Attorney-at-Law

LOOKBACK TO THE LAST ANTECEDENT

In Uncategorized on 08/30/2017 at 16:46

Another Tax Court grammatical extravaganza, and today Judge Lauber gives us a truly prime example in Roberta Borenstein, 149 T. C. 10, filed 8/30/17.

Roberta made a few payments for tax year 2012 during said year, totaling $112K, and Section 6513 deemed them all made as of April 15, 2013 (the dates matter here). Roberta got an extension to October 15, 2013 to file her 2012 return, but she didn’t. Roberta was a wee bit casual, and didn’t file until August 29, 2015.  But IRS beat Roberta to the punch, and hit her with a SNOD on June 19, 2015, from which Roberta timely petitioned.

Turns out Roberta’s late-filed return had her real numbers, and she only owed $79K. Both Roberta and IRS agree.

Roberta wants a refund. In fact, not only Roberta but also the Philip C. Cook Low-Income Taxpayer Clinic and the Harvard Federal Tax Clinic think she should get one.

Sorry, chaps. It’s all about the parenthetical phrase “(with extensions).”

Remember the whole lookback for refunds breaks down into three years from filing or two years from paying. See my blogposts “Lookback in Anger,” 12/12/11, and “Lookback in Anger – Part Deux,” 4/15/15, citing the Butts case, cited extensively in Roberta’s case.

OK, back to “(with extensions).” Section 6512(b)(3) holds the key. “In a case described in subparagraph (B) where the date of the mailing of the notice of deficiency is during the third year after the due date (with extensions) for filing the return of tax and no return was filed before such date, the applicable period under subsections (a) and (b)(2) of section 6511 shall be 3 years.” 149 T. C. 10, at p. 10.

Well, the due date (with extensions) was 10/15/13, so the third year began on October 15, 2015 and ended 10/14/16; the SNOD was June 19, 2015, and the return wasn’t filed until August 29, 2015.

IRS claims the two-year lookback applies, and Roberta is out.

“The ‘third year’ after that date began on October 15, 2015.  But the notice of deficiency was mailed on June 19, 2015.  That date was during the second year, not during the third year, ‘after the due date (with extensions) for filing the return,’ as the 1997 amendment [to Section 6512] requires.  Respondent accordingly contends that the exception set forth in the final sentence of section 6512(b)(3) does not apply, with the result that a refund or credit of petitioner’s $32,411 overpayment is barred by the two-year lookback rule generally applicable to nonfilers.” 149 T. C. 10, at p. 11.

Roberta and the clinicians claim the phrase “(with extensions)” isn’t tied to the third year.

“Petitioner’s textual argument focuses on the parenthetical ‘(with extensions)’ as it appears in the longer phrase, ‘during the third year after the due date (with extensions) for filing the return of tax.’  Respondent contends that this parenthetical phrase modifies ‘due date,’ the immediately preceding noun.  Petitioner contends that ‘with extensions’ should be taken instead to modify ‘the third year, a noun phrase that appears earlier in the sentence.  In that event, ‘the third year’ would be determined by reference to the original due date for her return and would be prolonged to include the six-month extension period.  Alternatively, petitioner contends that ‘with extensions’ should be taken to modify ‘3 years,’ the last two words in the sentence.  In that event, section 6512(b)(3) would afford taxpayers a maximum lookback period, not of three years, but of 3-1/2 years.  Under either of these interpretations petitioner would get her refund.” 149 T. C. 10, at pp. 15-16.

No dice, Roberta and clinicians.

“We find neither of these constructions plausible from the standpoint of normal English syntax.  A modifying phrase is normally read to modify the nearest plausible antecedent.  This rule is typically referred to as the ‘last antecedent’ rule.” 149 T. C. 10, at p. 16.

“Wholly apart from sentence structure, construing ‘with extensions’ to modify ‘due date’ results in a more logical and natural reading.  Congress knows that due dates for filing tax returns can be extended; ‘with extensions’ is thus read quite naturally to modify ‘due date.’  Years, on the other hand, do not have ’extensions’; they cannot be extended but invariably end 12 months after they begin. Congress is thus unlikely to have intended ‘with extensions’ to modify ‘3 years’ or ‘the third year.’” 149 T. C. 10, at p. 17.

Finally, this gem. “In a similar vein, amici curiae [the clinicians] urge that we consult the dictionary to learn that the preposition ‘with’ has among its accepted meanings ‘inclusive of.’  But unless the parenthetical phrase is read to modify something other than ‘due date,’ making this substitution does not help petitioner.  The ‘due date (inclusive of extensions) for filing the return of tax’ was October 15, 2013–the same date produced by respondent’s construction of the statute.  In effect, amici curiae argue that we should view ‘inclusive of’ as modifying the gestalt of the entire sentence, i.e., the sentence should be read generously to be ‘inclusive of’ taxpayers like petitioner.  That is not how prepositions work.” 149 T. C. 10, at p. 17.

We have legislative history and the anti-absurdity rule, but neither helps Roberta. IRC is littered with “due date (with extensions).” “With extensions” modifies “due date,” nothing else.

But Judge Lauber has some thoughts for the weary blogger who has to plow through this stuff (and unlike him is not getting paid to do this).

“Anyone who has managed to plod thus far through this Opinion will understand that the statutory provisions we are construing are extremely technical and complex.  It is possible that the drafters of the 1997 amendment [to Section 6512] did not think through all of the ramifications of Congress’ decision to ‘inject filing extensions into the lookback period mechanism,’ as petitioner puts it.  But wittingly or unwittingly Congress placed the words ‘with extensions’ in the text of the statute immediately after ‘due date.’  We must give meaning to those words.” 149 T. C. 10. at pp. 27-28.

And give them meaning Judge Lauber does, even though it hurts Roberta.

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