In Uncategorized on 12/11/2018 at 14:38

IRS picks up on Frank Loesser’s 1950 anti-hero’s line in Greenteam Materials Recovery Facility PN, Greenwaste Recovery, Inc., Tax Matters Partner, Docket No. 21946-09, filed 12/11/18. All y’all will recall the Greenteamers (or Greenwasters) and their capital gains from franchise sales.

No? Seriously? Well, dig my blogposts “Das Kapital,” 8/6/13, “Das Kapital – Part Deux,” 6/21/17, and the most popular of the three, “Settle Order on Notice,” 6/23/17. There now.

The Greens won the FPAA joust, and did the numbers. The Greens won big.

But the Green’s counsel complains to Judge Mark V Holmes in a letter.

“In it he stated that the effect of these decisions was to generate a substantial refund to the individual partners for tax year X and small deficiencies for them for two later tax years. He also stated that the IRS proceeded at speed to issue the notices of computational adjustment to them to collect the deficiencies for those two later years, but invited the individual partners to sue in the Court of Federal Claims or their local District Court for the substantial refund for [Year X].” Order, at p. 1.

So counsel asks Judge Holmes to order IRS to pay up.

No can do, says Judge Holmes. At least not yet.

If this involved individual partners who were entitled to a refund, no need for another lawsuit. A Rule 260 motion based on Section 6512(b) does the trick. But this is a TEFRA FPAA. No amount of refund for each individual partner is part of the decision. Thus Tax Court may have no jurisdiction.

Or maybe it does. “One practitioner’s guide says this means that our Court ‘has overpayment jurisdiction with respect to affected items.’ IRS Practice Adviser Report, ¶ 430: Judicial Review of the FPAA/FSAA. Another practitioner’s guide warns instead: “Comment: It is unclear whether § 6512(b)(2) and Tax Court Rule 260 apply in partnership actions where an overpayment would result to a partner based on the decision entered by the court in the partnership proceeding.” Richard A. Levine et al., Proced. & Admin.: Tax Court Litigation, 630-5th Income Tax (BNA).” Order, at p. 3.

So Judge Holmes treats counsel’s letter as a Rule 260 motion, and denies same without prejudice.

“It may turn out that following the Rule’s procedures moves the Commissioner to act expeditiously to wrap these cases up. It may turn out that petitioners discover through their own research that they do not want to proceed under this Rule; or the Commissioner may want to argue that it is inapplicable either on its own terms or by analogy.” Order, at p. 3.

So make the motion in proper form, and we’ll see.

I bet you’re asking what will happen in new cases now that TEFRA is gone. My bet is that the whole thing gets done at once.

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: