the Congress, and followed with Namibia: A Different Sort of Tax Haven? and The Snipes Tax Trial: A Circus in the Making?. Thanks to Paul Caron's TaxProf Blog for the heads up on the latest developments in the Snipes case.

According to the Ocala Star Banner, Snipes fired his attorney, and replaced him with Robert Bernhoft of Milwaukee, who then asked the court for a continuance. Bernhoft requested time to prepare the defense, and claimed that Billy Martin, the lawyer fired by Snipes, had committed "pretrial preparation failures." Martin disagreed, and in turn alleged that the firing was "a ploy" to obtain a continuance. The judge in the Snipes case also referred to the continuance motion as a ploy, asking Snipes and Bernhoft why they had not filed professional ethics complaints against Martin. One of Snipes' co-defendants, who represents himself, and the attorney for the other both agreed that a continuance was in order. The judge also was concerned that several continuances had already been granted in the case.

Shortly thereafter, according to this Hollywood Reporter story, the judge relented and granted the continuance. What changed his mind? He met with Snipes and was persuaded that there were "issues" between Snipes and Martin and that justice would be served by the continuance. Nonetheless, the judge made it clear that there would be no more continuances. The trial, originally set to begin on October 22, will now begin in January.

Martin has another famous client, one Michael Vick, who he represents in federal dogfighting charges. Bernhoft previously represented Snipes in a criminal paternity case, and succeeded in having the charges dropped. Neither attorney appears to restrict his caseload to tax work, which certainly cuts against the stereotype that lawyers are of two types, tax practitioners and anything-but-tax practitioners. Particularly in the area of criminal tax fraud defense work, it is not all that unusual to find the attorneys also representing people charged with crimes not involving tax matters.

Bernhoft has several very visible successful tax fraud defenses to his credit. He represented Joseph Banister, the former IRS agent, and Vernice Kuglin, the Federal Express pilot, both of whom had been indicted for failure to file federal income tax returns and to pay federal income taxes. He also obtained acquittals of 17 defendants in a trial more than a decade ago. He succeeded in the Kuglin case because he was able to persuade a jury that Kuglin's letters and inquiries to the IRS asking about the validity of the income tax corroborated the defense assertion that she wasn't trying to hide anything. The favorable verdict in the Banister case rests both on an arguably weak government case and the defense's ability to persuade the jury that the defendant genuinely believed that the income tax is invalid.

Bernhoft has an interesting tax history. On July 27, 1999, the United States District Court for the Eastern District of Wisconsin adopted the recommendation of the federal magistrate that the court grant the government's motion for summary judgment and its petition for a permanent injunction against Robert Bernhoft and Robert Raymond, prohibiting them from engaging in any and all of the following activities:

1. Inciting other individuals and entities to understate their federal tax liabilities, avoid the filing of federal tax returns, or avoid paying federal taxes based upon (a) the false representation that wages, salaries, or other compensation for labor or services are exempt from federal income taxation, or (b) any other such frivolous claim with respect to the scope of federal income taxation, or (c) any false or fraudulent claim regarding the allowability of any deduction or credit, the excludability of any income, or the securing of any other tax benefit for federal income tax purposes;

2. Advertising, marketing, or selling any documents or other information advising taxpayers that wages, salaries, or other income not specifically excluded from taxation under Title 26 of the United States Code are not taxable income;

3. Providing forms for or assisting any individual in the preparation of false Internal Revenue Forms W-4, W4E, 1040X, and any other form, return, or declaration claiming that the taxpayer is exempt from federal income taxation or entitled to excessive withholding allowances;

4. Filing, providing forms for, or otherwise aiding and abetting the filing of frivolous Freedom of Information requests with the Internal Revenue Service; and

5. Engaging in any other conduct subject to penalty under Section 6700 of the Internal Revenue Code, Title 26 of the United States Code.

When the defendants appealed, the decision was affirmed, and the Supreme Court refused to take the case. Raymond v. U.S., 78 F. Supp. 2d 856 (E.D. Wisc 1999), aff'd, 228 F.3d 804 (7th Cir. 2000), cert. denied, 533 U.S. 902 (2001).

It appears as though Bernhoft has switched gears, given up on marketing tax protest materials, and turned to taking on high profile tax fraud cases. He seems adept at getting juries to acquit tax fraud defendants. Of course, what isn't known is how many clients have pled guilty or otherwise failed in their attempts to escape the charges. It will be interesting to see how he fares in the Snipes case. Because of the continuance, we must wait a little longer. Hopefully the delay will improve the chances for the correct outcome, whatever it may be. But before the outcome is known, surely a variety of significant evidence will be brought forward. This story is far from over.

