#MeToo and the “Tax Cuts and Jobs
Act:” Time’s Up for the Law to Catch Up
Rachael Kohl,
The University of Michigan Law School
The rise of the #MeToo movement has created
vast waves across industries, continually highlighting an ever-present problem
in society and particularly in employment. The December 2017 “Tax Cuts and Jobs
Act” seemingly responded to the movement by adding a provision that removes any
tax deduction for “(1) any settlement or payment related to sexual harassment
or sexual abuse if such settlement or payment is subject to a nondisclosure
agreement, or (2) attorney’s fees related to such a settlement or payment.”
Internal Revenue Code (26 U.S.C.) 162(q). While the intent may have been to
identify abusers in these claims by dissuading confidentiality agreements, the
impact will likely have many other unanticipated effects in negotiations, case
valuation, settlement, and survivors’ desired confidentiality in an already
emotionally difficult claim. Many of these effects nullify the intended goal to
help survivors pursue their claims. Changing the tax structure to respond the #MeToo
movement shows legislative will to respond to this need. However, the tax code
is just a start to this needed conversation. This Article reviews the impact of
the new law and proposes revisions and additional ideas to better effectuate
needed changes in our laws to respond to the movement.
The Use-of-Money
Principle: A Conceptual Framework and
Unanswered Questions
Bob Probasco,
Texas A&M University School of Law
The government pays interest on tax refunds to taxpayers
and bills taxpayers for interest on additional balances due. As the IRS explains, “the underlying
objective is to determine in a given situation whose money it is and for how
long the other party had the use of it.” As tax law changed and tax practice evolved over time, however, the
initial statutory provisions were increasingly inadequate and surprisingly
difficult issues arose. Judicial
doctrines interpreted or modified the interest provisions of the Internal
Revenue Code to avoid inequitable results. Descriptions of these doctrines, often described as “the use of money
principle,” were sometimes unclear and the underlying concepts have been
imperfectly understood – if at all – by the IRS, taxpayers, and courts. This article establishes a framework for
understanding the analytically distinct issues, which require different
solutions:
·
“Whose
money is it?” – issues concerning changes in the tax liability reflected on the
return
·
“Who
has the use of it?” – issues concerning payments by taxpayers
·