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Procedure Roundup for 10/11/2013

Posted on Oct. 12, 2013

Excluding all the horror stories about the Service not being available, and the Federal Courts bracing for shutting down, things seemed a little slow.

Here is this week’s slimmed down roundup:

  • Jack Townsend on his criminal tax blog summarized the Service informational web page about procedure during the shutdown.  We stated before, and Jack highlights, the fact that the Service has indicated refunds are not being processed.  Interestingly, I received a sizable refund check today (it is Thursday, 10/10/13 as I write this) from the Service that was dated October 8, 2013.  I guess some refunds that were already somewhat processed are still cut by the Treasury.
  • SCOTUS has declined to review Schoppe v. Commissioner, which was decided by the Tenth Circuit, and highlighted a longstanding split regarding whether or not a taxpayer’s filing of a bankruptcy petition operates as a stay to debtor’s appeal of his adverse tax decision to the Tax Court under 362(a)(1) of the Bankruptcy Code.    The Tenth Circuit’s opinion can be found here.  The majority of Circuits, including the Tenth, who have considered this issue have held that the debtor’s proceeding in the Tax Court is not a continuation of the IRS assessment and proceedings.  The Ninth Circuit has held otherwise.
  • The Ninth Circuit in United States v. Pike held that a taxpayer who had forward dated a stock purchase agreement committed an affirmative act of tax evasion; although the forward dating of the documents did not reduce his stated tax liability, the Ninth Circuit concluded you could infer from the act an affirmative willful attempt to evade because its likely effect was to mislead or conceal some aspect of tax fraud.  Forward dating the agreement could have made it seem like the shares were received in the year following the actual year of receipt.
  • Fed Courts will remain open until October 17, except the Tax Court which is already shutdown.
  • IRS released some PTIN stats, which can be found here.  Of the 690,000 plus people with PTINs, about 32,000 are lawyers (one of those is mine), just over 214,000 are accountants, and 46,795 are enrolled agents.  That is a lot of PTINs.
  • Patrick J. Smith, a lawyer at Ivins, Phillips in DC, and someone who has written a bunch of great articles on regulations and the APA, wrote a response to the Harvard Law case comment on Dominion Resources which can be found here.  Mr. Smith’s bio is here, and you can find his past articles there.  The Harvard case note argued that regulations invalidated under the arbitrary and capricious standard of the APA would likely be remanded to the regulatory agency for corrective action without vacating.  Mr. Smith’s article takes the opposite position arguing Treasury Regulation are likely to be vacated, specifically because the Anti-Injunction Act forces litigation over Treasury Regulations to occur far after it would in most other regulatory regimes.
  • TaxProfBlog has the abstract of Professor Diana Leyden’s article, “Section 7433’s Statute of Limitations:  How Courts Have Wrongly Turned a Taxpayer’s Exclusive Sword into the IRS’s Shield Against Damages.”  Professor Leyden’s comment argues that courts are undermining the unauthorized collection statute by setting the start of the statute of limitations unreasonably early, at the time of the initial contact regarding collection, and not tolling the limitations period while collection actions continue. This issue connects with Keith’s post a couple of weeks ago where he argued forcefully for a reconsideration as to when collection activity should commence for purposes of bringing a request for relief from joint and several liability.
  • This isn’t really important, but I will cover the (Tax) Miseducation of Lauryn Hill, because it’s a slow week.  Ms. Hill was recently released early from jail, where she was doin’ time for tax evasion.  She claimed to have been thrust into a situation that she didn’t really understand, but that wasn’t found to be a valid reason for failing to file taxes for five (or more) years. This Refugee Allstar, the proverbial caged bird, dropped a single the day of her release.  I don’t know the reason she sings, but it may now be for restitution. Our colleague in the blogosphere, Kelly Phillips Erb, taxgirl, has a nice piece summarizing Ms. Hill’s busy 24 hours
  • Accounting Today has an interesting summary of an article regarding tax avoidance and the negative impact on human rights in developing countries, which is found here.
  • Here is a student paper arguing the acceptance of the “Turbo Tax” defense by the Tax Court in Olsen v. Commissioner was improper, and there were other, more appropriate, reasons to waive penalties.  This paper has a good summary of the history of the Turbo Tax defense, but I highlight it more so because the petitioner’s name was Kurt Olsen.  My father is also named Kurt Olsen; I’m pretty sure this wasn’t my father, though.  I think he probably would have brought up going to the Tax Court.
  • On Jack Townsend’s tax procedure blog, he has a write up of the recent Kaplan case, which can be found here.  This was a FICA/divisible tax refund case, where the Court dismissed the case for lack of jurisdiction because the Court felt the taxpayer failed to prove the $100/quarter paid under Flora was sufficient to pay the outstanding tax for any one employee.  Mr. Townsend provides a very nice summary of Flora in the blog before jumping to the case.
  • This week on Procedurally Taxing we covered the travails of a local convicted political felon whose story will open up a world of tax procedure discussion, including jeopardy assessments and the 2010 legislation allowing for assessment of restitution; a discussion of the potential to use license revocation as a means to encourage tax compliance; and a write up of the Woods Supreme Court oral argument which drew the Supremes to the fun world of TEFRA.
  • For those who cannot get enough TEFRA, others have also touched on the Supreme Court oral argument this week in Woods; including Reuters and the Miller Chevalier appellate tax blog.
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