Wednesday, May 26, 2004

The Tax Court in Durham v. Commissioner, T.C. Memo. 2004-125, has rejected a taxpayer’s equal protection challenge to Congress’s limitation of the expanded power to abate interest under Section 6404(e) to tax years beginning after the date of enactment (July 30, 1996). The court concluded:

One obvious rational basis for new section 6404(e)’s effective date is simple administrative convenience. In enacting new section 6404(e), Congress needed to define the situations that would and would not be subject to its provisions. Taking into account that income taxes are levied on an annual basis, it was rational for Congress to restrict the amendment’s application by tax year, limited to liabilities for tax years beginning after the date of enactment and so giving the IRS some time to adjust its own administrative routine at a lower cost to the Government. Considerations of administrative convenience have long been recognized as a valid reason for legislative line drawing. We need not, indeed we must not, engage in judicial second-guessing of such a legislative decision.