Knowledge Leaves Another Innocent Spouse Petitioner Standing at the Altar

Goode v. Commissioner, T.C. Summ. Op. 2021-34 finds another spouse seeking relief from liability under IRC 6015 failing because of the knowledge element and the lack of economic hardship.  As we discussed in the recent post entitled “Is Economic Hardship the Antidote for Knowledge in an Innocent Spouse Case?” the Tax Court has created an unmistakable pattern of finding against spouses who have knowledge of the item giving rise to the liability and do not prove economic hardship.  The Goode case is another case where the petitioner had three positive factors and only one negative factor, knowledge.  Despite the numerical advantage of the positive factors, the knowledge factor continues to enjoy the status of a superfactor unless the taxpayer seeking relief can successfully raise the antidote of economic hardship.

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Revenue Procedure 2013-34 purports to drop the superfactor status of knowledge and the Tax Court generally purports to follow the Revenue Procedure but on this issue, the outcome appears quite predictable to the PT writers but we note that our non-computer based analysis may be at odds with the computer Blue J Legal, Inc which finds economic hardship a relatively unimportant factor and abuse the key to success. 

The folks at Blue J follow several issues and model the decisional law in order to predict outcomes in future cases.  They have presented at the ABA Tax Section meeting and a couple years ago provided Les and me a private demonstration.  If you are working with one of the issues they model, their work could be helpful in assisting you with how to set up your case or whether to settle.  On September 27, 2021 an article concerning their product appeared in Tax Notes.  I realize it is behind a paywall and may not be available to all readers but if you are interested, I am sure the company would be glad to talk to you.

On IRC 6015(f) the article talks about the recent 7th Circuit decision in Rogers and provides:

We consider abuse and economic hardship to determine their relative importance in the court’s equitable relief analysis. We begin with our baseline prediction with greater than 95 percent confidence that equitable relief is unavailable, adopting the facts as found by the Tax Court and affirmed by the Seventh Circuit.

We next test the importance of the abuse factor. Contrary to what the Tax Court found, we alter the scenario by accepting Frances’s argument that her husband abused and controlled her to prevent her from knowing about or addressing the tax liability and that she feared retaliatory abuse. If that abuse were present, Blue J’s prediction reverses. Blue J’s machine learning technology predicts with 94 percent confidence that Frances would be granted equitable relief.

Once again beginning with our baseline prediction, we then test out the likely effect of accepting Frances’s argument that she would be unable to meet reasonable basic living expenses if she were forced to pay the tax liability. Blue J predicts that equitable relief would be unavailable, and the confidence in that prediction remains greater than 95 percent.

Therefore, the abuse factor is determinative, whereas the economic hardship factor is somewhat insignificant in this particular set of facts and circumstances. If Frances were able to convince the court of abuse, equity would be on Frances’s side.

The IRS guidance on IRC 6015 has evolved since the law passed in 1998, making it hard to lump together all 6015 cases.  It seems clear, however, that the Tax Court has not evolved with the IRS with respect to actual knowledge and failure to prove financial hardship.  In many ways, I can hardly say with a straight face that the IRS has evolved, since getting a successful determination from the innocent spouse reviewers in Covington seems impossible.  I can only imagine how dispiriting it must be to review hard luck stories day after day but I find the reviewers a bit jaded.  They have made amazingly inappropriate statements to our clinic regarding abused clients.  I wonder if a rotation out of a steady diet of innocent spouse cases might be healthy for those working in this unit.

Back to Ms. Goode and her problems with their 2010 return; let’s look at her facts.  As is typical in small tax caseS, she handled her case pro se, probably never looking at the data produced by Blue J or the blogs produced here.  She and her husband, who intervened, both worked for the Department of Defense.  He became ill in 2010 which caused both of them to resign from their positions and move to Florida to be nearer to his family.  She and her husband borrowed money from their retirement plans to tide them over while they looked for jobs in Florida.  They did not find work that paid as much as their DOD jobs and defaulted on the loans from the retirement accounts.  The defaulted loans triggered Forms 1099.  They filed a joint return for 2010, properly reporting the liability but not fully paying the $64,000 federal tax bill triggered by the loan defaults.

As often happens in cases of financial strife, petitioner and her husband separated and eventually divorced.  She moved to Texas with the children, went through several years of low wages, but eventually obtained another job with DOD which greatly improved her finances.  Had she filed for relief during the low income years, her outcome might have been different, but she may have been in currently not collectible during that period and not as focused on paying the liability. 

In her petition, she alleged spousal abuse and attached a copy of a protective order to her innocent spouse submission.  She did not qualify for streamlined relief under the Revenue Procedure because she did not qualify based on her income at the time of her request.  The court cites Rev. Proc. 2013-34 extensively and works its way through the factors listed in it.  She received positive factors for being divorced, for significant benefit (that is to say, she did not receive a significant benefit from the underpayment of the tax) and for compliance with tax laws.  The economic benefit factor was neutral as was health.  She knew at the time she filed the return that the tax triggered by the money both she and her husband pulled from their retirement accounts was not being paid so she failed the knowledge test.

The court made the following finding:

After evaluating the factors, we find that three of the seven factors weigh in favor of relief, one factor weighs against relief, and the remaining factors are neutral. In section 6015(f) cases, however, we do not simply count factors. We evaluate all of the relevant facts and circumstances to reach a conclusion. See Pullins v. Commissioner, 136 T.C. at 448; Rev. Proc. 2013-34, secs. 3.05, 4.03(2), 2013-43 I.R.B. at 398, 400.

In evaluating the relevant factors we conclude that the knowledge factor weighs too heavily against relief for petitioner. The 2010 tax liability attributable to intervenor partially arose from defaulted TSP loans to which petitioner had consented. She knew the liability would not be paid when she signed the return. Given these facts, we find that it would not be inequitable to hold her responsible for the underpayment for 2010.

Knowledge continues to rule the day.  If you don’t have the antidote, be prepared for a sad outcome.  As we have mentioned before, and as the tax clinic at Harvard knows from personal experience discussed here and here, no petitioner has successfully appealed a Tax Court denial of innocent spouse relief since the change in the law in 1998.  Of course, Ms. Goode, having filed a small Tax Court case, will not be changing that result.  There will be an oral argument before the 9th Circuit, probably in January 2022, in the case of Jones v. Commissioner, 9th Cir. Case No. 20-70013, Tax Court Docket No. 7493-18, where another attempt will occur.

Supreme Court Agrees to Decide Whether the CDP Petition Filing Deadline Is Jurisdictional

Today the U.S. Supreme Court agreed to hear Boechler v. Commissioner of Internal Revenue, appealed from the Eighth Circuit. The question presented is

Whether the time limit in Section 6330(d)(1) is a jurisdictional requirement or a claim processing rule subject to equitable tolling.

