Tax Procedure: Mootness and Merits Review in Collection Due Process Cases

tax courtWhen the IRS loses a pro se case in Tax Court, it’s noteworthy. When it loses to a prisoner who allegedly made frivolous tax filings, and the court issues a precedential opinion, something strange is going on. Last week that happened in a collection due process case. Vigon v. Comm’r, No. 28788-14L, 2017 U.S. Tax Ct. LEXIS 37 (July 24, 2017).

When the IRS files a notice of federal tax lien or a notice of intent to levy against a taxpayer’s property, it is required to provide the taxpayer with notice of his right to a collection due process hearing.… Read More

Tax Procedure: More on Divisible Taxes and the Full Payment Rule

divisible-taxes-and-the-full-payment-ruleNot all federal tax assessments are subject to the Tax Court’s jurisdiction, which means that in some cases the taxpayer is left with a refund claim as the sole source of judicial review. Full payment of the disputed tax assessment is a jurisdictional prerequisite for a refund claim. Flora v. United States, 362 U.S. 145, 150-51 (1960). There is a limited exception to this requirement: If a tax is divisible, then a payment of the tax for one or more individual transactions will suffice to establish jurisdiction. See, e.g., Psaty v. United States, 442 F.2d 1154, 1159 (3d Cir.… Read More

Tax Procedure: The Eleventh Circuit Sustains Penalty Defense Based upon an Accountant’s Advice

accountantTaxpayers frequently rely upon an accountant to prepare their returns, and that involves more than just filling out forms. In preparing a return, an accountant will need to make judgments about the appropriate treatment of tax items, including whether income represents capital gain or ordinary income and whether expenditures should be capitalized or treated as business expenses.

If the IRS concludes that one of these judgment calls is incorrect, the taxpayer can be exposed to penalties, such as the accuracy-related penalty under section 6662 of the Internal Revenue Code. Taxpayers frequently point to the accountant’s role in an effort to avoid liability for the penalty; the Code provides a defense where the taxpayer shows that that there was “reasonable cause” for the position taken on the return and that she acted in good faith.… Read More