VOLUME 164, ISSUE 4 March 2014


As most of us are aware, noncompliance with the tax law can lead to tax penalties, which almost always take the form of monetary sanctions. But noncompliance with the tax law can have other consequences as well. Collateral sanctions for tax noncompliance—which apply on top of traditional tax penalties to revoke or deny government-provided benefits—increasingly apply to individuals who have failed to obey the tax law. They range from denial of hunting permits to suspension of driver’s licenses to revocation of passports. Further, as the recent Supreme Court case Kawashima v. Holder demonstrates, some individuals who are subject to tax penalties for committing tax offenses involving “fraud or deceit” may even face deportation from the United States.

When analyzing sanctions as incentives for tax compliance, tax scholars have focused almost exclusively on the design and implementation of monetary penalties. This Article, in contrast, introduces the collateral tax sanction as a new form of tax penalty that does not require noncompliant taxpayers to pay the government money and that does not require a taxing authority to implement it. Drawing on behavioral research and experiments in the tax context and other areas, I argue that collateral tax sanctions can promote voluntary tax compliance more effectively than the threat of additional monetary tax penalties, especially if governments increase public awareness of these sanctions. Governments should therefore embrace collateral tax sanctions as a means of tax enforcement, and taxing authorities should publicize them affirmatively.

After considering the effects of collateral tax sanctions under the predominant theories of voluntary compliance, I propose principles that governments should consider when designing collateral tax sanctions. These principles suggest, for example, that initiatives to revoke driver’s licenses or professional licenses from individuals who fail to file tax returns or pay outstanding taxes would likely promote tax compliance. However, whether the sanction of deportation for tax offenses involving fraud or deceit will have positive compliance effects is far less certain. Finally, I suggest how taxing authorities should publicize these sanctions to foster voluntary compliance.

A U.S. firm buying and selling its own shares in the open market can trade on inside information more easily than its own insiders because it is subject to less stringent trade-disclosure rules. Not surprisingly, insiders exploit these relatively lax rules to engage in indirect insider trading: they have the firm buy and sell shares at favorable prices to boost the value of their own equity. Such indirect insider trading imposes substantial costs on public investors in two ways: by systematically diverting value to insiders and by inducing insiders to take steps that destroy economic value. To reduce these costs, I put forward a simple proposal: subject firms to the same trade-disclosure rules that are imposed on their insiders.

The traditional view of the federal administrative state imagines a bureaucracy consisting entirely of executive agencies under the control of the President as well as regulatory commissions and boards that are more independent of the White House. Administrative law clings to this image, focusing almost entirely on these conventional agency forms. The classic image, however, is inaccurate. The reality of the administrative state is more complex.

Contrary to the traditional view, a considerable bureaucracy exists outside of executive agencies and independent regulatory commissions: the largest employer of nonmilitary government employees, the U.S. Postal Service; the only major operator of passenger trains in the country, Amtrak; the organization that ended the career of cyclist Lance Armstrong, the U.S. Anti-Doping Agency; the primary responder to domestic emergencies, the National Guard; the major international lender to developing countries, the International Bank for Reconstruction and Development, a part of the World Bank group; and the federal government’s primary oversight agency, the Government Accountability Office, are a few examples.

This bureaucracy lives largely at the boundaries. There are organizations at the border between the federal government and the private sector. There are organizations at the border between the federal government and other governments, including those of states, foreign countries, and Native American tribes. And there are organizations entirely within the federal government that do not fit squarely within the Executive Branch, including but encompassing far more than independent regulatory commissions and boards. The variety, number, and importance of these organizations greatly complicate the structure of the federal bureaucracy as widely perceived.

To widen the lens on the administrative state, while trying to retain some tractability, this Article locates and classifies the missing federal bureaucracy along the borders of more conventional categories and other important boundaries. In addition to placing these missing parts on the bureaucratic map, it also considers movement to and from the center of these categories. The heart of this Article theorizes about these missing components, specifically why political actors would create bureaucracy at the boundary. Under the theory advanced here—and seemingly in reality—these entities are actually the ordinary outcome of the agency design process. This Article also considers whether their creation serves social welfare or democratic legitimacy objectives, suggesting that efficiency may not always trump accountability in these alternative agency structures. Finally, this Article examines important legal issues surrounding these other bureaucracies and how these entities might shape established law and governance of federal agencies.


“This employee is being terminated due to violation of company policy. The employee is gay.”

This was the reason Cracker Barrel stated for dismissing Cheryl Summerville, a cook for the restaurant chain, on her official separation notice. Cracker Barrel fired as many as sixteen employees pursuant to a company policy, promulgated in January 1991, stating that it was “inconsistent with [Cracker Barrel’s] concept and values and . . . with those of [its] customer base, to continue to employ individuals . . . whose sexual preferences fail to demonstrate normal heterosexual values which have been the foundation of families in our society.” In the face of criticism and a boycott by various groups, namely, the Atlanta chapter of Queer Nation, the Company rescinded its policy; however, at the time of the statement, the fired employees had not been rehired. Concerned about the impact of the adverse public reaction on Cracker Barrel’s sales, the New York City Comptroller’s and Finance Commissioner’s offices, as trustees of several of the city’s pension funds that collectively owned about $3 million of Cracker Barrel stock, submitted a shareholder proposal on behalf of the New York City Employees’ Retirement System, requesting that the company formally prohibit discrimination based on sexual orientation. In a no-action letter, “the [SEC] not only agreed that the proposal could be excluded” from the company’s proxy materials but also outlined a new standard—the “Cracker Barrel Standard”—which dictated that employment-based shareholder proposals would “always be excludable by corporations,” even if they implicated “significant social policy issues.” The 1992 Cracker Barrel shareholder proposal was the first of its kind to raise the issue of LGBT employment protections —after the SEC’s no-action letter, it could have been the last. However, almost twenty years after the SEC’s decision, the use of shareholder proposals to garner workplace protections for LGBT individuals has been extraordinarily successful.

Since 2000, forty-one states have passed appeal bond reform statutes, a tort reform measure that, in some shape or form, caps the amount of a supersedeas bond a defendant must secure in order to stay the execution of a judgment while pursuing an appeal. The state statutes vary widely in their operation, but their underlying goal is to protect a defendant’s right to appeal massive damages awards without putting himself in dire financial straits just to secure a sufficient supersedeas bond. Prior to the wave of reform beginning in 2000, state courts often required a bond in the amount of the full judgment plus costs and interest, which could be prohibitively expensive if the verdict was for hundreds of millions—or billions—of dollars. This Comment addresses whether state statutes capping supersedeas bond amounts are applicable in federal courts exercising diversity jurisdiction, or whether such statutes conflict with Federal Rule of Civil Procedure (FRCP) 62(d)—the rule governing postjudgment stays pursuant to supersedeas bonds.

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