D.C. Circuit Affirms Tax Court's Holdings on Written Supervisor Approval, Qualified Amended Return, and Statute of Limitations on UBS JDS (4/25/24)

In Lamprecht v. Commissioner, ___ F.4th ___ (D.C. Cir. 4/23/24), D.C. Cir. here and GS here, the Court affirmed the Tax Court in Lamprecht v. Commissioner, T.C. Memo. 2022-91, here. See Tax Court Sustains Accuracy-Related Penalty for Offshore Accounts, Rejecting Taxpayer's QAR, Statute of Limitations, and § 6751(b) Arguments (Federal Tax Procedure Blog 9/1/22), here. In so doing, the Court (Judge Walker) steps through the arguments and the resolution in a crisp straightforward opinion.

The background discussed in the opinion is that the IRS issued a John Doe Summons to UBS in 2008 (which essentially set off the IRS and DOJ foreign account initiative). UBS did not immediately reply with full and complete response. As a result, the civil statute of limitations for persons within the scope of the summons (U.S. person account holders) was suspended and did not pick up until the summons was resolved. Suspension of Statute of Limitations From the UBS John Doe Summons (Federal Tax Crimes Blog 1/26/14), here.

The opinion holds in the Court’s outline format:

I. The IRS Complied with 26 U.S.C. § 6751(b)(1)

A. It Doesn’t Matter When (or Whether) a Supervised
Tax Examiner Signs the Approval Required by
§ 6751(b)(1)’

B. The IRS May Use a Form 5345-D to Comply with
§ 6751(b)(1)

C. The Tax Court’s Refusal to Exclude the Forms 5345-D
from Evidence Was Not an Abuse of Discretion

II. The Lamprechts’ Corrected Returns Did Not Protect
Them from Penalties [QAR Issue]

A. The [UBS] Summons Was Legal

B. The Summons Relates to a Benefit Claimed on the
Lamprechts’ Original Tax Returns

III. The Penalty Assessments Were Not Too Late

A. The [UBS] Summons Was Not Resolved in August 2009

B. The [UBS] Summons Was Legal (Again)

 JAT Notes:

 1. What caught my attention was how crisply the Court (Judge Walker) steps through the analysis. I thought it was clear and well-written.

For fun, I did an MS Word analysis which assessed the opinion as follows: 

Flesch Reading Test	44.8
Flesch-Kinkaid Grade Level	10.6
Passive Sentences	8.9%

By contrast, MS Word assessed the Tax Court opinion, here:

Flesch Reading Test	25.0
Flesch-Kinkaid Grade Level	16.7
Passive Sentences	20%

For the Wikipedia introduction to these tests, see Flesch–Kincaid readability tests. (2024, March 19). In Wikipedia. https://en.wikipedia.org/wiki/Flesch%E2%80%93Kincaid_readability_tests

The Flesch–Kincaid readability tests are readability tests designed to indicate how difficult a passage in English is to understand. There are two tests: the Flesch Reading-Ease, and the Flesch–Kincaid Grade Level. Although they use the same core measures (word length and sentence length), they have different weighting factors.

The results of the two tests correlate approximately inversely: a text with a comparatively high score on the Reading Ease test should have a lower score on the Grade-Level test. Rudolf Flesch devised the Reading Ease evaluation; somewhat later, he and J. Peter Kincaid developed the Grade Level evaluation for the United States Navy.

Presenting these MS Word analytics is not to suggest that I think one opinion was better than the other. The Tax Court opinion develops the facts and law in more detail than the Court of Appeals’ opinion, which is entirely appropriate. The Courts of Appeals can synthesize and, in a sense, simplify. So, this particular note is perhaps of no consequence in the grander scheme of things.

And, I think it appropriate that I disclose the MS Word analysis for this blog entry. 

Flesch Reading Test	56,.1
Flesch-Kinkaid Grade Level	8.7
Passive Sentences	2.7%

2. The Court refers to the Tax Court as “tax court” (noncaps). I am sure other courts do that as well, but the official name of the court is “United States Tax Court” (§ 7441), which would, it seems to me, require short-handing to “Tax Court.”