Publication Date
Spring 2019
Journal
Florida Tax Review
Abstract
Of course, many taxpayers manipulate their affairs to minimize their taxes. The new December 2017 limits on state tax deductions evidence, however, the more endemic nature of the sham problem. Some state government officials have joined the loophole quest on behalf of their citizens. For instance, some states have proposed new state tax credits for "voluntary" contributions to state charities. Treasury Secretary Mnuchin aptly challenged this "ridiculous" attempt to "dress up" nondeductible tax payments as deductible charitable contributions. Despite Mnuchin's convincing rebuke, state officials carry on with their ongoing avoidance efforts.
In addition, similar avoidance schemes permeate many other legal areas such as property law, contract law, family law, and copyright law. While some courts strike down the sham attempts, other courts are less vigilant. Occasionally, some courts even endorse the workaround to achieve a desired goal.
How should the legal system respond to all these legal gymnastics? First, lawmakers should avoid even sanctioned indirect workarounds. Even though intended as a narrowly circumscribed allowance, these endorsed maneuvers foster disrespect for legal requirements and create an air of legitimacy for other unintended manipulations. Instead, lawmakers should endeavor to achieve their desired ends more directly, without resort to these problematic formalisms.
Unsanctioned schemes present a more intricate challenge. After analyzing the reasons behind the current judicial inertia, this Article crafts a new sham defense system sensitive to the root causes. A precise, but limited, sham definition provides the first line of a defense against the most egregious cases. Next, a balanced summary judgment approach further reinforces the new sham definition. Finally, legislative recommendations for vulnerable provisions complete the necessary protection.
Volume
22
Issue
2
First Page
313
Last Page
362
Publisher
University of Florida Levin College of Law
DOI
https://doi.org/10.5744/ftr.2019.1000
Disciplines
Administrative Law | Banking and Finance Law | Constitutional Law | Consumer Protection Law | Housing Law | Law
Recommended Citation
Mitchell L. Engler,
Sham on You: Too Good to Be True,
22
Fla. Tax Rev.
313
(2019).
https://doi.org/10.5744/ftr.2019.1000
Included in
Administrative Law Commons, Banking and Finance Law Commons, Constitutional Law Commons, Consumer Protection Law Commons, Housing Law Commons
