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Summary Opinions for 04/11/2014

Posted on Apr. 14, 2014

IMG_3122Villanova Law rained down its superior basketball talent on Temple Law at the fourth annual Deans’ Cup Basketball Tournament.  It wasn’t the rain, or thunder or lightning, that had Temple quivering in fear.  It was the blanketing Fogg that kept them in check.  Our own Keith Fogg, sporting the recreational spectacles (Rec Specs), participated again in this great fundraiser for the public interest fellows of both schools.  A crowd favorite, the raucous backing of his fans helped propel ‘Nova to a victory.

The cases in the round up this week are almost as entertaining as the spectacular sign in the photo.  We have jeopardy levies being upheld, even though the settlement officer wrongly decided the request for review was untimely, the Service failing to prove notice in TFRP cases with its computer log, bad puns involving Courtney Love and her band Hole, Mr. Hom claiming FBAR disclosure to DOJ is inappropriate again, and TFRP refund rejections not being an “IRS position” for administrative cost recovery:

  • The Tax Court upheld a jeopardy levy in Lee Ang v. Comm’r (not to be confused with the incomparable director, Ang Lee, although both did appear to attend NYU), where the settlement officer incorrectly determined that the request for review was untimely. As a side note, this case involved a nominee lien, which Keith wrote a great post on last week that generated some very interesting comments. In Mr. Ang’s case, the Court found that he was not prejudiced by the settlement officer’s incorrect finding that the request for administrative review of the levy was untimely.  Based on the record, and IRS settlement notes, that determination appeared to have little or nothing to do with the sustaining of the jeopardy levy, and it was Mr. Ang’s actions to obfuscate his holdings that resulting in the levy remaining in place.
  • Courtney Love has found herself in a tax Hole.  The IRS has slapped a $320k notice of tax lien on her.  One of greatest things about the notice of federal tax lien is the regular opportunities it gives to observe “stars” who do not pay their federal taxes.  While most federal tax matters are private, the notice of federal tax lien tells the world that someone owes taxes and it tells the amount due at the time of the filing of the notice.  Stars who fail to pay their federal taxes do for the collection division what high rollers who cheat on their taxes do for the criminal division.  This is the best advertising the IRS can get.
  • The District Court for Northern Florida in Thomas v. US  (couldn’t find the order online yet for free, but this link will take you to information on the docket) granted summary judgment for a taxpayer on a TFRP case finding the Service failed to meet its burden of proving proper notice.   In the case, proper notice was described as follows:

That statute states, “No penalty shall be imposed under subsection (a) unless the Secretary notifies the taxpayer in writing by mail to an address as determined under section 6212(b) or in person that the taxpayer shall be subject to an assessment of such penalty.” 26 U.S.C. § 6672(b)(1). The notice “shall precede any notice and demand of any penalty under subsection (a) by at least 60 days.” 26 U.S.C. § 6672(b)(2). The Internal Revenue Manual § explains that the IRS should fulfill this notice requirement by hand delivering or sending via certified mail a Form 1153 letter to the taxpayer. The Form 1153 letter gives notices of the assessment, contains a description of appeal rights, and allows the responsible party the opportunity to agree or appeal the penalty. I.R.M. § The notice must be sent to the taxpayer’s last known address, but proof of receipt is not required.

Relying on the 11th Cir. case in Bonaventure (almost identical facts but unreported), the Court found an unsigned Form 1153, and statements about proper procedure were not sufficient to show certified mailing of the notice to the taxpayer. Although other Circuits have dealt with what is proper notice, I could not find another Circuit dealing with this particular issue.  Court did not find that Service was entitled to presumption of official regularity.

  • From TaxProfBlog, we found this OIC settlement rate table on  The rate shows a steady increase in accepted OICs from 2008 to now, with an acceptance rates around 42% last year. Keith said to me he thought this had to do with more low income taxpayers using the program, and clearly qualifying, and few high income or asset taxpayers trying to qualify, but failing.
  • The IRS has updated its FATCA FAQs, increasing the content on registration of various entities.
  • Mr. Hom is tenacious.  The Northern District of California has tossed another of his counterclaims for wrongful disclosure between Treasury and the DOJ in his FBAR case (Docket No. C 13-03721).  We have covered Mr. Hom’s tax issues before on this issue here, and on his 90 day letter being invalid because it failed to include some TAS info here.
  • The Tax Court in Purciello v. Comm’r has decided that the Service was substantially justified in its positions taken against a taxpayer in a penalty case, when it seemed pretty clear the IRS did a terrible job in handling the matter…in this instance, the failures had nothing to do with the difficult to attain Section 7430 administrative costs.  The Purciellos had already recouped some legal fees related to a refund stemming from the same case, where the Service took the position that the refund claim was improper.  In the tax case related to the administrative handling of Purciellos’ claim, the Service eventually decided its position was incorrect.  The Court found that the Letters 3784 denying the claim did not officially take a position, and it wasn’t until the penalties were abated had the Service taken a substantially justified position.  The Service apparently also lost the case file, failed to follow proper assessment procedure, and was unresponsive for many years.  For Section 7430, the first of a notice of deficiency or an Appeals determination can generally be the Service position.  Courts have held that notice of deficiency has the same meaning as under Section 6212 (90 day letter), which isn’t applicable in TFRP cases. We’ve extolled the virtue of qualified offers in this blog in the past, but since the Service had not taken a position, I am not sure it would have helped the taxpayer here.  Perhaps it makes sense to consider a revision to the statute allowing a TFRP refund denial to be a position of the IRS.
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