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This is an exciting development for those interested in tax procedure. We have discussed Boechler and the question of jurisdictional time limits often on Procedurally Taxing. Carl Smith blogged about the Eighth Circuit decision here. Carl explained,

In Boechler, P.C. v. Commissioner, 2020 U.S. App. LEXIS 23306, on July 24, [2020], the Eighth Circuit aligned itself with the Ninth Circuit in Duggan v. Commissioner, 879 F.3d 1029 (9th Cir. 2018), and held that, even considering recent Supreme Court case law that generally treats filing deadlines as not jurisdictional, the Collection Due Process (CDP) Tax Court filing deadline at section 6330(d)(1) is jurisdictional.  The majority predicated its holding on an exception that Congress may override the general rule by making a clear statement in the statute that Congress wants the filing deadline to be jurisdictional.  In ruling that Congress had made a clear enough statement in the CDP provision, the Boechler majority rejected the D.C. Circuit’s opinion in Myers v. Commissioner, 928 F.3d 1025 (D.C. Cir. 2019), holding that the similarly-worded Tax Court filing deadline at section 7623(b)(4) for whistleblower award actions is not jurisdictional.  A concurring judge in Boechler said she felt bound to agree with the majority because of prior Eighth Circuit precedent, but if she were presented with the issue without that precedent, she would hold the filing deadline not jurisdictional.

The petition for writ of certiorari emphasizes this clear circuit court split and urges the Court to resolve the matter. Boechler further argues:

Review is also warranted because the Eighth Circuit aligned itself with the wrong side of the split. This Court has made clear that statutory time limits are quintessential claim-processing rules presumptively subject to equitable tolling unless Congress has clearly indicated to the contrary. And Section 6330(d)(1) is not the “rare statute of limitations that can deprive a court of jurisdiction.” United States v. Kwai Fun Wong, 575 U.S. 402, 410 (2015).

The petition cites a line of important non-tax cases including Henderson v. Shinseki and Irwin v. Dept. of Veterans Affairs. As Kristin Hickman observed, the case presents yet another issue at the intersection of tax procedure with important administrative law doctrine. Carl Smith deserves credit as the architect of many of the arguments against strict jurisdictional limits in the Code, going back to the 2016 Tax Court loss in Guralnik.

The issue of jurisdictional time periods is undoubtedly important doctrinally, but it is also of great practical importance. Two amicus briefs, both with PT connections, supported the petition for certiorari. The Center for Taxpayer Rights, represented by the Tax Clinic at the Legal Services Center of Harvard, filed an amicus brief emphasizing the judicial resources consumed by the strict policing of jurisdictional time periods. Keith blogged about one recent example here. The Center’s brief also urges the Court to specifically rule on whether the CDP petition filing deadline is subject to equitable tolling, describing common circumstances and compelling cases in which taxpayers lost their right to judicial review. These include case of taxpayers being actively misled by IRS errors, taxpayers suffering misfortunes such as late-delivered and undelivered mail, and taxpayers who file timely in the wrong forum.

The second amicus brief was filed by the Villanova Federal Tax Clinic and the Seton Hall Center for Social Justice Impact Litigation Clinic, represented by pro bono counsel from Skadden Arps. This amicus brief makes two points. First, the clinics argue that treating section 6330(d)(1) as jurisdictional would undermine Congress’s intent in creating Collection Due Process as a check on IRS collection activity. Second, the brief emphasizes the disproportionate harm to low-income taxpayers effected by treating the filing deadline as jurisdictional.

We will be following the case closely.

Objecting to Chapter 11 Plan/Objecting to Judge’s Questions

Quintela Group, LLC v. United States, No. 4:20-cv-03499 (S.D. Tex. 2021) provides insight both into the objection by the IRS to confirmation of a plan of reorganization and the objection by IRS counsel, presumably an assistant U.S. Attorney, to questions posed during the confirmation hearing.  Both objections provide the opportunity for discussion.  We have not previously discussed the situation in which the IRS objects to the confirmation of a chapter 11 plan.

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The district court describes Quintela as a small human resources consulting company.  It provides tests and testing software to guide human resources decisions.  The court states that, though small and in existence only since 2009, it has an impressive client list including several major universities and about 10 Fortune 500 companies.  That does seem impressive but despite landing some big clients, Quintela also landed in chapter 11 due to the accumulation of too much debt, including fairly significant tax debt.

Quintela had about $250K in federal tax liens filed against it in addition to other outstanding debts between $1 and $10 million.  The court says it proposed to pay its priority creditors in full over 5 years.  While the court makes this sound like a major accomplishment, basically putting this language in the plan fulfilled a requirement that would have led to an easily sustainable IRS objection had the debtor not said this.  Since the debtor’s plan met the statutory requirement for repayment in its description of what it promised to do, the IRS objection had to come from the more difficult position of arguing that the debtor could not actually do what it promised to do in the plan.

The IRS argument requires the court to determine the plan’s feasibility.  The debtor put on a witness to explain why the court should believe that it would make the payments it promised to make.  The IRS did not put on a witness but instead relied upon punching holes in the claims made by debtor’s witness.

I will pause here to note that this is very similar to what the IRS does in Tax Court cases – at least the relatively small dollar cases in which I am involved.  My former colleague in the Portland District Counsel Office and former director of the Lewis & Clark low income tax clinic, Jan Pierce, called this the raised eyebrow defense. In many small cases, it’s not cost effective or even feasible for the IRS to find a witness to actually contradict the testimony of the taxpayer.  So, the raised eyebrow defense has its place; however, if you want to attack financial projections it also has its severe limitations which the IRS faced in the Quintela case.

The bankruptcy court generally wants to confirm the plan.  If the plan works, creditors will generally get more money than they would in a liquidation.  If the plan doesn’t work, most creditors are not much worse off than they could have been if the court had denied confirmation.  So, the deck is a bit stacked against any creditor in this situation.  When you add to that natural stacking of the deck the fact that the IRS only used the raised eyebrow defense, stopping confirmation would have been difficult.

So, the bankruptcy court confirmed the plan, the IRS objected to that confirmation, and the district court essentially said the bankruptcy court had enough information to make its decision.  It declined to reverse confirmation, saying:

Having reviewed the record and the bankruptcy court’s thorough explanation of its reasoning, the Court concludes that the bankruptcy court’s finding was not clearly erroneous.

