Next Month’s Symposium Highlighting Relationship Between Tax and Race

I am writing to share information about an upcoming Symposium to be held on February 24, 2023 in Washington, D.C. on “The Federal Income Tax: Racially Blind But Not Racially Neutral.”  The symposium is free and open to the public. 

There are in-person and Zoom attendance options, with pre-registration here and a flyer with more information here. The program is sponsored by the American Tax Policy Institute and co-sponsored by the American College of Tax Counsel, the ABA Tax Section, Skadden Arps Meagher & Flom LLP, the Center for Tax Law and Public Policy at Temple University Beasley School of Law, the Elisabeth Haub School of Law at Pace University, and the Pittsburgh Tax Review.  The symposium comes at a time of increased attention concerning the relationship between tax law and racial justice. Professor Dorothy Brown’s book, The Whiteness of Wealth, has justifiably received wide recognition for shining a bright light on how the tax system disproportionately favors White Americans, reinforcing our country’s racial wealth gap.


On his first day in office, President Biden signed Executive Order 13985, Advancing Racial Equity and Support for Underserved Communities Through the Federal Government. And this past week, Treasury has released a working paper estimating the distribution of certain tax breaks by race and ethnicity. There is a Treasury blog post highlighting the main take aways from this important paper.

As the Treasury blog post notes,

The IRS does not collect information on race and ethnicity on tax returns, so to facilitate analysis of disparities in tax policy, the Treasury Department has developed an approach to impute race and ethnicity in tax data, which it will continue to refine. Using this approach, the Department has conducted a first-of-its-kind analysis of the impact of tax expenditures on racial and ethnic disparities, which will increase transparency and improve our understanding of how existing tax policies work.

In the study, Treasury found that preferential rates for capital gains and dividends, deduction for pass-through income, charitable deduction, home mortgage interest deduction, and deduction for employer-provided health insurance disproportionately benefit White families.

In contrast, Treasury notes that “Black and Hispanic families, who make up a disproportionate share of low-wage workers, disproportionately benefit from the Earned Income Tax Credit” And “Hispanic families, who have comparatively low rates of employer-sponsored health insurance, also disproportionately benefit from the Premium Tax Credit, which provides assistance for the purchase of health insurance through the Marketplaces. Finally, Hispanic families disproportionately benefit from the Child Tax Credit.” 

The Feb 24th Symposium thus comes at an important inflection point for scholars and others interested in how the tax system relates to issues of racial justice, and includes panels on the following:

• Race, History, and Taxation

• Tax Systems and Privileged Choices

• Systemic Inequalities Undergirding Facially Neutral Tax Laws

• Discrimination through Non-Discrimination

I am thrilled to participate, as I will discuss the relationship between tax administration and racial justice, an especially important topic given how, for better or for worse, Congress increasingly tasks the IRS to play a main role in distributing benefits relating to poverty relief, creating work incentives, and subsidizing health care, housing, and energy efficient consumption. The Center For Taxpayer Rights will explore these themes further in the fall of 2023 as part of its successful Reimagining Tax Administration series. The Center’s first Reimagining Tax Administration series in 2021 addressed running social programs through the Internal Revenue Code, and the 2022 series explored taxpayer rights at the state level. With its upcoming series Racial Impact of Tax Administration, the Center will follow up on many of the themes likely to be explored in the February 24th Symposium.

While virtual and in person attendance for the February 24th Symposium is free, there are limited spaces, so I encourage those of you interested to register asap.

A Quick Hobby Loss Refresher: Why These Losses Are Useless (At Least Until 2026)

Today’s post veers slightly from procedure. If one takes seriously the promise that the coming uptick in IRS will fall on those with incomes over $400,000, we might see an increase in hobby loss/ Section 183 cases. When wealthy taxpayers try their hand at boat chartering in the Caribbean, dressage, running a vineyard, or writing a travel guide premised on finding the best sushi in Japan, and the activities generate losses that the taxpayer would like to use to offset other income, the IRS may carefully scrutinize the taxpayer’s profit intent.


