The 9th Circuit Reverses The Tax Court, Finding That The Taxpayer Had Filed A Return When It Provided A Copy To The IRS During Its Examination

We welcome back guest blogger Janice Feldman. Janice is currently a volunteer attorney at the Harvard Law School Federal Tax Clinic and assisted in drafting the amicus brief filed by the clinic on behalf of the Center for Taxpayer Rights in Seaview Trading, LLC v. Commissioner. Prior to volunteering at the clinic, Janice worked for over 30 years in tax administration, first with the Department of Justice, Tax Division and then with the IRS, Office of Chief Counsel. She retired in 2019. At the time of her retirement, Janice was the Division Counsel/Associate Chief Counsel (National Taxpayer Advocate Program) at the Office of Chief Counsel. Keith 

In Seaview Trading, LLC v. Commissioner, the 9th Circuit looked at the age-old tax question of when is a return considered filed for the purposes of starting the assessment statute of limitations. The Center and the Clinic took a keen interest in this case as this issue – when is a return filed — is central to administering a fair and just tax system. Taxpayers and the IRS, alike, need to know what actions are sufficient to trigger the statute of limitations on assessment. Under the Taxpayer Bill of Rights, taxpayers have a right to finality. IRC Section 7803(a)(3)(F). If the taxpayers’ actions are insufficient to trigger the limitations period, then the IRS can make assessments forever.  

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In Seaview, the taxpayer, a partnership, believed it had filed its 2001 partnership tax return in July 2002, but the IRS had no record of the filing. In 2005, the IRS commenced an audit of the taxpayer’s 2001 return. The IRS agent conducting the exam notified the taxpayer that the IRS had no record of the taxpayer filing a 2001 partnership income tax return (Form 1065) and requested a signed copy. In response, the taxpayer faxed a signed copy of the return to the agent. The IRS later relied on the information on the faxed to propose an additional assessment against the taxpayer. The final partnership administrative adjustment (FPAA) proposing an assessment was issued in 2010, which was more than four years after the taxpayer faxed a signed copy of the return to the revenue agent.

The Tax Court in TC Memo 2019-122 took a draconian view holding that the taxpayer did not “file” a tax return when it faxed a copy to the IRS agent. Furthermore, the Tax Court found that the 2001 return faxed to the agent did not even qualify as a “return” reasoning that the taxpayer did not intend to file a return when it faxed the return to agent because the taxpayer included a copy of the certified mail receipt showing a July 2002 mailing date. Since the tax return faxed to a revenue officer was not a tax return filing nor a return, the Tax Court found that the final partnership administrative adjustment (FPAA) issued in 2010 was not barred by the limitations period under section 6229(a).  The IRS had unlimited time to assess as no return was filed.   

The taxpayer appealed to the Court of Appeals for the 9th Circuit. On May 11, 2022, the 9th Circuit rendered its decision and reversed the decision of the Tax Court. A copy of the 9th Circuit decision is located here

The Ninth Circuit stated that “Based on the ordinary meaning of “filing,” we hold that a delinquent partnership return is “filed” under § 6229(a) when an IRS official authorized to obtain and process a delinquent return asks a partnership for such a return, the partnership delivers the return to the IRS official in the manner requested, and the IRS official receives the return.”

Since the Tax Court had concluded that the signed copy of the Form 1065 faxed to agent was not a return under the Beard test, See Beard v. Commissioner, 82 T.C. 766, 777 (1984), the 9th Circuit went on to analyze this issue. The 9th Circuit found that the Form 1065 that Seaview faxed to agent met all the Beard criteria and therefore was a return.  

I commend the 9th Circuit. This decision is a big victory for the tax system as the audit process needs to be perceived by taxpayers as fair. When a taxpayer has evinced an honest effort to satisfy his obligation to self-report his tax liability and the IRS relies on that submission as a basis of an examination, the taxpayer should be entitled to finality, and the IRS should not have unlimited time to assess. The receipt of the return by the revenue agent in this situation should start the clock running on the assessment period. The IRS will still have three years from receipt to assess, but the IRS will not have all the time in the world. 

The case was decided in a split decision with a vocal dissent.  The dissenter based her position on the language of the regulation.  The majority acknowledge the regulation but pointed out the places in IRS subregulatory guidance in which the IRS and Chief Counsel instructed employees to accept returns in ways that differed from the rigid requirements of the applicable regulation which required submitting the return to the appropriate IRS Service Center in order for it to start the clock.  Because of the importance of the decision to the system, it will be interesting to see if the IRS accepts the decision and acknowledges that its employees are directed to accept returns in certain circumstances. 

The IRS may decide to limit its acquiescence of this decision to the 9th Circuit and continue to fight this issue in other circuits.  It may decide to seek en banc review encouraged by the dissent or to seek Supreme Court review if it has an adequate conflict.  There will be more to come about this case as the IRS reacts to the decision and plots its path forward.

Rare Discharge in Bankruptcy for Taxpayers with a Return Filed After an SFR Assessment

We welcome back guest blogger Ken Weil. Ken is one of the top national experts on the intersection of personal bankruptcy and taxation, and today we are fortunate to publish his analysis of an unusual loss for the government on the issue of dischargeability following a substitute for return assessment. Keith covered a previous case on the issue here. Christine

In Golden v. United States (In re Golden), Bankr. E.D. Cal. Adv. Proc. No. 21‑2012, Docket No. 60 (Golden), the taxpayer‑debtors Nicole Golden and Stephen Alter (the Taxpayers) argued successfully that their return was an honest and reasonable attempt to satisfy the requirements of the tax law.  The bankruptcy court discharged their tax obligation even though the Taxpayers had filed their return after the IRS initiated the substitute‑for‑return process, issued a notice of deficiency (NOD), and assessed tax based on the NOD.  This note calls that type of an assessment an “SFR assessment.”

As far as the author knows, Golden marked only the second time a court using a subjective‑test analysis discharged tax due on a return filed after an SFR assessment (and was not reversed on appeal).  Golden also extended the IRS’s streak of unsuccessfully arguing that the tax due on a document filed after an SFR assessment is per se nondischargeable.

