The results are out. The American Bar Association released their list of 100 of the top law blogs as of this year. The full list is available here.
A shout out to Procedurally Taxing for finally making the list this year!
I posted about this last year, but I think it bears repeating. Back in 2015, law professor Gregory Crespi coined the term “tax bomb” in reference to student loans. A “tax bomb” is oftentimes unexpected and seen when a taxpayer has surprise income that will be taxed. It can blow up a taxpayer’s taxes and result in money owed to the IRS. This concept of a “tax bomb” is also seen in retirement planning.
In the context of student loans, a “tax bomb” can be when a taxpayer has student loan debt that gets forgiven either through the Public Service Loan Forgiveness Program (PSLF) or Income Based Repayment (IBR). But, it becomes a bomb when the cancellation of student debt is viewed as income under 26 U.S.C. sec. 108(f) which results in a tax and requires payment to the federal government. However, in Professor John Brooks’ Tax Notes article, he confirmed that current interpretation allows an exception for PSLF, but not IBR. This means that if you have student loans forgiven under the PSLF program, then you will presumably not have to pay taxes. But, if you have student loans forgiven under IBR, then you may be stuck with a tax bill. The Treasury Department issued guidance on the issue in Rev. Proc. 2015-57. Brooks’ article does a great job explaining the nuances. Check it out here.
On a happier note, Senator Bob Menendez (D-NJ), Senator Elizabeth Warren (D-MA), Senator Ron Wyden (D-OR), Senator Debbie Stabenow (D-MI), and Senator Cory Booker (D-NJ) introduced the Student Loan Tax Relief Act which would exclude income created from the cancellation of student debt or student loan forgiveness. The bill is available here.
Hello, readers! My Tax Court internship has officially concluded, so I have returned to my blogging platform.
Two more disclaimers:
Thanks for reading!
First, the postings on my blog are my own words and Legal Biscuit’s words. Second, I will be taking a brief hiatus from providing legal advice and posting on my blog because tomorrow I start my judicial internship/summer law clerkship. Third, because I consider myself an ethical person and I abide by the rules of professional responsibility, during the duration of my internship/clerkship, I will not be publishing or blogging.
Thank you for being my avid readers and followers. I hope to return once my employment is completed.
In order to sue the Department of Justice, Microsoft has brought out the big guns by hiring law firms Covington and Burling LLP, where partner James Garland used to work for former Attorney General Eric Holder, and Davis Wright Tremaine LLP. Yesterday, Microsoft’s complaint was filed in the Western District Court of Washington State and the complaint is available on the Wall Street Journal website here. The complaint is also available on Pacer, but the Wall Street Journal has the free version.
In the past, the U.S. government has requested information about certain users from Microsoft, presumably when warranted Microsoft complied with the production of information, and then the U.S. government could temporarily bar Microsoft from telling its users about the request for data. Under 18 U.S.C. Section 2705, a governmental entity, with a court order, may delay notification to customers for a period not exceeding 90 days if the government has reason to believe that the notification would result in adverse results. So, a customer would not be notified that a provider, like Microsoft, supplied information to a governmental authority until well after the production of information. Adverse results include endangering the life or physical safety of an individual, flight from prosecution, destruction of evidence, tampering with evidence, intimidation of a potential witness, or otherwise seriously jeopardizing an investigation or unduly delaying trial.
Microsoft argues that this is unlawful and that tech companies should be allowed to tell their users when their cloud database and private information has been turned over to the government. The U.S. government may argue that the disclosure to users would compromise an investigation. However, Microsoft asserts that the U.S. government’s behavior is a violation of the Fourth Amendment. But, is it?
This lawsuit is no easy feat. It can be difficult to sue the U.S. government due to sovereign immunity issues. Furthermore, the lawsuit boils down to a fundamental right to privacy argument that seems almost basic and may merit standard Fourth Amendment treatment regardless of all the discussion about cloud computing and the digital age.
Under F.R.C.P. 12, a U.S. governmental agency has 60 days from when they were served to file an answer. It will be interesting to see who from the DOJ is assigned to the case and what the DOJ’s answer will be.
Furthermore, this case is not likely to settle. Rather than Microsoft’s typical way of hiring lobbyists to change the law through Congress, it looks like Microsoft is using the courts and this lawsuit to change Fourth Amendment law. Read more about this new case in this Wall Street Journal article here.
After an approximately $30 million dollar donation, one of the largest the school has ever received, George Mason University has agreed to rename its law school after the late Justice Antonin Scalia. As part of the terms of the donation, with money partially received from the Koch brothers/Koch Foundation, the George Mason University School of Law will convert its name from Mason Law to the Antonin Scalia School of Law or Scalia Law School for short. The Wall Street Journal and the Washington Post both published articles about the change on or around April 1st, but the name change is no April Fool’s joke.
