On November 15th, the Second Circuit affirmed a $33 million judgment assessing a foundation with transferee liability for another corporation’s taxes; instead of addressing the merits, the court’s opinion was focused on a date contained in the notice of transferee liability that the IRS sent to the foundation. That was because the taxpayer, Diebold Foundation, Inc. (“Diebold”), moved to dismiss its Tax Court petition for lack of jurisdiction after seven years of litigation. Diebold Found., Inc. v. Comm’r, No. 17-3622-cv, 2018 U.S. App. LEXIS 32309, *3-*4 (2d Cir. Nov. 15, 2018).
While Diebold’s decision to move for the dismissal of its case sounds a little strange, it is a legitimate strategy: If the statutory notice issued to the taxpayer is defective or it is not mailed, the Tax Court may lack jurisdiction, and if the action is dismissed, the IRS may be barred from correcting the notice if the statute of limitations has expired.… Read More