Taxpayers Ask Federal Circuit to Overturn “Harsh” Application of Statute of Limitations

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May 30, 2012

In Cadrecha v. United States, No. 11-152 (Apr. 2, 2012), the Court of Federal Claims ruled that the taxpayers could not escape the clutches of the statute of limitations, even though the failure to file a timely lawsuit was largely attributable to contradictory and confusing IRS communications.  The taxpayers have now appealed, hoping that the Federal Circuit will be more sympathetic.

The Court of Federal Claims acknowledged that the result was “harsh” on these facts.  The taxpayers filed a timely amended return in March 2007, styled as a protective claim for refund, on the theory that a recent Court … Read More

Bush TEFRA Claims Whacked for the Final Time

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May 29, 2012

Long-time readers of the blog may recall our coverage of the Federal Circuit’s stumbles through TEFRA in the Bush litigation, where a panel issued a surprising decision finding that a notice of deficiency was required to make what was previously understood as a mere TEFRA computational adjustment, but that the IRS’s failure to issue the notice was harmless error.  Both sides cried foul, and the en banc court overturned the panel’s decision.  The Supreme Court this morning today denied the taxpayers’ petition for certiorari, meaning that the case has reached the end of the line, which turns out to be … Read More

Home Concrete Decision Leaves Administrative Law Questions Unsettled While Excluding Overstatements of Basis from Six-Year Statute of Limitations

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May 3, 2012

[A shorter version of this blog post appears on SCOTUSblog.]

The Supreme Court last week ruled 5-4 in favor of the taxpayer in Home Concrete, thus putting an end to the long-running saga of the Intermountain litigation on which we have been reporting for the past 18 months.  The opinion was authored by Justice Breyer and joined in full by three other Justices, but Justice Scalia joined only in part.  The result is a definitive resolution of the specific tax issue – the six-year statute of limitations does not apply to an overstatement of basis.  But the Court’s … Read More

Ninth Circuit to Rule on Timing for Filing a Qualified Amended Return for an Undisclosed Listed Transaction

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May 1, 2012

The taxpayers in Bergmann v. Commissioner are appealing an adverse Tax Court decision, 137 T.C. No. 10, holding that they failed to timely file a qualified amended return for 2001 and thus are liable for the 20-percent accuracy related penalty.   The taxpayers participated in a listed transaction promoted by KPMG, known as the Short Option Strategy.  In 2004, two years after the IRS issued a summons to KPMG specifically identifying the Short Option Strategy transaction, the Bergmanns filed an amended return disclaiming the tax benefits of the transaction.  The case concerns the interpretation of Treas. Reg. § 1.6664-2(c)(3)(ii) (2004), which … Read More