Category Archives: criminal tax law

The Tax Court rejected the IRS' attempt to dismiss as untimely a petition that was due on Thanksgiving. The court, citing Code Sec. 7451(d), held that since the court was inaccessible on the date the petition was due, the period for filing was tolled for the period of inaccessibility plus 14 days. (Sall,  161 TC No. 13, 11/30/2023)

The IRS issued a deficiency notice to the petitioner. The IRS mailed the notice on August 26, 2022. The 90th day after August 26 was November 24, which was Thanksgiving Day (a federal holiday).

On the notice, the IRS listed the "last day" to file a petition in the Tax Court as November 25 (the day after Thanksgiving).

However, The Day After Thanksgiving Was An Administrative Holiday For The Tax Court, So The Courthouse Was Closed.

The Court's electronic filing system was operational and accessible at all relevant times.

Mr. Sall, the petitioner, mailed his petition to the Tax Court on Monday, November 28, and the court received and filed the petition on December 1, 2022. The IRS filed a motion to dismiss the petition as untimely because Mr. Sall mailed it after the November 25 deadline. 

Generally, a taxpayer must file a petition challenging a notice of deficiency within 90 days of the IRS mailing the notice. This deadline is jurisdictional and not subject to equitable tolling.

However, a filing deadline may be extended in certain circumstances. For example, the deadline for filing a petition is extended if the due date is a weekend day or a federal holiday, or if the "filing location" is inaccessible.

If the due date falls on a weekend day or a federal holiday, the due date is extended to the next business day. If the filing location is inaccessible, the due date is extended by the number of days the filing location is inaccessible plus an additional 14 days. (IRC Sec. 7451(b))

The Tax Court was closed for Thanksgiving, a federal holiday, and was also administratively closed the following day, so the filing location was inaccessible on those two days. The court received the taxpayer's petition on December 1, 2022, which was within the additional 14 days allowed by Code Sec. 7451(b).

Moreover, because the filing location was inaccessible, the availability of the court's electronic filing system was immaterial.

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The Financial Crimes Enforcement Network (FinCEN) has extended the deadline for new entities to file their initial beneficial ownership information (BOI) reports. 

Reporting Entities Created Or Registered In 2024 Will Now Have 90 Calendar Days, Instead of 30, From The Date Of Their Creation Or Registration To File Their Initial BOI Reports. 

FinCEN has provided this extension to give new reporting entities more time to become familiar with FinCEN's guidance and educational materials and to resolve any questions that arise in the process of completing their initial BOI reports.

This extension only applies to reporting entities created or registered in 2024. 

Reporting entities created or registered in 2025 or later will have 30 calendar days after their creation or registration to file their initial BOI reports.

The BOI Reporting Deadline Hasn't Changed For Reporting Entities Created Or Registered Before 2024. Those Entities Must Still File Their Initial BOI Reports By January 1, 2025.

FinCEN will not accept BOI reports until January 1, 2024. Reports should not be submitted to FinCEN before that date.

Have A Beneficial Ownership Problem?

Marini & Associates, P.A. 

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According to the DoJ, a Nebraska attorney was sentenced on November 30, 2023 to one year and one day in prison for filing false individual income tax returns. Thomas Campbell, of Bennington, pleaded guilty on July 27, 2023 to one count of filing a false tax return.

According to court documents and statements made in court, between 2014 and 2018, Campbell, a licensed attorney since 2011, was the owner and manager of TLN Law, a solo-practice law firm in Omaha. Campbell controlled the law firm’s finances and was aware of substantial amounts of cash payments (C Duction for Cash - Pronounced "See Duction") his firm received for legal services. 

For 2014 Through 2018, Campbell Did Not Report
Over $2.8 Million In Cash His Firm Received.

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Help With an IRS Tax Problem?

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The Tax Court has determined in Soroban Capital Partners LP, 161 TC No. 12 (11/28/2023)  that the limited partner exception in Code Sec. 1402(a)(13) does not apply to a partner who is limited in name only. In addition, since net earnings from self-employment is a partnership item, the functions and roles of a limited partner is a factual determination that is properly determined in a TEFRA proceeding. 

Soroban Capital Partners is a limited partnership subject to the TEDRA audit and litigation procedures. Soroban made guaranteed payments and distributed ordinary income to its limited partners. On its returns for the years in issue, Soroban reported as net earnings from self-employment its guaranteed payments to its limited partners plus the general partner's share of ordinary business income. However, Soroban excluded from its computation of net earnings from self-employment the ordinary income distributions to its limited partners. 

After An Audit, The IRS Increased Soroban's Net Earnings From Self-Employment To Include The Shares Of Ordinary Business Income Allocated To The Limited Partners, Taking The Position
That They Were Limited Partners In Name Only.

In the Tax Court, Soroban made two arguments. 

1. That the ordinary business income allocated to Soroban's limited partners is excluded from its net earnings from self-employment because those partners are state law "limited partners." 
2. That the Tax Court could not inquire into the functional roles of Soroban's limited partners in a partnership-level proceeding.

The Tax Court determined that Congress intended for the limited partner exception to apply to earnings of an investment nature (i.e., to a limited partner who is functioning as a limited partner). Thus, to determine whether the earnings allocated to limited partners were of an investment nature, the court was required to inquire into the functions and roles of the limited partners.

Since the partnership was required to calculate net earnings from self-employment at the partnership level, any adjustment to the calculation must be made in a partnership-level proceeding. Thus, contrary to Soroban's argument, the court had jurisdiction to determine whether the ordinary business income allocated to Soroban's limited partners were excluded from net earnings from self-employment in the current partnership-level proceeding.

The Tax Court also rejected Soroban's argument that since it is a state law limited partnership and its limited partners are "limited partners" under state law, their distributive shares of income are excluded from net earnings from self-employment under Code Sec. 1402(a)(13). The court found that before the partners' distributive shares could be excluded the court needed to find that they were functioning as "limited partners."

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

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