The record shows that Quintela Group sells products for which there is an appreciable demand. Quintela testified at the confirmation hearing that his company had brought in a significant amount of revenue and amassed an impressive clientele during its 11 years in business without conducting any sort of marketing or sales campaign. (Dkt. 8 at pp. 246–47). According to Quintela, Quintela Group counted 10 Fortune 500 companies among its clients, and it averaged between $1 million and $2 million in annual revenue for at least three of the years between 2015 and 2020. (Dkt. 8 at pp. 173, 228, 242–43). In its least successful year, 2020, Quintela Group was still on track to gross $700,000. (Dkt. 8 at p. 242). Quintela further testified that the COVID pandemic’s effect on Quintela Group’s business was starting to abate and that “the projects [Quintela Group] had in the pipeline [before the pandemic were] coming back[.]” (Dkt. 8 at p. 236). Quintela added that 2020 was “pretty unique,” and he projected that his company would “be back to probably at 1.2 million” in annual gross revenue in 2021. (Dkt. 8 at p. 243).

Since the record indicates that a market exists for Quintela Group’s products, the bankruptcy judge, in announcing his findings, focused on additional measures proposed by Quintela Group that would enable the company to tap into that market, promote its products more effectively, and ensure high net profits. The bankruptcy judge specifically mentioned the company’s more “focused marketing plan[,]” which included a contract with SHRM, the largest trade group in the human-resources industry, that would enable Quintela Group to offer its services on SHRM’s website for the first time. (Dkt. 8 at p. 284). The bankruptcy judge noted that the additional measures proposed by Quintela Group would not require substantial capital expenditures and that “management and current employees w[ould] continue to work for” Quintela Group. (Dkt. 8 at p. 284). The bankruptcy judge also discussed Quintela Group’s improved internal policies. Quintela testified that Quintela Group had improved its internal financial controls and accounti ng methods by working with a certified public accountant; the bankruptcy judge highlighted and credited that testimony. (Dkt. 8 at pp. 241, 283 –84).

The bankruptcy court did not clearly err in finding that Quintela Group’s proposed reorganization plan was feasible….

Pretty standard stuff for a review of a factual determination where the court was relying on a clearly erroneous standard.  The appeal of a bankruptcy decision to the district court does not involve the Appellate Section of the Department of Justice and the process of appeal review described in posts here and here concerning the room of lies.  I will be shocked if this case goes to the 5th Circuit.  I will not be shocked if debtor’s plan fails but, if it does, that does not necessarily mean the judge’s crystal ball is broken.

The IRS occasionally appeals plan confirmation but almost always it does so based on a legal failure of the plan and rarely, as here, based on an argument regarding a factual determination.

In addition to the somewhat unusual appeal of the fact-based decision where the IRS argued no contradicting evidence, the government attorney objected to questions asked by the bankruptcy judge.  This deserves quick mention.  Relatively rare circumstances exist where an attorney appropriately objects to a judge’s questions.  This does not seem to fit into those rare circumstances:

The mention of revenue projections during Quintela’s testimony led to an exchange in which the IRS objected to a line of questioning initiated by the bankruptcy judge. At the beginning of the confirmation hearing, the IRS objected to the admission of Quintela Group’s exhibits, including a set of written revenue projections, on the basis that Quintela Group had provided its exhibits to the IRS the day before the hearing instead of two days before the hearing. (Dkt. 8 at pp. 221–22).2 The basis for the IRS’s objection — untimely disclosure — seems a bit questionable as to Quintela Group’s written financial projections, considering that the IRS itself had extensively analyzed those same projections in a filing of its own two weeks before the hearing. (Dkt. 8 at pp. 55 –63). See Southern District of Texas bankruptcy case number 20-32577 at docket entries 53 and 61. In any event, the bankruptcy judge sustained the IRS’s objection but explained that he would give Quintela Group “an opportunity to prove [its exhibits] up.” (Dkt. 8 at pp. 221–22). When the bankruptcy judge later asked Quintela some general questions about there liability of Quintela Group’s revenue projections, the IRS objected to the bankruptcy judge’s line of questioning on the basis that it “[a]ssume[d] facts not in evidence” because “[t]he numbers in the projections [we]re not in evidence[.]” (Dkt. 8 at 241–42). The bankruptcy judge overruled the objection:

I’m overruling. I’m asking where the numbers came from. What facts did he have? What facts can be in evidence? Just asking where they came from. He can answer that.

I would be curious to learn from readers those circumstances in which they benefited from objecting to a question asked from the bench.  You know the court will overrule the objection.  The only hope is using the questions as a basis for appeal.  That did not work here.

Can IRS Levy Reach Future Rent Payments?

A relatively brief CCA issued this month discusses the IRS’s ability to levy on the right to receive rent payments beyond the date of the levy. The CCA explores the rationale as to why a single levy may have continuous legal effect that will extent to the right to receive future payments, a topic I discussed recently in Levy on Social Security Benefits: IRS Taking Payments Beyond Ten Years of Assessment Still Timely. It also explores whether the IRS is required to use a Form 668-A to effectuate the levy, as it appears that an IRS employee had arguably mistakenly served a Form 668-W. Form 668-W is typically associated with continuous wage levies.

As Keith has patiently explained to me (and readers of both the blog and the Saltzman and Book treatise), there are two types of levies: 1) one-time events and 2) continuous wage levies.  The one time event levies come in two varieties: 1) bank levies where the IRS gets what is in the bank that day or other similar levies where the IRS reaches a static asset and 2) levies that reach an asset with future fixed payments.  Lots of people have trouble distinguishing between continuous wage levies and levies with fixed future payments, and it appears that the mistaken form IRS used reflects some of that confusion.

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The levy involved in this CCA reaches an asset with fixed future payments. As the CCA explains, “rental income is generally subject to a levy with continuous effect meaning that, to the extent that future rental liabilities are fixed and determinable, meaning the terms are provided for in a rental contract, the single levy reaches both current and future rental payments.”

There are a handful of cases that apply this principle in the context of rental income, including United States v. Halsey, Civ. A.  No. 85-1266, 1986 U.S. Dist. LEXIS 24130 (C.D.Ill.1986). One wrinkle in the CCA is that the lease was a month-to-month, but as the CCA explains

that [the] lease was a month-to-month lease does not affect the levy’s attachment to future payments. The levy was effective to reach future payments not by reason of the fact that it continued to operate beyond the time at which it was made, which it does not, but rather because the levy reached Plaintiff’s then existing right to the future payments under the lease, not the future payments themselves.

The CCA concludes that the Service’s use of the Form 668-W (meant for wages and allowing for exemptions under 6334(a)) in the context of rental income does not invalidate the levy, relying on there essentially being no material harm by the use of the improper form and that there is no authority concluding that the Service use a particular form for effectuating the levy.

