Tax Notes Today's David Stewart chats with Francine J. Lipman, the William S. Boyd Professor of Law at the University of Nevada, Las Vegas, about her role as a Nevada tax commissioner and her recent column in Tax Notes on U.S. Supreme Court Justice Ruth Bader Ginsburg’s pro bono tax work.
Read the podcast episode's transcript below. The post has been edited for length and clarity.
David Stewart: Welcome to the podcast. I'm David Stewart, editor in chief of Tax Notes Today International. This week: a discussion with Francine Lipman. Francine is a professor of law at the University of Nevada, Las Vegas William S. Boyd School of Law. She also has a new regular column in Tax Notes. We talked about her career, the challenges of teaching tax law, marijuana taxation, and her new column. I'm joined on the phone by Professor Francine Lipman. Francine, welcome to the podcast.
Francine Lipman: Thank you very much, Dave.
David Stewart: You've just started a new column with Tax Notes. Why don't you tell listeners about yourself?
Francine Lipman: I am a law professor at UNLV, which is actually the only law school in the entire state of Nevada. I also serve the state of Nevada as a Nevada tax commissioner. I was appointed by Gov. Brian Sandoval (R) in 2016 to serve the state in that role.
David Stewart: Looking at your bio before we got started here, I see that you started out as a CPA but then went into law. I'm kind of curious about that career arc. What led you to where you are today?
Francine Lipman: I studied accounting as an undergrad and then went into public accounting as a CPA. I was a direct hire into the tax department, which was a little bit unusual then, but I really fell in love with tax. I also love going to school, so I was continuing to go to school, got an MBA, and then I wanted to continue my education and was trying to decide whether I should do a PhD or law and decided to go with law. It was really the academic experience that kind of drew me to law, but then I did practice with two big law firms in California doing tax, doing a lot of mergers and acquisitions work during the dot-com boom.
David Stewart: What led you back to academia?
Francine Lipman: I did enjoy practicing quite a bit. I loved the intellectual challenge, but like most tax professionals, realized tax practice and the practice of law is really 24/7. I really wanted to teach and pursue the opportunity to write and to think critically about tax. I am doing that and have been for almost two decades.
David Stewart: Now most recently in your teaching career you've had to adjust to the new reality of the Tax Cut and Jobs Act. Are you facing any challenges teaching the next generation of professionals?
Francine Lipman: Absolutely. Because of the timing of the Tax Cut and Jobs Act in the dead of night at the end of the year, we had law students who were basically sitting in classrooms, taking final exams with the old tax law. Within a couple weeks, I had an advanced federal income tax class that was starting, which is really a continuation of individual income tax, and the first day of class, we had to say, ‘Hey, what we just learned, what you just were tested on has completely changed.’ Casebook authors didn't even have a chance to update textbooks. Our code wasn't even really updated because it happened so quickly, so it was really just scrambling. I basically assigned the law, which as you know, is hundreds and hundreds of pages. It’s been really challenging to think about the Tax Cut and Jobs Act for law students, who woke up and the world had changed. What's fascinating, too, is everybody knows so much of the new law sunsets and so it's really hard to think about how to teach it, because you have to teach the old law as well as the new law. It's really overwhelming.
David Stewart: I'm sort of amused to listen to the academic side of this, being here on the journalism side. We spent the same period of time pouring through these things, trying to figure out what they were, and I hadn't actually thought about professors teaching the old law right up until the last moment.
Francine Lipman: Well, law students took their winter break and really were not thinking about what Congress is doing and then they come back and you have to say, ‘OK well, everything you've just really learned, we need to think about it differently,’ especially in areas like international tax.
David Stewart: How do you teach the international tax portions when everyone was still trying to figure it out as the semester is going on?
Francine Lipman: Since none of the casebooks have been updated, we had to go to the original source and trying to teach the original source as you're really trying to figure it out is messy. It's just not pretty, but that's consistent with what tax lawyers do, right? Tax is dynamic. In hindsight, it was a good exercise for students.
David Stewart: Alright, let's turn to another thing you mentioned earlier on about being one of eight Nevada tax commissioners. Can you tell me a little bit about that role?
Francine Lipman: Certainly. We have eight Nevada tax commissioners that are citizens and we each statutorily have to represent different demographics. For instance, there's someone who's in mining and there's someone who is in farming. We actually don't legislate or administer the gaming taxes, which as you might imagine are a significant amount of our revenue. That's a whole different commission. But we regulate sales and use tax, which is a huge revenue source. We don't have an income tax, but we do have a gross receipts tax on businesses. We have entertainment taxes. We have marijuana taxes that we regulate. We are just citizens; you don't have to be a lawyer. You don't actually have to have tax expertise, but you're appointed by the governor based upon some expertise that's relevant. We come together about once a month rule on regulations. We completely set up the whole marijuana regulation regime. The prior governor wanted the tax department to regulate marijuana, including all the health and safety issues, but if you think about it, that's a big responsibility because the federal government is not regulating marijuana at all. In Nevada, you can't smoke marijuana any place except in your home. A lot of tourists don't have homes there, so as a result what type of marijuana do you think people buy? Edibles, so we regulate edibles as well. It’s a little bit like a judge, but not exactly – we're more of an administrative regulatory body.
David Stewart: Now while you were working on these rules for marijuana, were there other states you could look to for examples of issues you needed to address?