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1. Applicable Law

In the First, Fifth, and Tenth Circuits, the rule is that tax due on a late‑filed return is always nondischargeable, even if the return were filed only one‑day late.  McCoy v. Miss. Tax Comm’n (In re McCoy), 666 F.3d 924 (5th Cir. 2012); Mallo v. IRS (In re Mallo), 774 F.3d 1313 (10th Cir. 2014); and Fahey v. Internal Revenue Service, 779 F.3d  1 (1st Cir. 2015).  The one‑day-late rule has been discussed extensively in Procedurally Taxing.  See K. Fogg, Debtors Still Trying to Fight Against One Day Rule (October 24, 2019), which cites prior discussions.  In shortened form, these three circuits reason that the language in 11 U.S.C. §_523(a)(*) requires that, for a document to be considered a valid return, it must satisfy all applicable nonbankruptcy law requirements, including applicable filing requirements and timely filing is an applicable filing requirement.  This note focuses on Golden and not the propriety of the one‑day‑late rule.

Outside of those three circuits, to determine whether a document filed late will be considered a valid return, the IRS and the other circuits follow the Beard test, which is a four‑part test.  Beard v. Comm’r, 82 T.C. 766, 775‑778 (1984), aff’d, 793 F.2d 139 (6th Cir. 1986).  The Ninth Circuit uses the Beard test.  Smith v. United States Internal Revenue Serv. (In re Smith), 828 F.3d 1094, 1096 (9th Cir. 2016), and United States v. Hatton (In re Hatton), 220 F.3d 1057, 1060-1061 (9th Cir. 2000).  As Golden arose within the Ninth Circuit, it will have no impact on those courts bound by the one‑day‑late rule.

Under the four‑part Beard test, for a late‑filed document to be considered a valid return

  • there must be sufficient data to calculate the tax liability;
  • the document must purport to be a return;
  • there must be an honest and reasonable attempt to satisfy the requirements of the tax law; and
  • the taxpayer must execute the return under penalty of perjury.

The most contentious part of the Beard test is whether the taxpayer made an honest and reasonable attempt to satisfy the requirements of the tax law.  That was the key question in Golden.

The Eighth Circuit stands alone in using an objective test to determine whether the taxpayer made an honest and reasonable attempt to satisfy the tax law.  Colsen v. United States (In re Colsen), 446 F.3d 836 (8th Cir. 2006).  Under the objective test, the inquiry into the validity of the document at issue is limited to the four corners of the document.  The IRS accepts that an objective test is used in the Eighth Circuit.  IRM 5.9.17.8.1(3) (12-09-2016).  The other “non-one-day‑late circuits” use a subjective test, and the Golden court used a subjective test.  Golden p.19 (“this court looks to the totality of circumstances”).

2. Factual Background

The tax year at issue in Golden was 2008.  The Taxpayers extended the return’s due date to October 15, 2009.

With the onset of the Great Recession in 2008, the Taxpayers experienced financial difficulties, including loss of a rental property through foreclosure.  In 2010, Golden took over operation of the jointly owned business from Alter.  Golden took an additional, unspecified amount of time to take over the tax responsibilities. 

The financial difficulties led to marital difficulties.  In February 2010, Golden separated from Alter.  At that time, the Taxpayers’ children were aged four and six.

On March 8, 2011, the Taxpayers filed their 2009 tax return.  On March 10, 2011, the Taxpayers’ accountant completed the 2008 return and the Taxpayers signed the return.  This was approximately 15 months after the extended due date for the 2008 return.  Thereafter, the Taxpayers held off filing the 2008 return in hopes of putting together the money to pay off the taxes and to understand the IRS’s position better.

On March 14, 2011, the IRS issued its NOD for 2008.  The NOD asserted a deficiency of $276,506.  The document signed by the Taxpayers asserted a liability of approximately $23,000.  The difference in the two amounts appears to have been primarily expenses incurred in running the Taxpayers’ business that were not accounted for in the NOD.

The Taxpayers did not respond to the NOD, and, on July 28, 2011, the IRS assessed the tax due as reported in the NOD.  From issuance of the NOD to assessment, 136 days elapsed.  On August 10, 2011, the Taxpayers filed a document that they asserted was their 2008 return.  From issuance of the NOD to the filing of the document that purported to be the return, 149 days elapsed.  From assessment to filing, 13 days elapsed.  From the extended due date to filing, approximately one year and ten months elapsed.

On February 11, 2013, the IRS reduced the assessed tax to the $23,000 number reported as due by the Taxpayers.

On April 30, 2014, the Taxpayers filed for relief under Chapter 13 of the Bankruptcy Code.  This was approximately two years and eight months after the Taxpayers filed the document purporting to be their 2008 return.  This was approximately four years and six months after the extended due date of the 2008 return.

The Taxpayers successfully completed their Chapter 13 plan.  They full paid their secured and priority tax claims of over $58,000 and made a small distribution to their unsecured creditors.

3.  Briggs, Sr.

Prior to Golden, the only case known to the author that discharged tax reported on a document filed after the SFR assessment was Briggs, Sr. v. United States (In re Briggs, Sr.), 511 B.R. 707 (Bankr. N.D. Ga. 2014), aff’d, Briggs, Sr. v. United States (In re Briggs, Sr.), N.D. GA. No. 15-2427‑MHC  (June 7, 2017) (“District Court Briggs, Sr.).  In that case, Mr. Briggs thought his business partner had filed his return.  Mr. Briggs had signed the return and sent it back to his business partner, as was his annual custom.  The business partner did not file the return, and an IRS SFR designation ensued.  The IRS mailed the NOD to the business partner’s address and not Mr. Briggs’s address.  Upon learning of the nonfiling and SFR assessment, Mr. Briggs filed a document purporting to be his return, and it was found to be a valid return. 

The United States argued in Briggs, Sr. that any document filed after the SFR assessment is per se not a return under §_523(a)(*).  Yet, in its appeal brief to the district court, the United States conceded that no appellate court had adopted the per se rule.  District Court Briggs, Sr. at p.8.  The District Court Briggs, Sr. opinion is now almost five years old.  In the ensuing five years, the author is unaware of any appellate court that has adopted the per se rule, i.e., an appellate court outside of the one-day-late circuits and the Eighth Circuit.

4. Facts used by the Court to find for the Taxpayers

At Golden p.20‑21, the Court explained why it thought the Taxpayers had made an honest and reasonable attempt to comply with the tax law. 

