Category Archives: criminal tax law

On September 30, 2021 we posted Is the CDP Petition Filing Deadline Jurisdictional? -  SC Agrees to Hear The Issue, where we discussed the U.S. Supreme Court agreed to hear Boechler v. Commissioner of Internal Revenue, appealed from the Eighth Circuit and the Question Presented Is Whether the Time Limit in Section 6330 (D)(1) Is a Jurisdictional Requirement or a Claim Processing Rule Subject to the Equitable Tolling?

Now according to Law360, the U.S. Supreme Court on April 21, 2022 found that the U.S. Tax Court had the authority to consider a North Dakota law firm's day-late challenge to an Internal Revenue Service levy, reversing an Eighth Circuit decision that sided with the agency.

Boechler PC's suit challenging the IRS collection actions is not barred by a 30-day deadline under Internal Revenue Code Section 6330(d)(1) for bringing lien and levy challenges in the Tax Court, the justices said in a unanimous opinion. 

That Deadline Isn't A Jurisdictional Bar That Needs
To Be Cleared To Get In Front Of The Tax Court,
According To The Justices.

"The text does not clearly mandate the jurisdictional reading," Justice Amy Coney Barrett said in the court's opinion. The statute's "30-day time limit to file a petition for review of a collection due process determination is an ordinary, nonjurisdictional deadline subject to equitable tolling."

The dispute between Boechler and the IRS centers on a notice Boechler received in 2015 from the IRS communicating a discrepancy between information reported by Boechler to the IRS and the Social Security Administration, according to court filings. The firm did not respond to the correspondence from the IRS, which thereafter assessed a roughly $19,000 penalty under IRC Section 6721 that the firm failed to pay.

The IRS indicated it would levy the firm's property, and the agency affirmed that determination in collection due process hearings, which are a means of challenging IRS collection actions like property levies and liens. The firm was required to file a petition with the Tax Court challenging that determination on or before Aug. 28, 2017, but it instead filed that case Aug. 29, according to court filings. 

The Tax Court dismissed Boechler's case because of this missed deadline in a decision ultimately affirmed by the Eighth Circuit. A three-judge panel said Congress intended for Section 6330's deadline to be jurisdictional based on the actual language of the statute, although U.S. Circuit Judge Jane Kelly noted concerns about the ruling's potential impact on low-income taxpayers.

Some have argued in briefs with the high court that interpreting Section 6330(d)(1) as creating a jurisdictional hurdle has the potential to disproportionately harm low-income people and those representing themselves in the Tax Court. The U.S. has rejected some of those arguments, contending that the data do not obviously support that low-income people are most likely to use collection due process procedures. 

Oral arguments in the case centered in part on the grammar of the statute, which says in a parenthetical that "the Tax Court shall have jurisdiction with respect to such matter." The firm and the U.S. government disagreed specifically over what "such matter" refers to and, more importantly, the phrase's jurisdictional implications.

This decision will help taxpayers who don't file petitions for review of CDP determinations within the 30-day filing period in Code Sec. 6330(d)(1). The IRS will still try to get late-filed petitions dismissed for lack of jurisdiction, but now late-filing taxpayers will be able to argue that they're entitled to equitable tolling of the filing deadline.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

 

Read more at: Tax Times blog

The U.S. Tax Court concluded in Treece Financial Svcs. Group, 158 TC No 6 (4/19/2022) that it has jurisdiction to review an IRS determination that a taxpayer wasn't eligible to participate in the Voluntary Classification Settlement Program (VCSP).

Treece Financial Services Group, a corporation, petitioned for review of a notice of employment tax determination under Code Sec. 7436. Both Treece and the IRS agreed that the agency had properly determined that someone working for Treece was an employee but disputed the proper amount of employment tax under that determination.

Treece asserted that the amount should be computed using Ann 2012-45, 2012-51 IRB 724, i.e., the VCSP.

The IRS Said Treece Couldn't Use The VCSP And
 Argued That The Tax Court Lacked Jurisdiction
To Review That Determination.