As I teach my students, Section 183 is technically a deduction allowance provision. Taxpayers may have some gross income from the hobby. Section 183 allows taxpayers to deduct some of the expenses from the activity, even if the taxpayer does not establish the profit intent to merit the activity qualifying as a trade or business.

If a taxpayer cannot establish the needed profit intent, Section 183 is supposed to allow taxpayers to deduct the expenses associated with the hobby activity to the extent that the hobby has kicked off some income. But for 183, the expenses would be considered personal nondeductible expenses under Section 262. That means that, theoretically at least, as a result of Section 183 taxpayers are not going to have an increase in tax liability due to their likely pleasurable but unprofitable activity. So Section 183 throws a small bone to taxpayers who, but for 183, would face an increase in tax liability from an otherwise personal activity that would not generate any deductible expenses.

Enter the 2021 Tax Court case of Gregory v Commissioner T.C. Memo. 2021-115. I came across it an article on Section 183 by Leila Carney, Entrepreneur or Hobbyist: Turning Losses Into A Win, 110 Practical Tax Strategies 10 (January 2023). And back in 2021 Bryan Camp has a really nice write up of the case in his weekly Tax Prof series, where he provides some helpful historical context for our tax system’s distinction between above the line and below the line deductions.

Gregory involved taxpayers who had a Caribbean-based boat chartering business. Gregory confirms that a taxpayer whose activity is deemed not for profit will not be able to take any deductions from that activity, save expenses (like local taxes) that would otherwise be deductible.

For those still with me here is the roadmap getting to that outcome. The Code does not specifically identify Section 183 as an above the line deduction used in computing AGI. To get to taxable income, taxpayers can elect to take their itemized deductions or take the standard deduction. Section 67 defines itemized deductions as deductions other than (i) those allowable in computing AGI and (ii) the deduction for personal exemptions allowed under Section 151.

Section 67(b) identifies a number of itemized deductions that are not considered miscellaneous itemized deductions (like, for example, home mortgage interest).

Unfortunately, Section 67(b) does not list Section 183 losses in the category of itemized expenses that are not miscellaneous itemized deductions.

Why is that unfortunate? Well, prior to 2018, miscellaneous itemized deductions were deductible only if they were greater than 2% of a taxpayers AGI. And, as part of what is referred to as the Tax Cuts and Jobs Act, from the years 2018-25, the Code suspends deduction of all miscellaneous itemized deductions. Until 2025, all expenses from the 183 hobby activity will be disallowed, (except expenses that would otherwise be deductible), even while income from the activity remains taxable “other income”..

In Gregory, the taxpayer argued that Section 183, as a more specific statutory provision, should in effect preempt Section 67, with the result that the allowance of expenses under 183 means that those expenses could be deducted above the line to establish AGI.

The Tax Court disagreed, finding that the statutes were not in conflict; rather it just “assumes there is conflict between these two provisions of the Code when in fact each provision may be given effect without precluding or otherwise undermining application of the other.”

The bottom line for the Gregorys is not pretty: the income from their boat chartering activities (totaling $342,173 and $313,825 for the respective years at issue) is taxed as “other income,” but the lion’s share of their corresponding expenses ($341,423 and $313,699) are MIDs. (Payments totaling $750 and $126 categorized as taxes.) Then, “because the Gregorys’ total miscellaneous itemized deductions for both years at issue were less than 2 percent of their adjusted gross income (AGI), no deductions for the [boat chartering] expenses (with the exception of the tax expenses) [are] permitted pursuant to section 67(a).”

The Gregorys have appealed this to the 11th Circuit; there was oral argument last week.


A couple of years ago IRS published guidelines for Section 183 audits. Given the temporary disallowance of all miscellaneous itemized deductions, the stakes are even higher when a taxpayer is deemed to not have the requisite profit intent. I suspect that we may see more of these fact-intensive cases in the years to come.