  • The Taxpayers did not “belatedly” accept responsibility for filing a return, and they did not “attempt to present inaccurate or fabricated information.”
  • Taxpayers “provided solid and accurate information” to the IRS.  Taxpayers used the “assistance of a tax professional” to present accurate information.
  • Taxpayers did not try to “walk away” from the debt.  They spent five years in “bankruptcy purgatory” in order to obtain a discharge.
  • The Taxpayers’ “corrective actions were not merely filing a ‘me too’” 2008 return that “parroted the assessed tax” with a goal of two years later filing for bankruptcy and asserting the tax debt should be discharged.
  • The IRS presented “no identifiable bad faith reason for the failure to file” the 2008 return sooner.
  • Although “beset” with financial and marital problems, the Taxpayers acted properly to substantially pay their tax obligations.

Without discussion, the Court rejected the per se rule.  Golden at p.3 (where the government argument is set forth) and p.19 (where the Court makes clear that the Hatton rule applies; the Court looked at the totality of circumstances to determine whether the Taxpayers acted honestly and reasonably in the filing of their return).

5. Lagniappes

Golden will be a tough case for the IRS to win on appeal.  Ninth Circuit case law is clear that a subjective test applies so de novo review is unlikely.  The government will need to prove clear error.  See District Court, Briggs, Sr. at p.4 (burden is on the government to show that the bankruptcy court’s findings were clearly erroneous).  The United States might question, even under a “totality of the circumstances” test, how much weight should be given to actions taken after the document is filed, e.g., completing a Chapter 13 plan.  Regardless, sufficient facts exist to support the Court’s holding.  For example, the Court found that “the personal and financial maelstrom is the reason for Plaintiff‑Debtor stumbling with respect to the 2008 federal tax return.”  Golden at p.21.  Kudos to the Taxpayers’ attorney for taking on this battle and winning.

In Golden, the IRS again argued for a per se rule.  Even though such a rule would make life easier for the IRS, the IRS should put that argument to bed.  It has been singularly unsuccessful.  Golden notwithstanding, the IRS still has a de facto per se rule.  It is very difficult for a taxpayer to prove that a document filed after the SFR assessment was an honest and reasonable attempt to comply with the tax law.

One other note, if you represent a client with a non‑filed return and a NOD has been issued and the 90‑day period has not run, strongly consider filing a Tax Court petition.  Section_523(a)(*) of the Bankruptcy Code provides that a return includes “a written stipulation to a judgment or final order entered by a nonbankruptcy tribunal.”  The Tax Court filing and subsequent final order will keep the bankruptcy‑discharge option open, and, perhaps, prevent an expensive discharge litigation.

Dial, redial, repeat

We welcome back guest blogger Barbara Heggie. Barb is the supervising attorney for the Low-Income Taxpayer Project of 603 Legal Aid in Concord, New Hampshire.  Her clinic serves taxpayers through the Granite State and is the only LITC in the state.  Today, she describes a recent experience in trying to assist a client.  Her effort reminds us of the difficulties facing taxpayers and practitioners trying to reach the IRS in the first place and trying to reach the “right” part of the IRS.  We recently discussed one of the impediments to reaching the IRS in our post on fee based calling which pushes human callers to the back of the line. Keith

Most people think of the autonomic nervous system as confined to such unconscious bodily processes as breathing, digestion, and heart rate. But most of you reading this have probably added another to the list – (re)dialing the IRS. Pandemic-related staffing shortages, antediluvial technology, and a private robocalling industry have teamed up to render uncertain the once-inviolable privilege of being placed on hold for an hour. Instead, any attempt to reach the IRS by phone, even via the Practitioner Priority Service (PPS), will likely end with this now-familiar recording: “We are sorry, but due to extremely high call volume in the topic you requested, we are unable to handle your call at this time.” A new callback option can spare us the slow torture of short-looped, wondrously-insipid hold music, but it can’t spare us the agony of trying to get there.

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Dial, redial, repeat.

This is all the more agonizing when we realize that a few well-placed, taxpayer-centric changes at the IRS could make this time suck a complete non-necessity. The National Taxpayer Advocate (NTA), Erin Collins, has written here and here about the robocalling problem and the low levels of telephone service at the IRS. And see here for several seemingly doable suggestions regarding economic hardship and collection processes by former NTA Nina Olson in her 2018 Annual Report to Congress.

Last week, I called PPS for a disabled domestic violence survivor subsisting solely on $1,020/month in Social Security Disability Insurance payments. She has a joint tax liability with her estranged husband, and she’s terrified he’ll get to her through the IRS. Each new collections notice sent her to the phone, anxious to explain her circumstances and request some sort of forbearance. But she couldn’t get past the “extremely high call volume.”

She came to me for help, and we decided I would start by asking the IRS to (1) record her balance-due accounts currently not collectible, due to financial hardship, and (2) place a domestic violence marker on all her accounts to prevent the IRS from releasing any of her contact information to an unauthorized person, including her husband. Conceivably, each of these requests could be made in writing, but much harm could come to this client while waiting for the IRS to process such submissions. A call to the IRS was required.

After dialing PPS sixteen times, each attempt involving a must-listen to various recorded messages, I made it onto the queue. Huzzah! I readily agreed to the callback option and got connected to a customer service representative (CSR) a half an hour later, just as promised. He placed a Victim of Domestic Violence (VODV) marker on my client’s accounts but said he could not record her balances uncollectible. I was surprised, given that I had chosen the menu option for “individual accounts already in collections, ACS.” Moreover, for balances at my client’s level, the Internal Revenue Manual requires no Collection Information Statement (CIS) if the only source of income is Social Security. But there had been a change in procedures, the CSR explained, and he offered to transfer me to the “real” Automated Collection System (ACS), where someone could do as I had requested.

Rather than have him transfer me, however, I decided to call PPS again – not because I thought a different CSR would give me a better answer, but because this one wasn’t able to send me the transcripts I wanted due to some equipment failure he was experiencing, and I wasn’t sure an ACS CSR would have the authority to do this. I hadn’t been able to retrieve the transcripts myself from the IRS Transcript Delivery Service (TDS) because . . . I don’t know. The CSR affirmed I had been listed on the accounts as an authorized representative for several days, but TDS said otherwise and refused to give up the transcripts. (This doesn’t appear to be an isolated incident; recently, many others in the Low-Income Taxpayer Clinic community have reported the same problem.)

Thus, I called PPS again.

Dial, redial, redial,

redial, redial, redial,

redial, redial, redial,

redial, redial, redial.

Just twelve times! The second PPS CSR got me the transcripts but said the same thing as the first one; the CNC request can only be handled by ACS personnel, no matter the circumstances. (A week later, TDS is still denying me access to these accounts.)

