ABA Tax Section Midyear Meeting This Week

The Tax Section of the ABA is holding its midyear meeting this week in a virtual format. It’s less expensive to register in this format and certainly less costly in time and money to attend. The program kicks off this afternoon with a New Attendee Orientation Reception at 4:00 p.m. and an opening plenary Tuesday at 10:30 a.m. EST, featuring Mark J. Mazur, Deputy Assistant Secretary, Tax Policy, US Department of the Treasury, and Janice Mays, Managing Director, Tax Policy Services at PwC US, exploring tax changes expected from the new administration and the new Congress.

The meeting has several panels addressing issues recently discussed in PT, which are detailed below. In addition, readers of this blog should find interesting the panels happening at the Administrative Practice, Individual & Family Taxation, Court Procedure & Practice, Tax Collection, Bankruptcy and Workouts Committee, and Teaching Tax Committees. There are too many excellent panels to highlight here. The full program is here, and the schedule at a glance is here.


On Thursday morning January 28, the Pro Bono & Tax Clinics committee is presenting two sessions on the EIP, which we have covered extensively on PT. One of the panels includes Yaman Salahi who was part of the team of attorneys representing incarcerated individuals who won their case to receive the EIP in the fall of 2020.

EIP for Incarcerated Individuals. Panelists will provide lessons learned and an update on the latest from the Scholl et al. v. Mnuchin class action lawsuit ordering that the EIP be disbursed to incarcerated individuals. They will also discuss the process by which inmates may claim the payment, any systemic issues that have arisen since the court ordered that the payments be made, and the ways in which the pro bono and tax clinic community can be helpful.
Panelists: Yaman Salahi, Partner, Leiff Cabraser Heimann & Bernstein, San Francisco, CA; Amy Spivey, Visiting Assistant Professor & LITC Director, UC Hastings Law School, San Francisco, CA

Caleb Smith is a speaker on the second panel, which has a broader focus. Les recently blogged on key differences between the advance payment of the EIP and the recovery rebate credit here.

The National Taxpayer Advocate, EIP Issues and What to Expect in Filing Season. The National Taxpayer Advocate will provide a review of the 2020 Annual Report to Congress, and panelists will troubleshoot some of the most common problems likely to arise with EIPs during the filing season. Topics will include assisting those that the IRS thinks have received the EIP already but never actually did, misdirected deposits, or issues with joint bank accounts and domestic violence. Additionally, the panel will address questions concerning individuals that did receive payments but shouldn’t have and whether IRS can recoup such payments under either assessment/deficiency procedures, as erroneous refunds, or under general offset authority.
Moderator: Terri Morris, Attorney and Christine Brunswick Fellow at Community Tax Law Project, Richmond, VA
Panelists: Erin Collins, IRS National Taxpayer Advocate, Washington, D.C.; Dietra Grant, IRS Wage & Income, Atlanta GA; Nancy Rossner, Attorney Community Tax Law Project, Richmond, VA; Caleb Smith, Clinical Professor University of Minnesota Law School, Minneapolis, MN

If you enjoyed the blog post on premature assessments of Tax Court cases or the mailing of 12 million notices weeks or months after the dates on the notices (and its unfortunate recurrence), you could attend a panel on which Keith will participate, for the Tax Collection, Bankruptcy and Workouts Committee. 

The Impact of Late-Issued Collection Notices in Bankruptcy and Tax-Related District Court Litigation. After the expiration of the hiatus on collection and enforcement under the People First Initiative, the IRS mailed millions of notices with expired action and response dates. In addition, the inability of the IRS and the Tax Court to process mail during the COVID emergency caused the IRS to make premature assessments of some tax liabilities. The panelists will discuss the effect of misdated notices and premature assessments on the validity of assessments and the effect of these notices and assessments in bankruptcy and tax-related collection litigation commenced by the U.S. Department of Justice Tax Division.
Panelists: Janice Feldman, Volunteer Attorney at the Federal Tax Clinic, Harvard Law School, Jamaica Plain, MA; Professor Keith Fogg, Director of the Federal Tax Clinic, Harvard Law School, Jamaica Plain, MA; A. Lavar Taylor, Law Offices of A. Lavar Taylor, Santa Ana, CA

On Thursday afternoon, guest blogger Omeed Firouzi moderates a panel for the Diversity Committee which should be of interest to all tax lawyers.

Inequality, Race, & Tax: Systems, Laws, & Enforcement. The United States exhibits wider disparities of wealth than any other major developed nation. Over the past five decades, wealth has increasingly concentrated among the highest-income households. These households are disproportionately White and male. In 2018, three White men held aggregate wealth greater than the aggregate wealth of one-half of all Americans. The median White household has 41 times more wealth than the median Black household and 22 times more wealth than the median Latinx household. On average women earn less than men in all industries. At the intersection of race and gender, the gaps are even more shocking. Women of color are disproportionately poor, suffering poverty rates of 21.4% Black women, 18.7% Latinas, and 22.8% Native American women, as compared to 7% for White men. Moreover, education, work, marriage and other attributes that fall under the rubric of “personal responsibility” do not remedy these disparities. White heads of household without a high school education have on average more wealth than college educated Black heads of households. White households with a single white parent have more than twice the net worth of two parent Black households. White households with an unemployed head have a higher net worth than Black households with a head who is working full time. In short, something must be done to reverse these racist trends. Tax and spending systems are the most profound fiscal tools under the government’s control. Many aspects of United States tax systems worsen inequality, especially the racial wealth gap. Three nationally recognized expert panelists will provide a deep dive into institutional racism in tax systems. The panel will begin with a broad overview, focusing on racism in tax systems targeting Black and Latinx taxpayers. The focus will then narrow further, looking at the disparate impact of taxpayer audits on communities of color. Finally, panelists will suggest concrete strategies to start to remedy these wrongs.
Moderator: Omeed Firouzi, Staff Attorney, Philadelphia Legal Assistance
Panelists: Donnie Charleston, Director, Public Policy & Advocacy, E Pluribus Unum; Francine Lipman, William S. Boyd Professor of Law, University of Nevada, Las Vegas; Jackie Vimo, Economic Policy Justice Analyst, National Immigration Law Center

Finally, on Friday Les and Nina are participating in a session at the Individual & Family Taxation Committee meeting, which promises a fascinating and important discussion of how best to address tax underreporting by individuals.

