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Summary Opinions for 12/20/2013

Posted on Dec. 24, 2013

Happy Holidays!!  And, sorry for the lack of posts over the last week or two. This will likely be the last post until the week of December 30.  We will be taking a brief respite to enjoy family time and the holidays (Keith is a new grandpa; Les is a newlywed—Congrats Les!!!), but will be back in full force in 2014.  Until then, there are a few procedure items below.  Have a happy and safe new year!

  • Jack Townsend has been prolific over the last week on both his Federal Tax Procedure Blog and his Federal Tax Crimes Blog.  It is all worthwhile, but one item I found very interesting was his write up on his Federal Tax Crimes Blog on the Clarke case.  The post is regarding the government filing a cert petition with SCOTUS, which we had previously indicated was coming.  Jack’s post has the entire 11th Circuit holding, which is somewhat counter to other circuits’ view of the issue, and portion of the filings, including the questions presented.  It comes down to whether a taxpayer is entitled to an evidentiary hearing on a summons if the taxpayer alleges improper purpose.  In Clarke, the taxpayer alleged that summons was only being issued to extend the statute of limitations.  Jack also includes large portions of his book to explain the issue, which is very useful; Saltz Book hits the circuit split in the issue in the update coming out in the next month.  Great write up, and a case that we will be watching.
  • Earlier this week I wrote about a client of mine who was the target of an IRS scam.  Wandering Tax Pro this week posted a very similar story here.
  • The Supreme Court has denied cert in Stocker v. United States, where the taxpayer has requested SCOTUS review the Sixth Circuit’s jurisdictional dismissal of a refund suit based on the taxpayer’s failure to show he filed amended returns within the three year period under Section 6511(a).  In declining to review the case, SCOTUS failed to address a circuit split on taxpayers using methods other than those under the statute to establish presumption of delivery.  The underlying issue is interesting here, but so is the fact that the 6th Circuit referred to Section 6511(a) as jurisdictional.  The trend over the last few years in non tax areas and some tax deadlines (including the look back period under 6511) has been to hold that many statutory time limits are not jurisdictional.  A few weeks ago, SCOTUS declined to review Boeri; the underlying Court of Appeals for the Federal Circuit decision can be found here.  Boeri applied to Section 6511(b), and clearly states this is not jurisdictional, relying on SCOTUS language. I will hopefully have more on Boeri soon. Regarding the evidence rule, the Sixth Circuit held that Section 7502 provided the sole exceptions to the physical delivery rule, and it would not look at additional evidence.  The Tax Court and various other Circuit Courts have allowed other evidence to show the document was timely mailed.  Had the Sixth Circuit determined Section 6511 was not jurisdictional, the taxpayer may have had an easier time making equitable arguments regarding the evidence and the treatment of its mailing.
  • TaxProfBlog has a summary of an article written by Calvin Johnson, which argues that for the reasonable cause exception to penalties, taxpayers should not be able to rely on the opinions of their own accountants or lawyers due to the inherent conflict in the practitioner desiring to retain the business.  We have lamented the attack on advisor reliance as a defense here at Procedurally Taxing, but this article approaches the matter in different way.  This is somewhat an extension of the promoter rationale for disallowing the defense.  I understand the position, but think it would be unrealistic for most taxpayers to go to those lengths.  Perhaps over the holiday, I will read the entire article and see if this is addressed.
  • The Service has released PMTA 2013-15, which has a good question and answer summary of various potential late filing scenarios with partnerships and S-corps, and what, if any, penalties should be imposed.
  • The Northern District of Florida has granted the Service’s request to levy the homestead of taxpayers in In Re Sanders, finding there were no reasonable alternatives and the property was not exempt under the state homestead exemption.  Case can be found at 112 AFTR2d 2013-7021.  Docket number is 4:13-cv-00352.  I could not find a link to the order – Sorry about that.
  • In the wake of Woods, SCOTUS has declined cert in two additional valuation misstatement cases, Alpha, LP v. United States and Crispin v. Comm’r.
  • In Bibby v. Comm’r, a somewhat unusual CDP case arising under 6330(f), which gives the taxpayer the right to a hearing within a reasonable time after a jeopardy levy.  This case involved a jeopardy levy and refund scam involving inflated credits.  The Tax Court sustained the levy and Appeals’ rejection of taxpayer’s suggested installment agreement because the taxpayer did not cooperate or respond to information requests. The refund scam included $203,000 of overstated withholding credits, among other inaccuracies.  The taxpayer’s behavior prior to his appeal, combined with the lack of responsiveness and cooperation by the taxpayer (who was represented), persuaded the Court that there was no abuse of discretion by Appeals in sustaining the levy and denying the installment agreement.
  • So 2013 doesn’t seem like a great year for MC Hammer.  Jay-Z gives him a shot out in Holy Grail, which would seem cool, except it is highlighting how he lost everything in the late ‘90s.  “I’m the [man], caught up in all these lights and cameras, but look what that [stuff] did to Hammer…bright lights is enticing…but soon as all the money blows, all the pigeons take flight.”  Jay-Z does also give a shout out to the Service in the song, but the language is a little colorful for these pages.  Mr. Hammer also seems to have some trouble with the Service, with TMZ reporting the IRS dropped an $800,000 lien on him.  Best bad pun line from TMZ is that “He got to PAY just to make it today”.  Hammer apparently tweeted that he had paid this debt, and has a receipt “stamped by a US Federal Judge”.  Do judges take payment and give receipts?
  • I’ve noted my interest in both the estate tax and tax procedure before on the blog, so I’m of course thrilled to comment on the Service’s release of PMTA 2013-014, which provides the Service’s position on whether CDP rights arise for a transferee of property from an estate when there has been an estate tax lien under Section 6324(a)(1), or the “like lien” described in (a)(2).  Chief Counsel has taken the position that the transferee is not entitled to CDP rights, and the regulations only allow CDP notice and hearing for “taxpayers”.  Prior guidance indicated that CDP rights did arise with a “like lien”, so this is a change in policy.  Practitioners handling a “like lien” situation should review this and prior guidance, and may find that an argument can be made in favor of providing CDP rights.
  • The Service has issued updated guidance on authorizing agents to act under Section 3504 for FICA and employment taxes.
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