Court Tosses Lawsuit Alleging Alleging Hollywood Foreign Press Association Bylaws Inconsistent With Its Tax Exempt Status

A golden globe award: a gold-colored globe on top of a pedestal.

The Hollywood Foreign Press Association (HFPA) is responsible for the Golden Globes. The latest ceremony was last week. Readers wanting a respite from tax procedure can jump to some nice pix and the list of winners here, though as subscribers know, tax is everywhere. And one of this year’s winners sweeps in the story line of an IRS audit, with Michelle Yeoh winning for the heavily praised (but I hated) Everything Everywhere All at Once.  In the movie, Yeoh tries to protect her family laundromat from Jamie Lee Curtis, who played Deirdre Beaubeirdra, an IRS revenue agent. But I digress….

In addition to shining the bright lights on Hollywood’s A-listers, the award show jogged my memory of a Ninth circuit case I read last month, Flaa v Hollywood Foreign Press Association.


The HFPA is no stranger to controversy. The networks, along with many actors and directors, boycotted the ceremony last year, with allegations of corruption, self-dealing and lack of diversity. It appears that the HFPA has changed some of its practices, and its boozy award ceremony is must see for some who find that kind of thing more interesting than the latest TIGTA report on CDP compliance or last week’s  TAS recommendation to divide the worker and child component of the EITC.

Flaa v HFPA primarily involves antitrust claims brought by Kjersti Flaa and Rosa Gamazo Robbins, longtime entertainment journalists who for years unsuccessfully sought admission to HFPA. According to the journalists, membership in the HFPA conferred numerous benefits to its members, and the group unfairly restricted access to keep spoils to members:

Movie studios provide HFPA members with access to Hollywood talent that non-HFPA members lack: HFPA members receive opportunities to interview and interact with popular actors, directors, and producers. Studios grant HFPA members such privileges in order to gain favor with the individuals responsible for voting on the Golden Globe Awards. HFPA members also reap financial benefits. Members receive invitations to all-expenses-paid excursions to film festivals and press junkets, and are paid directly by the HFPA for performing what the complaint describes as trivial, makeweight tasks.

Standards for admission to the HFPA are tight; according to the complaint “a journalist seeking HFPA membership was required to submit two letters of sponsorship from active HFPA members, provide 24 articles written by the applicant in the last three years, demonstrate membership in the Motion Picture Association of America, and receive a majority vote of the HFPA’s active members, among other requirements. The HFPA admitted only one new member in 2018, and no new members in 2019.”  (note HFPA appears to have mended its ways and has opened up membership considerably in the last year, see Tarnished Golden Globes attempt a comeback, after years of controversy).

After both Flaa and Gamazo Robbins were denied admission for multiple years, the journalists filed a suit challenging the HFPA’s membership policies under federal and state antitrust laws and California’s right of fair procedure. For good measure, they also sought a declaratory judgment that the HFPA’s bylaws conflicted with its status as an IRC § 501(c)(6) trade organization (to read more about (c)(6) versus the more well known (c)(3) status see the helpful write up from Marcum summarizing the differences).

Most of the opinion addresses the journalists’ unsuccessful antitrust claims. But as this is a tax blog, the key claim I discuss is how Flaa and Gamazo sought a declaration that the HFPA’s bylaws “are unlawful in light of the HFPA’s commitments and obligations as a tax-exempt Section 501(c)(6) mutual benefit corporation” because the HFPA’s bylaws serve to benefit its members rather than the industry as a whole. 

The court dismissed that claim, holding that the Declaratory Judgment Act limits courts’ jurisdiction to provide the relief they sought:

The Declaratory Judgment Act grants federal courts the power to “declare the rights of any interested party seeking such declaration,” but it expressly provides that declaratory relief is unavailable “with respect to Federal taxes.” 28 U.S.C. § 2201(a). That language creates a jurisdictional bar to declaratory relief related to federal tax controversies….The statute provides an exception to the tax-related jurisdictional bar for “actions brought under section 7428 of the Internal Revenue Code.” 28 U.S.C. § 2201(a). Section 7428, in turn, provides jurisdiction to determine whether an organization is entitled to tax-exempt status, but only in actions brought by the organization itself. See 26 U.S.C. § 7428(a)(1)(E), (b)(1).

