In Uncategorized on 05/01/2019 at 16:18

The morning line on admins & legals in USTC cases of first impression is definitely in longshot country. Jason Bontrager, 2019 T. C. Memo. 45, filed 5/1/19, is willing to try a bet, and his trusty attorney Holly C. Henson, Esq., already a recipient of a Taishoff “Good Try, First Class,” for trying to get Jason out of $72K worth of restitution, and getting IRS to fold on the Section 6601(a) underpayment interest, is in there pitching.

For Holly’s story, see my blogpost “One Man’s Tax,” 12/12/18.

But Judge Albert G (“Scholar Al”) Lauber will have none of it.

Justification is measured at different dates for admins & legals.

“For purposes of the administrative proceeding, the IRS’ position is that taken at the earlier of: (1) the date the taxpayer receives the decision of the IRS Appeals Office or (2) the date of the notice of deficiency.  Sec. 7430(c)(7)(B).  For purposes of a Tax Court proceeding, the IRS’ position generally is that taken when the Commissioner files his answer.

“As of both dates identified above, there existed no Court of Appeals precedent addressing whether the Commissioner was authorized to assess underpayment interest on restitution-based assessments.” 2019 T. C. Memo 45, at p. 7.

Tax Court hadn’t yet issued its full-dress T. C. saying “nuthin’ doin’ on the underpayment front, IRS”; for more on this, see my blogpost “IRS Gets Zip,” 10/3/17.

On both magic dates, “… what guidance was available supported the Commissioner’s view.  Respondent cites three opinions from other Federal trial courts adopting his earlier position that the IRS can assess underpayment interest on restitution-based assessments.  The IRS itself had consistently interpreted section 6201(a)(4) to authorize the assessment of underpayment interest in these circumstances.” 2019 T. C. Memo. 45, at p. 8. (Footnotes omitted).

So that IRS folded after Zip Klein called them on the river doesn’t help Jason, and doesn’t help Holly either. IRS concessions don’t equal want of justification.

I hope Holly’s other clients are paying her.

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