District Court Reverses Outlying Bankruptcy Court Decision Regarding Discharge of Taxes Following SFR Assessment

The case of IRS, et al v. Starling, No. 7:20-cv-07478 (S.D.N.Y. 2021) reverses the bankruptcy case discussed here.  The bankruptcy court followed the authority created in the 8th Circuit almost two decades ago.  The 8th Circuit’s position is distinctly in the minority regarding how to treat a taxpayer who fails to timely file a return prior to the time the IRS makes a substitute for return assessment (SFR).  By adopting the 8th Circuit’s position regarding late filed returns, the bankruptcy court found that Mr. Starling discharged his taxes and that the IRS violated the discharge injunction by pursuing collection against him after the granting of the discharge.  The decision of the district court realigns the outcome with the majority of courts that have looked at the issue.  A significant split of authority continues to exist crying out for a legislative or judicial resolution.

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Mr. Starling didn’t file his 2002 return.  The IRS followed the substitute for return procedures including a preliminary letter and a notice of deficiency.  He did nothing in response to these letters allowing the IRS to assess the taxes it determined due through the substitute for return procedures.  After the assessment, Mr. Starling submitted a return prepared by him which reflected the same amount of tax as the IRS assessed based on the notice of deficiency.  This fact made his case almost identical to the facts in the Hindenlang case that started this issue almost a quarter century ago. 

Waiting until after the IRS has gone through the notice of deficiency procedure and made the assessment based on a defaulted notice has caused every taxpayer except Mr. Colsen in the 8th Circuit to lose the discharge argument for one reason or another.  The bankruptcy court’s decision surprised me.  The government appealed as I predicted in the prior post.  The outcome here does not surprise me.  Perhaps Mr. Starling will appeal to the 2nd Circuit which does not have circuit decisional law on this issue.  If he does appeal, I expect that he will lose but whether he loses or wins he will create a conflict with one circuit or another.  Perhaps this could be that case that after a quarter of century resolves the issue of when it becomes too late to file a return and still reap the benefit of a discharge.

The district court decision highlights the continued uncertainty which puts the IRS and state taxing authorities in a tough spot.  They must create protocols for discharging taxes.  The IRS has created a protocol that it will not discharge a tax if the taxpayer files the return after the IRS has assessed the liability using the substitute for return procedures (except it cannot safely use that protocol in the 8th Circuit.)  When the bankruptcy court disagreed with the majority of cases reviewing this issue, it then found that the IRS had violated the discharge injunction and imposed sanctions.  The IRS does not want to get sanctioned and it does not want a discharge standard that has too many variables and unknowns.  I am sure it will continue to appeal any adverse decisions similar to Starling.  Its failure to take the Colsen case to the Supreme Court many years ago has proved to have been a mistake.  The IRS believed it could fix the problem created by Colsen with legislation; however, the legislation passed in 2005 has just made the situation more complicated as discussed in the many prior blog posts on this issue.

The additional party in the Starling case was the private debt collection company used by the IRS.  That company essentially violated the discharge injunction as an agent of the IRS.  With the decision that bankruptcy did not discharge this debt, the private debt collection company gets off the hook the same as the IRS.

The district court does a nice job of consolidating the cases decided on this issue and describing the failed legislative fix.  It notes that the bankruptcy court’s decision in Starling goes even further than the 8th Circuit did in Colsen:

But even the Eighth Circuit is unlikely to have regarded Debtor here as having made an honest and reasonable effort. First, there is serious doubt that Colsen‘s reasoning survives the addition of BAPCPA’s hanging paragraph, and at least one bankruptcy court within the Eighth Circuit has instead adopted the one-day-late test. See Kline v. Internal Revenue Serv. (In re Kline), 581 B.R. 597, 604 (Bankr. W.D. Ark. 2018). Second, while Colsen held that “the honesty and genuineness of the filer’s attempt to satisfy the tax laws should be determined from the face of the form itself, not from the filer’s delinquency or the reasons for it,” Colsen, 446 F.3d at 840, the court also noted that the late-filed form in that instance provided the IRS with new information that assisted the agency in determining the taxpayer’s ultimate tax liability, id. at 841. The Eighth Circuit distinguished the facts before it from those in Hindenlang, “where the taxpayer’s forms contained essentially the same information as the substitute forms that the IRS prepared and the calculation of tax did not change substantially.” Id. (citing Hindenlang, 164 F.3d at 1031.) Unlike in Colsen, Starling’s late-filed Form 1040 appears to have simply reiterated the tax assessment the IRS had already performed, and although this effort may have been an “honest” attempt to satisfy his obligations under the tax law, it was hardly “reasonable” to ignore multiple notices and only file years late with the same number the IRS had already come up with on its own. While I do not believe that the Colsen test is the appropriate one to apply here, especially in the wake of BAPCPA, Debtor fails to meet even that most lenient standard for avoiding § 523(a)’s discharge exception.

The statute of limitations on collection has apparently run on Mr. Starling’s debt.  So, the discharge aspect of this case no longer matters to him.  I don’t know if the contempt fees would sufficiently fuel an effort to go to the 2nd Circuit but maybe someone wants another circuit court decision on this issue and another shot at the Supreme Court.  This case breaks no new ground, and puts Colsen back in the 8th Circuit only.  The IRS continues to argue that any document filed after the assessment is automatically not a return.  To date, the IRS has not gotten one court to buy this argument.   In Briggs v. United States (In re Briggs), No. 15-2427-MHC at p.8 (N.D. Ga., June 7, 2017) (government admitted at oral argument that no court of appeals had adopted the per se argument).  The IRS has won every case but one when it argues that the document filed after the SFR assessment was not a return.  So, it has a de facto, if not a de jure, rule.

The facts in Briggs offer a good argument for the non per se rule but the IRS will continue to push for a per se rule because that’s what it needs in order to comfortably administer a provision, the discharge rule, that has significant adverse consequences when the creditor gets it wrong.  Because of their desire for a clear rule, taxing authorities would benefit from a visit to the Supreme Court in order to seek an administrable rule they can follow without fear even if the rule is not as favorable to them as the current situation.  Debtors might prefer the current state of affairs unless they live in the 1st, 5th or 10th Circuits where the current rules create a crushing situation for them.  We’ll see if Starling is the case that brings the issue to a head.

The Law Does Not Forbid a Helpful Internal Revenue Policy

Commenter in chief Bob Kamman returns with a colorful story following up on yesterday’s topic of jeopardy assessment.