The journalists’ argued that the object of their suit was not to challenge the organization’s status or the amount of taxes it might owe but simply to “seek a declaration that the HFPA’s bylaws conflict with the “obligations flowing” from its tax-exempt status.”

The Ninth Circuit disagreed:

[A] declaration that the HFPA’s bylaws conflict with its tax status would be functionally equivalent to a declaration that the organization is violating the tax laws. Such a declaration would necessarily imply that the HFPA is not entitled to its tax-exempt status, and it would serve no purpose but to threaten the HFPA with the loss of that status….The requested declaration is therefore one “with respect to Federal taxes,” so the district court correctly dismissed the claim for lack of subject-matter jurisdiction.


The DJA, like its cousin the Anti Injunction Act, still serves as a formidable barrier that prevents courts from considering matters that touch on federal taxes. The DJA, like the AIA, serves to shoehorn tax disputes into a traditional tax enforcement path, and prevents nontax disputes from sweeping in issues that touch on federal tax law.

Math Error and Limited Taxpayer Remedies

Last year I gave two talks about math errors, one for an ABA Tax Section meeting and the other for the annual conference the IRS sponsors for tax clinics. I also worked on a refresh of the math error subchapter in Saltzman and Book, IRS Practice & Procedure.

In doing this work last year I noted a few points that I think practitioners should consider.


As readers may know, when there is an adjustment that fits within the definition of a “mathematical or clerical error” IRS can assess without issuing a 90-day letter.  The statute requires the IRS to explain the error.

Taxpayers have the right to request an abatement within 60-days; if they do request an abatement, IRS is required statutorily to honor the request. If IRS believes that the item that gave rise to the original mathematical or clerical error is incorrect, it is required to issue a 90-day letter, thus subjecting the adjustment to the pre-assessment deficiency procedures.

What happens if IRS fails to honor a taxpayer request to abate the assessment? Or if the IRS fails to explain the math error assessment? These appear to be more than academic questions based on what I am hearing from practitioners and sources within IRS. And, with math error assessments growing exponentially following the COVID benefits distributed through the tax system (and likely to grow more given the Inflation Reduction Act’s adding categories of math error adjustments tied to the slate of new green credits for car purchases and home improvements) this will be a major issue for years to come.

Well, it depends.  If the IRS fails to abate and issue a notice of deficiency, it appears that the Tax Court does not have deficiency jurisdiction. Nor does it generally have the statutory power to enjoin the IRS from collecting or compel the IRS to issue a 90-day letter. 

How about in district court? Some courts have held that while the Anti Injunction Act and Declaratory Judgment Act do not deprive the court of jurisdiction, a taxpayer must still prove there is no adequate remedy. That is a problem, as some courts view the refund procedures as a sufficient remedy at law, with courts essentially stating that an IRS violation of the statute triggers no immediate right to remedy in the absence of full payment. See, for example, Deacon v. United States, 71A AFTR2d 93-4718, (CD CA 1990).

On the other hand, if IRS proceeds to take collection action as a result of the mistake, the Tax Court has held in a couple of nonprecedential CDP cases that the mistake can invalidate an assessment. See, for example  Robinson v Commissioner, Docket No. 6446-19L (Jan. 10, 2022) (Judge Gustafson Bench Opinion). While this can be helpful, the need to use the CDP procedures provides no relief for taxpayers if the IRS does not issue a notice of intent to levy or file a NFTL. With offsets not triggering CDP rights, and the most common form of enforced collection, IRS essentially gets a free pass.

Some may say this is unfair. And it is.

What about procedural due process and the constitution? Well courts have maintained that there is no procedural due process right to a predeprivation hearing when it comes to taxes, leaving taxpayers complaining about math error and the constitution to hold an empty bag. See, Polsky v Werfel  844 F.3d 170 (3rd Cir. 2016).

