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Summary Opinions for 12/06/2013

Posted on Dec. 7, 2013

I’m sure you all know Nelson Mandela died this week.  One of the first political discussions I can remember having was with my father about Nelson Mandela.  Not really a discussion; more of him explaining Mr. Mandela’s imprisonment.  I was probably five, maybe six, and it was prompted by hearing The Specials’ song “Nelson Mandela”/ “Free Nelson Mandela”.  I was dumbfounded by how he could be locked up, as everyone (my father & the Specials) so clearly knew he was wrongly jailed.  The unfolding of his story impressed upon me how lucky I was in the United States, where I now get to write for a blog that routinely criticizes aspects of the government, how much stronger he was then I probably ever could have been, and the power of music to help spread stories and political ideas such as his.  I am saddened by his passing, and very thankful for what he was able to accomplish.  To the tax procedure:

  • Let’s start with a little more on Woods, which we had some initial coverage on here.  Jack Townsend’s initial post highlighted Justice Scalia’s take down of the Bluebook as a persuasive document in statutory construction, which is found here, and was echoed by various other sources, including TaxProfBlog.  Professor Steve Johnson from Florida State posted his initial reactions on TaxProfBlog here, and as expected they are insightful and illuminating.  Professor Johnson’s first point is that TEFRA’s “utility [has] passed”.  I can recall Professor James Maule hammering this point in Partnership Tax years ago.  Professor Andy Grewal also posted on the Jurist.  Professor Grewal had filed an amicus brief in the matter, raising issues with the calculations under the regulations, which had not been raised by the taxpayers.  In his post, he also highlights the likely invalidity of the 1987 temporary regulations, which is a worthwhile discussion for this case and all others that deal with stale temporary regs post-Mayo. Jack Townsend on his Federal Tax Procedure Blog had a follow up post regarding Scalia potentially backdooring some legislative history into his review.  Another good post can be found at Jackeltaxlaw, where Monte Jackel provides a good summary and some interesting commentary.  As a side note, and I mean no offense by this, Monte Jackel is a great name.  It seems like he should be a PI in a gritty crime novel, or a wealthy, nefarious criminal.  There is a great back and forth between The Jackel and Andy Grewal (far less intimidating name) in the comment section regarding SCOTUS expressing explicitly or not an opinion on the district court’s application of the economic substance doctrine, which is also worth a read.  It ends with a planned meeting, involving booze, where the two of them are going to save the tax system.  It is not inconceivable that the two of them, intoxicated, could best Congress.
  • World Cup news, which I’m sure many of you have seen, has the US playing Ghana, Germany and Portugal in the first round.  This will be a tough row to hoe.  Also, a brutal travel schedule for the Yanks.  I’ll work on figuring out how to tie this to tax procedure before games start in June.
  • Anyone know Jeff Stimpson who writes the tax round up for Accounting Today?  The round up is great; with one glaring omission.  He never links us.  If you know him, please nudge him to start following us, so he can bask in –and share- our informative and entertaining post.
  • One (actually a couple) Billion Dollars!!  Is apparently what the Fisc is losing every year to fraud on stolen EINs.  Accounting Today covers the TIGTA report here.
  • The Tax Policy Center has a very clear explanation of Treasury’s efforts to reign in 501(c)(4) organizations’ political activities. It nicely describes the proposed rules, the backstory on how we are where we are in light of the 2010 Supreme Court Citizens United decision, and some tough questions that will persist even if the rules are adopted.
  • The Northern District of George granted summary judgment to the Service in Buckley v. US earlier this week, which allowed the service to continue to charge annual fees for PTINs.  I can’t link this yet, but am happy to send a PDF upon request.  The Court stated it had two questions to review.  From the Court:

First, this court must determine whether [Section 6109(a)(4)] permits the United States Treasury Department to issue regulations that assess user fees as well as annual renewal fees associated with PTIN assigned to those who prepare tax forms for compensation.

Second, this court must determine whether the annual renewal fee assessed for renewing one’s PTIN is either arbitrary and capricious or excessive.

As to the first point, the Court relied upon the 11th Circuit’s holding in Brannen, which specifically stated that the user fee was valid.  The Court did recognize the petitioner’s argument that this is a different fee (renewal not initial), but concluded this was of little significance.  The Court goes on further to give no love to Loving, holding it was inapplicable to this case, as it pertained to the competency testing and continuing education requirements for “registered tax return preparers”, not the PTIN fee.  Those are authorized under different statutory provisions.  As to the second point, the Court found the cost reasonable and that it was calculated by the Service in a reasoned way.

  • The wandering tax pro chimed in on whether the RTRP should survive.  He said the current regime will likely not survive Loving, and he thinks it should not, but he does believe some sort of voluntary designation and credentialing should be created.
  • Carlton Smith highlighted the order in O’Neill v. Comm’r, which I have linked here.  As Mr. Smith pointed out to us, this case has a nice summary as to why the Court doesn’t usually allow the Service to depose folks against their will.
  • From the Volunteer State, the DOJ is trying to stop a Tennessee tax return preparer, Stephanie Edmond, and her companies, the Tax factory and the Tax Factory Enterprise, from engaging in tax preparation and related services.  The Progressive Accountant has coverage.  Ms. Edmond allegedly was creating fake business, with fake deductions, and improperly claiming the EITC and other credits for her clients.
  • And, a recap, in addition to covering Woods, Keith responded to an argument about oversight of offers based on Thornberry, and Les wrote about the Jackson order and the SCOTUS holding in Ford. Today, Jack Townsend on his Federal Tax Procedure Blog has chimed in on Ford also.
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