The Fumo case, of course, is small potatoes.  If you want a real jeopardy assessment involving a real politician, you have to go back to March 13, 1925, when Internal Revenue assessed James Couzens, United States Senator from Michigan, $10.9 million in tax based on his sale in 1919 of Ford Motor Company stock to Henry and Edsel Ford.  Until 1915, Couzens had been vice president and treasurer of Ford Motor.

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The assessment was announced on the Senate floor by Couzens himself, who accused Treasury Secretary Andrew Mellon of initiating the audit to discipline Couzens for his investigation of the Bureau of Internal Revenue.  Couzens was a former mayor of Detroit who had been appointed to a vacant Senate seat in 1922 and then elected for a full term, starting nine days before the jeopardy assessment. 

Couzens (pronounced “cousins”) was one of several minority shareholders in Ford who complained that Ford was not paying dividends even though its profits could support them.  A state court agreed, so the Ford family agreed to buy them out.  The shareholders were reluctant to sell without knowing how much they would owe in income taxes, which were at a post-war high of 73% (with no break for capital gains).

And the shareholders did not know their cost basis because it depended on the value of the stock on March 1, 1913, when the income tax went into effect.  Ford was not publicly traded.  At the time, Internal Revenue would audit a company to determine this amount.  Henry Ford asked for an audit, and the Commissioner authorized it.

That “courtesy audit” placed the value at  $9,489 per share.  Couzens, who sold 2,180 shares for $29.3 million, used this audit result when he filed his 1919 return.  But then, under a later Commissioner, his return was audited under a new Commissioner.  (His return had also been audited in 1920, but for a different issue.)  And this time, the valuation was reduced to $2,634 per share.  A jeopardy assessment was required because the statute of limitations was about to expire on March 15, 1925, five years after the due date of the original return.  

Couzens and the other shareholders negotiated in secret with Internal Revenue lawyers until their lawsuit was filed in December 1925.  When it went to trial in January 1927 before the Federal Board of Tax Appeals (predecessor to the Tax Court), it was the largest income tax case in U.S. history. Government lawyers had reduced the claim by $1.5 million, allowing a value of  $3,548 per share, so only $9.4 million was at stake.

The petitioners argued estoppel required use of the higher valuation, but the BTA disagreed, and explained in terms that might be useful today:

The evidence shows that at the time of the valuation there was in the Bureau of Internal Revenue a policy of being helpful to taxpayers in adjusting them to the new tax law, but that this policy interfered with the administration of the assessment and collection of taxes and was soon restricted. . . .It should not be understood that the law forbids a helpful policy.  There is a public interest in the cooperation by the Bureau of Internal Revenue, and it should be given as freely as efficiency and good administration permit.  But it cannot go so far as to fix a responsibility beyond that contemplated by the statute, and it would be unjustified to stifle a spirit of helpfulness with a caution against binding and irrevocable action.

In May 1928, the three participating judges of the Board decided  the stock was worth $10,000 per share.  Couzens owed nothing, and could collect a refund of the $92,000 in taxes he had paid in 1924, having filed a timely claim, because of the earlier audit on an unrelated issue.  

Two other Ford shareholders involved in the case were the estates of John and Horace Dodge, also well known in the automobile industry. Another of the shareholders, John W. Anderson, was represented by E. Barrett Prettyman, who later became an Appeals Court judge and had a D.C. courthouse named after him.

Jeopardy Assessments

Jeopardy assessments are relatively unusual and have not been heavily covered on PT, with the exception of the District Court and Tax Court cases of former Pennsylvania state Senator Vincent J. Fumo. I first wrote about the government’s attempted jeopardy assessment against Mr. Fumo early in the life of this blog, here and here, with the second link containing links to even earlier discussions of the case and of jeopardy assessment.  Caleb Smith wrote a more recent post about the case.  Mr. Fumo is a former powerful state senator in Pennsylvania who was convicted of abusing his position and spent time in prison as a result.  His tax liability relates to his use and alleged abuse of a tax exempt organization for personal gain.  In May 2021, only eight years after the filing of the Tax Court petition following the denial of a jeopardy assessment against him, the Tax Court granted partial summary judgment to the IRS, leaving the balance of the issues to be decided after a trial to be held at a future date.  This is not the normal time trajectory for a jeopardy assessment case.  The blog posts above provide background regarding the denial of the jeopardy assessment. 

A recent jeopardy decision in the case of Kalkhoven v. United States, No. 2:21-cv-01440 provides a much more normal case for taking another look at jeopardy assessment for those readers who did not follow PT in 2013 when I provided an earlier explanation of the provision.

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Jeopardy stands as an exception to the normal path of making an assessment. The IRS’s authority to make assessments is set out in the Code. In our income tax system, described as a self-assessment system, the vast majority of assessments made by the IRS result from the filing of a tax return on which the taxpayer tells the IRS the amount of tax owed and grants permission thereby for the IRS to make the assessment. IRC section 6201(a)(1).

In cases in which the IRS challenges the amount of tax reported on the return, the person auditing the return seeks the taxpayer’s permission to assess additional tax by asking the taxpayer to sign a form consenting to an additional assessment.  If the taxpayer does not consent to the additional assessment, the statute provides for the IRS to send a notice of deficiency giving the taxpayer the chance to contest the additional taxes prior to assessment, resulting in statutory permission for the IRS to make the additional assessment either because of default of the taxpayer in petitioning the Tax Court or a Tax Court decision document entered after settlement or judicial opinion.  (Math error assessments are another part of this path to assessment; they involve consent by default or the opportunity for a notice of deficiency.) See IRC sections 6212 and 6213.

Standing outside this normal path to assessment is jeopardy assessment.  Congress recognized that the ability of the IRS to assess additional taxes could take time.  It may not have envisioned the amount of time the Fumo case is taking, but it knew that the taxpayer could delay assessment by slowing down the audit and by going to Tax Court, and that the delay of assessment could create opportunities for dissipation of assets which would ultimately prevent the IRS from collecting the correct amount of tax.  So, in extraordinary circumstances, it permits the IRS to assess the additional income taxes (or other taxes subject to the deficiency procedure) first and only later give the taxpayer a chance to contest the correctness of the assessment. (See sections 6851, 6852, 6861, and 6862.) The IRS employed this procedure successfully in the Kalkhoven case.

