The Taxation Section is pleased to announce its third annual Law Student Writing Challenge. Students are asked to write a paper analyzing the tax-related issues in connection with the question below.
Challenge participants will be evaluated on their research, analysis, persuasiveness, and writing ability. The review panels will choose an overall winning entrant to the Challenge who will be awarded a $1,000 cash scholarship. The other three winners will each receive a $250 cash scholarship. Each of the four winners will also have their submission considered for publication in the Michigan Tax Lawyer.
Eligibility: Eligible participants must either:
- be enrolled, as of August 1, 2021, and continuing through September 30, 2021, at an ABA-accredited law school that is located in the State of Michigan; or
- be enrolled, as of August 1, 2021, and continuing through September 30, 2021, at an ABA-accredited law school that is located anywhere in the United States and, within the last two years, been employed or had an unpaid internship at a Michigan office of a law firm, accounting firm, or governmental agency
Students wishing to confirm eligibility before participating may email the Taxation Section’s Program Facilitator, Mary Owiesny, at firstname.lastname@example.org, with their specific circumstances.
Format: Each participant must write a response to the challenge question in the form of an email to the client that otherwise conforms to the specifications for submission to the Michigan Tax Lawyer. The response should be no more than 1,500 words. The response itself should not include author information, which will be separately included with the submission packet. The title of the response should be “Law Student Writing Challenge.” Participants are expected to draft their submission independently and without the assistance of others.
Submissions: Participants must submit their response by email to the Taxation Section’s Program Facilitator, Mary Owiesny, at email@example.com on or before September 30, 2021. The submission must be a single PDF document that includes (1) a cover sheet with the student’s name, law school, and contact information, (ii) evidence of their enrollment at a U.S. law school and, if a non-Michigan law school, proof of employment or internship meeting the requirements for eligibility, and (3) their paper.
Review process: The review process will be conducted by panels of the Taxation Section. The author’s identifying information will not be known by the reviewers during the review. Reviewers will award points to each entry based on, in no particular order, (1) substantive analysis, (2) conciseness, (3) format, (4) writing style, and (5) originality. The selection of the top submissions will be in the sole discretion of the Taxation Section.
2021 Law Student Writing Challenge Question:
Your client is Shannon Friendly. She has a job as a graphic designer and earns a salary of $50,000 per year, but is drowning in student loan debt. In 2019, she started a side hustle designing websites for local businesses. It really took off and she had gross receipts of $50,000 for that year. She did not know how to claim this income or her $15,000 of business expenses on her tax returns. Her friend, who is a plumber, told her that since it is side-income and not subject to tax withholding, she does not have to include in her tax return. He also commented, “it’s not like the IRS is ever going to know you received this money, right?” So, she just left it off of her 2019 tax returns.
On February 24, 2021, she received a CP2000 notice from the IRS for tax year 2019. The notice informs her that the IRS is assessing her the following: (1) additional income and self-employment taxes of $17,630; (2) interest in the amount of $1,586; (3) a negligence penalty of $3,526; and (4) a penalty for failing to make estimated payments in the amount of $4,407.50. This notice is based on the IRS receiving multiple 1099-MISC from all of Shannon’s clients, which totals $50,000.
Shannon had no idea that her clients would file 1099-MISC with the IRS. She thought only she got a copy of them. She is very worried that she is in a lot of trouble and is going to lose everything she’s been working so hard for. Shannon thinks it is unfair that they included all of her business income, but did not account for her business expenses. She also had no idea she had to make estimated payments on her side-gig income and doesn’t understand why there is a penalty for something that she did not know about. Write her an email summarizing your plan to respond the notice and deal with the penalties. She will also need to understand the IRS procedures involved in resolving this situation. In addition to advising her on the current mess, your answer should also explain her specific filing and payment obligations in the future.