Francine Lipman: Absolutely. This was actually voted on by the population, so there was a long period of time that we could think about it. The executive director of the tax department spent a lot of time in Colorado and Oregon and really went to school on those states' pros and cons, so we avoided a lot of missteps that other states had made because we were able to see what worked and what didn't work. We have had a really successful marijuana regulatory program. The prior governor really wanted it to be the gold standard of regulating marijuana, somewhat on par with how Nevada is looked at for regulating gaming. What's interesting is it took an enormous amount of time, and it still does because there's such a check and balance on the marijuana. We track it from seed to sale. It’s also a 100 percent cash business and so that creates all sorts of other issues. The Department of Taxation had to buy some really sophisticated cash counting machines because when someone walks in with $100,000 in cash to pay their taxes, you don't want to have a person counting it. They’ve had to invest in that and a lot more people to do auditing. So, it's been very interesting. The most interesting thing I think [is] even the IRS has to segregate the cash because it reeks so much of marijuana that they have special Febreze rooms where they spray the money.
David Stewart: I would not have thought about that. Let's turn to your new column that you'll be writing for Tax Notes. It's a quarterly column I understand. What sort of issues will you be focusing on?
Francine Lipman: I'm going to focus on pro bono tax. It might not be something that folks think about when they think about a tax practice, but since the mid 1990’s more and more of our social welfare programs are run through the income tax system. Why is that? Because we have had to and now it's really kind of set in stone, a welfare to work program. There really is not much out there for individuals in true welfare; it's almost all work fare. So how do you measure work? Well, typically we pretty much measure work every year on your income tax return. Congress has used the income tax system to deliver benefits for working lower- and middle-income Americans, and so tax practice for an enormous part of the population is about getting a wage subsidy. The problem with that is our tax system is so complicated that these individuals aren't really able to navigate the audit and the disallowances themselves. About almost 40 percent of all audits are now on the earned income tax credit , which is the refundable credit that lifts millions and millions of kids and their parents out of poverty every year. And in our tax system, if you don't respond, you lose. These people need representation, and the good news is across the country we have a wonderful network of pro-bono tax lawyers like myself. Every calendar call, every tax court calendar call is covered because so many individuals are pro se. They're representing themselves against the IRS in a federal courtroom when they've probably never even been in a courtroom. Can you imagine that? Think about how intimidating that is. It’s fascinating that welfare law is now really tax law, so I want to highlight this so that we can continue this robust pipeline and tell the pro bono tax stories, which are just heartwarming and give every tax lawyer an opportunity to participate.
David Stewart: Speaking of stories, your first column was published August 12. Can you tell me about your first column here?
Francine Lipman: Yeah. I'm excited about the first column. It's already out there, so I want everyone to download it and read it. It is called “Pro Bono Matters in On the Basis of Sex,” which is referring to the wonderful tax movie On the Basis of Sex that features Justice Ruth Bader Ginsburg and her husband Marty Ginsburg. As a tax lawyer looking at this, it's a lovely story because, first of all, you learn a lot more about Justice Ginsburg. You see a side of her that I am not sure that we really have seen before. It’s this magical love story and as a tax lawyer, we love when somebody loves a tax lawyer. Marty Ginsburg was a brilliant renowned tax lawyer who has since passed away, but he was also known as just a lovely, fun, engaging person. Here you have this lovely love story between Justice Ginsburg and her husband Marty and more importantly, they do this amazing tax pro bono work that sets the stage for Justice Ginsberg's career in gender equality. It's the case of Charles Moritz, who is really kind of a classic bachelor who's working hard and just trying to get by, but his mother, who's almost 90, is not well and she needs care. She of course doesn't want to go to a nursing home and so she moves in with him. Well, in order to live his life, he still has to work and so he gets a caregiver and he pays for it, and then he takes on his tax return the caregiver deduction. But the caregiver deduction was disallowed because he was a man. It was only allowed for women and for widowers or someone whose wife was institutionalized. So wonderful Marty Ginsberg saw this and he says, ‘Ruth, you have to read this case’ and she says, ‘I don't read tax cases.’ He says, ‘This one you'll want to read’ and that set the stage for gender equality because they appealed that case and they won in the appellate court. The opposing counsel then tried to assert the case to the U.S. Supreme Court and in that cert. request, they listed all the laws that discriminated on the basis of sex. The Supreme Court did not take the case, but Ruth Bader Ginsburg took that list and one by one started attacking all those laws. What I love about this movie is that it celebrates tax lawyers, Marty Ginsburg specifically, and it also shows the juxtaposition of how a pro bono case can literally change the landscape of the world. The actor who plays Charles Moritz does a wonderful job of demonstrating how that tax law really hurt him. He felt as if he was let down by the federal government and not allowed a deduction that made so much sense for him to take, but he couldn't take it because it discriminated. Justice Ginsberg flies to his house in Denver and tries to convince him to appeal the case, and at first he doesn't want to, but then she convinces him. And then when they're starting to think at some point of not proceeding, he says, ‘No, we have to do this.’ Like so many of our pro bono clients, he becomes personally and emotionally engaged. When they prevail, it changes the world, but it also changes his world and that's what I want people to get out of the movie.
David Stewart: Alright, I haven't seen the movie yet, but I definitely have to. I do have your column here, so I've got the next best thing.
Francine Lipman: See the movie. It’s not in theaters. You can get it online, I'm sure. It's really a wonderful movie.
David Stewart: I hadn't really thought about it as a movie about tax lawyers. I hadn't been aware of it until your column, so I will definitely take your advice and check this out.
Francine Lipman: Wonderful.
David Stewart: And I'm looking forward as well to your next column, which I'm sure you're already planning out, but until then I want to thank you for being here.
Francine Lipman: Thank you very much.
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