Although most U.S. corporations do not pay federal income taxes, over the last several years some corporations have been willing to report, and shell out to the Treasury, hundreds of millions of dollars in taxes that they did not owe. They did so to conceal the fact that they were playing with Monopoly money—fabricating profits as phony as the pastel-colored money used in the classic Parker Brothers board game. Of course, once the game was up, these corporations wanted to raid the community chest to get their tax money back. But is it appropriate to refund taxes in such circumstances? This Article traces the history of tax-refund suits and concludes that such suits are in essence claims in equity. This means that claimants are subject to well-established equitable defenses like the doctrine of unclean hands and equitable estoppel. This Article argues that given the potentially corrosive effects of tax fraud on the U.S. tax system, the assertion by the Internal Revenue Service of equitable defenses to earnings-inflation-related refund claims would provide a more effective penalty regime than the current statutory system. In making this argument, this Article necessarily traverses several areas of law, including corporate fraud, the history and development of equity, the rules versus standards debate, law and economics, risk management, optimal penalty theory and even a bit of tax policy.
Volume 90 - No. 1
- Note: Copyrighted Laws: Enabling and Preserving Access to Incorporated Private Standards
- Note: Embracing Ambiguity and Adopting Propriety: Using Comparative Law To Explore Avenues for Protecting the LGBT Population Under Article 7 of the Rome Statute of the International Criminal Court
- Note: Getting Back to Basics: Recognizing and Understanding the Swing Voter on the Supreme Court of the United States
- The Value of the Standard
- The Substantially Impaired Sex: Uncovering the Gendered Nature of Disability Discrimination
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