The CSR offered to transfer me to ACS, and this time I agreed. After a few minutes, another CSR picked up the line, and I made my simple pitch: please record my client’s balance-due accounts as uncollectible because her only income is Social Security and she’s experiencing financial hardship. This CSR, #3 of the day, said he couldn’t see any debt under my client’s SSN – and, therefore, couldn’t help me. I stressed it was a joint liability, with my client listed as the secondary on the account. The CSR responded that this explained the problem and asked if I had any other questions. Telling him that the previous two CSRs of the day hadn’t had any such problem left him unfazed. When he suggested transferring me to “Collections,” I agreed, not bothering to ask where I had been the whole time.

The beauty of a unit-to-unit transfer is that you bypass the hold queue and go straight to a CSR picking up your line. At least, that’s how it used to be. This time, it took over two hours – the longest hold time I’ve ever encountered. Luckily, however, CSR #4 of the day was able to both see and do. I made my pitch for uncollectible status and explained the client’s income stream. The CSR verified the Social Security income, found no other sources, and granted the request for uncollectible status. As expected, she didn’t require a CIS. And by then, it was bedtime.

Fans of the Python-esque film Brazil may find some commonalities.

State Level Taxpayer Rights: A Survey of State Tax Administration

We welcome back guest blogger Anna Gooch, who last year joined the the Center for Taxpayer Rights as a Research Fellow. Next fall Anna will begin a Christine A. Brunswick Public Service Fellowship sponsored by the ABA Tax Section, where she will continue working to further taxpayer rights. Christine

Under a grant from the Rockefeller Foundation, the Center for Taxpayer Rights has developed a survey of state tax administration practices and procedures to better understand how taxpayer rights are protected. The survey gathers information relating to income tax (where applicable), property tax, sales tax, and any other statewide tax that the state may have. In each of these sections, the questions are divided into categories, including Assessment, Appeals, Collection, and Litigation. Volunteers are asked to provide an explanation as well as a citation to their response when possible. Once the information is collected, we will make recommendations for administrative procedures for practices that work well, and we will propose model legislation for state funding of low-income taxpayer clinics and the establishment of state taxpayer advocate/ombuds offices. We will also identify areas of deficiency in taxpayer protections and advocate for change where we believe taxpayer rights are in jeopardy.  The Center plans to hold a Reimagining Tax Administration workshop in the fall of 2022 to discuss the survey findings and recommendations.

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Why do a state taxpayer rights survey?  Unlike the federal government, states often operate under balanced budget requirements and cannot create money, so they rely heavily on tax collections to provide services and programs.  They do not have the same infrastructure for tax compliance as the federal government, so they also rely on the IRS to identify taxpayers with audit issues and make parallel adjustments, and they utilize private debt collection agencies to a great extent.  Moreover, states heavily rely on data mining to identify non-compliance and issue automated notices; this approach places burden on taxpayers, especially those who are low income. Most states do not provide the same protections and collection alternatives for taxpayers experiencing economic hardship; several states automatically file notices of tax liens when a debt arises and others revoke drivers’ licenses if a tax debt is above a certain dollar amount.

With the help of the LITC community and the ABA’s State and Local Tax Committee, we have spent the last several months recruiting volunteers to complete the survey for each state. The survey was sent to the first group of volunteers in early January, and we are starting to receive completed responses. As of this writing, we have received responses for five states: Alabama, Illinois, New Jersey, Utah, and Texas. While it is too soon to make any conclusions, I am happy to share some preliminary data from the first few responses. The survey contains about 200 questions in total, but below are some key findings that I find particularly interesting.

Of the five states for which the Center has received a response:

  • Two regulate commercial return preparers (Alabama, Illinois).
  • All regulate property appraisers.
  • Four use private collection agencies for income tax debts (Illinois, New Jersey, Utah, Texas).
  • One state funds LITCs to help taxpayers with state tax issues (Illinois).
  • All have physical locations where taxpayers can receive assistance from the tax agency.
  • Only one state offers forms and guidance in languages other than English (Texas). 
  • Three have state taxpayer advocates that may help taxpayers with income tax and sales tax issues (Alabama, New Jersey, Utah). One has a taxpayer advocate office that may assist taxpayers with property tax issues (Utah).
  • All have a taxpayer bill of rights.

There are still a few states for which we are seeking volunteers. Those states are:

  • Hawaii
  • Montana
  • Nevada
  • North Dakota
  • Oklahoma
  • Vermont
  • West Virginia
  • Wisconsin
  • Wyoming

If you would like to complete the survey for any of the states listed above (or if you know someone else who may be interested), please email anna@taxpayer-rights.org. As noted above, we plan on holding a workshop in the fall to share our findings, as well as best practices and recommendations. Thank you to our volunteers – this project would not be possible without your assistance.

No Rehearing En Banc for Goldring: Is Supreme Court Review Possible?

The last time we talked about Goldring v. United States, 15 F.4th 639 (5th Cir. Oct. 4, 2021), the taxpayers had won their case for a refund of deficiency interest, creating a circuit split with FleetBoston Fin. Corp v. United States, 483 F.3d 1345 (Fed. Cir. 2007).  On November 18th, the government petitioned for a rehearing en banc.

On March 2, 2022, after briefing by the parties in early December, the court denied the petition for rehearing en banc.  The court was polled, with seven judges (Smith, Stewart, Dennis, Haynes, Graves, Higginson, and Costa) voting for rehearing and ten judges (Owen, Jones, Elrod, Southwick, Willett, Ho, Duncan, Engelhardt, Oldham, and Wilson) voting against.  That may be the end of things, with taxpayers filing future cases in district courts rather than the Court of Federal Claims, hoping to repeat the Goldring result.

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It’s also possible that the government will consider filing a petition for a writ of certiorari, hoping to reverse.  For one thing, the government argued in its petition that there were more potential cases with this issue than I had anticipated.

The Chief Counsel, Internal Revenue Service, has advised us that nearly 4.4 million individual taxpayers have claimed successive credit elects in the past three years.  Chef Counsel estimates that approximately 25,000 of those individuals will have a later determined income-tax deficiency, and could file claims for refund of underpayment interest under the reasoning of the panel’s decision.  For corporate taxpayers, to whom the panel’s reasoning equally applies, Chief Counsel foresees roughly 2,000 potential refund claims, which could range into the multiple millions of dollars.  All of these claims must be manually processed, as the rule in this case would require the IRS to determine to what extent a taxpayer’s credit balances, year over year, offset a deficiency determination before interest can be computed on the difference.

