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

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

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


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

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

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

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

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

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

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

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

Opportunities for Improving Referrals by VITA Sites to LITCs

We welcome guest bloggers Janice Feldman and Jonathan Blake. Janice is currently a volunteer attorney at the Harvard Law School Federal Tax Clinic. Prior to volunteering at the clinic, Janice worked for over 30 years in tax administration, first with the Department of Justice, Tax Division and then with the IRS, Office of Chief Counsel. She retired in 2019. At the time of her retirement, Janice was the Division Counsel/Associate Chief Counsel (National Taxpayer Advocate Program) at the Office of Chief Counsel. Jonathan is a student attorney with the clinic and one of the leaders of the law school’s VITA clinic.  Keith

January 24th marked the start of this year’s tax filing season, and as a result the Volunteer Income Tax Assistance (VITA) program is now available to aid qualified taxpayers with the filing of their returns. Depending on the location, assistance may be given in person or virtually through a secure website. We applaud the wonderful service the VITA volunteers provide and their ability to adapt to the pandemic conditions through the use of technology.

Since 1969, the IRS’s VITA program has offered free basic tax return preparation to qualified individuals. These individuals include taxpayers with household income below a specified cap (currently $58,000), disabled taxpayers, and limited English-speaking taxpayers. The locations where the assistance is provided – called VITA sites – are set up in public libraries, community centers, and similar facilities.

Although the IRS oversees the VITA program by administering training for volunteers and making grants, the IRS does not staff the sites. Community members, ranging from college students to retirees, sign up to volunteer; neither work experience nor formal education in taxation is required. VITA is not intended to be a replacement for the broader set of services a taxpayer may obtain from a tax practitioner. (However, tax practitioners make excellent VITA volunteers. To learn more about becoming a volunteer and how to be matched with a local VITA site, please click here).

In doing research at the Harvard Clinic, it has come to our attention that sometimes VITA volunteers may not realize if an issue is beyond the scope of what a volunteer can handle, or if they do, may not know how to direct the taxpayer to get the help they need elsewhere. This blog post attempts to put a spotlight on this problem and propose a few ideas to remedy it.


Some taxpayers who visit VITA sites have tax issues that extend beyond preparation of their tax returns. For this reason, VITA volunteers are trained to consult the Scope of Service chart. This chart states whether returns requiring certain IRS forms and schedules may be prepared by VITA.

There exists a whole spectrum of tax matters that are not addressed on the Scope of Service chart. For example, responding to a notice of deficiency is not a part of the list of services that a VITA volunteer can do. So what happens if among the envelopes containing the taxpayer’s W-2 and 1099s, the VITA volunteer sees a notice of deficiency was issued to the taxpayer and his ex-wife, claiming additional tax due for an earlier tax year because the ex-wife has unreported income? Alternatively, the taxpayer could present the notice to the volunteer after reading the question about IRS letters on the VITA intake form, which taxpayers fill out upon arrival at a VITA site. The volunteer may not understand the significance of the taxpayer receiving the notice of deficiency, and may simply prepare the current year return and not advise the taxpayer about the significance of the notice or that a Low Income Tax Clinic (LITC) might be able to help. Per Congress, VITA sites are encouraged, when appropriate, to inform taxpayers about LITCs. See Internal Revenue Code Section 7526A(g)(3).

In this example, the taxpayer might be a good candidate for obtaining innocent spouse relief. The VITA volunteer cannot explore this issue, but the LITC can. And even if the volunteer recognizes the need for a referral to an LITC, the volunteer may struggle with the mechanics of the referral as no procedures for referral are in place. Likewise, there are no clear rules on which LITC to contact. Examples like this highlight two challenges for VITA volunteers and site coordinators: (i) educating volunteers so they can identify fact patterns where LITC assistance would be appropriate and (ii) effectively connecting the taxpayer with an LITC.

The first challenge is largely dependent on the adequacy of training. The site coordinator training materials dedicate one slide to LITCs, consisting primarily of links to IRS webpages. The lengthier site coordinator handbook does enumerate issues that LITCs can handle, but it is unclear if site coordinators who do not have experience in these tax areas will know enough to spot potential referral opportunities after just reviewing this list. The training materials for volunteers go into no greater detail. Importantly, none of the exams required to be a site coordinator or a volunteer have any questions on making a referral to an LITC.

An initiative from the Center for Taxpayer Rights, the LITC Support Center, is attempting to fill this gap in training. As covered in a recent Procedurally Taxing blog post, the LITC Support Center is “creating materials for VITA sites and taxpayers about … what they can do via self-help and when they need to reach out to an LITC for assistance.” These documents are available – and will be added to over time – on the website’s Resources for Taxpayers tab. The IRS should consider incorporating the same sort of content in the VITA training materials and exams it produces.

Updating the training materials should of course not limit exploration by the IRS of other measures. In particular, perhaps the optimal time to ask the taxpayer about receipt of IRS letters or other tax issues is when the VITA volunteer has finished preparing the return, not during the intake process. This is also a natural point to discuss LITCs if the taxpayer were to owe money for the tax year.

The second challenge is to ensure the taxpayer is properly connected to someone at an LITC. Given that the population of taxpayers who utilize VITA services includes low income and limited English-speaking taxpayers, these individuals may have limitations, so simply providing an email address or phone number for a local LITC might be insufficient. The current official training materials provide no rules regarding how to make a referral. Thus, the official training materials should be revised to include specific rules and best practices regarding how VITA volunteers should reach out to their LITC partners.

The comprehensive volunteer training publication contemplates LITCs and VITA sites will be in contact regarding the procedures for referring taxpayers. It states, “Ideally, tax preparation programs and LITCs will share information and discuss how best to make a referral.” For large, established, or year-round VITA sites, there is a decent chance these discussions are taking place. At other sites, that only have a reason to refer a select number of taxpayers each year, volunteers may be determining in real time how and where to refer the taxpayer. One possible solution is to require site coordinators to annually contact their nearest LITCs about referral procedures. Hopefully, taking this action would form an enduring yet informal partnership between the two organizations, with successful referrals being made in both directions.

VITA sites and LITCs each serve an important role in helping taxpayers meet their tax obligations. Because more complicated tax issues may surface during the tax return preparation process, it is important that the VITA volunteers are able to identify issues beyond scope and to know where to refer a taxpayer in this situation. Communication and training seem to be the key to remedying this problem. In order for taxpayers to fully benefit from these resources, the IRS would be wise to study strengthening the training materials and requiring site coordinators to contact their nearest LITCs so that an informal partnership is formed.