In Uncategorized on 04/24/2018 at 16:18

No, not the Barbara Stanwyck-Bert Lancaster thriller of seventy years ago. This is the story of the wrong EIN on a 941, and the taxpayer’s attempt to get proper credit after the 3SOL has run.

So it’s equitable recoupment to the rescue for Emery Celli Cuti Brinckerhoff & Abady, P.C., 2018 T. C. Memo. 55, filed 4/24/18, a local law firm.

For the skinny on equitable recoupment, see my blogpost “Equitable Recoupment,” 7/8/13.

ECCBA went from LLP to PC, in the process getting a new EIN but putting the old LLP EIN on the 1Q 941 for the transition quarter. The clock had long since run when IRS dinged the PC for the “unpaid” FICA/FUTA/ITW that its predecessor had in fact paid.

PC’s counsel was a wee bit late (like about seven weeks) getting the SO all the documents, pictures, descriptions and accounts to paper the goof. The SO had already determined to drop a NOD on PC, but same had not yet issued when PC’s counsel unloaded the exculpatory material.

Judge Gale: “First, we note that the administrative record includes not only material that the settlement officer reviewed but also material that was available for his review. See Thompson v. U.S. Dept. of Labor, 885 F.2d 551, 553-556 (9th Cir. 1989); West v. Commissioner, T.C. Memo. 2010-250, slip op. at 11 n.11.  Moreover, at the time of … PC’s CDP hearing, the Internal Revenue Manual (IRM) instructed Appeals employees conducting such hearings to “[c]onsider information received after the due date for supplying information but prior to issuance of the Notice of Determination/Decision Letter.”  IRM pt. (Oct. 30, 2007); see Shanley v. Commissioner, T.C. Memo. 2009-17, slip op. at 15 (noting the de facto extension of time for submitting information arising from the requirement in IRM pt. that an Appeals employee consider information submitted before the issuance of a notice of determination).  It is undisputed that Emery PC submitted substantial information and supporting documents 11 days before the notice of determination was issued and that the settlement officer did not consider the submission. The submission included two letters with extensive attachments.  In view of the fact that these materials were available for the settlement officer’s review, and that IRM guidelines instructed him to review them, we find that the two letters and their attachments are part of the administrative record.” 2018 T. C. Memo. 55, at pp. 21-22 (Footnote omitted).

IRS was going to collect twice. LLC was too late to go back, and PC was sufficiently aligned in interest with LLC to get the benefit of the payment. IRS’ argument that the alleged overpayment arose out of two taxable events is wrong; the taxable event was payment of taxable wages, not the Commissioner’s assessment of tax. And PC used reasonable care: the right amount of tax was timely paid and reported. Only the EIN was wrong. So no late-filing or late-payment chops.

As for remand to Appeals, there’s nothing fresh for Appeals to decide. The bushelbasketful of papers that PC’s counsel put in before the NOD issued was part of the administrative record. It was introduced on the trial as well. So it was “all ye know on earth and all ye need to know,” as a much finer writer put it.

Whether PC or LLC, ECCBA wins it.

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