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Summary Opinions for 11/22/2013

Posted on Nov. 25, 2013

There were a ton of really interesting cases this week, including Rand and Anderson, which we covered.  I touch on one or two more below, along with a handful of other items that jumped out at us this week.

  • On the subject of return preparers, the National Consumer Law Center has published a report synthesizing years of mystery shopper studies, and studies of return prep fees. It argues forcefully that the IRS should have the ability to regulate preparers, and presents model languages that states can use to regulate preparers.
  • More on return preparers, Tax Girl writes about the stubborn problem of ghost preparers, that is paid preparers who do not sign returns; this problem is the fly in the ointment/the skunk in the garden party/the fly in the chardonnay of efforts to provide additional oversight over preparers.
  • Briefing before SCOTUS has begun in Quality Stores. Miller & Chevalier’s Tax Appellate Blog has coverage here.  I thought this was just a boring substantive tax law issue, but to my surprise there is a great procedure issue lurking in the background.  Thankfully, Kristen Hickman, a law professor at the University of Minnesota has filed an amicus brief regarding whether Chevron or Skidmore provides the appropriate standard of review for an IRS revenue ruling.  The parties have not raised this issue, and Ms. Hickman is interjecting and requesting SCOTUS provide guidance regarding this issue when deciding the matter.   Patrick Smith has written an article regarding the same, a summary of which can be found here.  This is a really interesting issue, which extends to other IRS positions beyond regulations.  For instance, to what extent are webpage FAQs entitled to deference, because it somewhat seems like the IRS’s go to manner of conveying procedural and substantive direction to taxpayers lately. I think this is also intertwined with another very interesting question regarding whether these and other informal guidance can create taxpayer rights.  I have not yet read all of Ms. Hickman’s brief, but I suspect it follows Mr. Smith’s arguments in his article. Post-Mayo, IRS regulations should be reviewed like all other regulations under the two step Chevron framework.  But, under Mead Corp., not all administrative guidance is evaluated with that level of deference.  Usually, only regulations are promulgated under the required delegated authority from Congress and done formally enough (notice and comment) to qualify for Chevron.  Mead also states that when Chevron does not apply to the guidance, Skidmore v. Swift applies, where the weight is based on the document’s “power to persuade” based on the “thoroughness evident in its consideration; the validity of its reasoning; its consistency with earlier and later pronouncements; and all those factors which give it power to persuade, if lacking power to control.”  Smith further applies Skidmore to the revenue rulings in Quality Stores, and believes SCOTUS should give it little if any weight.  Ms. Hickman’s brief indicates there is confusion at the lower court level, and the Court could be tempted to apply Chevron deference to revenue rulings (not being argued by the Service).  Perhaps it is simplistic, but I think my view is that revenue rulings are promulgated under the APA, so the Service can’t be entitled to that level of deference.  I could easily be missing something though.
  • Because who doesn’t need more letters after their name. Going Concern posted a fake AICPA article about some new designations.  Some NSFW language, but kind of funny.
  • Les covered the discussion draft of the administrative tax changes earlier this week, which can be found here.  I would like to have Procedurally Taxing make a submission of comments, if we can find the time.  We would love to know our readers thoughts too (be forewarned, if they are insightful, I will likely steal them).
  • Courtesy of TaxProf Blog, a summary of the million or so pages discussing the international tax law draft changes.
  • More football players failing to follow tax laws –ex-packer, Leroy Butler, is being investigated in connection with his charity, which had its exemption revoked for failing to file its returns.  Sports Illustrated indicates that donations may have been solicited and accepted after the revocation of its exemption.
  • Service issued two notices of proposed revenue procedures, one revising the procedure for competent authority assistance (Notice 2013-78), and one for advanced pricing agreements (Notice 2013-79).  I believe there are some significant changes, and I will either try to write something up this week, or find content created by others on this to share.
  • Jack Townsend’s Federal Tax Procedure Blog covers Estate of Taneblatt v. Commissoner, in which the Tax Court excluded expert testimony that a taxpayer tried to backdoor into the matter.
  • The IRS Advisory Committee released its annual report.  Included in the suggestions were that the Service should have more voluntary disclosure programs, decrease 2848 processing time, and increase guidance to practitioners on professional obligations.  
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