The court noted that the VCSP provides partial relief from federal employment taxes for eligible taxpayers that agree to treat workers prospectively as employees for future tax periods. To be eligible for the VCSP, a taxpayer must: 

1. Have consistently treated the workers as nonemployees; 
2. Have filed all required Forms 1099, consistent with the nonemployee treatment, for the previous three years; and 
3. Not currently be under employment tax audit by the IRS.

Generally, the Tax Court said, it has jurisdiction under Code Sec. 7436(a) to determine: 

1. Whether an individual providing services to a person is that person's employee for purposes of subtitle C; 
2.  Whether the person, if an employer, is entitled to relief under section 530 of the Revenue Act of 1978; and 
3. The proper amounts of employment taxes which relate to the IRS's determination concerning worker classification.

The Court's Deficiency Jurisdiction Includes Reviewing Administrative Determinations That Are Necessary To Determine The Merits Of The Deficiency Determinations. (Trimmer, 148 TC 334 (2017))

In addition, Trimmer held that there is a strong presumption that an act of administrative discretion is subject to judicial review. Further, in 2000, Code Sec. 7436(a) was amended to provide the Tax Court jurisdiction to "determine whether such a determination by the [Treasury secretary] is correct and the proper amount of employment tax under such determination."

The court concluded that, pursuant to statute and case law, the Tax Court has jurisdiction to determine whether the liability is correct in proceedings for determination of employment status. Because the denial of a taxpayer's eligibility for VCSP directly affects the amounts of tax, the procedures that Congress has established for judicial review of the IRS's determinations logically contemplate review of such a denial as one element of the determination.

Have an IRS Tax Problem?

Read more at: Tax Times blog

We previously posted on July 3, 2020, The Common Law Mailbox Rule Now Superseded By Regulations where we discussed that after Sec. 7502's enactment, the courts generally took two positions regarding its effect on the common law mailbox rule. 

Some courts held that it superseded the common law mailbox rule and provided the exclusive exceptions to the common law physical-delivery rule. Other courts held that Sec. 7502 only provided a safe harbor to the physical-delivery rule and that under the common law mailbox rule, testimonial and circumstantial evidence could still be used to prove timely mailing.

To resolve the split among the courts, the IRS issued regulations (proposed in 2004, finalized in 2011) to make clear that the common law mailbox rule is no longer available. Under the regulations, a document must be postmarked by the U.S. Postal Service on or before the last date prescribed for filing, and the document must actually be delivered to the IRS (Regs. Secs. 301.7502-1).

The court said on April 13, 2022 that it dismissed Stephen Pond's case because he hadn't proved his return was physically delivered on time, and under a Treasury regulation, the only exceptions to a requirement to show physical delivery were those for certified or registered mail explicitly included in Internal Revenue Code Section 7502 . 

Pond claimed he mailed his amended return via first-class mail and the Internal Revenue Service has no record of receiving it before the statute of limitations ran out, so he failed to meet either criteria to bring his case, the court said.

Have a Tax Problem?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243

Read more at: Tax Times blog

On April 30, 2021 we posted Draft Schedules K-2 And K-3 Released To Enhance Reporting Of International Tax Matters By Pass-Through Entities where we discussed that the Treasury and the IRS released on April 30, 2021 updated early drafts of new Schedules K-2 and K-3 for Forms 1065, 1120-S, and 8865 for tax year 2021 (filing season 2022). The schedules are designed to provide greater clarity for partners and shareholders on how to compute their U.S. income tax liability with respect to items of international tax relevance, including claiming deductions and credits.

The Internal Revenue Service has now added to a set of FAQs regarding new schedules K-2 and
K-3.

Schedule K-2 is an extension of Schedule K of Form 1065 and is used to report items of international tax relevance from the operation of a partnership. Schedule K-3 is an extension of Schedule K-1 (Form 1065) and is generally used to report to partners their share of the items reported on Schedule K-2.

The FAQ Now Includes Eight New Question-And-Answers, Including Whether Two Parts Of The New Schedules Must Be Completed For Dormant Foreign Corporations.

The FAQ also includes information on whether a filer who qualifies for an exception to a requirement to file Forms 5471, 8865 or 8858 must still do so because of the instructions for the new schedules.

Have as IRS Tax Problem?

 Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243) 

Read more at: Tax Times blog