Go With The Flow, and The Check’s Not the Thing

This blogpost has nothing to do with the immigration or naturalization law in this or any other country.

Rather, the question is, when the SOL is at issue in a passthrough, is it the return of the passer or the return of the receiver that triggers the SOL.

Judge Paris will tell us, in Neil L. Whitesell and Tracy L. Whitesell, 2017 T. C. Memo. 83, filed 5/18/17. It’s Neil’s story.

His Sub Ss kicked off the parade, and IRS hit Neil with a SNOD, to which Neil riposted with an OIC and a check for $3 million, with conditions, which sets up the second of the subtitles hereinabove set forth, as my colleagues with Cadillac health plans would say.

Don’t ask. I just got back from the orthopedic surgeon, and though the knife isn’t on the menu, some minor immobility is.

Well, Judge Paris lays it out.

“This Court has consistently held that the relevant ‘return’ for determining whether the period for assessment has expired under section 6501(a) is that of the taxpayer with respect to whom the Commissioner seeks to determine a deficiency. See Robinson v. Commissioner, 117 T.C. at 313; Lardas v. Commissioner, 99 T.C. 490, 493 (1992) (and cases cited thereat). The Court has reached that conclusion irrespective of whether the adjustment concerned the transactions of another entity or whether that entity was taxable. See Lardas v. Commissioner, 99 T.C. at 493.” 2017 T. C. Memo. 83, at p. 8.

Neil relied upon a now-demolished conflict between Circuits that the Supremes squashed, and Congress double-squashed, twenty-five years ago. Collectors of accounts of ancient battles can check out 2017 T. C. Memo. 83, at pp. 8-10.

Neil claims his $3 million check, which IRS cashed, was an accord and satisfaction, because IRS didn’t bang it back to Neil within 90 days.

Negatory, good buddy, says Judge Paris. The sovereign isn’t bound by State law enactments like the Uniform Commercial Code. And IRS did bang the OIC and check back to Neil in sufficient time to satisfy Judge Paris.

Takeaway- It’s the receiver, not the passer, whose return governs. And an OIC is nothing until IRS blesses it.