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

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 establishes … Read More

Supreme Court Debates Whether Anti-Injunction Act Is Jurisdictional

As we previously reported, Day 1 of last week’s oral argument in the Supreme Court on the challenges to the health care legislation focused on whether the Anti-Injunction Act bars the lawsuits.  The excitement about the argument on that issue was largely gone as soon as it was over, because it was fairly apparent that the Court will not find the Act to be an obstacle to reaching the merits of the health care dispute.  Indeed, Robert Long, the lawyer who argued as amicus for that position, has predicted that he will not get a single vote.  Certainly the … Read More

Tax Anti-Injunction Act Issue Set to Lead Off Supreme Court Consideration of Health Care Act

The Supreme Court is preparing to hold oral arguments on its long-awaited consideration of the constitutionality of the health care legislation.  The arguments will cover four distinct issues in three different cases and occur over three days, March 26-28.  The most prominent issue, of course, is whether the “individual mandate” requiring almost everyone to have health insurance is constitutional.  Additional issues are “severability” (whether the entire law must be struck down if the individual mandate provision is unconstitutional or whether other portions of the law can survive) and whether the Medicaid expansion provisions of the law are impermissibly “coercive.”

But … Read More

Third Circuit Debates Tax Court Jurisdiction Puzzle

As we have previously reported, the Third Circuit is considering a tricky issue relating to the Tax Court’s jurisdiction to resolve disputes concerning overpayment interest.  At the oral argument, the court explored different facets of the issue, even while joking about its complexity.  At one point, one of the judges appeared to question whether the Tax Court’s Estate of Baumgardner case was correctly decided, even though the IRS had acqueisced in it.  Government counsel declined that offer, instead adhering to the view that Baumgardner is different because it involved deficiency interest rather than overpayment interest.  Taxpayer’s counsel invoked Code section … Read More

Sunoco Oral Argument Rescheduled for January 25

The Third Circuit has revised its January oral argument calendar and rescheduled the oral argument in Sunoco for the morning of Tuesday, January 25.  The case had been scheduled for argument on the previous day.  The panel that will hear the case is Chief Judge Theodore McKee, Judge D. Brooks Smith, and Judge Richard Stearns, a district judge from the District of Massachusetts who is sitting by designation.… Read More

Oral Argument Scheduled in Sunoco

The Third Circuit has scheduled the oral argument in Sunoco for January 24, 2011.  The briefing was completed back in March, and the briefs can be found at the bottom of our previous post.… Read More

Schizophrenic Application of Tax Penalties (Part II)

The last post in this series discussed differences in procedural posture that cause differences in the application of penalties.  Court splits in how the various and sundry penalty provisions in the Code are applied is an even more confusing area.  The two principal confusions are in the areas of TEFRA and valuation misstatements.  We will deal with TEFRA in this post.

Partnerships are not taxpaying entities.  They flow income, losses, deductions, and credits through to their partners who pay the tax.  Nevertheless, since Congress enacted the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. No. 97-248, 96 Stat. … Read More

Schizophrenic Application of Tax Penalties (Part I)

Based our recent post on the Sala decision here, we have had several comments inquiring about the varied application of penalties in the “tax shelter” cases.   This is the first in a planned series of responses to those comments that will try to explain, iron out, or at least flag, some of the irregularities. 

When looking at the application of penalties to ”shelter” cases generally, procedural posture matters.  A good example of this is Sala.  Why did the 10th Circuit discussion in Sala omit penalties?  Because it was a refund case in which the taxpayer appears to have filed a … Read More

Third Circuit Briefing Completed in Sunoco

On March 5, 2010, the government filed its reply brief in its appeal from the Tax Court’s decision in Sunoco Inc. v. Commissioner, 122 T.C. 88 (2004), thus completing the appellate briefing.  The case raises a novel issue concerning the Tax Court’s jurisdiction to determine overpayment interest.  Sunoco filed a petition seeking redetermination of deficiencies for its 1979, 1981, and 1983 tax years.  In an amended petition, Sunoco reported that certain issues had settled but argued that the IRS had committed errors in calculating the interest on underpayments and overpayments arising out of those issues because it used incorrect starting … Read More