CAVEAT: MY LAST YEAR TEACHING TAX PROCEDURE AT UH LAW SCHOOL WAS FALL 2015. I AM LEAVING THIS PAGE UP ONLY BECAUSE SOME STUDENTS CURRENTLY TAKING OR CONSIDERING TAKING A TAX PROCEDURE COURSE MIGHT BE INTERESTED.
IMPORTANT NOTE TO STUDENTS -- SEE THE KEY MATERIALS IN THE ROW FOR THE EXAM BELOW (INCLUDING STUDENT QUESTIONS AND ANSWERS.
Unit 1
8/13 |
Introduction to Class
Ch. 1 Purpose and Scope Ch. 2 Organization and Structure of the Federal Revenue Function Ch. 3 Taxpayer Access to Information – FOIA and the Privacy Act Ch. 4 Confidentiality and Disclosure of Tax Return Information |
Unit 2
9/3 |
Ch. 5 Returns
Ch. 6 Statutes of Limitation through page 150 (End just before Ch. 6.IV Overpayments) Case Assignments: – Badaracco –Bartlett, Bloom, Cox, Disevo & Frick Williams v. Commissioner – |
Unit 3
9/10 |
Ch. 6 Statutes of Limitations full Chapter (Did not reach this
chapter last week)
Ch. 7 Interest Case Assignments Brockamp – Hiran, Hussain, Mukoro, Mundt & White Estate of Branson – Bartlett, Bloom, Cox, Disevo & Frick |
Unit 4
9/17 |
Ch. 8 Penalties (from beginning to p. 323 ending just
before I. International Evidence Gathering)
Case Assignments: Addington – Frick, Bartlett, Hussain Boyle – Bloom, Hiran, Cox Strebert – |
Unit 5
9/24 |
Ch. 9 The Examination Function
Case Assignments: Powell – Cox, Hussain Gertner – Frick, Bloom, Frederick – |
Unit 6
10/1 |
Ch. 9 The Examination Function (cover any carryover
matters)
Ch. 10. Appeals Ch. 11 Notice of Deficiency Additional Assignment: Are Appeals Officers Equipped and Trained to Assess Accurately the Litigating Hazards of a Case? (9/25/15), here. |
Unit 7
10/8 |
Ch. 12 Litigation
Additional Required Reading for 12.III.D. Injunctions in Tax Litigation, beginning on p. 424: “When Is A Tax Not a Tax?” (Tax Procedure Blog 8/2/12), here. |
Unit 8
10/15 |
Ch. 13 Assessment Procedures & Ch. 14 Collection Procedures
(to p. 465 – XIV Outsourcing the Collection Function)
Drye – Frick, Husain Rodgers – Cox, Hiran, Bloom Williams – Mukoro, Mundt MISSING GRAPHIC FROM P. 424 OF STUDENT EDITION IS HERE |
Unit 9
10/22 |
Ch. 14 Collection Procedures (from p. 465 – XII.
Outsourcing the Collection Function to End of Chapter)
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Unit 10
10/29 |
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Unit 11
11/5 |
Ch. 15 Partnership and S Corporation Audit and Litigation Procedures
Ch. 16 Overpayments |
Unit 12
11/12 |
Read Principal Life Insurance Company v. United States, 95 Fed. Cl. 786 (2010), which is in the materials and may be viewed online here. I have a blog on the case titled Principal Life — A Masterpiece of Tax Procedure (11/29/13), here. In some ways, this is an esoteric case, but it pulls together certain key concepts, including the ubiquitous Section 6213(a), the so called prohibition on assessment that has been a standard theme in the class. I encourage each student to work their way through this gem of a decision. This is a specific assignment and therefore may be a subject for the examination. Provided enough students read, we can usefully cover the whole class.