Further, the panel’s opinion seemed to base the decision on a rationale with which the DOJ Tax Division strongly disagrees.  The panel started with a statement about the purpose of interest.  “Under the use-of-money principle, a taxpayer is liable for interest only when the Government does not have the use of money it is lawfully due.”  It later noted “the simple, undisputed fact that the IRS was never deprived of its use of the money the Goldrings lawfully owed it at any point during the five-year underpayment interest assessment period.”  But since the IRS held that money in accounts for other tax years, that sounds very much like a broad “netting” principle – that an overpayment in any tax year can be used to offset an underpayment in another tax year to reduce interest on the latter. 

The DOJ Tax Division, on the other hand, construes the use-of-money principle more narrowly, as an aid for interpretation when the statute is ambiguous rather than a broad equitable principle.  See a 2012 version of the DOJ Tax Division Settlement Reference Manual, specifically Appendix Y (Interest), page 2:

While case law is important in interpreting these statutes, interest liability may not be extended beyond what the statute prescribes. For example, the “use-of-money” principle is frequently invoked in tax cases.  This principle, which is stated to be the rationale for charging interest, is a useful guide for interpreting interest statutes where the statute is ambiguous or where the application of the statute to a particular fact situation is unclear.  Nonetheless, the use-of-money principle is not a principle of substantive law and (contrary to arguments sometimes advanced by taxpayers) cannot impose liability for interest that is beyond the scope of the Code’s interest provisions. 

This is the most recent version of the manual I was able to find online.  I’m not sure if there’s a more recent version, but I would be surprised if this attitude had changed in the past ten years.

I’ve heard/seen the attitude toward “use-of-money” arguments expressed somewhat more, shall we say, sharply or forcefully by at least one or two DOJ attorneys over the years.  And the statutory netting provision of section 6621(d) is written more narrowly than the result in Goldring, arguably demonstrating that Congress specifically decided against offering the netting benefit that the Goldrings argued for.  So, I wouldn’t be surprised if the DOJ attorneys here argued for a trip to the Supreme Court to try to overturn the Goldring result.  I’m just speculating, of course, but I’d love to be a fly on the wall in the “Room of Lies” that Keith described here and here.

You Call That “Notice”? Seriously?

Last April, I wrote (see here and here and here) about the Federal Circuit’s decision in General Mills, Inc. v. United States, 957 F.3d 1275 (Fed. Cir. 2020), aff’g 123 Fed. Cl. 576 (2015).  The briefs on appeal are available here: the taxpayer’s opening brief, the government’s answering brief, and the taxpayer’s reply brief.  This was a complex case, involving the intersection of TEFRA partnership audit procedures and the “large corporate underpayment” (LCU interest, or “hot interest”) provisions of the Code.

There was one argument made by the plaintiff on the TEFRA issue that I addressed rather briefly, because the Federal Circuit simply swatted it away.  That argument really warrants more discussion because it’s a serious problem that goes beyond just this specific context, one that we need to continue challenging: the adequacy of notices to taxpayers.  So let’s talk about that case a bit more.

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The Background

This is a very abbreviated version of the facts, because I want to focus on that one argument General Mills raised and the court rather perfunctorily swatted down.  Interested in more?  Check the opinions or prior blog posts.

The General Mills consolidated group (“GMI”) filed corporate tax returns for the 2002-2003 and 2004-2006 tax years, and General Mills Cereals, LLC (“Cereals”) filed partnership tax returns for the same years.  Various members of the GMI consolidated group were partners in Cereals, so the tax returns—and any audit adjustments—for Cereals flowed through to GMI.  The IRS audited both sets of tax returns for all these years.  Although there are some slight differences between the audits for those two periods, for simplicity I will focus on the 2002-2003 tax returns.

Deficiencies were identified for both the corporate and the partnership tax returns.  As this was back in the days before the Bipartisan Budget Act of 2015, the TEFRA audit procedures were still in effect.  For the remainder of this post, references to Code sections in the 62xx range will be the old, pre-BBA versions, which have been replaced in the current Code by the new BBA procedures.

TEFRA “Computational Adjustments”

TEFRA required “partnership items” to be resolved at a partnership-level proceeding.  After that proceeding ended, the effects of the adjustments to partnership items were translated into partner-level tax liabilities by means of “computational adjustments.”  Notices of deficiency at the partner level are required only if a partner-level “determination” is required; otherwise the IRS can assess immediately.  (Penalties can be assessed immediately even though a partner might raise partner-level defenses in a refund claim/suit.)  Immediately assessable computational adjustments also include “any interest due with respect to any underpayment or overpayment of tax attributable to adjustments to reflect properly the treatment of partnership items.”  Treas. Reg. § 301.6231(a)(6)-1(b).

TEFRA also provided a mechanism for taxpayers to challenge computational adjustments that did not require a deficiency proceeding, in section 6230(c).  The taxpayer must file a refund claim “within 6 months after the day on which the Secretary mails the notice of computational adjustment to the partner.”  Thereafter, a refund suit can be brought within the period specified in section 6532(b) for refund suits.  Section 6511(g) provides that section 6230(c) applies, rather than the two-year period specified in section 6511(a), with respect to tax attributable to partnership items.

You guessed it.  The partners (individual members of the GMI consolidated group) paid the assessed liabilities and then filed refund claims.  Those refund claims were timely under the two-year period in section 6511, but not under the six-month period in section 6230(c).  So GMI had to argue that the longer period applied.

There were a lot of different arguments by GMI that I discussed at length last April.  Here, I want to focus on GMI’s argument that the six-month period never commenced, because none of the communications from the IRS qualified as a “notice of computational adjustment.”

A Brief Pause to Consider Other Types of Notices

A notice of deficiency clearly identifies the tax year, the amount of the deficiency, and the reasons for the deficiency.  The IRS sends it by certified mail.  It clearly identifies what the taxpayer must do to challenge it – file a petition with the Tax Court – and the period within which the taxpayer must do that.  It even calculates the deadline and states it explicitly on the first page, and the taxpayer can rely on that even if the IRS erroneously calculates the date.  Stat notices are not without their flaws, but this is about as good as you could hope for – the “gold standard.”

