IRS Modifies Position On Raising Jurisdictional Defense In Estate Tax Installment Cases

UIL Number(s) 6166.00-00, 7422.06-00

This is in response to a request that we reconsider the Service's position described in John G. Rocovich, Jr. v. United States, GCM 39839, Tr-45-17-91 (March 1, 1991). That memorandum, in turn, reconsidered the Service's position described in * * *, GCM 35696, I-22-74 (February 27, 1974). GCM 35696 concluded that a defense based on Flora v. United States, 357 U.S. 63 (1958), aff'd on reh'g, 362 U.S. 145 (1960), should not be raised when a section 6166 election has been made and the taxpayer has brought suit to challenge the correctness of the amount of its liability before paying all of its section 6166 estate tax installments.

We continue to believe that it was proper to revoke GCM 35696 in light of the court decisions cited in GCM 39839. We acknowledge, however, that some doubts remain concerning the application of those court decisions to cases with dissimilar facts. We recommend, therefore, that the Service adopt a case-by-case analysis of the applicability of the Flora defense to cases being litigated that involve taxpayers who have made section 6166 elections. GCM 39839 is modified by suspending the analysis and conclusion to the extent inconsistent herewith.