Tuesday, August 18, 2015

What is the Date of Filing for Returns Solicited by and Delivered to an Agent (8/18/15)

I posted a blog on my Federal Tax Crimes Blog that may have some discussion that Federal Tax Procedure enthusiasts may find interesting.  The FTC Blog entry is:  Ninth Circuit Requires a Filing for Tax Perjury Charge (8/16/15; 8/17/15), here.  The Blog discusses the recent opinion in United States v. Boitano, ___ F.3d ___, 2015 U.S. App. LEXIS 14096 (9th Cir. 2015), here.

The criminal tax issue was whether filing of the tax return was an element of the crime of tax perjury, § 7206(1), here.  This invites the question of precisely what is a filing of a tax return.  In Boitano, the taxpayer signed and submitted the returns to an IRS agent not authorized to receive returns for filing.  That agent perceived irregularities in the returns and therefore did not send the returns for processing.

The Government conceded that the returns were not filed because the agent did not send the returns for processing.  The issue on appeal in Boitano was whether filing was an element of the crime of tax perjury.  The text of § 7206(1) does not require filing, but the Ninth Circuit had earlier held that filing was an element of the crime.  The Government argued, in effect, that that earlier holding was incorrect.  This panel of the Ninth Circuit held itself to be bound by the earlier precedent.  (The panel offers some interesting analysis of what constitutes a binding precedent for a three judge panel.)

The key for readers of this tax procedure blog is the question of what constitutes a filing (as opposed to the elements of the crime of tax perjury).  In many civil audits or other encounters with agents, the agents will sometimes request either delinquent original returns or amended returns.  As noted in Boitano, most agents are not authorized to receive returns for filing purposes and thus the mere act of receipt is not a filing.  The agents receiving such returns should process those returns which, when processed, would constitute a filing.  The issue practitioners face when the agent asks for the return(s) is whether, to insure that the return(s) will be treated as filed, they should (i) file the original returns in the normal manner (usually by mailing to the service center) with a copy to the agent or (ii) deliver the original return(s) to the agent with the expectation the the agent will process the return(s).  Readers interested in this issue should review the FTC Blog linked above and consider the following additional matters.

In my practice, I have been wary of giving the agent the original for processing.  I can't recall if I have ever done that.  I much prefer filing the regular way with a copy to the agent.

This issue may lurk in the OVDP where amended or delinquent returns are submitted to the OVDP group.  Are the OVDP agents authorized to receive the returns and, upon mere receipt, have them treated as filed?  I don't know the answer to the question.  Within OVDP, at least sometimes, the agents just hold the returns without processing and make an agent's report incorporating the items in the amended or delinquent returns as adjustments in the agent's report as if the amended or delinquent returns had not been filed.  If the OVDP is closed out with a closing agreement, I suppose that it does not make any difference.  But, if the taxpayer opts out, it might make a difference, particularly in the case of delinquent returns that would start the running of the statute of limitations under § 6501(c)(3), here.  I would hope that, in cases like that, the IRS would not attempt to assert that the receipt was not a filing for purposes of the civil statute of limitations.  But who knows?  In this regard, as I note in the FTC Blog entry, the Government's brief in Boitano said (in footnote 4):
   n4 * * * * Defendant’s handing the returns to Agent Connors did not constitute filing, and Agent Connor’s forwarding the form (but not the returns) to the service center did not result in the returns being filed. See 26 U.S.C. § 650126 U.S.C. § 6091(b)(4)26 C.F.R. § 1.6091-2
I would appreciate readers views and experiences.

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