Fresh Look at an Old Problem: Reducing the Tax Gap. The tax gap, or the difference between total taxes owed and taxes paid on time, is a longstanding problem. This panel highlights recent proposals to reduce the tax gap, with a focus on the underreporting tax gap associated with individuals.
Moderator: Leslie Book, Professor of Law, Villanova University Charles Widger School of Law, Villanova, PA
Panelists: Mark J. Mazur, who was recently returned to Treasury as Deputy Assistant Secretary, Tax Policy, (he was previously the Director at the Tax Policy Center, Urban Institute, Washington DC); Nina Olson, Executive Director of the Center for Taxpayer Rights, Washington DC; Charles O. Rossotti, Senior Advisor, Carlyle Group, Washington DC; Natasha Sarin, Assistant Professor of Law, University of Pennsylvania Law School & Assistant Professor of Finance at the Wharton School of the University of Pennsylvania, Philadelphia, PA

Year in Review – Court Cases

This review of 2020 Tax Court cases is partially cribbed from a presentation given by LaKesha P. Thomas, Esq., Clinic Director at Three Rivers Legal Services (FL); William Schmidt, Clinic Director at Kansas Legal Services; and Caleb Smith, Associate Professor of Clinical Law at University of Minnesota Law School.

In this post several of the cases of particular importance this year are highlighted.  Litigation during 2020 seemed to take a back seat to general tax administration which the pandemic through into thorough disarray.  Nonetheless, the EIP cases offered some interesting crossover litigation and other cases explored important areas of tax procedure as well.

Note that some of the Tax Court cases discussed below are not linked, as online opinions are currently unavailable through the Tax Court site due to the ongoing implementation of the DAWSON system.


EIP Litigation:

Scholl v. Mnuchin, Dk. No. 20-cv-05309-PJH discussed here, here, here and here.

  • IRS withholding EIPs to incarcerated individuals and encouraging those that received them to pay them back.
  • Statute does not include incarceration as disqualifying otherwise eligible individuals. Only legal authority is IRS online FAQs.
  • Class Action Suit: Victory for Incarcerated Individuals
  • Importance for Practitioners:
  • Using admin law as your way into Court
  • Increasing reliance by IRS on FAQs and sub-regulatory guidance in fast-changing circumstances

Amador v. Mnuchin, Dk. No. 20-cv-01102-TDC (D. Md.) discussed here.

  • IRS denying EIPs to U.S. citizens who filed joint returns with a non-citizen spouse (filed as a class action).
  • Court denied gov’t motion to dismiss on sovereign immunity, standing, and 12(b)(6) grounds.
  • Related case: Doe v. Trump, Dk. No. 20-cv-00858 (C.D. Cal.) (granting government motion to dismiss and sustaining CARES Act spousal exclusion under rational basis review), appeal pending, Dk. No. 20-56019 (9th Cir.)

R.V. v. Mnuchin, Dk. No. 20-cv-01148-PWG (D. Md.)

  • IRS denying EIPs to U.S. citizens who are the underage children of undocumented immigrants.
  • Court denied gov’t motion to dismiss on standing and 12(b)(6).

What is a return:

Fowler v. C.I.R., 155 T.C. No. 7 (2020) discussed here and here.

  • Individual attempted to e-file return multiple times but was rejected for lacking “IP PIN.” Later mailed in return.
  • IRS began deficiency procedures within 3 years of later mailed return, but not within 3 years of e-filed attempts. If those (rejected) e-filed returns were valid, IRS deficiency untimely. Which is what Court held.
  • E-filed returns are rejected all the time when they otherwise would be valid
  • ASED date arguments (and by consequence, CSED)
  • Late filing penalty arguments

Quezada v. IRS, No. 19-51000 (5th Cir., Dec. 11, 2020) see discussion of Fifth Circuit’s opinion here and prior opinions here and here

  • Taxpayer failed to file Form 945 for backup withholding.
  • In bankruptcy, IRS sought to collect assessed tax, penalties & interest; taxpayer argued that the 3-year statute of limitation had expired, because his filed 1040 & 1099 were a “return” that triggered the SOL.
  • Fifth Circuit found the 1040 & 1099 combination sufficient to constitute a “return” and reversed bankruptcy court and district court, which had both agreed with the IRS.

Coffey v. Commissioner, No. 18-3256 (8th Cir., Dec. 15, 2020), rev’g, 150 T.C. 60 (2018) (fully reviewed and very fractured Tax Court opinion), see discussion of Eighth Circuit’s opinion here and previous discussions here, here and here

  • Taxpayers claimed to be residents of Virgin Islands.
  • Taxpayers filed returns with Virgin Islands and gave copy of portion of returns to IRS
  • Tax Court found submissions triggered running of statute of limitations and 8th Circuit reversed

Innocent Spouse Cases

Sutherland v. C.I.R., 155 T.C. No. 6 (2020) discussed here, here, here and here.

  • Taxpayer First Act (TFA) changed scope of review of Tax Court in Innocent Spouse (I/S) cases mostly to admin record at time of IRS determination (IRC 6015(e)(7))
  • Problem is taxpayers can get into Tax Court before (or without) IRS making a determination in I/S (IRC 6015(e)(1)(A)). What does Tax Court Review? Sutherland kicks the can… TFA provision only applies for petitions filed after 7/1/2019

Jacobsen v. C.I.R., 2020 U.S. App. LEXIS 4544 (7th Cir. 2020) discussed here and here.

