Category Archives: criminal tax law

On January 28, 2020 we posted Postmark Rule Did Not Apply to Late-Filed Tax Return Requesting a Refund where we discussed that a district court has held that the postmark rule did not apply to a late-filed tax return that sought a refund of taxes paid. But the court noted that this is an issue of first impression for the 7th Circuit Court of Appeals which might have a different view.

The court brought up an issue that it said was a question of first impression for the 7th Circuit Court of Appeals. The issue was that perhaps there are two different filing dates for the taxpayers' tax return and their refund claim (even though both were done with one document). The return was filed when it was received by the IRS, under  Emmons. But maybe the refund claim was filed when it was mailed.

While the district court said it could find no support for this theory (and, in fact, the IRS cited many cases that consistently treated the date that an untimely tax return was received as the filing date of the administrative claim), it said that the 7th Circuit might have a different view.

Now in Harrison (DC WI 1/29/2020) 125 AFTR 2d ¶2020-397 the district court, vacating its own decision, has held that the postmark rule did apply to a late-filed tax return that sought a refund of taxes paid.

Under the postmark rule, a tax return is deemed to have been filed on the date of mailing but only if the postmark date is before the due date for the return. (Code Sec. 7502(a)(2))

But the postmark rule does apply, in some situations, to claims for refunds even if the postmark is after the due date for the return. Where a claim for credit or refund is made on an original tax return, and the timely mailing rule wouldn't apply to the return itself because it was postmarked after the return due date, the rule will apply separately to the claim for credit or refund if: (1) the postmark date is within the period that is three years (plus the period of any extension of time to file) from the day the tax is paid or considered paid; (2) the claim for credit or refund is delivered after this three-year period; and (3) the conditions of the postmark rule are otherwise met. (Reg. § 301.7502-1(f)(1))

The amount of a refund cannot exceed the portion of the tax paid within the period, immediately preceding the filing of the claim, equal to three years plus the period of any extension of time for filing the return. (Code Sec. 6511(b)(2)(A)) The period is often referred to as the look-back period.

A tax return that claims a refund qualifies as a claim for refund under Code Sec. 6511. (Reg. § 301.6402-3(a))

Taxes withheld during the year are deemed to have been paid on the 15th day of the fourth month following the close of the tax year. (Code Sec. 6513(b)(1)).

Twenty days after the original district court decision, the taxpayers motioned the court to reconsider based on Reg. § 301.7502-1(f)(1).

Upon seeing the taxpayer's new information, the IRS conceded it had no basis to oppose the motion for reconsideration, and the IRS confirmed that it will issue a refund in the amount sought in the taxpayer's complaint, plus statutory interest.

The district court vacated its previous decision that, since the tax return was filed late, the postmark rule did not apply. In accordance with Reg. § 301.7502-1(f)(1), the postmark rule did apply.

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Posted by Ronald A. Ma

According to the Taxpayer Advocate Service (TAS), The Internal Revenue Service (IRS) has begun conducting face-to-face meetings with individual and business taxpayers as a part of a special compliance effort entitled Revenue Officer Compliance Sweep (ROCS).

The RO’s will visit areas where there is little to no IRS presence. They will interview taxpayers while gathering financial information to help them become compliant now and remain so in the future. The new effort began Wisconsin, Texas, and Arkansas and will eventually rollout nationwide.

To avoid confusion with IRS scam artists and other imposters, the IRS will announce general details about these efforts in specific locations as an important step to raise community awareness around IRS activity during a specified time.

Visits from IRS agents shouldn't be confused as a scam. Here’s what to look for:

• Taxpayers may receive an appointment letter requesting certain information and providing an opportunity to call the IRS to set up an appointment prior to the visit.
• The first face-to-face contact from a RO will most likely be unannounced. Taxpayers should be aware they have a tax issue before they receive a visit from a RO because the IRS would have previously sent correspondence attempting to resolve the issue.
• When a RO visits a taxpayer, they will always provide two forms of official credentials, called a pocket commission and a HSPD-12 card. Both forms include a serial number and photo of the IRS employee. The HSPD-12 card is a government-wide standard for secure and reliable forms of identification for federal employees and contractors. Taxpayers have the right to see each of these credentials and can verify information on the RO’s HSPD-12 card by calling a dedicated IRS telephone number, provided by the RO, for verifying the information and confirming his or her identity.
• A legitimate RO is there to help taxpayers understand and meet their tax obligations, not to make threats or demand some unusual form of payment for a nonexistent liability. The RO will explain the liability to the taxpayer. Taxpayers may request the name and telephone number of the manager of the field revenue officer if they have any concerns.
• If the taxpayer has an outstanding federal tax debt, the visiting officer will request payment and provide a range of payment options, including a check payable to the U.S. Treasury.

When interacting with taxpayers, RO’s have the responsibility to educate the taxpayer about the Taxpayer Bill of Rights (TBOR), identify economic hardships if there is an outstanding federal tax debt and payment creates a hardship, and advise and seriously consider collection alternatives.

Taxpayers should be aware that RO’s may also consider other means of resolving the tax debt including:

• Setting up an installment agreement to allow the taxpayer to pay the bill over time;
• Recommending relief from penalties (when available) imposed when the tax bill is overdue (e.g., if there is reasonable cause) or recommending adjustment or abatement if the tax debt is in doubt;
• Evaluating whether the taxpayer is a good candidate for an offer in compromise, where the IRS would accept less than the full amount of the tax liability; or
• Suspending collection due to currently not collectible accounts, which could include In Business Trust Fund taxpayers.

 Contact the Tax Lawyers at 

Marini & Associates, P.A.   

for a FREE Tax Consultation contact us at:

www.TaxAid.com or www.OVDPLaw.com or

Toll Free at 888-8TaxAid (888) 882-9243

The Tax Court, in Hommel, TC Memo 2020-4, has determined that an individual who had a $1 million tax deficiency was not liable for an accuracy-related penalty because the IRS failed to prove it complied with the required procedures for imposing such a penalty. 

1. the penalty determination is communicated to the taxpayer in the form of a notice of deficiency (NOD), or
2. another form of formal communication is sent to the taxpayer that both:

In Palmolive, (2019) 152 TC 75, the taxpayer argued that the IRS hadn’t proved exactly how or when the revenue agents made their initial determinations to assess penalties. The penalty-approval form in Palmolive did not bear the name of the revenue agent who made the initial determination, or any name at all, but the parties stipulated to the identity of the IRS employees involved in making the initial penalty determination.