Wednesday, April 13, 2022
Good Intentions: Administrative Fiat And The Basic Welfare Exclusion
Samuel D. Brunson (Loyola-Chicago; Google Scholar) & Christian A. Johnson (Widener), Good Intentions: Administrative Fiat and the Basic Welfare Exclusion, 99 Wash. U. L. Rev. __ (2022):
Since its introduction in 1913, the federal earnings tax has considered earnings expansively, subjecting just about all forms of enrichment as gross earnings until Congress explicitly exempted the earnings from taxation. However within the earnings tax’s second decade, the Bureau of Inside Income created an exception to the broad attain, an exception not grounded in any sort of Congressional enactment. The Bureau’s apply of excluding sure advantages started innocuously within the late Nineteen Thirties by excluding sure social safety advantages from gross earnings. Over the many years, the IRS has used what it now refers to because the “normal welfare exclusion” to exclude from gross earnings all the pieces from subsistence advantages to funds made to protect historic buildings. Confronted with troublesome questions surrounding poverty and skill to pay, the final welfare exclusion has offered a means for the IRS to resolve complicated and unanticipated questions on whether or not sure authorities welfare advantages represent gross earnings.
The overall welfare exclusion, nevertheless, depends upon an enigmatic basis of administrative rulings and selections fully unhooked from any statutory authority or course. Whereas this administratively-created normal welfare exclusion is broad and impacts tens of hundreds of thousands of taxpayers, it nonetheless has been largely neglected by taxpayers, tax students, and even legislators.
This Article does three issues. First, it comprehensively traces the event and evolution of the final welfare exclusion. Second, it highlights the issues created by the advert hoc nature and lack of tether to any legislative authority. Third, it offers a path by which the final welfare exclusion can proceed to learn low-income taxpayers whereas decreasing the complexity and overreach of the IRS.
https://taxprof.typepad.com/taxprof_blog/2022/04/good-intentions-administrative-fiat-and-the-general-welfare-exclusion.html