Mr. Kalkhoven participated in tax shelters, held money in offshore accounts and controlled businesses that sold valuable real estate.  The IRS calculated he owed about $350 million in taxes, penalties, and interest.  As in the Fumo case, he brought suit in district court seeking a review of the jeopardy assessment.  This type of case is usually fast moving because the IRS has tied up the taxpayer’s assets without the normal formality of permission or a Tax Court case.

a taxpayer may seek judicial review of a jeopardy assessment. See id. § 7429(b)(1)(2) (“[T]he taxpayer may bring a civil action against the United States for a determination under this subsection — district courts of the United States shall have exclusive jurisdiction over any civil action for a determination under this subsection). The court’s review is de novo. Olbres, 837 F. Supp. at 21; Fumo v. United States, No. 13-3313, 2014 WL 2547797, at *16 (E.D. Pa. June 5, 2014) (“The district court’s review . . . gives the IRS’s administrative determination regarding the jeopardy assessment no deference whatsoever.”). The district court’s consideration is limited to determining only 1) whether the jeopardy assessment was reasonable under the circumstances, and 2) whether the amount assessed was appropriate. 26 U.S.C. § 7429(b)(3); Olbres, 837 F. Supp. at 21. The government bears the burden on the first issue, while the taxpayer bears the burden of proof on the second. 26 U.S.C. § 7429(g)(1)(2).

Mr. Kalkhoven did not challenge the amount of the assessment.  He only challenged the appropriateness of using the jeopardy process.  The court noted that the standard of reasonableness of the IRS actions requires it to show that collection might be jeopardized by a delay caused by using the normal procedures for assessment and collection and not that collection would actually be jeopardized.  It also noted that because of the nature of the proceeding it can hear information that might not come into evidence in a trial on the merits and that parties can present affidavits.  The object here is to have the court make a swift decision on the basic correctness of allowing the IRS to bypass the ordinary assessment and collection process.  (The taxpayer will still get the opportunity to go to Tax Court to contest the amount of the assessment, but the Tax Court’s review will be post-assessment and possibly post-collection.)  The district court must make this decision within 20 days after the suit contesting the jeopardy assessment is brought (unless the taxpayer requests an extension), and the decision of the district court, like the decision of the Tax Court in a small tax case proceeding, is final and not reviewable.

The court first addressed a jurisdictional issue raised by the IRS that Mr. Kalkhoven failed to exhaust administrative remedies prior to bringing the jeopardy action.  The IRS argued that he needed to make an administrative request to undo the jeopardy assessment before he could jump into court.  The court skirts the issue, finding that it has jurisdiction to decide if the jeopardy assessment was reasonable.  It points out that Mr. Kalkhoven did send correspondence to the IRS prior to bringing suit and did have a virtual conference with Appeals days before filing suit.  Perhaps the court did not want to fully address this issue because of the way it intended to rule in the case.  Holding against the taxpayer on this issue might allow an appeal and delay the process.  Courts have allowed an appeal of the denial of jurisdiction in this context.  The Tax Clinic at Harvard cited to the allowance of an appeal in this context, discussed here, in its failed attempt to appeal the denial of jurisdiction in the small tax case context.  The circumstances seem parallel.

In looking at the reasonableness of the IRS actions, the court noted that some disagreement among reviewing courts existed regarding reviewing for reasonableness or reviewing based on the preponderance of the evidence. It sided with the majority on this issue, reviewing for reasonableness.  Citing the Fumo decision at the district court, the court stated that it looks to see if one of three conditions exist:

(i) The taxpayer is or appears to be designing quickly to depart from the United States or to conceal himself or herself.

(ii) The taxpayer is or appears to be designing quickly to place his, her, or its property beyond the reach of the Government either by removing it from the United States, by concealing it, by dissipating it, or by transferring it to other persons.

(iii) The taxpayer’s financial solvency is or appears to be imperiled.

The court also noted that finding one of those three conditions does not serve as a precondition to sustaining the jeopardy assessment and that other actions by the taxpayer could also support a finding that the jeopardy assessment was reasonable:

“[p]ossession of, or dealing in, large amounts of cash,” “[p]ossession of . . . evidence of other illegal activities,” “[p]rior tax returns reporting little or no income despite the taxpayer’s possession of large amounts of cash,” “[d]issipation of assets through forfeiture, expenditures for attorneys’ fees, appearance bonds, and other expenses,” “[t]he lack of assets from which potential tax liability can be collected,” “[u]se of aliases,” “[f]ailure to supply appropriate financial information when requested,” and “[m]ultiple addresses”) (citations omitted)). Several courts have considered additional factors such as whether:

the taxpayer travels abroad frequently, . . . the taxpayer is leaving or may be expected to leave the country, . . . the taxpayer has recently conveyed real estate, . . . or discussed such conveyance, . . . the taxpayer controls bank accounts containing liquid funds, . . . the taxpayer has not supplied public agencies with appropriate forms or documents when requested to do so, . . . the taxpayer controls numerous business entities, . . . the taxpayer attempts to make sizable bank account withdrawals at the time of the assessment, . . . the taxpayer maintains foreign bank accounts, . . . the taxpayer takes large amounts of money offshore, . . . the taxpayer has many business entities which can be used to hide his assets.

Bean v. United States, 618 F. Supp. 652, 658 (N.D. Ga. 1985)

Here, the court finds that the IRS met the second test.  Mr. Kalkhoven argued that he was not removing his assets quickly.  I guess, without looking at his brief, that he argued he was doing so with all deliberate speed but not quickly.  The court found his actions to warrant concern by the IRS and support the reasonableness of its jeopardy assessment.  It then spent several paragraphs detailing his actions and how they appeared designed to place his assets beyond the reach of the IRS despite his large outstanding liability.  It contrasted Mr. Kalkhoven’s case with the Fumo case in a footnote:

Kalkhoven argues he disclosed the existence of all his assets on his tax returns and the fact of disclosure also renders the assessment unreasonable. However, it is unclear what underlying assets were disclosed. Gov. Suppl. Br at 4; compare Fumo, 2014 WL 2547797, at *21 (“Defendant knows the location and amount of the proceeds from [p]laintiff’s real estate sales. . . . Moreover, the IRS was able to trace the transfers using only public records, which does not tend to show an appearance of trying to hide assets from the government”). Although Kalkhoven may have disclosed the entities that hold certain assets “the mere disclosure of entity names does not negate the added complexity and collection difficulty that attends such schemes. To find otherwise would reward those who engage the most sophisticated advisors and encourage taxpayers to establish complex asset-holding schemes that they can disclose on the surface to escape potential jeopardy assessment or collection.”   

Certainly, the size of his liability also matters in a case like this, although the court does not expressly mention it.