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Unit 13
11/19 |
Ch. 18 Trends in Enforcement Efforts
Ch. 19 Ethics, Malpractice and Tax Procedure Total text pages – 9 (but see extra reading materials) Read the two articles in the class materials file — All Students. David M. Richardson, Audit Avoidance via Intent Modification — Is Fred Corneel onto Something … or Not, 2001 TNT 131-93 (2001)(on SSRN here). Fred Corneel, Audit Avoidance: A Response to David Richardson, 2001 TNT 131-91 John A. Townsend, Audit Avoidance as Tax Crimes Issue (11/20/09), here. Sarah Q. Wirskye, Ethical and Strategic Issues Unique to Tax Cases, 38 Champion 26 (2014), here. Review for Examination (about 1 hour); Review Table of Contents [TO COME] and note the portions marked for Exclusion Review the few Federal Tax Procedure Blog entries that I have marked for the class under the tag UH TPC 2015, [TO COME] Student Evaluation period is open until 12/3 - Please evaluate your professors (including me). Table of Contents - Inclusions and Exclusions for Examination, here. Optional Class function after class this evening. CANCELLED! To the class, I have had to cancel this event. I am having a medical procedure on Thursday before the class. The doctor's staff is discouraging anything after the procedure. But, I will try to make it to the class and expect to the cover the assignments. Anything beyond that is likely to be too ambitious. Sorry for the cancellation. Maybe sometime when Irene and I are in Houston next semester, we will attempt it again. See you Thursday for class (I will be there but given the timing of events, I may be a bit late; please stay because I do want to cover the assignments and go over the scope of the examination). |
Unit 14
No Class |
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12/___
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Tax Procedure Exam
The instructions for the Exam are as follows (so that you will have read them before appearing for the Examination): Instructions: 1. Resource Materials: Students may use only the following in the examination: (i) the text book, (ii) the Code, and (iii) the student's personal notes. 2. A computer may be used to access the Resource Materials described in paragraph 1 and to type the answers to the examination. You may use MS Word (or a Word substitute such as Open Document that saves in Word format), Word Perfect or a text file to type the exam answers. 3. For all examinations received in written format, I will have my assistant type the examination into word processor format for grading so that good or bad handwriting will not affect the grade. It is important that you write legibly so that my assistant can type your answers accurately. 4. The examination is two hours. Qualifying foreign students will be allowed up to 3 hours. 5. Please read the facts and the questions carefully. Then, think your answer through. I recommend that you outline your answer on a separate sheet of paper or in a separate word processor file before you start answering. Succinct, focused correct answers are valued over long, unfocused correct answers. A succinct answer (e.g., a yes or no or a date) can be explained as appropriate. 6. Questions may be framed as asking for advice that you will provide orally to a client. Advise the client in plain, succinct answers. Since you would not normally cite Code sections to a client, conclude your answer with a short “Note to File” citing the Code sections. 7. Please letter/number your answers using the same letter/number used in the question. 8. Please put your examination ID number and an indication of LL.M. or J.D. Blue books should have that information on the cover of each blue book (e.g., 727 LLM). Word processor files should have that same information at the top of the first page and the word processor file should be named with that information (e.g. 727LLM.doc or 7032JD.doc). DO NOT PUT YOUR NAME ANYWHERE IN THE BLUE BOOK OR COMPUTER FILE. 9. The percentages at the beginning of each paragraph number are guides as to the relative weight for the examination answers. 10. For the questions, I use a convention that starts with the year 01. That is not the same as 2001. It is the first year under consideration, with later years (after 01) named 02, 03, etc. 11. Where IRS forms are mentioned and may be helpful, I attach the forms to the examination and indicate that they are attached when I refer to them. Any forms not attached are not helpful to your answer. STUDENT QUESTIONS AND JAT ANSWERS: QUESTIONS ON 12/14 Theses question 1-4 were asked by a student and were related to the Principal Life case. 1. How do you calculate the earliest date the IRS may assess tax liability. ANSWER TO QUESTION ONE. Section 6213(a) provides in relevant part that the IRS may not (generally and here we are talking generally) assess "until such notice [of deficiency] has been mailed to the taxpayer, nor until the expiration of such 90-day * * * period, * * * nor, if a petition has been filed with the Tax Court, until the decision of the Tax Court has become final." So, with no more facts, the IRS must first issue a notice of deficiency and then may assess: (1) if no Tax Court petition is filed, 90 days after the notice is issued or (2) if a Tax Court petition is filed, after the Tax Court decision has become final. The timing of the finality of the Tax Court decision is determined under § 7481, with the caveat the assessment before finality may be earlier under § 7485. That is the general rule. Critical exceptions to § 