  • Tax Court and 7th Circuit determining how to weigh factors in Innocent Spouse relief where taxpayer has “actual knowledge” of items leading to understatement
  • Taxpayer seeking equitable relief under IRC 6015(f) with all positive factors except knowledge… both courts say, “no dice.”
  • Highlights the need to argue no actual knowledge!!! (If at all possible)
  • Recognize extreme uphill battle of getting reversal on Appeal for I/S

CDP Cases

Lander v. C.I.R., 154 T.C. No. 7 (2020) discussed here, here, here and here.

  • Collection Due Process Issue: When is a taxpayer precluded from raising the underlying tax because they had a “prior opportunity” to dispute? (IRC 6330(c)(2)(B))
  • Tax Court held that taxpayer request for audit reconsideration (with Appeals) was “prior opportunity” precluding right to raise underlying liability
  • Importance for Practitioners:
    • Don’t request audit reconsideration (i.e. wait until CDP to raise the issue)?
    • Take it to appellate court? Don’t use S-Case designation…

Patrick’s Payroll Services v. Comm’r, No. 20-1772 (6th Cir.) discussed here

  • Taxpayer arguing that 6330(c)(2)(B) imposes a disjunctive test (i.e. non-receipt of notice of deficiency or no prior opportunity) that allows a taxpayer to contest their underlying liability if one of the conditions is satisfied

Amanda Iris Gluck Irrevocable Trust v. Comm’r, 154 T.C. No. 11 (2020), discussed here.

  • Taxpayer sought to challenge underlying liability resulting from IRS computational adjustments.
  • Judge Lauber found that the taxpayer did not have a prior opportunity and that Court had jurisdiction to review a computational adjustment in CDP cases.

Cue v. Comm’r, No. 21404-18SL (T.C. 2019), discussed here.

  • Taxpayer challenged filing of federal tax lien on basis that a FTL would prevent him from keeping his job as a banker. At Appeals, the settlement officer declined to withdraw the lien and the taxpayer lost his job.
  • In a bench opinion, Judge Goeke found that the SO abused her discretion by failing to consider that the taxpayer would lose his job if she failed to withdraw the lien. Judge Goeke reversed and declined to sustain the notice of determination.

Barnhill v. Comm’r, 155 T.C. 1 (2020), discussed here.

  • Taxpayer did not receive a letter from the IRS scheduling an Appeals conference to dispute assessment of a Trust Fund Recovery Penalty (TFRP).
  • Judge Gustafson held that the taxpayer did not have a prior opportunity to dispute and thus was able to challenge the filing of a federal tax lien on the merits.

Timely Filing as Jurisdiction or Claims Processing Rule

Organic Cannabis Foundation v. Comm’r, No. 17-72874 (9th Cir.)

  • 9th Cir. panel affirmed Tax Court and held that IRC 6213(a)’s time limit is jurisdictional

Boechler, P.C. v. Comm’r, No. 19-2003 (8th Cir.) discussed here

  • 8th Cir. panel affirmed district court and held that IRC 6330(d)(1)’s 30-day CDP time limit is jurisdictional.

Castillo v. Comm’r, No. 20-1635 (2d Cir.)

  • Briefs submitted – arguments by taxpayer and amici for non-jurisdictional nature of CDP filing deadline & that IRC 6330(d)(1) should be interpreted to allow jurisdiction on late-filing when CDP notice was not received by petitioner within 30-day period

Year in Review – Administration

This review of 2020 legislation is cribbed from a presentation given by LaKesha P. Thomas, Esq., Clinic Director at Three Rivers Legal Services (FL); William Schmidt, Clinic Director at Kansas Legal Services; and Caleb Smith, Associate Professor of Clinical Law at University of Minnesota Law School.

The biggest administrative action taken by the IRS in 2020 derived from its power under 7508A which gives the IRS the power to waive many requirements when a declared disaster occurs.  We discussed 7508A and the power it grants to the IRS as well as the power the IRS exercised in numerous posts over the year.  You can find them here, here, here, here and here.  In addition to the “normal” powers granted to the IRS under 7508A, 2020 also brought the possibility of new power and postponement created by 7508A(d) passed just before the pandemic arrived in the United States but without thought of how it would operate in the setting of a global pandemic.  Figuring out exactly what 7508A(d) means is something still underway as we discussed here.  In general, the IRS exercised its power to postpone in a broad manner through Notice 2020-23 and other notices exercising the power granted in IRC 7508A.


Notice 2020-23: Tax Action Relief

Taxpayers have until 7/15/2020 to perform the following time-sensitive tax actions if normally due on or after 4/1/2020 and before 7/15/2020:

  • File U.S. Tax Court petition
  • Filing a claim for refund or credit
  • Filing a suit for a claim for refund or credit
  • All actions listed in Rev. Proc. 2018-58
  • 180-day qualified opportunity zone investment period
  • Related Tax Changes IR-2020-59 -Installment Agreements:
  • Payments between 4/1/2020 and 7/15/2020 are suspended.
  • The IRS will not default IAs during this period.

Notice 2020-18

Pursuant to this notice certain federal income tax payments and income tax returns due on 4/15/2020 were postponed until 7/15/2020 creating perhaps the longest filing season ever.This relief applied to:

  • Individuals filing the Form 1040 series
  • Trusts and estates filing a Form 1041
  • Partnerships filing Form 1065
  • Corporations filing the Form 1120 series
  • 2019 federal income tax payments, and •2020 federal estimated income tax payments. The relief does not apply to: •Federal payroll taxes, and Federal information returns.
  • If the TP needed beyond 7/15/2020 to complete a postponed tax returnthe taxpayer could file Form 4868 or Form 7004 by 7/15/2020 extending the due date until 10/15/2020

-Under IRS FAQs, the following were permitted until 7/15/2020:

2019 IRA and HSA contributions, and 2019 employer contributions to qualified retirement plans.

-Interest, penalties, and additions to tax for failure to pay began to accrue on 7/16/2020 for all federal income tax payments subject to postponement.

