Attorney-at-Law

SOMEBODY DOES READ THIS BLOG

In Uncategorized on 12/04/2011 at 02:41

Or, A Sentence or Two

Somebody reads my blog. I got an e-mail on Friday, 12/2/11, from J. P. Finet, Legal Editor with the BNA Daily Tax Report, asking me to comment on Coffey v. Com’r, No. 11-1362, decided 12/2/11 by the Eighth Circuit. I’ll quote the relevant portion of the e-mail: ”That decision appears to be at odds with the Third Circuit’s ruling in Appleton v. Commissioner, which allowed the U.S.V.I. to intervene. What I am looking for is just a sentence or two from Mr. Taishoff about why practitioners should care about the ruling.”

I was out getting a drink when Mr. Finet’s e-mail arrived, so I didn’t respond at once. My apologies, sir.

However, anyone who has ever read this blog, much less ever encountered me in any other context, knows that I never limit myself to “a sentence or two.” Wind me up, and I’ll give the Energizer Bunny a decent run for his/her loose change.

Coffey is not “at odds” with Appleton, except for a hyper-technical parsing of FRCP 24, which I leave to the law review editors. See my blogpost “Missed It, But Better Late Than Never,” 8/24/11, wherein I summarized the Third Circuit’s decision, reversing Tax Court. Third Circuit remanded the case, stating that Tax Court (Judge Jacobs) got intervention under FRCP 24 wrong.

Appleton talks about as-of-right intervention. Coffey talks about either as-of-right or permissive intervention. But Third Circuit and Eighth Circuit agree. Holding in both cases: USVI should be allowed in at the trial stage. Appleton involves an argument about effective and orderly tax administration. Coffey goes off on the administration of USVI’s “unique” economic development program, but that’s embodied in Section 934.

Effective tax administration or economic development program, call it what you will, is, and of right ought to be, an essential governmental interest, beyond economics. And in Appleton and Coffey the issue is statute of limitations. In both cases, returns were filed per Code; three-year period ran; and no IRS  claim of tax-protester phony returns or fraudulent returns. IRS says, “You filed with BIR (United States Virgin Islands Bureau of Internal Revenue), per Section 932(c)(4). But the statute of limitations is open because you never filed with IRS.” Eighth Circuit noted that Section 932(c)(4) says filing with BIR satisfies filing requirement.

If IRS is right, no VI taxpayer who filed properly per Section 932(c)(4) has ever filed a return. And even if they were audited by BIR, paid up, and case closed–they are still subject to IRS audit.

So USVI has a very real interest. If BIR says it’s over, is it over?

Why should practitioners care? Other than VI practitioners, of course. Because it matters when it’s over. For everybody. We all know that the economic development program for our beautiful but insolvent Islands in the Sun, like all unguided Congressional largesse, led to game-playing. Were the taxpayers in Appleton and Coffey pure of heart and clean of hand? I don’t know. But good or bad, if the law, as embodied in the Acts of Congress, says it’s over, it’s over.

So my reply to Mr. Finet’s request for “a sentence or two why practitioners should care” is “All practitioners should care because it matters that taxpayers, and people, should know that when it’s over according to law, it’s over.”

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