Monthly Archives: June 2024

According to Law360, a jewelry company's one-day-late filing of a petition for reconsideration of an employment tax determination does not deprive the U.S. Tax Court of jurisdiction in the case, the court said On June 25, 2024, denying the IRS' attempt to get the case tossed in Belagio Fine Jewelry Inc. v. Commissioner, U.S. Tax Court docket number 35762-21.

Since Congress did not clearly state that the 90-day deadline to file for a redetermination of employment status is a jurisdictional requirement, the court does not lose jurisdiction based on Bellagio Fine Jewelry Inc.'s late filing, Judge Travis A. Greaves said in the opinion. The Internal Revenue Service had moved to dismiss the case for lack of jurisdiction. 

Judge Greaves further said the relevant historical treatment of Section 7436(b)(2), which established the deadline, also doesn't demonstrate that Congress intended for it to be jurisdictional.

Following an audit, the IRS determined in 2021 that the company had an unreported employee in 2016 and 2017, saying that it owed employment taxes as well as other penalties, according to the court. 

The Company Mailed Its Petition Contesting This Determination To The Court Four Days Prior To The Deadline To File It,
But The Petition Showed Up One Day Late.

The company also argued that the 90-day deadline should be subject to equitable tolling, but the court said it would reserve judgment on that argument until a proper dispositive motion regarding the matter is presented.

Read more at: Tax Times blog

According to Law360, the U.S. Supreme Court on Friday overturned a decades-old precedent that instructed judges about when they could defer to federal agencies' interpretations of law in rulemaking, depriving courts of a commonly used analytic tool and leaving lots of questions about what comes next.

In a 6-3 ruling, a majority of justices held that the high court's test established in 1984's Chevron v. Natural Resources Defense Council improperly prioritized the executive branch's legal interpretations over the judicial branch's.

The decision hands a win to fishing industry plaintiffs that sought the complete destruction of so-called Chevron deference and introduces significant uncertainty about how lower courts will weigh competing legal arguments in the large arena of rulemaking litigation.

Plaintiffs in Loper Bright v. Raimondo and Relentless v. Department of Commerce had asked the high court to overturn Chevron or at least significantly narrow the doctrine's application.

All nine justices in January heard oral arguments in Relentless, but in Loper Bright, heard the same day, Justice Ketanji Brown Jackson recused herself due to her involvement in the matter as a judge at the D.C. Circuit.

Both Relentless and Loper Bright are centered around fishing groups' challenges to a 2018 National Marine Fisheries Service rule requiring fishers to pay part of the cost of having federal compliance monitors aboard their ships. The plaintiffs in both cases had argued unsuccessfully that NMFS interpreted the Magnuson–Stevens Fishery Conservation Management Act too broadly and created regulations that exceed the agency's authority.

But the hostility to the Chevron precedent that some of the current justices have expressed led to speculation that the plaintiffs' luck could and did in fact change at the Supreme Court.

Read more at: Tax Times blog

According to Law360, The U.S. Supreme Court on June 24, 2024 said in U.S. v. Miller, case number 23-824, that it would review a Tenth Circuit decision that found that the bankruptcy trustee of a defunct Utah company seeking Chapter 7 protection could recover $145,000 in tax payments from the IRS.

In an order list, the Supreme Court said it would grant a request by the government to review the Tenth Circuit's June 2023 decision, which the U.S. said created a circuit split. 

Read more at: Tax Times blog

In 2023, the first full year funding from the Inflation Reduction Act (PL 117-169) became available to the IRS, the agency focused on hiring customer service representatives now, there is a shift towards onboarding new examination staff, according to the head of the agency.

Speaking on June 13, 2024 at a joint conference hosted by the IRS and the Tax Policy Center, IRS Commissioner Danny Werfel said Inflation Reduction Act funds in fiscal year 2024 are not only bringing in new auditors and lawyers, but also data scientists, engineers, and industry subject matter experts, including those in the digital asset space.

Calling Hiring A "Multi-Pronged Effort," This Wave Is
Centered Around Increasing Scrutiny On Those On
The IRS' "High Risk" List, Including Tax Delinquent Millionaires, Non-Filers, And Complex Partnerships
Seeking To Avoid Tax Exposure.

Due to years of underfunding, IRS audit rates of large corporations and multimillionaires fell between 2010 and 2021. Overall staffing in the agency’s compliance offices declined 30% during that time.

The Agency's Efforts Have so Far Recovered
$520 Million from Millionaires Who Have Either
Not Filed Their Taxes or Failed to Pay Their Tax Debt.

Through a combination of increasing compliance staff and recently announced targeted enforcement campaigns against high-risk taxpayers making over $400,000 a year, the IRS can demonstrate "that this is a positive return on investment" by closing the overall gap between taxes owed and taxes paid, Werfel said of the inflation bill's funds.

He added that investments in artificial intelligence will assist in audit selection and recognizing areas "where tax evasion is occurring," such as transfer pricing, using "much more sophisticated analytics."

Providing Context On Why Expanding The IRS Workforce
Is Necessary, Werfel Said That Before The Enactment Of
The Inflation Reduction Act, The Agency's Staff Size
"Was Roughly The Same As It Was In The Late 70s."

Continuing, he mentioned that leaders of other countries' tax authorities have commented to him about "how small the IRS is on a per capita basis compared to the other nations."

Since 2022, the IRS has added about 11,000 full-time positions, including staff working on audits as well as those tasked with customer service and other jobs. The agency plans to add an additional 14,000 full-time positions with funding from the Inflation Reduction Act by fiscal year 2029. Some new hires will be replacing people retiring or leaving. The increases would bring the number of total IRS employees to 102,500, Werfel said.

Have an IRS Tax Problem?

 

Sources:

CNN

Daily Tax Report

Read more at: Tax Times blog