Reason #2939 I Want to Teach Property Law

A colleague sent me an email the other day, and it added to the list of reasons I want to teach the first-year property course. The email referred me to a story and came with an introductory tag line: "Talk about great exam questions!" Oh, indeed, there are. It's true, we law faculty don't need to make things up when we need hypotheticals. The world just keeps on giving.

The story has been reported in more than a few places, but the email that sent me to the BBC America version. Though the BBC titled its piece "North Carolina Pair Feud over Leg" I think "Tales of the Lost Leg" has a better movie title ring to it.

The facts are fairly simple, if not very bizarre. After he was in a plane crash, John Wood's leg was amputated. He kept the leg so he could be "buried as a whole man when he died." He put the leg into a barbecue smoker and then put the smoker into a storage facility. For some reason, Wood stopped paying the rental fees for the storage facility, so the storage company seized the storage locker contents and sold them at an auction, using the proceeds to pay Wood's storage fees. The purchaser of the items, Shannon Whisnant, looked inside the smoker and found the leg. He gave it to the police, and after determining no crime had been committed, they handed it off to a funeral home so that Wood could retrieve it.

In the meantime, Whisnant was collecting money from people willing to pay to look inside the empty smoker. That inspired him to ask the funeral home for the leg. The folks there refused, so Whisnant approached Wood and proposed joint custody of the leg, with a sharing of profits. Wood rejected the offer and demanded the return of his leg. Whisnant threatens legal action if the leg is not returned to his possession, claiming he has a receipt for its purchase. According to this more recent report, Wood and Whisnant have agreed to take their case to the Judge Mathis show, and were scheduled to tape the episode last Friday. According to this story, the leg is not at the funeral home, Whisnant says he doesn't have it, and also says he has an idea where it is.

Most folks who haven't been to law school would ask, "OK, so who gets the leg?" Perhaps some lawyers would simply ask that question. But there are all sorts of questions that need to be answered. For the moment, assume that the contract between Wood and the storage company was valid and enforceable, and that there were no improprieties with respect to the auction at which Whisnant made the purchase.

Here are the questions that need to be answered:

1. Did Whisnant obtain legal title to the leg by purchasing the contents of the storage locker even though neither he nor the storage company knew the leg was in it?

2. If so, are there any statutes barring the sale of body parts that would invalidate the alleged sale?

3. Did Wood's storage of the leg in the locker violate any health or safety ordinances or similar laws?

4. If so, does the violation keep the leg out of the bundle of contents that the storage company was permitted to sell?

5. Did Whisnant abandon title to the leg when he transferred it to the police?

6. Did the funeral home undertake any fiduciary responsibility to Wood when it took possession of the leg?

7. How much of the amount paid by Whisnant for the bundle of property sold by the storage company is allocable as his tax basis in the leg?

8. If Whisnant is held not to own the leg because he transferred it to the police, is he entitled to a loss deduction equal to his tax basis in the leg?

9. If Whisnant is held not to own the leg because he transferred it to the police and is not permitted to claim a loss deduction, is he entitled to a charitable contribution deduction for the value of the leg?

I am certain there are more questions. For the moment, those are enough to keep any law student writing for an hour or two.

As to the outcome: Forgive me, but it seems Whisnant ought to let Wood have his leg, no matter what "the law" might say. Whisnant has one motive, and only one motive, namely, money, and he's trying to bank not on his own efforts and contribution to society but on the misfortunes of another person and the unexpected inclusion of an amputated leg in a bundle of items purchased at an auction. Even if Whisnant is poor, the decent thing to do is to back down. Now I need to go find out what Judge Mathis decides.

If you are wondering where all the puns and word plays are, I've been nice and resisted the temptation. Actually, I've been trumped. A marvelous use of a variety of anatomical terms and leg-related words, not unlike my style of toying with the language, appear in the "What kind of sauce would you like on that?" account of the story on the Crooked Paws Retreat blog. Yes, you read that right.

All I'll say is that when Thanksgiving, which is less than two months away, finally rolls around, I'm going to be ready with all sorts of tales (ouch) when someone (probably me) is carving the turkey and says, "Who gets the leg?" Well, I'll also say that I might be risking access to the dessert table if my smart-aleck comments get people's noses out of joint.