While the country is deeply saddened by Justice Scalia’s death, many are still in shock over the loss of a truly influential judge. It is Article II, Section 2 of the U.S. Constitution that gives the President, with advice and consent of the Senate, the authority to appoint judges of the Supreme Court. As the current President Obama fights with Republicans in the Senate over the appointment of a new Supreme Court Justice, it will be interesting to see how upcoming case decisions will change due to the loss of such an outspoken legal figure.
Forthcoming Supreme Court decisions will, for the most part, be reviewed as an eight judge panel. This means that decisions that were originally 5-4 could result in a 4-4 even split. That being said, Tom Goldstein from SCOTUS Blog wrote a piece addressing this issue. Read his article here.
Most notable of Goldstein’s post is this:
If Justice Scalia was part of a five-Justice majority in a case – for example, the Friedrichs case, in which the Court was expected to limit mandatory union contributions – the Court is now divided four to four. In those cases, there is no majority for a decision and the lower court’s ruling stands, as if the Supreme Court had never heard the case. Because it is very unlikely that a replacement will be appointed this Term, we should expect to see a number of such cases in which the lower court’s decision is “affirmed by an equally divided Court.” (emphasis added)
Also, please be sure to check out SCOTUS Blog’s other coverage on Justice Scalia’s death available here.
Yesterday, Supreme Court Justice Antonin Scalia passed away. While I missed my opportunity to meet Justice Scalia in person when he spoke at my school, he has had an impressive impact on all Americans through his literal, originalist, textual interpretations of the law and written decisions. His death marks the end of an era on the Supreme Court.
Further details about Justice Scalia’s life and passing are detailed in this New York Times article and this NPR broadcast. While this comes as shocking news to a lot of people since his death was so unexpected, the upcoming presidential election now takes an interesting turn as both parties fight to obtain power to appoint the next Supreme Court justice if current President Obama does not appoint a new justice soon. Things are about to get a lot more interesting in the current presidency and in the upcoming presidential elections.
In my last post about a new bill addressing student loan debt forgiveness, I mentioned that student loan debt that is forgiven may be viewed as taxable income. I wanted to further clarify my earlier statements. As with most things, there are exceptions.
Generally speaking, debt that is forgiven is typically viewed as income by the IRS and this means that it will be taxed. Again, this is a very general rule. But, there are many exceptions to this rule. For example, from 2007 to 2014, this general rule did not apply to short sales with mortgage debt that is cancelled or forgiven because of the Mortgage Forgiveness Debt Relief Act.
Similarly, with student loans, the specific area in the code that refers to gross income exclusions for student loans is 26 U.S.C. Sec. 108(f). In addition, the IRS has a publication available here that states if you work for a 501(c)(3) tax-exempt organization for a certain period of time under certain conditions, then your student loan forgiven debt will be discharged and not viewed as gross income. Within the publication and within the student loan debt forgiveness programs, there are additional parameters that must be met by the borrower (too long to go into for this post, but I can save it for another post if readers are interested in learning more). But, in short, there is an exception to student loan debt forgiveness taxability. Additional information about student loan debt forgiveness is available in this other IRS publication on page 4 available here.
One of the biggest technicalities to student loan debt forgiveness is the taxability of the forgiven debt. This means that a person could work in public interest for 10 years or have a low salary for 25 years and get all their consolidated student loan debt forgiven (and have affordable payments through out the repayment period), but the forgiven debt will be treated as taxable income.
Depending on how big that forgiven debt is, the tax liability may be completely unaffordable to the student loan borrower. Thus, this is one of the big potential flaws or big red flags to student loan debt forgiveness.
Recently, Senator Jeff Merkley (D-Ohio) introduced a bill called the Income-Based Repayment Debt Forgiveness Act. Most importantly, the Act “would ensure that students are not taxed on debt that is forgiven at the end of this process” under Merkley’s new repayment system.
Merkley goes further to explain that under the Income-Based Repayment Debt Forgiveness Act and his proposed Access to Fair Financial Options for Repaying Debt (AFFORD) Act, there would be a two type repayment system. The two type system has some similarities to the current student loan loan repayment system and the same premise as an income based repayment plan, but it would get rid of the public service loan forgiveness program and removes some of the other repayment plans.
Merkley describes the AFFORD Act in a press release on August 5, 2015 excerpted below.
“One would be the traditional fixed repayment plan, in which borrowers pay the same amount each month over a set period of time to pay off the full balance and interest on the loan.
The other would be an income-based repayment plan modeled on the current Pay As You Earn (PAYE) model. Under the PAYE model, the borrower would pay 10% of his or her discretionary income and have any remaining debt forgiven after 20 years.”
The full text of the bill is available here.