Ninth Circuit: Laidlaw's Harley Davidson Sales v. Commisioner

Law requiring initial determination of tax assessment to be approved by a supervisor prior to enforcement of the penalty doesn't preclude pre-approval notice to the taxpayer that the government will enforce the penalty; the supervisor's approval must occur before the actual enforcement, but sufficiently in advance that the supervisor still has the discretion to withhold approval.

DISSENT:

By the plain language, the initial determination must be approved before it becomes the basis for agency action.

Laidlaw's Harley Davidson Sales v. Commisioner

Fifth Circuit: Trafigura Trading v. USA

 As the fees assessed on the exported oil don't accrue any benefit to the exporters, but are rather directed to things generally useful to society, the assessment is an unconstitutional tax, rather than a permissible user fee.

DISSENT:

There are issues for trial, since the assessments aren't tied to the value of each barrel, and there is no explicit requirement in the precedent that the exporter be the sole beneficiary of the fees assessed.

Trafigura Trading v. USA

Fifth Circuit: Vitol v. USA

When a fuel is correctly categorized as taxable under the statute, it is ineligible also to be categorized as an alternative fuel, since the latter statute excludes fuels encompassed by the definition of taxable fuels.  The statutory scheme is clear enough to defeat a plain meaning argument to the contrary.  Any partial categorization of a blend as partially alternative would require a clear statement in the statute.

DISSENT:

The provision making the two categories mutually exclusive is in the excise tax portion of the Code, so the tax credit language in another area isn't bound by it, given plain meaning to the contrary.  The excise provisions define the wide swath of the tax categories, and the credit provisions define particular instances.  Ordinary meaning is the Star of Bethlehem.

Vitol v. USA

Seventh Circuit: Frances Rogers v. CIR

 

Innocent Spouse relief unavailable when the spouse in question is represented by counsel in a formal proceeding (even if that counsel is their spouse), attends the entire proceeding, and is highly educated.

When assessing standard of living when determining if the spouse had a duty to inquire about the questionable tax filings, the relevant consideration is whether there was a substantial increase in the standard of living, not whether it was generally high.

A legally sophisticated party's affidavit claiming that there was no conflict in being represented by their spouse in a tax case involving a jointly filed return waives a subsequent right to a new trial based on evidence that their counsel allegedly didn't call witnesses that would support the legally sophisticated party's claim to Innocent Spouse relief.

https://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2021/D08-17/C:20-2789:J:Scudder:aut:T:fnOp:N:2748862:S:0

Ninth Circuit: USA v. Jane Boyd

 

Statute that allows for penalties for any violation of a certain section does not permit multiple penalties for multiple aspects of the violation of a single obligation, but rather establishes that any of the violations specified in the statute and associated regulations are subject to the penalty.

Materially similar provision for willful violations of the same obligation that allows for multiple penalties cuts against the idea that multiple penalties should be allowed in the section of the statute that doesn't explicitly mention them.

Tax statutes should be strictly constructed where they impose an obligation.

DISSENT:

The reporting requirement is a procedural element, but the substance of the statute is that each of the foreign bank accounts should be reported.

The use of "violation" as defined by its context in the similar provision establishes that the term should have that definition throughout the statute. 

Majority's reading is not strict, but strained.

USA v. Jane Boyd

DC Circuit: BCP Trading and Investments, LLC v. Cmsnr. IRS

 

Investigation of accountancy firm did not create a situation of undue contractual influence on the taxpayers, as some had multiple advisors, and some were sophisticated business professionals; the accountancy firm notified the taxpayers of the investigation in a manner that allowed for outside advice on at least some of the relevant transactions.

For purposes of determining whether the partnership was a sham, while the correct business purpose test is distinct from the court's intent-based test, the two are not mutually exclusive, since intent is necessary to prove business purpose.  The transaction had no practical economic effects other than the creation of intentional artificial tax losses.

Tax court's refusal to allow intervenor is reviewed for clear abuse of discretion, given the broad FRCP rule and the court's procedural discretion.  Denial of intervention of right or denial of permissive intervention would both have been appropriate, given the existing representation of interests.

BCP Trading and Investments, LLC v. Cmsnr. IRS

Federal Circuit: Kimble v. US

 

Given that the taxpayer knew that they had a foreign bank account, the taxpayer didn't tell their accountant about the account, and the taxpayer signed the tax return, the court did not clearly err in finding a willful or reckless violation of the law.

The maximum penalty looks to the statute, rather than the regulation, since they contradict.

No error in mitigation, since the relevant mitigation guideline imposes the maximum penalty on accounts over a million dollars in value.

A foreign bank account is not in itself a property interest sufficient to establish a significant contact with the foreign country.

Plaintiff did not establish grounds for mitigation where the taxpayer is beneficiary of only part of the proceeds of the account.

Reference to an excess penalty in the filing did not preserve an Eighth Amendment claim.

