Tax Notes logo

Summary Opinions aka Procedure Roundup for 10/25/2013

Posted on Oct. 28, 2013

Title this week comes from Professor Grewal, and it may have some staying power.  Pretty full line up this week, and all very interesting.  Here you go:

  • From TaxProf Blog, a summary of Washington & Lee Law Professor Michelle Drumbl’s article to be published in the Pittsburgh Tax Review, “Those Who Know, Those who Don’t, and Those Who Know Better:  Balancing Complexity, Sophistication, and Accuracy on Tax Returns.”  The article is a critique of the existing penalty and penalty abatement system.  We will be covering penalty abatement due to reliance on practitioners in the estate tax realm within the week.  While I will mostly be assailing tax holdings in the area, Ms. Drumbl actually suggests solutions.
  • Here is an article on Tax Connections about the increase in gift tax return audits, and the use by the Service of John Doe summonses to get information on real estate transfers to related parties.  I’m all for stopping folks who fail to follow the gift tax laws, especially since my clients work hard to comply, but given the current exemption level, this seems like a lot of work with little return.  I could be completely wrong, though.
  • Taxpayer was tossed from the District Court for Kansas because she attempted to question her underlying tax liability in an unauthorized collection action case she brought under Section 7433.  See Myers v. United States.  Court said that it could not review underlying liability in a Section 7433 case, and there was nothing to suggest that collection action was otherwise inappropriate.  Further, taxpayer failed to exhaust administrative remedies, as required by the statute. The Court notes that whether this (and other requirements prior to judicial review) is a jurisdictional requirement is not uniformly agreed to by the Courts, and the Tenth Circuit has not decided this matter.  This issue as to whether a requirement is jurisdictional seems to be making its way up to the District Court and Circuit Court lately, including generating a circuit split as to whether exhausting administrative requirements prior to judicial review of a jeopardy assessment is jurisdictional.  We hit it very hard in Saltzman and Book revised Chapter ¶10.05, which is being rewritten and coming out before the end of the year.
  • IRS issued guidance on the date to purchase insurance under the Affordable Care Act to avoid the application of the penalty.  NPR has the story here.
  • IRS announces one to two week delay in filing season, which can be found here. You can search the internet for all kinds of finger pointing on this.
  • TaxProf Blog has a summary of a NYT blog post on income tax withholding hitting its 70th anniversary.  The post touches on the history, the possible impact on the growth of government, and the fact that withholding may confuse taxpayers into thinking they are getting a tax break when they get their refunds.  I would also highlight our Roundup last week, which provided a summary of an interesting article blogged on by Peter Reilly on the Forbes blog regarding policy implications of the fact that those due refunds are less likely to cheat.  I understand the potential negatives, but think I am still firmly behind withholding. I note as well that Mr. Reilly filed a follow up after hearing from the original author of the study, noting that a balance due return might not lead taxpayers to evade but might contribute to taxpayer propensity to undertake technically legal avoidance.
  • On Mr. Townsend’s tax procedure blog here, there is a good discussion of the recent Seifert v. Comm’r case from the Tax Court.  What is even better than the case discussion is the huge amount of information Mr. Townsend supplies regarding CDP, Audit Reconsideration, and OICs for Doubt as to Liability.  I had a gentleman named Steve Kesselman as my tax procedure professor in the Villanova Graduate Tax program, who some readers probably know.  He, in addition to being a great adjunct professor, was former IRS Deputy Chief Counsel and held other executive positions at IRS in his day job, and was one of my favorite professors of all time, so I can never claim I wished I had someone else, but I think it would be fun to fly back and forth to Houston to audit Mr. Townsend’s class.
  • The Tax Court, in J&S Auto Painting Inc. v. Comm’r, held that a settlement officer did not abuse her discretion by failing to hold a face-to-face CDP hearing with the petitioner, when the settlement officer communicated through letters, faxes and telephone conversations with petitioner’s counsel, and during those communications indicated no face-to-face meeting would occur without a new offer.  The petitioner claimed to not have knowledge of most of those communications, and therefore no CDP hearing occurred, but the Court found the communications constituted an appropriate CDP hearing with the taxpayer’s representative.
  • An interesting and surprising case was posted by  Anthony Parent, Esq. on his blog here and here.  I have no knowledge of the case other than what is stated in the blog, which describes a licensed attorney who went canary on his clients, and acted as the key witness in the DOJ prosecution of two of his clients for offshore activities.  There are alleged mistresses, continued assistance with the government, horrible false advertising, and other interesting tidbits.
  • I may be turning Procedurally Taxing into a rag.  Les and Keith write weighty articles about important issues such as the Loving case and the operations of the Tax Court before and after the shutdown, while I am writing about mistresses and informants above, and ex-NFL players in this paragraph. On to the quasi-celebrity gossip, but this time at the intersection of the NFL concussion debate, the Philadelphia Eagles (although I live outside of Philadelphia, I am a Giants fan), and tax fraud.  I found this through Joe Kristan’s tax bog, and it is the last item on this posting. Main story can be found here.  Former Eagle receiver Freddie “FredEx” Mitchell has claimed that traumatic brain injuries from football caused him to assist in an elaborate scheme to defraud the government out of millions.  I have not read the pleadings, but I thinking FredEx can expect prompt delivery to jail.  In a past press conference, Freddie thanked his hands for assisting in his wonderful receiving game; apparently, he is throwing his brain under the team bus in this case.
  • This link is a Youtube clip of Nina Olson discussing the negative impact of failing to properly fund the Service.  With such a wonderful last name, there really is no way she is wrong. I am sure I found this through some other blog, and cannot remember.  My apologies to that blogger.
Copy RID