And while I and others (like Nina Olson) have argued that procedural due process doctrine when it comes to taxes needs a refresh, for now it faces some steep headwinds, though the right court might treat the constitutional issues differently for a math error stemming from an adjusted refundable credit as contrasted with say a math error triggering a positive tax liability. And perhaps a challenge that focuses on inadequate notice rather than hearing may have more traction.

For readers who want more on this, with my colleagues Anna Gooch and Marilyn Ames I will be updating even further the IRS Practice & Procedure with more discussion of the above, as well as some possible ideas for challenging errors.

In the meantime Congress could help by expanding the Tax Court’s jurisdiction to allow for power to enjoin when the IRS makes a math error mistake. Or to have jurisdiction if the IRS fails to abate within a defined time of a taxpayer request.

For now, lots of taxpayers seem to be sitting on a right with a very limited remedy.

Polselli Summons Case Heads To Supreme Court

Last January in Circuit Split on Notice Rules For Summonses to Aid Collection I discussed how the Sixth Circuit case Polselli v United States resulted in a split in the circuits on a fundamental issue in IRS summons practice: does the IRS have to give notice when it issues a summons in the aid of collecting an assessed tax? The Sixth Circuit, in contrast with the Ninth Circuit in Ip v US, held that the taxpayer has no right to notice so long as the summons followed an assessment or judgment and it was issued in the aid of collecting the tax.

Notice is key, because under the statute the government’s waiver of sovereign immunity is tied to notice, and thus a court lacks jurisdiction to hear a challenge if a party is not entitled to notice.


After the defeat the taxpayer filed a cert petition; the government opposed the petition. The Center for Taxpayer Right, with counsel Latham & Watkins, filed an amicus brief  in support of the petition (disclosure: I am on the Board of the Center; Keith is President and also on the Board; Nina is the Founder, Executive Director and Treasurer and also a Board Member).

Last month the Supreme Court granted cert over the government’s opposition.

In Polselli, the Sixth Circuit held that Section 7609(c)(2)(D)(i) “unequivocally provides that the IRS may summon the third-party recordkeeper of any person without notice to that person if (1) an assessment was made or a judgment was entered against a delinquent taxpayer and (2) the summons was issued “in aid of the collection” of that delinquency.”

The taxpayer’s cert petition identifies the question presented as “whether the § 7609(c)(2)(D)(i) exception applies only when the delinquent taxpayer owns or has a legal interest in the summonsed records (as the Ninth Circuit holds), or whether the exception applies to a summons for anyone’s records whenever the IRS thinks that person’s records might somehow help it collect a delinquent taxpayer’s liability (as the Sixth Circuit, joining the Seventh Circuit, held below).”

As the petition noted, the government’s summons reached two of the taxpayer’s law firms and his wife, raising privacy interests and possible privilege issues.

Under the government’s and Sixth Circuit’s view, the statute gives the IRS the absolute right to issue a collection summons without notice or right to challenge.

As the Center’s amicus brief highlights, the government and Sixth Circuit’s position effectively provides that the exception to notice in Section 7609 swallows the rule and subverts the balance between privacy and the government’s interest in tax collection:

The Sixth Circuit’s interpretation of one exception leaves a gaping hole in Section 7609’s protections and swallows the general rule of notice. The Sixth Circuit held that the IRS may issue a summons seeking the records of people who do not owe the IRS a penny, without notice, so long as the IRS issued the summons to aid in the collection of someone else’s tax liability. This interpretation places virtually no limits on the IRS’s ability to seek records without notice. And without notice, an innocent person whose records are sought lacks any meaningful opportunity to prevent disclosure of her private information. The Sixth Circuit’s interpretation nullifies the right to protect private information from IRS overreach.

Stay tuned, as this is the latest in a series of important procedural issues reaching the Court.