There was no stated relief from 2020 estimated tax underpayment penalties.

Taxpayer First Act –

Expands/Strengthens Taxpayer Rights and Reforms the IRS

List of different IRS actions here.  The IRS issued several News Releases:

  • IR-2020-206, IRS adds six more forms to list that can be signed digitally; 16 now available
  • IR-2020-188, IRS updates procedures for designating taxpayer disputes for litigation, implementing provisions of Taxpayer First Act
  • IR-2020-55, IRS announces waivers for Offer in Compromise applications
  • IR-2020-27, IRS launches Identity Theft Central
  • IR-2019-206, IRS: Recent legislation requires tax exempt organizations to e-file forms

Suspension of various IRS activities from April 1 to July 15 (installment agreement payments suspended, initiating new liens and levies suspended, etc.)

List of changes here.

COVID-related collection procedures – Taxpayers owing less than $250,000 wanting an installment agreement may not need to submit a financial statement may not have a notice of federal tax lien filed in their case.  List of changes here.

Current E-Signature and e-communication procedure –electronic signatures and e-mailing more accepted by IRS

The IRS announced that next year it will introduce a secure portal to submit Forms  2848 and 8821 and a Tax Pro Account for e-signing 3-party authorizations.  The disruption caused by the shut-down of the IRS for several months left practitioners unable to access eServices and ascertain information about their client’s accounts in addition to being unable to call the IRS to learn about the accounts.  Creating a secure electronic system that allows practitioners to have access to this information has become more critical.  Even after the IRS employees began returning to work the low staffing of the CAF units left practitioners without an effective means of using eServices.

Even as the IRS returned to work in the summer it acknowledged that taxpayers continued to need relief and that it had to temper its collection activities until it could work through the huge backlog of mail awaiting its staff as they returned to work.  It created the Taxpayer Relief Initiative:

Under the new IRS Taxpayer Relief Initiative, changes to collection procedures are as follows:

  • Payment plan extensions. “Taxpayers who qualify for a short-term payment plan option may now have up to 180 days to resolve their tax liabilities instead of 120 days,” the IRS said.
  • Less documentation required. Certain qualified individual taxpayers who owe less than $250,000 may set up installment agreements without providing a financial statement or substantiation if their monthly payment proposal is sufficient. 
  • Tax liabilities automatically added. The IRS will automatically add certain new tax balances to existing installment agreements. The agency says this new “taxpayer-friendly approach” will help some taxpayers avoid defaulting the agreement.
  • More flexibility. In cases where taxpayers are temporarily unable to meet the payment terms of an accepted Offer in Compromise, the IRS says it will be “offering additional flexibility.” 
  • Option to make changes online. Instead of having to talk to the IRS about having changes made to an existing installment agreement, qualified taxpayers with installment agreements paid by direct debit will now be able to make changes online. The IRS said, for example, that taxpayers could “propose lower monthly payment amounts and change their payment due dates.”

It allowed individuals entering into an installment agreement for 2019 taxes to have no notice of federal tax lien filed for tax liabilities up to $250,000.  It will be interesting to see what long term changes to IRS collection practices may result from the pandemic both in the way taxpayers and practitioners contact the IRS and in the decisions the IRS makes regarding collection from outstanding accounts.

Preserving Tax History and the People Who Make It

One of the unexpected side benefits of participating in a blog is the connections that it allows you to make with others.  Through the connection I have established with long-time commenter of the blog post, Bob Kamman, and the chance publication of my first name in one post, he provided me with the genealogical history of my family dating back to the first person from my father’s family who landed in Virginia in the 17th century. 

A recent post has brought in another interesting connection.

Bill Elliott, who practices in the Dallas area and who I have known for many years because of his publication of an excellent book on tax collection, Federal Tax Collections, Liens and Levies, Warren Gorham & Lamont, New York, New York (2d. ed. 2019), read the recent post in which I mention Judge Vasquez and the new book about the judge.  Bill reached out to me to point me to his extensive video interviews of Judge Vasquez which you can find here, here and here.  These interviews are part of a series of video interviews Bill has conducted with major figures in the tax world sponsored by the Tax Section of the State Bar of Texas.  The video interviews provide a glimpse of the individuals impossible to achieve through the written word.  Congratulations to Bill and the Texas State Bar for their project.

If you enjoy getting to know about individuals involved in tax and prefer a medium other than writing, you might also check out the People in Tax podcast series created by James Creech through the ABA Tax Section.

Remember Low Income Taxpayer Clinics and Other Tax Charities on Giving Tuesday

Procedurally Taxing readers are probably being bombarded by fundraising requests from all sorts of nonprofits today, which somehow has become designated as a global “Giving Tuesday”.   No doubt, in this time of the pandemic and economic stress, there are many worthy causes if one is inclined to give.  In the face of job losses, unemployment, illness, and racial injustice, it would be easy to overlook the important work being done by Low Income Taxpayer Clinics (LITCs) and other tax charities like the Tax Assistance Public Service (TAPS) endowment.  I would just like to encourage PT readers to take a moment out of their day and reflect on the work of the LITCs and consider contributing to (and volunteering with) their local clinic.


2019 was the 20th anniversary of the federal LITC grant program, which was created by the IRS Restructuring and Reform Act of 1998 (RRA 98) and IRC section 7526.  (Full disclosure: I testified before the House Ways and Means Oversight Committee and the Senate Finance Committee during the RRA 98 hearings about the importance of a grant program for LITCs, and the LITC I founded is a grant recipient.  I also oversaw the LITC grant program from 2004 to 2019, as the National Taxpayer Advocate.  So I am little biased in favor of LITCs!)  It is thrilling to see that twenty of the LITCs that were in the first round of grantees in 1999 are still participating in the federal grant program today.  In grant year 2019, the IRS issued $11.7 million in grants to 131 organizations.

