Tonight the class for tax procedure starts. I will periodically post updates and errata here for students and mark those with a keyword "UH TPC 2014." So, click on that keyword to retrieve the entries relevant for the class. Not all entries will be relevant to the case, so students may not want to spend their valuable time with those entries.
Please note the errata page in the column at the right.
Thursday, August 28, 2014
Wednesday, August 27, 2014
BASR Briefs On Issue of Unlimited Statute of Limitations for NonTaxpayer Fraud (8/27/14)
I have previously written on the Allen issue -- whether Section 6501(c)(1)'s unlimited statute of limitations may be triggered by fraud on the return that is not the taxpayer's fraud. See Allen v. Commissioner, 128 T.C. 37 (2007), here. (For my blogs on the issue, see here.)
Since Allen, the courts addressing the issue have been sparse, but seemed to accept the validity of Allen's holding that fraud on the return triggers the unlimited statute of limitations even if it was not the taxpayer's fraud. Allen involved a run of the mine fraudulent preparer, but the more prominent instances where the holding could apply involves the plethora of bullshit / fraudulent tax shelters that were popular with the wealthy in the 1990s and in the early 2000s. Apparently not anticipating the holding in Allen, the IRS walked away from making adjustments to taxpayers investing in those shelters where it could not find an open statute of limitations under the other rules. The IRS did try to get some relief by asserting the 6 year statute, but came up short on that in U.S. v. Home Concrete & Supply, LLC, ___ U.S. ___, 132 S.Ct. 1836 (2012), here. (See The Supreme Court Blesses Taxpayers Sheltering and Hiding Income from Six-Year Statute of Limitations (Federal Tax Crimes Blog 4/25/12), here.) Then, the IRS belatedly discovered the implications of Allen.
In BASR Partnership v. United States, 113 Fed. Cl. 181 (9/30/13 Filed; As Revised 10/29/13), here, the Court of Federal Claims rejected Allen and held that the unlimited statute in Section 6501(c)(1) required the taxpayer's fraud. That holding, of course, warmed the hearts of taxpayers who invested in bullshit / fraudulent tax shelters -- a win on the audit lottery they willing and joyously played. For prior discussions of BASR, see Court of Federal Claims Holds that Unlimited Civil Statute of Limitations Requires Taxpayer's Fraud (Federal Tax Procedure Blog 10/3/13), here, and Judge Holmes of the Tax Court Sets up the Allen Issue Conflicts (Federal Tax Crimes Blog 11/14/13; revised 11/16/13), here.
The Government appealed BASR to the Court of Appeals for the Federal Circuit. That case is now pending. But it has been briefed. I offer today in this blog entry the briefs of the parties and of Amicus Curiae (arguing that the Allen holding is incorrect). Those briefs are:
I will cut and paste the Summaries of the Arguments in the Briefs:
Since Allen, the courts addressing the issue have been sparse, but seemed to accept the validity of Allen's holding that fraud on the return triggers the unlimited statute of limitations even if it was not the taxpayer's fraud. Allen involved a run of the mine fraudulent preparer, but the more prominent instances where the holding could apply involves the plethora of bullshit / fraudulent tax shelters that were popular with the wealthy in the 1990s and in the early 2000s. Apparently not anticipating the holding in Allen, the IRS walked away from making adjustments to taxpayers investing in those shelters where it could not find an open statute of limitations under the other rules. The IRS did try to get some relief by asserting the 6 year statute, but came up short on that in U.S. v. Home Concrete & Supply, LLC, ___ U.S. ___, 132 S.Ct. 1836 (2012), here. (See The Supreme Court Blesses Taxpayers Sheltering and Hiding Income from Six-Year Statute of Limitations (Federal Tax Crimes Blog 4/25/12), here.) Then, the IRS belatedly discovered the implications of Allen.
In BASR Partnership v. United States, 113 Fed. Cl. 181 (9/30/13 Filed; As Revised 10/29/13), here, the Court of Federal Claims rejected Allen and held that the unlimited statute in Section 6501(c)(1) required the taxpayer's fraud. That holding, of course, warmed the hearts of taxpayers who invested in bullshit / fraudulent tax shelters -- a win on the audit lottery they willing and joyously played. For prior discussions of BASR, see Court of Federal Claims Holds that Unlimited Civil Statute of Limitations Requires Taxpayer's Fraud (Federal Tax Procedure Blog 10/3/13), here, and Judge Holmes of the Tax Court Sets up the Allen Issue Conflicts (Federal Tax Crimes Blog 11/14/13; revised 11/16/13), here.
The Government appealed BASR to the Court of Appeals for the Federal Circuit. That case is now pending. But it has been briefed. I offer today in this blog entry the briefs of the parties and of Amicus Curiae (arguing that the Allen holding is incorrect). Those briefs are:
- Government Opening Brief, here.
- BASR Answering Brief, here.
- Amicus Curiae Brief, here.
- Government Reply Brief (Responding to BASR Brief and Amicus Brief), here.
I will cut and paste the Summaries of the Arguments in the Briefs:
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