August 2022 Digest

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In August, some were stuck in the past while others focused on the future. The DOJ was living in the past when it misinformed the Court about rules related to section 6015(f). The Center for Taxpayer Rights is reimagining tax administration; the Tax Court may be heading in the direction of making more records publicly available; and we should have more clarity on the types of circumstances that allow for equitable tolling in the coming year.

Reimagining Tax Administration

Reimagining Tax Administration: Social Programs Through the Tax Code – Characteristics of the EITC/Advance CTC Population: This multi-post series highlights Center for Taxpayer Rights’ workshops, and a forthcoming report, that looks at benefits administered through the tax system while exploring and discussing alternative approaches. This first post looks at the individuals who receive government benefits, specifically the EITC and ACTC, and the advantages and disadvantages of the IRS administering benefit programs at a time when household compositions are evolving.

Reimagining Tax Administration: Social Programs Through the Tax Code – Workshop 3: Design Theory and Administrative Burden: This second post explores how program design and administrative burdens impact the ability of individuals to understand and navigate social programs, and how the current structure may deter the target population from receiving benefits.

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Reimagining Tax Administration: Social Programs Through the Tax Code – Workshop 4: Eligibility Rules for EITC/CTC and Other Family Benefit/Anti-Poverty Programs, Part I: This post closely examines the eligibility rules for tax benefits (and other benefits); and explores whether the rules fit the characteristics of the target population; whether otherwise eligible children may be missed due to the rules; and the nature, extent, and impact of EITC errors.

Reimagining Tax Administration: Social Programs Through the Tax Code – Workshop 4: Eligibility Rules for EITC/CTC and Other Family Benefit/Anti-Poverty Programs, Part 2: This post addresses the risks that might arise in using the tax system to deliver benefits, how other countries have tried to minimize the risk, and why the tax code is the place to house these programs despite the risks.

Tax Court Updates, Orders, and Decisions

Getting Into the Tax Court: The Tax Court set out the guidelines for entry to the courthouse in D.C. and other places where it sits. The guidelines require all entrants to answer self-certifying health screening questions. Trial participants, witnesses, and members of the public are also required to register their name, phone number, email address, place of trial and date of trial using a QR code before entering any courthouse.

When Will the Tax Court Redact?: A recent order from the Tax Court indicates the Court is willing to redact a petitioner’s unredacted sensitive information. This may suggest the Court is thinking about how to balance protecting petitioners’ information with the public’s right to access Court records, but it could also just be a new practice adopted only by certain judges.

Prior Opportunity and Receipt of the Notice of Deficiency: The tax lawyer petitioner in Chinweze argued he did not receive a notice of deficiency and therefore can raise his underlying liability in a CDP hearing. His facts were not very sympathetic, and the Court used the probative information gleaned from a form 3877 to conclude the notice was properly mailed. The case provides a good roadmap of the challenges petitioners may encounter when arguing non-receipt.   

District Court Decisions

Latest Round in PTIN Litigation With District Court Finding For Government In Steele v US: The Court allowed the government to assert the deliberative process privilege when plaintiffs tried to compel discovery about the creation and implementation of the original PTIN program. The Court also strongly disagreed with the plaintiffs claim that the government failed to assert the privilege with sufficient detail.

DOJ Misinfoms District Court on IRC 6015(f) Relief Filing Deadline: The DOJ misinformed the Court about the relevant case law and regulations and ignored the 2019 amendment to section 6015(f) in U.S. v. Weathers. How could the DOJ attorneys not know that the Lantz and Jones cases and the regulation were all legislatively overruled? They subsequently admit their error as discussed below.

The 6511(h) Conundrum: How to Remain in the Courthouse When the IRS Tries to Bar Your Entry?: Recent decisions involving section 6511(h) are summarized. The IRS has been successful in having most cases dismissed when the taxpayers failed to include documentary support with their administrative claims, but the plaintiffs in Subbiah are in the minority who have avoided dismissal. The post calls on the IRS to solicit comments on Rev. Proc. 99-21 and establish a unit to facilitate the claims of taxpayers who claim financial disability.

DOJ Apologizes for Misinforming District Court on IRC 6015(f) Deadline: The DOJ filed a notice admitting it was wrong about the filing deadline under section 6015(f), however, the Court still lacks subject matter jurisdiction since the District Court holds that only the Tax Court can consider innocent spouse relief.

