Summary Opinions for 8/08/14

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Although I’m not thrilled to be back to work this week after vacation, I am excited about having scheduled time to work on Procedurally Taxing again.  Below you will find a summary of some items we didn’t otherwise cover last week while I was away, but first I wanted to highlight Carlton Smith’s post from this Monday on the IRS trying to conflict lawyers out of representing taxpayers in court when they also represented the taxpayers in CDP hearings.  The response to the post was very strong, with many practitioners chiming in through LinkedIn, email, and in our comment section.  I commend the post and the comments to anyone who has not yet reviewed the material.  Here are the other procedure items that caught our eye:

  • From JOTWELL, Professor Christopher Walker reviews Professor Kristen E. Hickman’s contribution to this year’s Duke Law Journal Symposium on administrative law and tax.  Professor Walker provides a great write up of Professor’s Hickman’s article and her current research into whether revenue raising is actually a valid reason for tax exceptionalism.  I would recommend this summary and the article (and symposium issue) to anyone interested in the intersection of administrative law and tax (as you all know, we are fairly high on this topic).
  • From Jack Townsend’s Criminal Tax Crimes Blog, a write up of Whistleblower 2231-12W v. Comm’r, where the IRS argued that FBAR penalties are outside the scope of the whistleblower statute, Section 7623(b).  The Tax Court found it lacked jurisdiction as no determination had been made, and declined to address the alternate IRS argument.  Jack indicates that these penalties are likely outside the scope of the payment regime.
  • Anyone heard of walk-up payments?  Sounds vaguely illegal, like it should involve ‘stutes (my short slang for prostitutes).  Walk-up payments with the IRS are where a taxpayer who largely only deals with cash can bring the funds to a third party that then allows the funds to be electronically transferred to the IRS.  Many lower income taxpayers are unbanked and this is a way to pay; also, however taxpayers who may have illicit business dealings but who choose to pay their taxes may use this method.  The Service recently released Chief Counsel advice on whether this is a valid payment method under Sections 6311 and/or 6302.  The advice indicates that Section 6302 is the applicable authority, and these types of payments could be acceptable with no additional regulations if other informal guidance was issued by the Service.  Perhaps such guidance will be forthcoming.
  • Some interesting summons info post Clarke.  Here may be the first post-Clarke ruling in Hawaii Pacific Finance v. US.  The Court found that the respondent had not raised an inference of bad faith by claiming the Revenue Officer threatened to pull the respondent’s individual tax returns and threatening him with potential jail time.  The Court held that although the Officer’s intent and actions were important, it was the agency’s intent on honestly pursuing the goals of Section 7602 by issuing the summons that mattered.  “Tough language” by the Officer would not be sufficient to show an improper purpose. Revised chapter 13 in Saltz/Book on summons will be coming out later this fall. This case and likely other post-Clarke cases will be discussed.
  • For those of you who had perhaps hoped that the Service would view Clarke as taxpayer friendly, my man from the Magic City, Joe DiRuzzo (who seems to have a hand in a case with every major tax procedure matter), forwarded a reply brief from the government, where the government largely argues Clarke has not changed how courts should review allegations of improper purpose.  I’ve recreated some of the position on Clarke from the government brief:


In Clarke, the Supreme Court reversed the Eleventh Circuit, holding “that a bare allegation of improper purpose” on the part of the IRS in issuing a summons “does not entitle a taxpayer to examine IRS officials.  Rather, the taxpayer has a right to conduct that examination when he points to specific facts or circumstances plausibly raising an inference of bad faith.”…


The [summonsed individual] is wrong to rely on Clarke in criticizing this Court’s characterization of the “heavy” burden that the party challenging a summons must meet in order to overcome the government’s prima facie showing of the four elements of Powell…But the Court’s own three uses of the word “heavy”…are all in quotations from other cases…and this “heavy” burden is well-established, with its origin in Supreme Court…


Contrary to this well-established “heavy” burden, [the summonsed individual] contends the Supreme Court in Clarke “lowered the bar” that a party challenging a summons must meet and instead created “a new analytical framework,” but he is incorrect.

  • The long awaited final whistleblower regulations have been issued.  Accounting Today has a nice summary here.  You can find the entire regulations here, “if you’re not into the whole brevity thing.”  We will hopefully post some insight and practical tips on these regulations shortly.
  • The Fifth Circuit in Salty Brine I, LTD v. United States (is there a type of brine that is not salty?) has held it and the district court had jurisdiction to review the purchase of annuities by partners after royalty interests were distributed out of a TEFRA partnership, concluding the determination of a partnership item “requires a holistic approach to examining the classification of potential income items.”  And, although the partnership was not involved in the subsequent transactions, “under TEFRA [the courts had jurisdiction] to address every part of the royalty interest transaction, and ultimately to disregard the entire transaction, including the annuity sale, for tax purposes.”
  • The Jack Townsend had a post last week regarding practitioner frustration with the move to the streamlined OVDP process, which can be found here.
Avatar photo About Stephen Olsen

Stephen J. Olsen’s practice includes tax planning and controversy matters for individuals, businesses and exempt entities for the law firm Gawthrop Greenwood, PC.



  1. Bob Kamman says

    Inexplicably, this week’s edition (or to use last week’s term, addition) omits any reference to the famous Fogey Footnote in Tax Court Judge Mark V. Holmes order of August 13 in the Caylor Land & Development case (Docket No. 172014-13 et al).

    Judge Holmes noted that in the course of discovery, “both sides have responded to the need to exchange documents relevant to case preparation with a spirit less cooperative than the Court’s customs and rules expect. Both have acted in ways that sometimes seem a parody of civil discovery.”

    For example, Judge Holmes chided petitioner for submitting “photocopied pages from old dictionaries to show that respondent’s use of the computerese ‘deduped’ made no sense to their counsel, even though it has become a commonplace bit of jargon in the age of electronic discovery.1″

    The footnote explains:

    “For fogeys reading this: ‘Deduped’ and related terms like ‘deduplication’ mean the removal of the vast quantities of redundant images in electronic recordkeeping systems, such as the original email in an email stream that gets attached to the bottom of every follow-up email, or the 100-page attachment that is sent in identical form to 50 different emails with the press of a cc button. The term has its own Wikipedia entry Data Deduplication, WIKIPEDIA (Aug. 12, 2014, 4:44 PM),; and there have been law-review articles written about it Ralph C. Losey, “Hash: The New Bates Stamp”, 12 J. Tech. L. & Pol’y 1 (2007). This subsubsubdispute could have been resolved with a google search.”

    Meanwhile, your fogey commentator is unable to find a definition for “subsubsubdispute,” even using Google (will that company file a pleading asking that its trade name be capitalized in subsequent Tax Court references?)

  2. A: When a poster to this blog, inexplicably, chides one of its hard-working hosts for describing last week’s summaries’ post as the latest “addition” rather than “edition.”

    Q: What is a “subsubsub dispute?”

  3. Bob Kamman says

    No chiding intended. I considered the word choice a subtle reference to the firing of Tim Torkildson. I leave for Rome tomorrow night but with insufficient holy water available even at the Vatican to cleanse me of my sin, I will instead pour a bucket of vice water over my head. Glubglubglub.

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