TaxProf Blog

Danny Werfel (Duke) presents Risk Framework For The Use Of Artificial Intelligence In Tax Administration and Practice at Duke today, as part of its Tax Policy Seminar hosted by Larry Zelenak:

This tax policy seminar will focus on a potential new risk framework for the responsible use of artificial intelligence (AI). In conversations with tax practitioners, administrators, and advisors, a consistent theme has emerged: while interest in AI adoption is accelerating, there is not yet a widely accepted, trusted framework to help organizations identify, evaluate, and mitigate the associated risks.

This author intends the risk framework to help prevent rapid integration of AI outpacing necessary guardrails. The proposed framework introduces two distinct risk registers: one designed for tax preparers (“Stack Model”) and another for tax administrators (“Quadrant Model”). While these registers reflect the unique operational challenges faced by the public sector vs. the private sector, they also reveal important areas of overlap, particularly in data integrity, algorithmic bias, and the protection of taxpayer rights.

Andrew Appleby (Tennessee, SSRN) presents Constitutional Commandeering, 62 Wake Forest L. Rev. ___ (forthcoming 2026) at Florida State today as part of its Law and Business Speaker Series hosted by Jeffrey Kahn:

The anti-commandeering doctrine has emerged as one of the most consequential principles in contemporary federalism jurisprudence, with implications extending across immigration enforcement, firearms regulation, data privacy, and a widening array of domains where federal and state authority intersect. Yet despite the doctrine’s growing prominence, courts and scholars lack a coherent framework for distinguishing permissible federal preemption from unconstitutional commandeering of state governments. This Article argues that state taxation provides an ideal lens through which to develop and evaluate such a framework. Taxation lies at the core of state sovereign authority and serves as a cornerstone of fiscal federalism.

Congress has shown an increasing willingness to enact statutes that restrict state taxing power—legislation that tests the boundaries between legitimate Supremacy Clause preemption and impermissible commandeering.  Through a detailed analysis of five significant federal tax preemption efforts, including proposed federal legislation that would preempt state regulation and taxation of artificial intelligence (AI), this Article demonstrates that current jurisprudence fails to provide adequate guidance for resolving this tension.

After tracing the doctrinal evolution of both the anti-commandeering doctrine and federal tax preemption efforts, this Article proposes two novel analytical frameworks to determine when federal restrictions on state taxing authority cross constitutional boundaries. The first offers a bright-line rule that provides certainty and ease of application; the second presents a multi-factor balancing test that affords greater contextual sensitivity. Both frameworks aim to preserve the structural integrity of fiscal federalism while accommodating legitimate federal interests in regulatory uniformity. If the anti-commandeering doctrine is to remain a meaningful constraint on federal power, it must protect the foundation of fiscal federalism: state taxing authority.

Ted Afield (Georgia State) presents A Catholic Social Teaching Approach to Tax Administration and Enforcement and From Rerum Novarum to Modern Catholic Thought today at Georgia, as part of its Tax Policy Colloquium Series hosted by Assaf Harpaz:

This article explores modern Catholic perspectives on taxation, from Rerum Novarum to the present day, using the United States as a case example to illustrate how one country’s Catholic thinkers have applied more generalized Vatican statements on the issue. While modern Catholic social teaching has only addressed taxation to a limited degree, it has situated it within key pillars of Catholic social teaching, such as the common good, subsidiarity, solidarity, and a preferential option for the poor. Modern Catholic social teaching on taxation engages with the tension between solidarity and subsidiarity, two foundational principles of Catholic social thought. Whereas solidarity emphasizes the interdependence of members within a community and their shared responsibility towards each other, subsidiarity argues for decentralization, asserting that social issues should be dealt with at the most local level possible. As a result, the preferential option for the poor serves as a mediating principle to help resolve this tension. This chapter describes the relevant Catholic social teaching principles and then traces both Vatican statements and the views of United States thinkers throughout the late-nineteenth, twentieth, and early twenty-first centuries to provide a picture of the current state of Catholic thought on taxation in the United States as an example of the application of limited modern Vatican guidance on taxation.

For more information on the Tax Policy Colloquium, please contact Assaf Harpaz.

Lucy Msall (Chicago) presents Never-Realized Capital Gains at Toronto, as part of its James Hausman Tax Law and Policy Workshop Series hosted by Ben Alarie:

Appreciated assets are subject to capital gains tax when sold by their original owner. Yet under policies of “stepped-up basis,” many countries forgive this latent tax obligation if the asset is instead transferred, unsold, to the owner’s heir. In the first part of this paper, we create novel data on capital gains in Norway. A large fraction of household wealth, especially at the top, comes from unrealized asset appreciation and thus contains latent capital gains tax liability. Much of this latent liability is never taxed: outflows from the stock of unrealized capital gains are relatively rare and Norway’s stepped-up basis policy gave yearly exemptions equal to 40% of the yearly tax base of realized capital gains. In the second part of the paper, we study how realization and intergenerational transfers changed when Norway moved from a system of stepped-up basis to a carryover system in which heirs inherit their predecessor’s latent capital gains tax obligation when they inherit appreciated assets. Using two difference-in-difference empirical strategies that exploit cross-sectional variation in either portfolio composition or investor age, we estimate that the removal of step-up precipitated large increases in taxable realizations (a 33% increase in capital gains tax collections) and a corresponding reduction in intergenerational transfers attributable to highly-appreciated stock.