A notice of determination denying innocent spouse relief can be pretty good too.  The most recent we received, by Letter 3288, was sent by certified mail and clearly identified the tax year(s) at issue and a (too) brief explanation of why relief was denied.  (A request for the administrative file is definitely in order!)  It clearly specified, at the top of page two, the taxpayer’s right to challenge the determination by filing a petition in Tax Court and the period within which the taxpayer must do that.

A notice of intent to levy is, frankly, horrible.  They’re too long and poorly written, hard to understand for a layperson; even for some students at an academic LITC.  They muddle the message by combining requests to pay with notifying the taxpayer of her rights.  The next-to-last notice (CP504) is misleading, as discussed below.  The final notice (LT11, CP90, etc.) explains the right to a CDP hearing reasonably well, including the period within which the taxpayer has to request a CDP hearing, but the message can be drowned out by the scare tactics elsewhere within the notice.  On the positive side, both these notices at least specify their statutory basis – sections 6331(d) and 6330(a) respectively, and both must be delivered personally or by certified mail.  There are other problems with collection notices, but those will do for a start.

Keith has a great blog post here about the distinction between the 6331(d) notice (CP504) and the 6330(a) “final notice” providing the right to a CDP hearing (LT11, CP90, etc.) and the history.  It also points out how misleading, if not knowingly false, the 6331(d) notice is.  Go read Keith’s post now if you haven’t already/lately.  I like to think of the difference as that the 6331(d) notice by itself only allows the limited categories of levy described in section 6330(f), most notably state tax refunds or jeopardy collections.  For those categories, a CDP hearing is available only post-levy.  For all other categories, a CDP hearing is available pre-levy but the IRS must first send the 6330(a) “final notice” to allow the taxpayer to request a hearing.  It’s a bit of a mess procedurally.

Math error notices are . . . well, look at this post by Keith (including the comments and the NTA blog post he links to) for some of the many defects of math error notices. 

Multiple Communications

GMI, on the other hand, was dealing with a notice of computational adjustment.  The Court of Federal Claims and the Federal Circuit considered several of the communications from the IRS to GMI as possible notices of computational adjustment, either separately or collectively, that would have started the statute of limitations running.   

First, on August 27, 2010, the IRS sent a letter with Form 5278, “Statement—Income Tax Changes” enclosed. That form included a line for “Balance due or (Overpayment) excluding interest and penalties” with a corresponding dollar amount, the additional tax owed by the partners from the settlement of the partnership audit.  No amount was shown for interest, but the cover letter stated that the IRS “will adjust your account and figure the interest.” 

The Court of Federal Claims quoted a statement in the earlier Form 870-LT (AD) settlement agreement for the Cereals audit that the taxpayer consented to the immediate assessment of deficiencies in tax and penalties “plus any interest provided by law.”  I emphasized that last phrase because the court did.  Three times, once for each place that phrase occurred on Form 870-LT (AD).  Pause for a moment and consider the reaction if a settlement agreement or notice of deficiency had not specified the exact amount of tax and penalties and merely said “the amount of additional tax and penalties provided by law.”  And here, there was enough ambiguity about what the law provided regarding “hot interest” that “provided by law” was not sufficient anyway.

Second, the IRS assessed the adjustments to GMI’s returns, flowing through from the partnership audit and including interest, on September 3, 2010.  The assessment, of course, would have just shown up as a lump sum.  I defy anyone to reverse engineer the calculations underlying an interest assessment on a large corporate return, including flow-through adjustments from a partnership.  It can be done, but anyone in their right mind would give up long before they reached a solution.  GMI proceeded to pay the assessed amounts on April 11, 2011. 

Finally, on April 18, 2011, the IRS sent GMI detailed interest computation schedules.  As described, those were probably sufficient to identify the IRS application, which GMI disputed, of the “hot interest” provisions.  (This discussion focuses on the 2002-2003 tax years.  For the 2004-2006 tax year, the IRS sent two different sets of interest computation schedules, the first one of which implied that “hot interest” wouldn’t apply at all.)

GMI’s Argument

What was missing from all these communications?  The August 27, 2010, letter didn’t state the amount of the computational adjustment.  The September 3, 2010, assessment gave the total amount of interest assessed, which did not break out the portion attributable to the increased tax and penalties included in the computational adjustment and was insufficient to identify how the IRS calculated that amount.  The April 18, 2011, interest computation schedules did provide sufficient information to identify what GMI considered in error.  None of them were explicitly identified as a “notice of computational adjustment.”  None of them specified the applicable statutory provision.  None of them specified the deadline for filing a refund claim, a deadline that was different from the normal statute of limitations for filing refund claims.

When I compare this notice of computational adjustment (at least with respect to the interest amount) to other notices described above, it seems: (a) significantly worse than the notice of deficiency and an innocent spouse notice of determination; (b) arguably worse than collection notices; and (c) at least as bad as some of the worst examples of math error notices.  Being “no worse than math error notices” is not a good standard for the IRS to strive for.

GMI argued that

a notice of computation adjustment must (1) contain the amount of adjustments, (2) contain a statement of the increased rate of interest that will apply, and (3) provide the partner with some indication that the document is intended to be a notice of computational adjustment that triggers a 6-month period of limitations under § 6230(c)(2)(A).

It cited McGann v. United States, 76 Fed. Cl. 745 (2007) as establishing that standard.

The Federal Circuit Was Not Convinced

The court noted GMI’s arguments but rejected them because those asserted requirements went beyond the statutory text.

GMI contends that the notices were defective for various reasons. First, GMI says that the IRS was required to give notice that “a jurisdictional period was being triggered,” and the schedules failed to mention § 6230(c) or the six-month limitations period. GMI also argues that the schedules were tainted by the failure to mention the Partnership proceedings and the failure to separate the accrued interest on underpayments resulting from the corporate proceedings from that of the Partnership proceedings. These contentions lack merit. The Court of Federal Claims stated that the notice of computational adjustment need not be in any particular form, and we agree. Indeed, the Internal Revenue Code does not define what a notice of computational adjustment should contain.

(citations omitted)  At most, the court would have required “the information [GMI] needed to assess whether the IRS may have erroneously computed the computational adjustment,” but it concluded the various communications provided that.