As I discussed in my post last week, part of the mission of the Center for Taxpayer Rights is to promote and support the LITCs.  I briefly covered all the work the clinics have been doing on behalf of vulnerable taxpayers throughout the pandemic. Not only have they successfully litigated access to Economic Impact Payments (EIPs) for millions of taxpayers, but on a day-to-day basis LITCs have been up and running, in virtual environments, helping tens of thousands of taxpayers in tax disputes with the IRS.

A quick look at the 2019 LITC Program Report provides some eye-popping statistics – For grant year 2018 (the most recent grant cycle for which numbers are publicly available):

  • 19,513 taxpayers were represented by LITCs in tax controversies with the IRS;
  • 16,595 taxpayers received consultations or advice from LITCs;
  • 3,199 taxpayers were brought into filing compliance by the LITCs; and
  • 4,261 taxpayers were brought into collection compliance.

If those numbers don’t demonstrate the important role LITCs play in the lives of low income taxpayers, maybe these statistics will drive the point home:

  • Over $4.7 million in refunds were secured by LITCs;
  • Over $123 million in tax liabilities were decreased or corrected by LITC representation; and
  • 8,516 taxpayers facing collection action received relief through LITC representation.

Clinics represent taxpayers in all manner of disputes, including collection due process hearings, offers in compromise, currently not collectible classification, non-filers, earned income tax credit and child tax credit audits and audit reconsiderations, and worker classification.  The 2019 LITC Program Report (page 20) contains many “success stories” which everyone should read, but this one really shows the life-changing impact of LITC representation:

LITC Helps a Veteran and His Wife Find Relief From Debt and Saves Their Home

The taxpayers were a senior couple with no children. The husband had served in the military and was disabled during combat operations. He had a construction business, and together he and his wife invested large amounts of time and money into renovating their home into a bed and breakfast.

After years of financial setbacks, the couple lost their home and long-time business, resulting in a large outstanding federal tax debt. The taxpayers filed for bankruptcy. At that time, they were living on a fixed income of Social Security and a small Veterans Administration pension in a subsidized senior apartment that they were told they could not live in if they had more than $10,000 in tax debt.

The couple came to the LITC after they began receiving certified mail notices from the IRS about the federal tax debt. The clinic called the IRS to place a 60-day hold on collection while the clients gathered documents for an OIC. The couple then received a notice of intent to levy their Social Security benefits, and the clinic requested a CDP hearing, where it helped the couple settle their entire federal tax debt with an OIC for $1.

The taxpayers returned a customer satisfaction survey to the LITC and acknowledged the work of the staff attorney by saying, “Wonderful you have such a smart, kind, and caring man on your staff. Thank you so much for everything.”

128 LITCs participated in the Tax Court’s Clinical Program, whereby the Court includes “stuffer letters” from the LITCs in various notices to pro se petitioners and LITCs and other pro bono programs attend calendar calls and pre-calendar settlement days, as well as enter appearances before the court on behalf of low income taxpayers.  Over 9 percent of all LITC cases in grant year 2018 involved litigation, with the majority in Tax Court.

Now, what can PT readers do?  Well, for one, you can contribute.  Remember that LITC federal grant funding is dependent on LITCs raising a dollar-for-dollar match – either through hard cash or the fair market value of in-kind contributions, including volunteer time.  As I mentioned in last week’s post, many small and rural LITCs have a hard time raising matching funds – so your contributions will literally bring in a dollar for every dollar you contribute.  The Taxpayer Advocate Service website has a map that lists all the LITCs currently funded along with their websites, and Publication 4134 contains LITC grantee names, locations, and telephone contact information. 

If there is a clinic in your vicinity, please consider volunteering for their pro bono panel as well as giving – LITCs need help from all manner of taxpayer professionals – attorneys, CPAs, enrolled agents.  And your volunteer time counts as matching funds – in grant year 2018, over 1,887 volunteers gave 56,971 hours.  If there isn’t a clinic near you, consider giving to a rural or other clinic that has not yet received the full $100,000 annual federal grant.  You can find the list of 2020 grantees and the grant award here.

And please don’t forget the Tax Assistance Public Service (TAPS) Endowment.  PT has long been an advocate for this important program, as witnessed by the link button on PT’s website.  Through the TAPS endowment fund, the American Bar Association Section of Taxation provides stable, long-term funding for its tax-related public service programs. The TAPS endowment fund primarily supports the Christine A. Brunswick Public Service Fellowship program, which provides two-year fellowships for recent law school graduates to work for non-profit organizations offering tax-related legal assistance to underserved communities.

In its four-year existence, the TAPS endowment fund has supported 20 fellows. Not only have the fellows produced impressive results, but many have secured positions in the field of low-income tax assistance and continue to serve low-income communities and train a new generation of law students to provide these services. Other fellows have clerked for judges of the U.S. Tax Court who value their experiences working with underserved taxpayers and their perspectives gained from their first-hand involvement in low-income tax issues. Fellows who practice tax law in other settings such as major law firms and the government, continue to contribute to the Tax Section by remaining active in pro bono initiatives, speaking on panels, leading committees, drafting comments, and mentoring fellows and other new lawyers. This program has been incredibly successful both in serving taxpayers who otherwise might not have representation, making systemic change in local communities and in providing a springboard to careers in low-income tax services. Consider giving to the TAPS endowment fund today by clicking on the button on the PT website.

Of course, Keith, Les and I also would welcome any contributions to the Center for Taxpayer Rights as well – the Center now has its own “donate” button on this blog – but your contribution to any of the these LITCs not only will provide much-needed funds but also will show the hard-working clinicians that their work on behalf of low income taxpayers is deeply appreciated by the entire tax community.

So.  On this Giving Tuesday, or really any other day, those of us in the tax profession have a broad array of opportunities for giving in the tax field.  We, more than anyone else, know the difference representation can make in the lives of taxpayers.  Please take a moment out of your day to look at the website of your local LITC and consider giving.  Even the smallest donation can help with an IRS match and other expenses.  And, on behalf of Procedurally Taxing, thank you!