In the Fumo case, the IRS lost the jeopardy hearing, throwing it into the “normal” deficiency process, though eight years into its Tax Court proceeding I am not sure that this would be called the normal process.  Whether normal or not, the deficiency process does not provide the IRS with the immediate opportunity to seize assets to satisfy a liability.  In essence, the district court in the Fumo case felt that the assets would still be around to satisfy the tax at the end of the deficiency process, where the district court in the Kalkhoven case was concerned that they would not.  This abbreviated proceeding takes on great significance when you contrast the difference in outcomes between the two cases and see the IRS standing on the sidelines unable to take any collection action against Mr. Fumo for almost a decade while it has immediately taken possession of Mr. Kalkhoven’s assets and has the green light to go after any others it can locate.

Preview of This Week’s ABA Tax Section Virtual Fall Meeting

The ABA Section of Taxation kicked off its Fall Meeting virtually yesterday, with a plenary address by Thomas A. Barthold, Chief of Staff, Joint Committee on Taxation, followed by CLE programs from the Corporate Tax, Employee Benefits, State & Local Tax, and Transfer Pricing committees. A full week of programming follows, starting at 10:30 AM Eastern each day.

I will preview several sessions of interest in this post. The full program is available here, with the “schedule at a glance” here. To register, click here. (Registration is free for J.D. and LL.M. students, and $25 for LITC practitioners.)

Sessions are all held live, but registrants can also view sessions on replay – a major bonus of the virtual format for those of us who like to attend multiple committee meetings and for those with conflicting obligations.

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The CLE sessions presented yesterday are already available for viewing, as is the plenary address, Rewriting the Internal Revenue Code in a Pandemic, presented by Thomas A. Barthold, Chief of Staff, Joint Committee on Taxation. Those curious about the budget reconciliation process, the Byrd rule, and what tax writing looks like on the ground will find it illuminating and thought-provoking. The plenary session also includes remarks by Julie Divola, Chair of the Tax Section, by Wells Hall, Chair-Elect, and by Caroline Ciraolo, Vice Chair of Membership, Diversity & Inclusion.  

Readers of this blog may be interested in the panels happening at the Administrative Practice, Individual & Family Taxation, Civil & Criminal Tax Penalties, Court Procedure & Practice, Diversity, Tax Collection, Bankruptcy and Workouts, and Teaching Tax Committees, as well as the Pro Bono and Tax Clinics Committee. There are too many excellent panels to highlight them all here. Several committees also offer informal networking events, and the week ends with the always excellent Women in Tax Forum. I encourage readers to check out the full program and the schedule at a glance.

The Civil & Criminal Tax Penalties committee offers two programs today, at 12:30 and 2:30 p.m. ET. Part One includes subcommittee reports on important developments, followed by a cutting-edge discussion evaluating taxpayers’ exposure from their participation in COVID relief programs. Part Two presents additional important developments, and a final panel on taxpayer privacy versus the public’s right to know at 3pm, at which PT contributor Nina Olson is speaking.

Taxpayer Privacy v. The Public’s Right to Know. In the wake of the Watergate scandal Congress substantially increased the statutory protections for taxpayer privacy, including imposing criminal penalties for various forms of unauthorized disclosure. At the same time, the First Amendment provides for freedom of the press and journalists are tasked with informing the public on matters of national import. Recently, high profile leaks of tax return information have led to blockbuster reports by ProPublica (on the tax strategies of high net-worth individuals) and the New York Times (on former President Trump’s tax returns), among others. This panel will explore what I.R.C. §§ 6103 and 7213 protect and prohibit, how these laws potentially interact with the First Amendment, how newsrooms think through the legal and ethical questions surrounding the publication of leaked or stolen information, and more.

Moderator: Benjamin Eisenstat, Caplin Drysdale, Washington, DC

Panelists: Jesse Eisinger, Senior Reporter & Editor, ProPublica, Washington, DC; Cara Griffith, President and CEO, Tax Analysts, Washington, DC; Nina Olson, Executive Director, Center for Taxpayer Rights, Washington, DC; Jenny Johnson Ware, McDermott Will & Emery, Chicago, IL

The Administrative Practice committee teams up with the Court Procedure & Practice committee to present three joint sessions tomorrow. The Current Developments program at 10:30 ET is sure to be of interest to PT readers. The second program at 12:30 p.m. ET concerns CIC Services, which PT has covered in many prior posts, several of which can be found here, with Les’s most recent post here. The third session focuses on John Doe Summonses and begins at 2:30 p.m. ET on Wednesday.

Current Developments. This panel will include a report from the Tax Court, as well as a discussion of significant IRS guidance and pending litigation.

Moderators: Kandyce Korotky, Covington & Burling LLP, Washington, DC; Michael J. Scarduzio, Jones Day, New York, NY

Panelists: The Honorable Emin Toro, U.S. Tax Court, Washington, DC; Richard G. Goldman, Deputy Associate Chief Counsel (Procedure & Administration) Office of Chief Counsel, IRS, Washington, DC; Natasha Goldvug, Department of Treasury, Washington, DC (Invited)

CIC Services, LLC v. Internal Revenue Service: Opening the Floodgates to Pre-Enforcement Tax Litigation? In a unanimous decision, the Supreme Court held that the Anti-Injunction Act’s bar on lawsuits for the purpose of restraining the assessment or collection of taxes did not bar a pre-enforcement challenge under the Administrative Procedure Act of an IRS reporting rule backed by tax penalties. This panel will discuss helpful background regarding the Anti-Injunction Act and Administrative Procedure Act; examine the facts of the case and key arguments presented to the Court by the parties and amici curiae; and debate the implications of the Court’s ruling for pre-enforcement lawsuits challenging the validity of Treasury and IRS rules and regulations.

Moderator: Antoinette Ellison, Jones Day, Atlanta, GA

Panelists: Bryan Camp, Texas Tech University School of Law, Lubbock, TX; Kristin Hickman, University of Minnesota Law School, Minneapolis, MN; David W. Foster, Skadden, Arps, Slate, Meagher & Flom LLP, Washington, DC; Gil Rothenberg, former Chief of the Justice Department Tax Division’s Appellate Section, Adjunct Professor of Law at American University’s Washington College of Law, Washington, DC

Also on Wednesday afternoon, Teaching Taxation presents an important program on promoting diversity, equity, and inclusion in tax at 12:30.

Promoting Diversity, Equity, and Inclusion in Tax: Ideas and Resources for Mentoring Diverse Students and Leading Discussions of DEI in Tax. (Recommended for Young Lawyers) “We will all profit from a more diverse, inclusive society, understanding, accommodating, even celebrating our differences, while pulling together for the common good.” Ruth Bader Ginsburg. “Diversity requires commitment. Achieving the superior performance diversity can produce needs further action − most notably, a commitment to develop a culture of inclusion. People do not just need to be different, they need to be fully involved and feel their voices are heard.” Alain Dehaze. This panel will document the need for greater diversity in the field of tax law − in practice and in Academia – and share ideas to promote this goal, with a focus on law students and recent law school graduates. The panelists will (1) provide information about existing programs to promote DEI in the tax profession, (2) discuss ways to build the tax profession pipeline, to recruit and retain diverse tax attorneys, and to provide strong platforms for professional success, and (3) solicit audience participation and ideas for new initiatives.