Another Offer Denied, Another Reason for Submitting in Collection Due Process: The benefits and protections available when submitting an offer through a collection due process hearing are highlighted in this post. In Dillon the taxpayers tried to obtain district court review of their offer which was returned as non-processable because the IRS determined it was submitted to hinder or delay collections. The Court held that the suit was barred by the APA.

Circuit Court Decisions

DC Circuit Blesses IRS’ Glomar Defense In Long Running FOIA Dispute: The taxpayers in Montgomery submitted a FOIA request for documents related to whistleblower forms in an effort to determine how the IRS learned of its partnership transactions. The IRS refused to either confirm or deny the existence of such documents. This is a Glomar defense and can be used in cases where confirming or denying the existence of the records would reveal protected information.

First Circuit Finds Anti-Injunction Act Does Not Bar Challenge to IRS’s Use of John Doe Summons That Gathered Taxpayer’s Virtual Currency Transactions: The First Circuit in Harper v Rettig held that a constitutional challenge to the IRS using John Doe Summons authority to obtain information about virtual currency transactions is not barred by the Anti-Injunction Act (AIA). The Court remanded the case saying that the taxpayer is seeking relief from the legal wrong of acquisition and retention of financial records, rather than the assessment or collection of tax.

11th Circuit Affirms That Anti-Injunction Act Prevents Taxpayer Seeking Access to Appeals: In Hancock County Land Acquisitions the taxpayer alleged that the IRS’s failure to refer its case to the IRS’s Independent Office of Appeals violated the Taxpayer First Act’s mandate that Appeals be generally available to all taxpayers. The Eleventh Circuit’s unpublished opinion held that the AIA barred the lawsuit, which is difficult to harmonize with the Harper decision above.

Equitable Tolling Litigation Updates

Another Update on Boechler Follow-on Litigation – Part 1: This two-part post provides updates on equitable tolling litigation. The first part looks at the deficiency cases and provides updates on Hallmark and Culp. The parties have completed briefing in Hallmark. The petitioners in Culp have filed their opening brief after the Court denied the government’s motions for summary affirmance and to strike merits amicus brief filed by the Center for Taxpayer Rights. It will likely be next year when we have an opinion on both cases.

Another Update on Boechler Follow-on Litigation – Part 2: This post looks at the CDP equitable tolling cases. Boechler may never generate a ruling on whether its facts support equitable tolling because the parties may settle on the merits. Updates on Castillo, Amanasu, and Myers are provided, along with an analysis about what may happen in other cases. Amanasu or Myers are the ones to watch to be the first precedential opinions on the issue.

Comments, News, and Other Updates

Commenting on Forms: The Center for Taxpayer Rights and an LITC made comments on the change of address and VITA intake forms. The recommendations were that IRS simplify the form 8822, make it more accessible, better explain its importance, and allow it to be electronically submitted. With respect to the VITA intake form, it recommended changes that foster better coordination between VITA and LITCs so that individuals having their returns prepared know how to obtain controversy assistance when needed.

The Fear Over IRS Funding: Many practitioners have spoken out against the scare tactics being used by politicians over the IRS’s funding news. This post links to Les’s NBC Think Op-Ed on the issue.

TIGTA’s Annual Review of CDP Processing     : TIGTA’s review found that the IRS complied with the IRM in most cases, but the IRS is still making mistakes when it comes to calculating collection statute expiration dates.

Late Filing Penalty Relief for 2019 and 2020 Returns to Generate Automatic Refunds: The IRS is automatically abating penalties for late filed 2019 and 2020 returns. Returns must be filed by September 30 to qualify. The post contains a link to the NTA’s blog which provides more information.

IRS Criminal Investigation in the News: CI’s 2021 Annual report is discussed in order to help provide information about what CI actually does and why their work is not something most taxpayers should fear.

Samantha Galvin About Samantha Galvin

Samantha Galvin is a Clinical Professor of Law and the Director of the Federal Tax Clinic at Loyola University Chicago. She previously taught and directed the LITC at the University of Denver for more than nine years. Professor Galvin has taught tax controversy representation, individual income tax, and tax research and writing. In the FTC, she teaches, supervises and assists students representing low income taxpayers with controversy and collection issues.

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