How You Can Help Support the Center For Taxpayer Rights

Readers of PT know that Keith and I are members of the Center for Taxpayer Rights’ board of directors (Keith is the president).  We strongly support the Center’s mission of advancing taxpayer rights in the United States and around the globe.  In this regard, a few weeks ago Nina shared some of the significant things the Center for Taxpayer Rights has accomplished during 2022, and the Center’s plans for 2023 are equally impressive.  Its work is increasingly recognized as a nonpartisan source for important issues tax administration (see, e.g., the NPR discussion earlier this week with Nina concerning the IRS not auditing the former President during his first two years in office). Today, we’re asking that readers join me and Keith and other readers who have contributed and consider supporting the Center’s important work.  You can do so here.

At its founding, one of the Center’s goals was to raise the awareness among non-tax foundations and grantors of the role taxation and taxpayer rights play in the health and welfare of nations.  The Center has been incredibly successful in this area.  We now count the Rockefeller and Schusterman Family Foundations as funders, underwriting important projects including the two Reimagining Tax Administration series (Running Social Programs Through the Tax Code and State Tax Practices and Taxpayer Rights) and our pro bono/training coordinator.  For 2023, these foundations will continue funding a Reimagining Tax Administration series Exploring The Racial Impact of Tax Administration.  Further, over the next two years, the Robert Woods Johnson Foundation has committed significant funding for a project titled, Toward a more inclusive tax system: Shaping the Benefits-mission of the Internal Revenue Service.  In February, we’ll be launching a series of Tax Chats! exploring how to go about transforming the IRS into a 21st century tax administration.  And, we will be returning to our in-person International Conference on Taxpayer Rights, to be held in Santiago, Chile in May 2023, with the theme of Access to Judicial Review.

As important as this external support is, we need the tax profession to show its support for the Center’s work.  The one area that is still difficult to fundraise for is the LITC Support Center, which provides technical support for Low Income Taxpayer Clinics (LITCs) around the country.  In addition to filing amicus briefs on important taxpayer rights issues and participating in high-impact litigation, the LITC Support Center also operates LITC Connect, the “dating app” for LITCs and prospective volunteers.  In 2023, the Center will be beta testing LITC Connect for VITA sites and other non-governmental organizations to make referrals of their low income clients to LITC Connect where they have tax disputes.  And we will be building our library of training videos and materials so volunteers and LITCs have resources to help them with their representation. 

The Support Center’s mission of expanding the reach and capacity of LITCs should resonate with all of us in the tax profession, who daily see how access to representation can change the outcome in tax disputes and ensure taxpayer rights are protected for low income taxpayers.  So, as 2022 comes to a close, we at PT ask that you consider donating to the Center for Taxpayer Rights and its project, the LITC Support Center.  Help the Center help others.  Thank you!

The Most Viewed Procedurally Taxing Posts of 2022

PT had a banner year-with, 279 blog posts to date, thousands of subscribers, and views pushing over the two million mark.

In today’s post, we offer the top-viewed posts of the past year. The list includes some long time favorites from years past as well as some posts that had their debut in 2022. 

We thank our loyal readers and contributors who have helped to make our blogging enjoyable.

Some changes to the blog are on the horizon; but what will continue is our commitment to providing quality analysis and context for developments in tax administration and tax procedure, a goal that began with our first post Welcome to Procedurally Taxing! almost ten years ago.

Here are the top posts of 2022.

read more…

1. Biden Administration Floats Refundable Pet Tax Credit Idea to Boost Child Tax Credit

The number one post this year originally appeared on April 1, 2021, and reflects my real talent: a frustrated wannabe Onion writer. The post had a strong surge this past month, causing my colleagues to request that I add a more explicit disclaimer.

2. Requesting an Offset Bypass Refund and Tracing Offsets to Non-IRS Sources

The all time most viewed post on PT, Keith’s 2015 post is a crucial source of information for taxpayers looking to receive a refund and sidestep the IRS’s offset powers.