The court’s apparent conclusion that a notice, unless it is misleading, need only comport with statutory requirements is disturbing.  McGann stands for the proposition that there is a minimum requirement of due process that may exceed statutory requirements.  The Federal Circuit distinguished McGann as involving a misleading notice of computational adjustment and concluded the notices sent to GMI were neither misleading nor contradictory.  It didn’t mention the statement from McGann that “the notice of balance due bears no indication that it is to be taken as a notice of computational  adjustment, nor does it disclose that Mr. and Mrs. McGann would have had to contest any amounts said to be due within a six-months’ period thereafter.”  The McGann court also pointed out that “neither the Form 4549A nor the accompanying Form 886-A previously sent to Mr. and Mrs. McGann contained such an advisory.”  The McGann court also looked to cases involving notices of deficiency as “instructive” in determining whether a notice of computational adjustment was adequate.

Conclusion

I can understand why Congress and the IRS might not specify, and courts might be reluctant to impose, rigorous requirements for notices of computational adjustment.  With respect to additional tax and penalties, the amount of the aggregate adjustment was already determined in the TEFRA proceeding.  The partner-level adjustments seem merely mechanical and unlikely to be in error.  But it doesn’t make sense with respect to complex interest computations, which were not addressed in the TEFRA proceeding.  That rationale is probably also the unstated reason for why the IRS treats math error notices so cavalierly.  But we know those math error notices also increasingly include adjustments that go far beyond the simple mechanical adjustments that have an extremely high likelihood of being correct.

Not only math error notices but also notices of computational adjustments require improvement, beyond the statutory requirements, to protect taxpayer rights.  We can and should work with the IRS and Congress to achieve better notices.  But pushing for the courts to recognize and enforce higher standards is also a worthy fight, even if it may feel like tilting at windmills.

Confusion Over Attorney’s Fees in Ninth Circuit Stems from Statute and Regulation…

Today we welcome back Maria Dooner.  Maria is a practitioner-in-residence at the Janet R. Spragens Federal Tax Clinic at American University’s Washington College of Law.  She returns to help us understand the 9th Circuit’s recent decision regarding attorney’s fees.  Keith

As Keith discussed here, the Ninth Circuit recently issued its opinion on Tung Dang and Hieu Pham Dang v. Commissioner, T.C. Memo. 2020-150. By finding the plaintiffs ineligible for an award of administrative and litigation costs, the court brought closure to the Dangs’ final pursuit of attorney’s fees. Yet, in doing so, it created some confusion (in its majority opinion) and clarity (in its concurrence) and provided another reason why the statute and regulation involving the recovery of administrative costs from administrative proceedings should be changed.

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The Ninth Circuit’s Majority Opinion…

When explaining the Dangs’ ineligibility for administrative costs from the collection dispute, the court states the following:

…they are ineligible because no costs were incurred before the commencement date for the relevant administrative proceeding.

However, the parties were not simply disputing whether costs were incurred before the commencement datefor the relevant proceeding, which was a Collection Due Process (CDP) hearing. Rather, the parties were debating the definition of reasonable administrative costs – they were specifically disputing the starting point in which reasonable administrative costs were incurred, if at all, in the context of a CDP hearing. For example, the government argued that the starting point was the notice of determination, which is the conclusion of the administrative proceeding in a collections matter. According to the government, the Dangs were ineligible for administrative costs because no costs were incurred after the issuance of the notice of determination. 

In contrast, the Dangs argued that the commencement date for administrative costs in a collections matter was the 30-day letter, which allowed the taxpayer the opportunity for administrative review in the Internal Revenue Service Office of Appeals. The Dangs proclaimed that when Congress altered the definition of the commencement date within IRC § 7430(c)(2) to include the first letter of proposed deficiency (a 30-day letter)under the IRS Restructuring and Reform Act of 1998 this also encompassed a 30-day letter that provided an administrative review to a CDP hearing.

Unfortunately for the Dangs, this argument not only failed to resonate with the court, but it also confused them. The court felt the Dangs were contesting administrative costs in a former examination dispute and included the following in its opinion:

To the extent that they seek administrative costs for their examination dispute with the IRS, their request is untimely, and they were not the prevailing party.

But, at no point in the Dangs’ brief did they argue that they were entitled to administrative costs from the examination dispute. And, at no point did the government rebut this. The statement of issues was confined to the administrative and litigation costs related to the collection proceeding. (By way of background, the IRS erred in this proceeding and this was recognized by IRS Counsel as well as Judge Armen in the U.S. Tax Court.)

Within its majority opinion, the court missed an opportunity to define administrative costs and explain why the Dangs were ineligible to recover them. The court stated that the Dangs had not incurred any costs prior to the commencement of the relevant proceeding, but what was its opinion on the time (and costs) incurred during the CDP Hearing, which occurred after its commencement? Or, did the court agree with the government that the starting point was the notice of determination and that no costs were incurred after the notice of determination? 

Judge O’Scannlain’s Concurrence

Some clarity is provided within Judge O’Scannlain’s concurrence, which addresses the timing rule and the validity of the regulation (26 C.F.R. § 301.7430-3).

Judge O’Scannlain states that the regulation (26 CFR § 301.7430-3), which the government relies upon in its brief,is not a “permissible construction” of IRC § 7430. Though Judge O’Scannlain agrees with the government’s interpretation of the hanging paragraph, which precludes the recovery of administrative costs in collection hearings, he states that the regulation, which excludes collection hearings from the definition of administrative proceedings, contradicts the plain language of the statute.

Confusion over the recovery of attorney’s fees stems from the statute itself (IRC § 7430) and regulation (26 C.F.R. § 301.7430-3)

First, the statute is confusing with respect to the recovery of administrative costs from collection proceedings. The statute begins by stating that a prevailing party may be awarded administrative costs from an administrative proceeding (see IRC § 7430(a)(1)). Then, it proceeds to eliminate most administrative costs from collection proceedings due to a timing rule (see hanging paragraph of IRC § 7430(c)(2)). But then, it reiterates that administrative proceeding means any administrative proceeding (see IRC § 7430(c)(5)).

Second, taxpayers struggle to make sense of a confusing statute and tackle the timing rule.  For instance, the Dangs emphasized the statute’s broad coverage of administrative proceedings and how it explicitly includes the recovery of costs related to the collection of any tax (see IRC § 7430(a)(1)). To satisfy the timing rule, the Dangs stated that it is not the notice of determination that is relevant but the first letter of proposed deficiency because this is synonymous with any 30-day letter, which opens the door to an administrative proceeding. So rather than conflating a collection proceeding with a deficiency one (which may have been the belief of the court), the Dangs were essentially making a substance over form argument that if embraced by the court would have facilitated the recovery of the administrative costs from the CDP hearing.  

