Judge David Gustafson opens his 2018 campaign in his typical style. He’s confronting the 3SOL for Section 6707A chopping for some four (count ‘em, four) tax years.

Here’s Laidlaw’s Harley Davidson Sales, Inc., Docket No. 14616-14L, filed 1/3/18.  According to Notice 2007-83, IRB 2007-45, 11/5/07, Laidlaw should have filed Form 8886 four (count ‘em, four) times, for some cash value life insurance dodges, which I’ve blogged elsewhere.

But Laidlaw didn’t file until two years after the last return was due. IRS did beat the SOL for the last of the four years. But IRS’ chop aggregates the four years’ worth of chops in the penalty assessment.

“However, 26 C.F.R. § 1.6011-4(e)(1) requires a disclosure for each year; and section 6707A(a) seems to impose a penalty as to ‘any return or statement’ that fails to make the required disclosure; and section 6707A(b)(1) requires that the penalty be measured as a percentage of  ‘the decrease of tax shown on the [singular] return’. A simple reading of this text would suggest that the section 6707A penalty must be imposed year by year, by reference to the tax benefit claimed on the return for each year. If that is correct, then the IRS’s …assessment in this case would seem to disregard the statute of limitations for [the three back years] (which barred assessment) and to wrongly impose for [fourth year] the penalty attributable in fact to those earlier years.” Order, at p. 2.

Well, Laidlaw should be all over this, right?

“Petitioner addresses the general three-year limitation of section 6501(a) but seems not to explicitly address section 6501(c)(10)–the special SOL provision as to this penalty, which is apparently effective for the three earliest years at issue.” Order, at p. 2.

IRS wants summary J. But IRS won’t get it; at least, not yet.

As for the need for separate assessments for each year, made within the 3SOL, Judge Gustafson is, as usual, unwilling to impose his point of view on the parties.

“The foregoing is not a holding but is a tentative hypothesis as to which we invite correction by counsel for the parties.” Order, at p. 2.

So let’s have a phoneathon, and “…Petitioner should be prepared to show that its analysis takes section 6501(c)(10) into account.” Order, at p. 2.

And Judge Gustafson obligingly designates this order. Happy New Year, Judge.