Moderator: Katie Pratt, Professor of Law and Sayre Macneil Fellow, LMU Loyola Law School Los Angeles

Panelists: Professor Alice Abreu, Honorable Nelson A. Diaz Professor of Law and Director, Temple Center for Tax Law and Public Policy, Temple University Beasley School of Law, Philadelphia, PA; Caroline D. Ciraolo, Kostelanetz & Fink, LLP, inaugural Vice Chair, Membership, Diversity, and Inclusion, Tax Section Council, ABA; Professor Steven Dean, Brooklyn Law School; Honorable Juan F. Vasquez, US Tax Court; Lany L. Villalobos, Kirkland & Ellis, LLP, Assistant Secretary, Tax Section Council, American Bar Association (2021-2022), Immediate Past-Chair, ABA Tax Section Diversity Committee

Wednesday afternoon’s programming continues with a Diversity Committee session on return preparer fraud at 2:30 p.m.

Protecting Vulnerable Taxpayers Against Tax Preparer Fraud. (Recommended for Young Lawyers) Many taxpayers turn to paid tax preparers to help them navigate the tax code and accurately prepare their tax returns each year. While most tax return preparers are qualified and professional, unscrupulous tax return preparers do exist and can cause financial hardship and legal problems for the taxpayers who hire them. This is especially true for low-income taxpayers and other vulnerable communities. This panel will provide a comprehensive discussion of tax return preparer fraud and how to help those who have been taken advantage of by unethical tax return preparers. Panelists will identify resources to report tax return preparer fraud and what options are available to taxpayers to help remedy the damage caused by the tax return preparer. Lastly, the panel will discuss regulation of tax return preparers and what steps the tax community can take to reduce the risk of tax return preparer fraud.

Moderator: Shahin Rahimi, Legal Aid Society of San Diego, San Diego, CA

Panelists: Hana M. Boruchov, Boruchov Gabovich & Associates PC, New York, NY; Omeed Firouzi, Philadelphia Legal Assistance, Philadelphia, PA; William Schmidt, Legal Aid of Western Missouri, Kansas City, MO; Patrick W. Thomas, Frost Brown Todd, Louisville, KY

The Pro Bono and Tax Clinics committee presents two programs on Thursday morning. The first panel highlights administrative barriers that often prevent low-income taxpayers from receiving tax benefits to which they are entitled. This discussion is extremely timely as Congress debates whether to extend advance CTC payments.  We have covered problems with the IRS identity verification program here and here. Nina Olson wrote about problems with customer service and return processing recently here.

The second panel on determining a taxpayer’s “last known address” under the Code is a topic that has also prompted many PT posts.

Barriers to Tax Benefits: Resolving ID Verification and Payment Delivery Issues. (Recommended for Young Lawyers) The CARES Act and American Rescue Plan Act expanded numerous important benefits for low-and-middle income individuals delivered through the tax code -for example, the Advance Child Tax Credit and the Recovery Rebate credits. This panel will discuss numerous barriers that have emerged in getting those payments to the rightful recipients including ID verification issues, payments to the unbanked, and working with incarcerated individuals and the housing insecure.

Moderator: Anthony Marqusee, Philadelphia Legal Assistance, Philadelphia, PA

Panelists: Laura Baek, IRS TAS, Washington, DC; Barbara Heggie, Low-Income Taxpayer Project, Concord, NH; Nanette Downing, Director of Identity Assurance, IRS, Washington, DC; Denise Davis, Director of Return Integrity Verification Program Management, Atlanta, GA

A Simple Question with a Complicated Answer: Determining a Taxpayer’s Last Known Address. (Recommended for Young Lawyers) Many IRS notices are required to be mailed to a taxpayer’s “last known address.” Failure of the IRS to properly mail such notices can carry profound consequences. Determining exactly what a taxpayer’s last known address should be, however, is increasingly contentious. This panel will review the regulatory and subregulatory guidance on what is required for a taxpayer to effectively change their address with the IRS. It will also discuss how the recent 3rd Circuit decision Gregory v. Commissioner and the online IRS “portals” may affect this area of law.

Moderator: Briana Fehringer, Partner at Anderson & Jahde, P.C., Littleton, CO

Panelists: Christopher Valvardi, IRS Office of Chief Counsel (P&A), Washington, DC; Audrey Patten, Harvard Legal Services Center, Jamaica Plain, MA

Speaking of IRS customer service, on Friday the Individual & Family Taxation Committee presents a two-part session featuring IRS Wage & Investment Commissioner Ken Corbin.

The Service of the Service: Interacting Now and in the Future. (Recommended for Young Lawyers) This two-part panel will examine the current state of IRS customer service and how technology may transform how the IRS interacts with taxpayers. Part one will focus on common scenarios that taxpayers, practitioners, and IRS personnel have faced with the continuing backlog of correspondence and return processing. The panel will focus on how practitioners have attempted, with varying degrees of success, to resolve these problems. It will bring together viewpoints from private practice, tax clinicians, the Taxpayer Advocate, and the IRS. Part two will focus on strategic IRS initiatives to use Artificial Intelligence (AI) and data analytics to automate core components of customer service – some already in testing. The panel will discuss the IRS’s concierge service initiative, which will be AI-driven with some IRS representative collateral support, and how the initiative interacts with the broader Taxpayer First Act implementation programs. The panel will explore issues of equity in accessing responsive service by different taxpayer populations.

Part One Panelists: Kenneth C. Corbin, Commissioner, Wage & Income Division, IRS, Atlanta, GA; Andrew VanSingel, Local Taxpayer Advocate, IRS, Chicago, IL; Olena Ruth, Ruth Tax Law, Denver, CO; W. Edward (Ted) Afield, Clinical Professor of Law and Director, Philip C. Cook Low Income Taxpayer Clinic, Georgia State University, Atlanta, GA

Part Two: Joshua Beck, Attorney Advisor, Taxpayer Advocate Service, Des Moines, IA; Leigh Osofsky, Professor of Law, University of North Carolina School of Law, Chapel Hill, NC; Joshua Blank, Professor of Law, University of California, Irvine School of Law, Irvine, CA; W. Edward (Ted) Afield, Clinical Professor of Law and Director, Philip C. Cook Low Income Taxpayer Clinic, Georgia State University, Atlanta, GA