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Summary Opinions for 5/23/14

Posted on May 28, 2014

Our weekly summary of tax procedure items from last week that we did not otherwise cover.  This week was a little slow compared to others, but some good cases pertaining to obtaining fees and information regarding venue in criminal tax cases.  Also, a practitioner who really seemed to hate his auditing agent.

  • More in the Cohen saga.  Les touched on the DC Court of Appeals in In Re: Long-Distance Telephone Service Federal Excise Tax Refund in a prior post and outlined the primary holding here.  This case deserves a full  write up, and we will hopefully get to that shortly, but there were two additional interesting holdings that I thought we should note.  First, the Court of Appeals held it had jurisdiction to review the district court, even though the Service argued the district court remand was not a reviewable decision.  The Court stated that was generally true, but held that the Service admitted it would not engage in future rulemaking, so the taxpayer had no ability for other potential appeals.  The Court also held that the taxpayer failed to exhaust her administrative remedies, and therefore could not seek costs.
  • The Bankruptcy Court for the Middle District of Georgia in In Re Pointer has held that the failure to exhaust administrative remedies under Section 7433(d) may not be jurisdictional, but, following Hoogerheide and Galvez, stated the failure to exhaust administrative remedies resulted in a failure to state a claim upon which relief could be granted.  We have discussed the nature of the exhaustion requirement under Section 7433(d) before, and it is reviewed significantly in Saltzman and Book (revised) chapter 10.05.  This issue is coming up somewhat frequently, with splits on whether or not this is a jurisdictional prerequisite.  Unfortunately, even the courts holding it is not jurisdictional have been tossing the cases for failure to state a claim.  Someone needs to make a more compelling equitable argument.
  • The Journal of Accountancy has a news story regarding the IRS position on practitioners who have been disbarred or suspended from practice before the IRS continuing to prepare tax returns.  Office of Professional Responsibility has decided not to attempt to bar those individuals from simply preparing returns, and has issued letters stating PTINs may be obtained.  Les was recently on a panel with Rob Malone from OPR where this was discussed (I was also on the panel, but my contribution was just a few minutes talking about Procedurally Taxing).  It was made clear that IRS has other arrows in its quiver to potentially deal with practitioners who prepare returns.  The DC Circuit opinion in Loving may create some questions surrounding the scope of OPR’s authority to sanction practitioner conduct; we will monitor closely OPR guidance in light of its likely narrow reading of Loving.  Mr. Malone also discussed the final Circular 230 regulations, which we had hoped would be issued by the time of the panel last week.  Unfortunately, we are still waiting, but those should be issued very soon, and we will touch on them once they come off the press.
  • Tax Analysts is heaping on the hate for the private debt collection concept.
  • Now this is a tax protest!  Tax Girl has a nice write up of a former accountant who threatened to kill the IRS agent who was auditing his tax returns.  Claiming that you will shoot the agent in the “f*#%ing knee caps”, rape his wife and murder his child is not my go to responses to dealing with the IRS, and I don’t think we will be adding a subchapter in Saltzman and Book for that approach.  Additional horrible details can be found at the Daily Mail.
  • A taxpayer was granted relief from an order dismissing his case for failure to prosecute over the objections of the IRS.  In Austin Inv. Fund, LLC v. US, the DC District Court held the taxpayer was effectively pro se, and his testimony that he did not receive the original order seemed credible.  Interestingly, the taxpayer failed to notify the Court of his address change, which caused the issue.  The Court found this was excusable neglect, and the Service was not prejudiced (a new suit could have been filed had the above been dismissed).
  • From Jack Townsend’s Federal Tax Crimes blog is a discussion of how the Credit Suisse CI and prosecution ended up in the Eastern District of Virginia.  Jack supplements his summary of the NYT’s article with materials from his tax procedure text, which has a great outline of jurisdiction in criminal tax matters.
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