Third, the government places significant reliance on a regulation (26 C.F.R. § 301.7430-3) that redefines “administrative proceeding” and excludes most collection proceedings from this definition. As Judge O’Scannlain articulates in his concurrence, the regulation is not aligned with the statute. (Remember, this conflicts with the statute that defines administrative proceeding as any administrative proceeding and specifically references the collection of tax.) So, in addition to the statute, the regulation is also a source of confusion in these cases.  

This confusion is heightened by one of the regulation’s exceptions – it recognizes a CDP hearing, which specifically disputes the validity of the tax assessment under IRC § 6330 and IRC § 6320, as an administrative proceeding. (IRC § 6330(c)(2)(b) provides the opportunity for a taxpayer to contest the validity of the tax liability if the taxpayer “did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability.”) Here, the regulation changes the fundamental nature of a CDP hearing to fit its definition of an administrative proceeding. Under the regulation, a CDP hearing that involves a dispute over the underlying tax liability is considered an administrative proceeding (and not a collection action) whereas one that involves a pure collection dispute is not an administrative proceeding. This does not make logical sense because regardless of whether the taxpayer is disputing the underlying tax or providing a collection alternative within a CDP hearing, the taxpayer is still very much in the heart of a collection proceeding. The taxpayer is ultimately contesting a notice of intent to levy or notice of federal tax lien, has only 30 days (not 90 days) to petition to the U.S. Tax Court and still receives a notice of determination (not a notice of deficiency) at the end of the matter. IRC § 6330(d)(1).

Though the above exception is favorable to the taxpayer, there is also the question of how this exception satisfies the timing rule within IRC § 7430(c)(2). Ironically (for the Dangs), the IRS appears to be embracing a substance over form interpretation of the hanging paragraph of IRC § 7430(c)(2) and is viewing the notice of intent to levy or notice of federal tax lien as a notice of deficiency for those who did not have an opportunity to dispute their underlying tax under IRC § 6330(c)(2)(b). However, if taxpayers, such as the Dangs, attempt to raise this argument in their favor, such as viewing a 30-day letter, which provides an opportunity into a collection proceeding, as a first letter of proposed deficiency, they will most likely confuse the court.

The regulation (26 C.F.R. § 301.7430-3) should be altered…

While the government may believe it is simplifying (and perhaps streamlining) the law by relying on a regulation that eliminates most collection actions from the definition of administrative proceeding, the government’s reliance on this regulation only compounds the confusion that already stems from the statute. Since it is an inaccurate interpretation of the statute (as Judge O’Scannlain conveys in his concurrence), it forces an unnecessary dispute over the definition of an administrative proceeding when the real dispute should be over what constitutes reasonable administrative costs due to a timing rule.

Instead of defining the administrative proceeding as one that excluded most collection proceedings, the IRS should address the impact of statute’s timing rule within the regulation’s definition of administrative costs (26 CFR § 301.7430-4). By addressing it within “administrative costs,” the regulation would be more aligned with the statute.  Again, there is no limitation on the definition of administrative proceeding in the statute – in fact, the statute states any (see IRC § 7430(c)(5)). Further, it is the subsection on administrative costs (IRC § 7430(c)(2)) where the hanging paragraph on the timing rule resides.

But better yet, Congress should change the statute to encompass the recovery of administrative costs from collection proceedings…

Without a modification to the timing rule within the statute, it seems nearly impossible to recover administrative costs related to the collection of tax.

While a notice of proposed levy may be viewed as notice of deficiency when a taxpayer is disputing the validity of the tax in a collection proceeding (and did not have the opportunity to do so earlier), taxpayers (like the Dangs) who are purely disputing the proposed collection action (and not the underlying tax) will face an uphill battle when trying to convince a court that the first letter of proposed deficiency in the law should be viewed as any 30-day letter into a collection proceeding. 

Again, Congress could incorporate language, such as “the date of receipt by the taxpayer of a right to a Collection Due Process (CDP) hearing” into the hanging paragraph of IRC § 7430(c)(2). Though taxpayers will continue to face challenges related to the prevailing party rules and “substantial justification” exception for the government, this will at least facilitate an opportunity to recover administrative costs, such as in the Dangs’ case.

As a final reminder, the Dangs asked for a levy on their retirement, which would have paid the tax in full. While the IRS is cautious with levying retirement accounts as a matter of policy, resistance to it as a collection alternative (when a taxpayer specifically requests it) is at odds with its intention to collect taxes as efficiently as possible. The agency needs additional incentives to follow published guidance in collection due process hearings, and by not allowing the recovery of administrative costs, Congress may not only harm taxpayers but also the IRS. By allowing for the recovery of administrative costs from a CDP hearing, Congress may see an added benefit that goes beyond just discouraging overreaching and abusive actions by the IRS it may just enhance the efficiency of tax collection – a core purpose of the agency.

Congress Should Make 2022 Donations to Ukraine Relief Deductible in 2021

We welcome back commenter in chief Bob Kamman with a suggestion to Congress regarding how it could help further to provide relief for the individuals impacted by the crisis in Ukraine.  Keith

Ukraine President Volodymyr Zelensky addressed the United States Senate on March 5, 2022, by video connection.  President Zelensky is a law-school graduate, although he chose to follow what some consider the more respectable profession of acting until called to politics.  But he is probably not familiar with American tax law and specifically the enactment 17 years ago of the Indian Ocean Tsunami Relief Act.

That law allowed Americans to deduct on their 2004 federal income tax return, any contributions made in January 2005 for relief of tsunami victims.   The tsunami occurred on December 26, 2004, with an epicenter near Sumatra, Indonesia.

Generally, retroactive legislation early in the following year has been more of a disaster than the one it is trying to ameliorate.  But come on, guys, as our President might say.  This is a war on a European country of more than 40 million people.  The refugee count is already in the millions. 

So, announce it now.  Donations made to qualified organizations by April 18 may be claimed on either a 2021 or 2022 return.  Yes, many people have already filed, but those with deeper pockets are more likely to file closer to the deadline or to request an extension.

The legislation doesn’t have to be passed tomorrow.  Just introduce it with enough bipartisan sponsors that the effective date is certain. 

And maybe this would be more symbolic than productive in net donations for the year.  But when was a better time for symbolism?

There are many charities that qualify for a tax deduction under Sec. 501(c)(3) The Philadelphia Inquirer put together a list of some organizations last week.  I am sure there are others, and publicity about a new option on year of deduction will spur efforts to put out the word on them.