6213(a)'s general rule are set forth in § 6213(b) to permit earlier assessment. If you get a question asking for the earliest date for assessment, it might be worth looking through the exceptions in § 6213(b). For example, Principal Life discusses the possible application of § 6213(b)(4) which permits immediate assessment of an "amount paid as a tax." What does that mean? The Principal Life decision provides its answer to that is a somewhat complex fact pattern. Read Principal Life; you might also review the blog entry I link above on Principal Life. 2. How do you calculate the latest date the IRS may assess Tax liability. ANSWER TO QUESTION TWO: The assessment must be made within the assessment statute of limitations. Section 6501(a) provides that the limitations period is generally 3 years from the date the return is filed. The other subsections of 6501 provide rules as to how the statute may apply in particular situations. If you get the question, you should first make sure you understand the relevant facts. Sometimes the question may offer irrelevant facts, but it is important that you consider only the relevant facts. Then you might look at the balance of § 6501 to see if there are relevant facts that require an answer different from 3 years from the date of filing the return. For example, § 6501(e) provides a 6-year statute in certain cases. A key to application of the 3 year statute or a 6-year statute is that § 6213(a) requires that, before assessment, the IRS is prohibited from assessing the tax under the rules noted in answering question 1 above. Section 6503(a) suspends the statute of limitations for assessment when the IRS issues a notice of deficiency. For example, assume an individual taxpayer whose year 01 return is due 4/15/02 files the year 01 return on 4/15/02. The IRS would have until 4/15/05 to assess. If the IRS issues a notice of deficiency on 4/1/05, the assessment statute is suspended when there is still 14 days left on the assessment statute. Section 6503(a) says that the statute is suspended during the time the IRS is prohibited from assessing under § 6213(a) (see those rules in the answer to 1 above) plus 60 days. You thus calculate how long the IRS is prohibited from assessing, add the 60 days commanded by § 6503(a), and add the 14 days when the suspension commenced upon issuance of the notice of deficiency. To continue the example, say that the taxpayer does not file a petition with the Tax Court in response to the notice of deficiency, the IRS will have in the example the sum of the following from the date of the 90 day letter -- 5/1/05: a. The 90 period during which the IRS is prohibited from assessing. This period ends 6/30/05. b. PLUS, the additional 60 day period allowed by § 6503(a). Adding this period moves the end until 8/29;/05. c. PLUS, the remaining period on the statute when the notice of deficiency was issued. Adding this period, the period moves to 9/12/05. So, the last day the IRS May assess in this example is 9/12/01. I won't expect you to determine the precise date unless you are good with calculating dates or have a calendar. But I will expect you to know the formula which is: a. The 90 day period the IRS is prohibited from assessing. b. PLUS 60 days. c. PLUS the days remaining on the statute when the notice was issued. Additional considerations are required if the taxpayer files a Tax Court petition. Then, in order to calculate under paragraph 1 of the formula, you must consider that the prohibition on assessment continues through the date the Tax Court decision becomes final. Remember that this calculation looks only to § 7481 and when finality is determined under that section, then the additions of 60 days and the time remaining on the statute when the notice was issued must be factored in to determine the last date the IRS could assess. (In this regard, § 7485 might permit an earlier date for assessment than finality of the Tax Court decision, but that is not the question being answered here.) The formula thus is: a. The date of finality (determined as indicated) b. PLUS 60 days. c. PLUS 14 days. The precise dates here cannot be calculated without knowing the date of finality, but that is the formula. Keep in mind that the only differences in the formula is element a. Elements b and c are the same. 3. How do you determine if the tax deficiency is subject to any special rate of interest. ANSWER TO QUESTION 3. The rate of underpayment / deficiency interest is determined in §§ 6601 and 6621. Section 6621(a)(2) provides a rate of the Federal short-term rate plus 3 %. The interest rate applies from the due date of the return. § 6601(a). The key exception for this class is § 6621(c)'s "Increase in underpayment rate for large corporate underpayment." Read the statute to determine when it applies and how much the interest rate increase is. The large corporate underpayment rate increase applies from the earlier of (1) the first letter of proposed deficiency (often called the 30-day letter) or (2) the notice of deficiency. § 6621(c)(2)(A). 4. How do you determine if the taxpayer is entitled to overpayment interest. The overpayment interest rate applies if the tax overpays. That is the answer to the question asked. The question not asked but which I answer anyway is the amount of the overpayment interest. Generally, the overpayment interest rate is the same as the underpayment interest rate. However, for certain corporate overpayments, the rate is reduced to either 2% (the GAAT rate) or .5% (the large corporate overpayment rete). |