Taxpayer Successfully Sues Tax Preparation Firm

The clinic regularly has clients appear who arrive because they received poor assistance in preparing their return.  The proper preparation of the tax return is the single most important act in the tax process.  Good preparation eliminates the need for all manner of downstream problems.  When the clinic assists someone in putting their tax affairs back in order following poor preparation of their return, we often wish that clients could recover, and the clinic could recover, damages from the preparer whose knowing or unknowing actions caused the problem.  Of course, we also wish the IRS could regulate preparers to provide some quality control on the front end rather than having to chase after bad preparers after damage occurs.

The case of Weinstock v. Harvey, No. 8:19-cv-02979 (M.D. Fla. 2020) provides a rare, at least in my experience, example of a taxpayer suing a tax preparation firm for the problems caused by the poor preparation.  The preparers do not show up to defend themselves which causes some education on the importance of pleadings in default cases.


In 2017 Ms. Weinstock went to Harvey’s Tax Service to have her returns prepared for 2014, 2015 and 2016.  I assume from the court’s description that the 2014 and 2015 returns were being filed late.  She does arrive, however, in time to still receive the refunds, if any, for 2014 and 2015.  She reaches an agreement with Harvey’s to pay an initial fee of $750 plus 15% of any refunds she receives.  Paying for return preparation based on a percentage of the refund received sets the situation up to incentivize the preparer to find the biggest refund.  We all see the ads during tax season from various preparers who promise to find the biggest refund, but structuring payment in this way raises red flags.

Before going further in telling the story of Ms. Weinstock’s tax woes, I decided to look up Harvey’s Tax Service to see if anyone else had problems.  That search resulted in a link to the Better Business Bureau of Plant City, Florida.  The BBB site does indeed suggest problems with Harvey’s.  The most notable problem is a description of actions taken by the Department of Justice:

Government Action:

The following describes a pending government action that has been formally brought by a government agency but has not yet been resolved. We are providing a summary of the government’s allegations, which have not yet been proven.

On March 17, 2020, The United States Department of Justice in Tampa, Florida, found that Mr. Jasen Harvey and Harveys Tax Service violated preliminary and permanent injunctions that barred them from preparing, filing, or assisting in the preparation or filing of federal tax returns for others.

For that violation, the court held Mr. Harvey and Harveys Tax Service in contempt and ordered them to pay $19,550 to the United States, representing the fees Jasen Harvey and Harvey’s Tax Service received for 92 tax returns they prepared or filed in violation of the court’s injunctions. In addition, the court ordered those defendants to reimburse the government for $631.04 in travel costs the United States incurred to attend the contempt hearing held on March 13, 2020.

The United States filed a complaint against Catharine Harvey, Jasen Harvey, and Harveys Tax Service on Jan. 9, 2020. According to the complaint, the defendants prepared returns for customers seeking millions of dollars in refunds of tax purportedly withheld on fictitious income reported on fabricated Forms 1099-MISC and on bank deposits reported on fabricated Forms 1099-A. On Feb. 18, 2020, the court issued a preliminary injunction that barred the defendants from preparing returns for customers, finding that the United States offered sufficient evidence to show that defendants had a history of filing fraudulent refund claims, and were likely to continue to file fraudulent returns absent a court order to stop. The court issued a permanent ban on Feb. 24, 2020, finding the defendants “unfit” to prepare tax returns.

The court found that the United States demonstrated by clear and convincing evidence that the defendants willfully violated these court orders, which unambiguously barred the defendants from preparing returns for others. In addition to the monetary sanctions, the court ordered that it will sentence Mr. Harvey for his willful contempt at a hearing on July 9, 2020.

The BBB site suggests that Ms. Weinstock is not the only person interested in Harvey’s.  The web would lead on to believe that Harvey’s has not only been assisting people with taxes for 21 years but is still assisting them.

Ms. Weinstock filed returns showing a refund due to her of $157,472.  I don’t know what sort of business she was in for the years at issue but that’s quite a large refund.  The IRS paid the refund after taking about $20,000 of it to satisfy past due taxes on her account.  After issuing the refund, however, the IRS decided to audit the return and disallowed the entire refund.  It also hit her with a penalty of $31,507.  The opinion does not describe a deficiency process but rather a notice of tax due.  It also states that the IRS issued a Notice of Jeopardy Levy.

Jeopardy levies are quite rare.  The opinion does not give any real facts regarding the jeopardy levy.  Someone at the IRS would have made a determination regarding the likelihood that Ms. Weinstock’s money would soon be out of the reach of the IRS.  The IRS attorneys would have signed off on this determination.  Among other things using jeopardy levy allows the IRS to bypass the collection due process procedures and immediately levy on any assets held by Ms. Weinstock.  The opinion left me with the impression that through the jeopardy levy process the IRS collected $200,119 to satisfy the tax deficiency resulting from reversing the claims on the returns, the penalties imposed, interest, etc.

Ms. Weinstock then turned to recover from Harvey’s.  She alleges that her tax problems resulted from the action of Harvey’s “due to their actions and misrepresentations in preparing Weinstock’s federal tax return….”  Failing to reach a satisfactory agreement with Harvey’s, Ms. Weinstock sued in federal district court “seeking an award of compensatory damages, punitive damages, attorney’s fees, and costs.”

The next several paragraphs of the opinion detail her efforts to obtain a default judgment.  Throughout the remainder of the court process, no one appears to respond to her allegations and the district court seeks to determine what it can award to her in the absence of a response.  The discussion may be instructive to anyone seeking a default judgment in district court.  After requiring Ms. Weinstock to refile, the court determines that she can obtain a judgment against the two individual owners of Harvey’s for four items:

Legal fees incurred associated with the IRS$29,800.00
Penalties paid to the IRS$31,507.40
Interest paid to the IRS$19,937.90
Fees Paid to Defendants$12,190.00

It does not grant her a default judgment for the treble damages due to fraud that she requested.  The court analyzing her pleadings and determines that she alleged sufficient facts to establish a claim for fraud meeting the heightened requirements for such allegations required by FRCP 9(b).  With respect to the punitive damages, however, the court finds that even though her pleadings may be sufficient there must be a trial.  So, the court does not throw out her claim but refuses to rule for her on these damages in the default judgment setting.

