Tax Blog/Blawg

On November 20, 2023, the U.S. Court of Appeals for the Sixth Circuit in Mann Construction ruled that its 2022 decision – which had held that sub-regulatory pronouncements labeling transactions as “listed” or “reportable” (and thus subject to penalties for failure to disclose) are invalid under the Administrative Procedure Act – applies only to taxpayers in the Sixth Circuit because the IRS shrewdly mooted the case before the district court on remand was able to issue a nationwide vacatur.

As background, Congress has given the IRS a panoply of potent weapons to combat ...

Recently, the IRS has been devoting substantial resources to its investigation of Malta Pension Plans.  Just this month, the IRS Criminal Investigation division served summonses on multiple entities and persons who it believes were involved with such plans, and has proposed making the transaction a “listed” transaction.  Either action would be noteworthy, but that combined activity tells a story of deep IRS scrutiny.  This article discusses that activity, and provides some high-level options for affected taxpayers.

The Latest Listed Transaction: the Maltese Pension

On June ...

Every five years the Bureau of Economic Analysis (BEA) is required to collect information and compile statistics on the scale of foreign-owned business activities in the United States under the International Investment and Trade in Services Survey Act of 1976. This information is used by the federal government to analyze the impact of foreign investment on the U.S. economy. In general, with few exceptions, if a foreign person (an individual or an entity) owned or controlled, directly or indirectly, 10% or more of the voting securities in a U.S. entity at the end of the of the ...

For taxpayers challenging IRS notices and regulations designating transactions as “reportable transactions” or “listed transactions,” the Mann Construction case keeps getting better. 

In 2022, the U.S. Court of Appeals for the Sixth Circuit in Mann Construction held that IRS Notice 2007-83, which labeled a certain type of transactions as a “listed transaction,” was invalid due to the IRS’ violation of the Administrative Procedure Act in promulgating the notice. Last week, on remand, the district court amplified the IRS’ loss by vacating the IRS notice not only ...

Back in July 2022, the media reported that two of President Trump’s rivals, former FBI Director James Comey and his deputy, Andrew McCabe, had both been selected for IRS examinations under the National Research Program (NRP).  There were allegations that President Trump had sicced the IRS on his political foes.  That Comey and McCabe were both selected for NRP audits seemed at best a statistical anomaly given the low nationwide audit rate.  At worst, it conjured images of Nixon’s enemies list.  

In a report dated November 28, 2022, the Treasury Inspector General for Tax ...

During IRS audits, we routinely encounter examining agents who become suspicious (even apoplectic) when the audit trail from the client’s general ledger to source documents is imperfect.  Well, it turns out the IRS may be throwing stones in their own glass house.  The IRS reports to Congress and other external parties the size of its unpaid tax debts to justify its requests for enhanced resources for tax enforcement, and for other informational purposes.  The gross receivable is taken from the agency’s general ledger.  

According to a General Accounting Office (GAO) report issued ...

For decades, tax audit procedures for partnerships had been governed by a framework established in the Tax Equity and Fiscal Responsibility Act of 1982.  This partnership audit regime was commonly referred to as the TEFRA partnership procedures, or simply TEFRA.  In 2015, in response to widespread criticism over the complexities of TEFRA, Congress replaced TEFRA with a new audit regime under the Bipartisan Budget Act of 2015, now the BBA partnership procedures. 

The BBA partnership procedures have been phasing in, with the first wave of partnership audits applying the BBA still ...

On December 29, the Eleventh Circuit in Hewitt v. Commissioner gave taxpayers a nice victory to ring in the New Year.  There, the Court struck down a 1980’s era conservation easement regulation and reminded Treasury and the IRS that the notice-and-comment cornerstone of the Administrative Procedures Act (APA) requires that agencies genuinely consider and address legitimate public comments received on proposed regulations.

In 1995, the Supreme Court in Perez v. Mortg. Bankers Ass'n, had described an essentially four-step procedure for notice-and-comment rulemaking: (1) an ...

As Democrats continue to finalize their now-$1.75 trillion tax-and-spending plan, the Federal income tax deduction for state and local taxes (the “SALT deduction”) has once again reared its head in partisan politics playing out in deliberations over a major piece of legislation.  As prior blog installments have discussed, the SALT deduction cap became a political lightning rod in 2017 when a Republican-controlled Congress passed the Tax Cuts & Jobs Act.  Four years later, here we go again.  Interestingly, for the SALT deduction’s first 150 years, it was not a partisan issue.  It ...

Greek philosopher Plutarch is famous for posing the Ship of Theseus Paradox.  The mythical hero Theseus, upon sailing back to Athens after an epic battle, replaces, one-by-one, the old, decayed planks of his mighty ship with new and stronger timbers.  The thought experiment is whether the ship which has been restored by replacing each and every one of its wooden planks is still the same ship.  If not, when did it become a new ship?  When half of the planks were replaced?  When the last plank was replaced? 

In a recently issued appellate court decision, Schneider National Leasing, Inc. v. United ...