Kimble v. US

Eleventh Circuit: James Clay, et al. v. Commissioner of Internal Revenue

 

Agreement on taxation of ceded land is subject to the court's plain meaning reading; the member of the tribe that is party to the accord has no power to define a contrary reasonable reading.

Casino revenues did not arise from the land in question.

In the absence of a formal lease, the tax court determination that the lands were not leased by the tribe is supported by substantial evidence.  Tribe has not identified any statutory basis for the claimed exemption for profits from leased lands.

James Clay, et al. v. Commissioner of Internal Revenue

Federal Circuit: Meidinger v. US

 

Completing a form to report tax noncompliance under a statute that authorizes the payment to the reporter of the portion of the monies recovered does not create an enforceable contract with the government; a contract arises only if the reporter and the government specifically negotiate its terms.

Meidinger v. US

Second Circuit: Keefe v. Commissioner of Internal Revenue

Petitioner's omission of necessary regulatory permissions and merely casual conversations about the prospect of rental sufficed to establish that the property wasn't regularly and continuously used in that manner.

Late tax filings in previous years are appropriately penalized given the present loss of the deduction.

Materially distinguishable precedent cannot be used to establish sufficient substantial authority to justify the earlier tax position.

Keefe v. Commissioner of Internal Revenue

Eighth Circuit: Deaton Oil Company, LLC v. United States

A claim that an agent did not pay taxes and make payments does not state a claim as a defense to nonpayment unless the nonperformance incapacitated the principal in that respect -- a high bar.

http://media.ca8.uscourts.gov/opndir/18/09/172326P.pdf

Eighth Circuit: United States v. Deborah Brabant-Scribner

As the regulation requires the IRS to consider alternatives for collection and not alternatives to collection,   agency need not have resolved a compromise offer before an Article III court can permit the sale of the primary residence.

http://media.ca8.uscourts.gov/opndir/18/08/172825P.pdf

Second Circuit: Trusted Media Brands, Inc. v. United States of America

Tax.  Where one section of a statute grants an extended period of time to do X, and Y is an alternative to X, a reference elsewhere in the law saying that X and Y are governed by the initial provision can simply mean that they are separately governed by it.

(Probably.)

http://www.ca2.uscourts.gov/decisions/isysquery/cb713570-cf6f-478b-a928-4f292687255f/1/doc/17-3733_opn.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/cb713570-cf6f-478b-a928-4f292687255f/1/hilite/

Sixth Circuit: Jodi Hohman v. Maurice Eadie

By the terms of the statute, taxpayers have a cause of action for improper collection activities, but not for improper assessment activities.

Although the natural persons and small partnerships holding a cause of action under the statute resemble LLCs, LLCs are not within the plain terms of the statute, and do not have a right to file suit.

Discovery properly limited.

http://www.opn.ca6.uscourts.gov/opinions.pdf/18a0131p-06.pdf

Eighth Circuit: Bobby Hargis v. John Koskinen

Owner of passthrough corporations must establish an actual outlay of resources to establish sufficient basis in the corporation to list the corporations losses on their taxes.  Signing as a co-borrower a corporate loan does not establish a personal outlay.

[again, folks, this site doesn't contain advice of any kind.]

http://media.ca8.uscourts.gov/opndir/18/06/171694P.pdf

Fourth Circuit: Shari Renee Lauflett v. Commissioner

Jurisdiction grant inside parentheticals in a prefatory part of the statute makes appeals time limit jurisdictional; in addition to plain language, the fact that collections actions can't be enjoined absent a timely filing, and agency can't collect until after the cutoff establish the reading.

http://www.ca4.uscourts.gov/opinions/171986.P.pdf

Fifth Circuit: Gail McClendon v. USA

Regardless of the ultimate burden at trial, a deft's reasonably supported assertion that less than the full amount of taxes due was available for use in the company's accounts presents a genuine issue of material fact for trial.

http://www.ca5.uscourts.gov/opinions/pub/17/17-20174-CV0.pdf

Federal Circuit: WMI Holdings Corp. v. US

As plaintiff didn't sufficiently establish value of particular assets within a group acquisition, court was not obliged to independently evaluate the assets.

(NB:  we don't know many things, but we especially don't know tax and patent.  As always, entertainment purposes only.)


http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/17-1944.Opinion.6-1-2018.1.pdf

Eleventh Circuit: USA v. Sally Jim

Where gambling revenues are used for the welfare of tribe members, statute requiring tax payments on Indian gambling business prevails over earlier statute exempting Indian general welfare payments from taxation.

Refusal to amend monetary judgment against an intervenor of right was not an abuse of discretion.

http://media.ca11.uscourts.gov/opinions/pub/files/201617109.pdf

Ninth Circuit: MARTIN SMITH V. IRS

Bankruptcy, Taxes


Post-assessment tax form filing was insufficiently honest and reasonable to allow tax debt to be discharged in bankruptcy.


 MARTIN SMITH V. IRS