The Treasury Green Book Proposals for Tax Legislation on Procedure (including the NTA Blog Regarding the § 6751 Proposal) (5/7/24)

The National Taxpayer Advocate, currently Erin M. Collins, offers a blog that often contains information useful for tax procedure enthusiasts. The recent blogs are here. The most recent is Treasury FY 2025 Green Book Proposes to Essentially Eliminate Written Supervisory Approval for Penalties (NTA Blog 5/2/24), here.
 
The NTA laments that Treasury wishes to do away with § 6751(b)’s written supervisory approval requirement.  Section 6751(b) is a poorly drafted statute causing considerable confusion and requiring considerable administrative and judicial resources. From my perspective, the commotion around § 6751(b) has served little purpose other than rewarding tax abusers by avoiding penalties because of an IRS procedural foot-fault that really did not affect those taxpayers negatively. Nevertheless, being the NTA, the NTA must advocate for the taxpayers and finds some value in the written supervisor approval requirement. For Treasury’s view on the subject, readers might want to read the section of the Green Book General Explanations starting on p. 175, here.
 
The Green Book catalogs Treasury’s proposals to Congress for changes in statutory law. The Treasury General Explanations of the Green Book are here. The Table of Contents for the General Explanations is here. The General Explanations make the proposals in a format discussing present law, reason for change, and the proposals for change.

I thought I would mention without detail some of the other Green Book proposals that might be of interest to tax procedure enthusiasts. These proposals are under headings titled Improve Tax Administration and Improve Tax Compliance (see Table of Contents pp. iii & iv which provide links for the items in the Table of Contents). All of the proposals are important, but the ones I thought worth mentioning are:
 
1. The modification of § 6751(b)’s written supervisor approval requirement discussed above, starting at p. 175 here. (JAT Note: One matter perhaps relevant here is that Treasury has Proposed Regulations that attempt to make some sense and order from the 6751(b)’s written supervisor approval requirement. See Musings on Proposed § 6751(b) Regulations and the Potential Demise of Chevron Deference (Federal Tax Procedure Blog 1/8/24; 1/15/24), here.)
 
2. Revision of § 6103 to clarify that Tax Return Information Disclosed on the Public Record in Judicial Proceedings or in Publicly Filed Notice of Federal Tax Lien Is Not Tax Return Information Prohibited From Disclosure (General Explanations starting at p. 187, here.)
 
3. Allow Admission in Innocent Spouse Cases of Relevant Evidence at Trial (Rather than Limited to Administrative Record) (General Explanations starting at p. 190, here.)

4. Proposals to Deal with Listed Transactions: (i) extension of the statute of limitations from 3 to 6 years;  and (ii) in intermediary transactions, impose federal secondary liability on the shareholders of  the corporation avoiding payment of tax in intermediary transactions. (General Explanations starting at p. 196, here.)
 
5. Impose Affirmative Requirement to Disclose A Position Contrary to a Regulation. (General Explanations starting at p. 199, here.)

 

6. Extend Statute of Limitations for Tax Assessments Involving Omitted Income of $100 million. (General Explanations starting at p. 201, here.) (JAT Note: Of course, as the General Explanations note, other provisions of the current Code might impose a 6-year or extended period for omissions of gross income.)
 
7. New Penalties and Regulation of Paid Return Preparers. (General Explanations starting at p. 206, here.)
 
8. Make repeated Willful Failure to File a 5-Year Felony. (General Explanations starting at p. 211, here.) The increased criminal penalty would apply to “any person who willfully fails to file timely required tax returns in any three years within a consecutive five-year period, where the aggregate tax underpayment for such five-year period is more than $250,000.”  (JAT Note: TIGTA made a related proposal for a 2-year felony, see TIGTA Recommendation for Legislation Consideration to Make Failure to File a 2-Year Felony (Federal Tax Crimes Blog 3/9/23), here.)

9. Provisions for Certain Expatriates: (i) extended statute of limitations if return is filed without a required Form 8854, Initial and Annual  Expatriation Statement, (ii) authority to IRS to provide relief for “a narrow class of lower-income dual citizens with limited U.S. ties;” and (iii) eliminating the requirement for a “sailing permit.” (General Explanations starting at p. 213, here.)
 
10. Provide for Information Reporting by Certain Financial Institutions and Digital Asset Brokers for Purposes of Treaty Exchange of Information Requirements. (General Explanations starting at p. 224, here.)
 
11. Require Reporting of Foreign Digital Asset Accounts. (General Explanations starting at p. 227, here.)