3.  The Facebook Pixel and Unauthorized Use and Disclosure of Tax Return and Tax Return Information

The most viewed post that had its debut in 2022; here Nina Olson discusses a Markup report detailing the presence of a Facebook (or Meta) pixel on various tax software websites that discloses taxpayer identity and financial information, gathered in the course of preparing and filing tax returns online, to Facebook.  

4. 11th Circuit Affirms That Anti-Injunction Act Prevents Taxpayer Seeking Access to Appeals

In this post I discuss Hancock County Land Acquisitions v US, where the taxpayer brought an action alleging that the IRS’s failure to refer its case to the IRS’s Independent Office of Appeals violated the Taxpayer First Act  The Eleventh Circuit, in an unpublished opinion, held that the Anti-Injunction Act barred the lawsuit.

5. Discharging Student Loan Debt

In this post from February, Keith discusses  Wheat v. Great Lakes Higher Education Corp, and the Department of Education’s unsuccessful efforts to get  a bankruptcy court to reconsider discharge of student debt.

6. “The Dark Net? We OWN the Dark Net.” -Charles Rettig, IRS Commissioner, ABA Tax Section Meeting

In this guest post, Karen Lapekas reflects on former Commissioner Rettig’s comments he gave at the Fall ABA Tax Section meeting in Dallas. The post also has a thoughtful introduction from Nina Olson.

7. How Did We Get Here? A New Series …

In the first of a series, Nina Olson offers her views on the state of the IRS, and a way forward.   The series offers thoughtful takes on correspondence exams and processing of returns.

How Did We Get Here? Correspondence Exams and the Erosion of Fundamental Taxpayer Rights – Part 1

 How Did We Get Here? Correspondence Exams and the Erosion of Fundamental Taxpayer Rights – Part 2

How Did We Get Here? 2-D Barcoding and the Paper Return Backlog – A Missed Opportunity

8. Making Additional Work for Yourself and Others

In this post, Keith discusses IRS receiving paper returns and checks, yet with its processing woes IRS was sending correspondence that reflected an unawareness as to whether the agency received a return. This added more work and stress for taxpayers and practitioners, and ultimately the IRS too.

9. The IRS Strikes Back Against Robocalls

In this post, the third post of the past year that discussed enQ, a private for pay service that allows subscribers to skip the phone line and get access to IRS, Keith discussed IRS efforts to thwart its use.

10. 2021 Tax Court Exam for Nonattorneys

In this guest post, Sherrill L Trovato provides detailed information about the examination the Tax Court administers to non-attorneys who practice before it.

IRS Asks Tax Court To Reconsider Green Valley v Commissioner

Not dead yet. That is what the IRS’s latest filing in Green Valley v Commissioner indicates, as the IRS is not throwing in the towel in its efforts to defend the validity of its listing notices despite its loss in Green Valley.

Last week in IRS Announces It Will Start Following the Law (With Respect to Identifying Some Listed Transactions) Jonathan Black discussed how following its loss in Green Valley, the IRS issued an announcement identifying certain syndicated conservation easement (“SCE”) transactions as listed transactions. It simultaneously filed for publication with the Federal Register a Notice of Proposed Rulemaking (“NPRM”) – REG-106134-22, Syndicated Conservation Easement Transactions as Listed Transactions – formally designating SCEs as listed transactions in proposed regulations.

In its announcement the IRS stated  that “Treasury and the IRS disagree with the Tax Court’s decision in Green Valley and the Sixth Circuit’s decision in Mann Construction, and are continuing to defend the validity of existing listing notices in circuits other than the Sixth Circuit.”

And as part of the IRS’s disagreement with the Tax Court (and Sixth Circuit), last week IRS filed a motion in Tax Court asking that the Tax Court reconsider its Green Valley opinion. Its motion highlights arguments the government made in a supplement to its earlier motion in opposition to summary judgment. The motion also questions whether Tax Court judges actually read its argument, given that none of the multiple Green Valley opinions addressed or cited it, and the summary of the procedural history fails to identify the government’s supplemental filing.