I do not know her chances of successfully collecting the $93,000+ that she won and whether it is worth the effort to continue to pursue the larger judgment.  The case encouraged me because I have seen very few cases brought by individual taxpayers against the persons who prepared their returns.  While the Department of Justice is also pursuing Harvey’s, its ability to pursue all parties preparing bad returns is limited by resources.  In order to shut down individual preparers whose actions cause taxpayers downstream pain and suffering as they endure audits and collection action, individual clients may need to take the lead.  The default nature of this judgment provides little guidance on what would happen at a trial.  We don’t know the extent to which, the taxpayer may have known or suspected the claimed refund was too high or other potential defenses to such an action the preparer might raise.  Still, the actions of this one taxpayer could make a difference in helping to police the tax preparation industry to rid it of preparers who do not seek to prepare an accurate return.

An Update on the Center for Taxpayer Rights

It’s been a little over a year since the Center for Taxpayer Rights (CTR) began operations, and Keith, Les and I thought it might be a good time to give a short update on the Center’s activities over the last fifteen months.  Soon there will be a new “button” on PT’s homepage, which takes you to the Center’s “donate” webpage … but more on that later.

Visitors to the Center’s website can learn about the International Conference on Taxpayer Rights, sign up for the Taxpayer Rights Digest, and learn about the amicus briefs filed on behalf of the Center by the Harvard Law School Federal Tax Clinic and others.  We are committed to raising taxpayer rights issues in the courts via amicus briefs; the Center and LITCs are particularly well-situated to explain the impact of various holdings on low and moderate income taxpayers, analyses and consequences that might not otherwise be raised in litigation.


With respect to the International Conference on Taxpayer Rights, because of the pandemic we now have two conferences scheduled for 2021 – one in May 2021 which we are hoping we can physically convene in Athens, Greece, and one in October 2021, in Pretoria, South Africa (which was originally scheduled for this past October, but oh well, the pandemic intervened).  The theme of the Athens conference is Quality Tax Audits and the Protection of Fundamental Rights; its agenda will be published in December.  The theme of the Pretoria conference is Taxpayer Rights, Human Rights: Issues for Developing Countries; that agenda is now up for viewing on our website!  Both of the 2021 conferences will be live-streamed, so we can expand our reach, not just because of the pandemic but also because we want more folks from less affluent countries, and young scholars or students, to be able to participate, albeit virtually.

Because we had to postpone the 2020 Pretoria conference, we decided to launch Tax Chat!, a monthly series of conversations between myself and folks from an array of disciplines who are working in the field of tax and tax administration.  So far, we’ve had three Tax Chats!  Our topics have included the International Observatory on the Protection of Taxpayer Rights; Taxpayer Rights, Human Rights, and Achieving Sustainable Development Goals; and the Anthropology of Tax.  All of the Tax Chats! are recorded; you can access them on the Center’s YouTube channel.  They really are interesting, and they really are a chat – no power points allowed, just a good conversation about tax.

You can learn about all this and get notifications about upcoming events by signing up for the Taxpayer Rights Digest, the Center’s newsletter.  We promise not to clutter your email box; we’ll only communicate when there actually is news.

The Low Income Taxpayer Clinic Support Center When I was executive director of The Community Tax Law Project, I hoped to establish a national resource center for the growing Low Income Taxpayer Clinic movement, but my appointment as the National Taxpayer Advocate sidetracked that plan a bit.  Well, now we’re back on track – the Center has established the Low Income Taxpayer Clinic Support Center, which supports and encourages the expansion of Low Income Taxpayer Clinics (LITCs) domestically and internationally.  The idea for the LITC Support Center borrows on the practice in other areas of poverty law, which have established national support centers, including the National Consumer Law Center, the National Immigration Law Center, and the National Homelessness Law Center.  An LITC Advisory Board, drawn from the diverse LITC community and including representatives of academic, legal aid, and community-based LITCs, advises the Center on the type of support or research activities that LITCs could benefit from, including the development of training for new volunteers and conducting surveys to determine the needs of low income taxpayers. 

Perhaps the most significant aspect of the LITC Support Center’s activities is the establishment of the CTR Litigation Strategy Group.  This group, with about forty members, meets weekly to discuss ongoing casework and litigation and to identify areas of law affecting low income taxpayers that might be ripe for challenge.  The goal of the CTR Litigation Strategy Group is to help the LITCs to operate along the lines of a national law firm, working together throughout the circuits to litigate taxpayer rights and other issues affecting low income taxpayers.  We started by focusing on aspects of the IRS’s implementation of Economic Impact Payments, which, as readers of PT are well aware, drew several significant challenges, including on behalf of incarcerated individuals; US citizen spouses and children of undocumented persons; and federal beneficiaries with dependent children.  Attorneys for the plaintiffs in many of these cases are members of the CTR Litigation Strategy Group.  On our weekly calls, we also have met with attorneys raising procedural due process issues in the context of federal benefits programs; we are identifying and developing potential procedural due process challenges in tax litigation.  So … stay tuned! 

Now, here is our “ask” …..

As readers of PT know, LITCs are central to ensuring two key taxpayer rights – the right to retain representation, and the right to a fair and just tax system.  By providing pro bono representation of low income taxpayers and educating low income taxpayer about their rights and responsibilities, LITCs ensure that tax disputes are decided on the merits and not by default.  Moreover, through litigation of cases, comments on regulations and IRS notices and initiatives, and articles, research, and conferences, LITCs ensure the tax law takes into consideration the facts and circumstances of low income and other vulnerable populations, not just the affluent or corporations.

