In Uncategorized on 10/24/2019 at 15:40

Judge Albert G (“Scholar Al”) Lauber looked back to the last antecedent of the words “(with extensions)” and found that Roberta Borenstein, Docket No. 23559-15, filed 10/24/19, wasn’t entitled to a refund of the $33K she overpaid, because IRS hit her with a SNOD before she filed the return that everyone agrees accurately reflects the tax she owed.

This was the “flush language” of Section 6512(b)(3). For more about the syntactical tohubohu this engendered, see my blogpost “Lookback to the Last Antecedent,” 8/30/17.

Well, the Harvard Low Income Tax Clinic and the Philip C. Cook Low-Income Tax Clinic didn’t think so. And neither did 2 Cir, after the said Clinicians besought a reversal, and got it.

Here’s Borenstein v. Com’r, No. 17-3900, decided 4/3/19. While looking back to the last antecedent is a long-standing rule of construction, it isn’t an absolute, and 2 Cir managed to dig into enough legislative history to find that the 1997 amendment that added the flush language was intended to place nonfiling taxpayers who got late SNODs on equal footing, whether or not they applied for extensions they never used.

“The Tax Court’s interpretation of 26U.S.C.§6512(b)(3) results in differential treatment of taxpayers that the statute’s flush language was intended to eliminate: it would have had jurisdiction to grant Borenstein a refund if she had not been granted an extension for the filing of her return, but lacks jurisdiction because she obtained an extension that was not used. And if the Commissioner had mailed the notice of deficiency six months earlier, or six months later, the Tax Court would have unquestioned jurisdiction to grant Borenstein a refund under two‐year and three‐year look‐back periods, respectively. The Tax Court’s interpretation disclaims jurisdiction to order a refund simply because the Commissioner chose to mail the notice of deficiency during a (supposed) gap in the Tax Court’s jurisdiction in the second half of the second year after Borenstein’s extension period. But ‘there is no need to read [the flush language of §6512(b)(3)]‐‐a provision designed to benefit the taxpayer who receives an unexpected deficiency notice‐‐as giving the [Commissioner] an arbitrary right to shorten the taxpayer’s period for claiming a refund if that taxpayer has not yet filed a return, ‘thereby’ convert[ing] an intended benefit into a handicap.’” Decision, at p. 9 (Citation omitted).

You can’t be mechanical when Congress intended a benefit, and you have to read the IRC to benefit the taxpayer where the words manifest Congress’ intent, albeit inartfully. Creating a “black hole” because a taxpayer got an extension she didn’t use was hardly what Congress could have intended.

And look at Section 6511(b)(2)(A), where the statute says “equal to 3 years plus the period of any extension of time for filing the return.”

“In view of our obligation to resolve doubtful language in tax statutes against the government and in favor of the taxpayer, we conclude that ’(with extensions)’ has the same effect as does the similar language that existed in §6511(b)(2)(A) at the time of §6512(b)(3)’s amendment‐‐that is, the language expands the Tax Court’s jurisdiction to order refunds and credits.” Decision, at p. 10. (Footnote omitted, but it says, yeah, like IRS says, the analogy to Section 6511 is imperfect, but hey, “no analogy is perfect.” Decision, at p. 10, footnote 2).

Reversed and remanded. So Judge Scholar Al tells Roberta and her low-income crowd, and IRS to do the numbers to fork over Roberta’s $33K.

PS- I hate to spoil a good story, but since when is a $33K refund “low income”? That’s more than a wee bit above 400% of poverty where I come from.


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