As to the merits, in its motion the IRS does not challenge the Tax Court’s conclusion that guidance would generally subject to the APA’s notice and comment requirements; instead, it argued that the Tax Court failed to “consider statutory text evidencing Congress’s clear intent that such notices need not follow notice-and-comment procedures….” in this particular context.

All of this brings into question the APA, at 5 USC § 559, which provides that a subsequent statute is not to displace the APA “except to the extent that it does so expressly.”

According to the motion, the Tax Court failed “to appreciate the existence and implications of the dozens of listed-transaction notices that had already been issued without notice-and-comment when the American Jobs Creation Act [ACJA] of 2004.”

This is not the first time that the government has highlighted this legislative context. It raised them below in its supplemental objection for partial summary judgment. In its supplement, the IRS focused on legislative context that in its view demonstrated that Congress expressly intended to displace the APA’s notice and comment requirements when it came to identifying listed transactions:

As previously explained in Respondent’s Objection, Section 6662A, which imposes an accuracy-related penalty on understatements attributable to reportable transactions, was enacted as part of the AJCA, which was passed in part to “provide the Treasury Department with additional tools to assist its efforts to curtail abusive transactions.” S. Rep. No. 108-192, at 90. To this end, the AJCA also included other provisions, such as Section 6707A (penalizing failure to disclose a reportable transaction), Section 6501(c)(10) (extending the assessment statute of limitations for listed transactions), and Section 6404(g)(2)(E) (creating an exception from underpayment interest suspension for listed transactions). See AJCA, § 811(a), Pub. L. 108-357, 118 Stat. 1418, 1575, 1580, 1581, 1652. Section 6662A, as well as other AJCA provisions, incorporated by reference Section 6707A’s definitions of “reportable transaction” and “listed transaction,” terms that originated from the Treasury regulation. I.R.C. § 6662A(d); 65 Fed. Reg. 11207 (Mar. 2, 2000).

In its motion for reconsideration, IRS also took a shot at the Sixth Circuit’s Mann opinion, and its similar failure to address the broader legislative context:

The Mann court focused exclusively on Section 6707A, but that provision was not the only part of the AJCA enacted to combat abusive tax shelters, nor the only one to endorse the IRS’s identification of listed transactions by notice. Other provisions in the statute make clear that Congress viewed the listing notices that existed at the time the AJCA was passed — none of which had gone through notice-and-comment — as validly issued. If those notices were invalid, Congress passed dead letters.

The motion highlights Section 6501(c)(10), which “holds the statute of limitations for assessing a tax deficiency open until one year after the taxpayer’s participation in a listed transaction was disclosed.” As the motion notes,

Congress lengthened the assessment period for taxpayers who had failed to comply with the IRS’s listed transaction disclosure requirements before October 22, 2004. If Congress believed the existing notices identifying listed transactions were invalid, then there would have been no listed transaction to which Section 6501(c)(10) could apply when AJCA was enacted.

The motion also discusses how the AJCA created a new exception to the suspension of the accrual of interest on a liability if the IRS fails to notify the taxpayer of the liability within a certain time. In ACJA, Congress provided that

[i]nterest now continues to accrue on a tax liability relating to a listed transaction regardless of how long it takes for the IRS to notify the taxpayer of that liability, and regardless of whether the taxpayer complies with the IRS’s disclosure requirements. AJCA § 903(c), 118 Stat. at 1652 (codified at 26 U.S.C. § 6404(g)(2)(E)). This new exception applied with respect to interest accruing after October 3, 2004. AJCA § 903(d)(2). This effective date shows that Congress’s target included taxpayers who had already participated in listed transactions identified by notice.


Requests to reconsider face a high hurdle, requiring that the opinion contain substantial errors in fact or law. Perhaps the Tax Court’s earlier failure to address these points was deliberate; if it was an oversight it might be enough to get the Tax Court to reconsider. And even if the Tax Court does not reconsider its opinion, the motion spells out what is likely to be the government’s primary argument on appeal.

Stay tuned.