Today, there are over 130 LITCs throughout the United States, receiving a total of approximately $12 million in IRS grants annually pursuant to IRC § 7526.  To receive an IRS grant, LITCs must demonstrate a dollar-for-dollar match, in the form of either cash or in-kind contributions.  One of the challenges for many LITCs, however, is the ability to raise matching cash funds.  This is particularly the case for LITCs serving taxpayers in rural areas.  While donated volunteer attorney, CPA, and Enrolled Agent time can count as an in-kind match, for many clinics located in rural states, there may be few volunteer tax professionals available.

To address these unmet needs, in 2021, the Center plans to establish the LITC Pro Bono Referral Network, which will build upon existing informal efforts for recruiting attorneys nationally and creating a database of willing pro bono volunteers with tax expertise.  The Referral Network will also identify LITCs that are serving rural or vulnerable populations in need of pro bono attorney expertise not available in their service areas. The Network’s website will enable LITCs to request pro bono support, identifying the specific issue and the expertise required, and the Network will then connect the LITC to a qualified and available attorney.  Attorneys who are uncomfortable litigating can sign up to provide technical advice and assistance to LITCs or can volunteer to help with training (virtually).

The Network will not only enable the provision of direct assistance to low income taxpayers in tax disputes with the IRS but it will also generate matching funds for the LITCs so they can request additional funding from the IRS.  This additional funding, in turn, can be used to improve the direct delivery of service to low income taxpayers by funding more staff attorney time at the LITCs.  A win-win for everyone.

This is where we need your help – up until now, the Center has run as an all-volunteer organization.  But as we launch the LITC Pro Bono Referral Network, we need to contract programming services and secure data storage, and more importantly, we need a staff person to do the volunteer vetting, matching, answering questions, and general program duties for the Network.

So.  Please help us expand access to legal assistance for low income taxpayers – we need your financial support to help us build the Network, and we’ll later enlist your volunteer efforts to protect low income taxpayers’ rights to retain representation and to a fair and just tax system.  You can donate to the Center here.

Thank you!

ABA Tax Section Meeting Next Week

The Tax Section of the ABA is holding its fall meeting next week in a virtual format. It’s less expensive to register in this format and certainly less costly in time and money to attend.  My panel met this past week to test the platform.  I could probably write a post describing the technological challenges facing the panelist with whom I am working and particularly my own personal challenges with the process.  But assuming the technology works the way it seems designed, the programming should work well even with a few Luddites like me participating. 

The meeting has several panels addressing issues recently discussed in PT.

One of the panels includes Yaman Salahi who was part of the team of attorneys representing incarcerated individuals who won the case on Thursday, September 25, 2020.  Les is also on that panel and will talk about the CARES Act cases in which he is involved.  This panel will occur on Thursday, October 1 from 10:00-11:30 AM.  Here is the description of the panel and the panelist.

CARES Act Litigation. The panelists will discuss current issues and litigation related to the CARES Act, focusing on issues unique to an unprecedented era where guidance had to have been issued quickly. Discussion will include constitutional claims, claims under the little Tucker Act, claims related to the APA, choosing proper parties, plaintiff and defendant, and understanding litigation strategies. A discussion of the CARES Act legislation and the role of IRS’s publication of associated FAQs will also be included.

Moderator: Amy Spivey, Visiting Assistant Professor, UC Hastings Law School

Panelists: Les Book, Professor of Law, Charles Widger School of Law, Villanova; Jen Burdick, Supervising Attorney, Community Legal Services of Philadelphia; Robert Friedman, Senior Counsel, Institute for Constitutional Advocacy and Protection; Nina Olson, Executive Director, Center for Taxpayer Rights; Yaman Salahi, Lieff Cabraser Heimann & Bernstein

Immediately after this panel will be an opportunity to hear Chief Special Trial Judge Lewis Carluzzo give an update on the Tax Court and the many changes happening there.

If you enjoyed the blog post on premature assessments of Tax Court cases or the mailing of 12 million notices weeks or months after the dates on the notices, you could attend a panel on which I will participate.  If you have not already made note of this, Chief Counsel’s office has created a dedicated email address for anyone facing a premature assessment issue: taxcourt.petitioner.premature.assessment@irs.gov.  We will be discussing this address and other issues related to premature assessments.  This panel will also occur on Thursday, October 1, from 2:30 to 4:00 PM.

Navigating Late-Issued Collection Notices Administratively and in Litigation. After the expiration of the hiatus on collection and enforcement under the People First Initiative, the IRS mailed upwards of 20 million notices, many of which had expired action and response dates. The IRS created new response dates to some notices via an insert included with certain notices, but some have questioned the effect of, and how to respond to, the late-issued notices. In addition, the inability of the IRS and the Tax Court to process mail during the COVID emergency caused the IRS to make premature assessments of some tax liabilities. The panelists will discuss the potential effect of misdated notices on the validity of assessments and notices of federal tax lien; best practices in responding to expired notices administratively and in litigation; and jurisdictional limits of the courts to adjudicate certain issues concerning collection due process rights (including the role of equitable tolling). The panelists will also discuss practical steps to reverse premature assessments resulting from the Tax Court’s inability to process petitions and the IRS’s inability to process offers in compromise and installment agreements.

Moderator: Kelley C. Miller, Reed Smith LLP

Panelists: Frank Agostino, Agostino & Associates, P.C.; Professor T. Keith Fogg, Director of the Federal Tax Clinic, Harvard Law School; Honorable Mark V. Holmes, Judge, United States Tax Court; Julie L. Payne, Assistant Division Counsel (Tax Litigation), IRS Office of Chief

Here is a link to the full program.  In addition to the panels in which Les and I will participate, readers of this blog should find interesting the panels happening at the Administrative Practice, Individual & Family Taxation, Court Practice and Teaching Tax Committees.  In limiting my referrals to these sessions, I do not mean to suggest the other committee programming will not also be good, but it is generally not as targeted to controversy practitioners interested in procedural tax issues.