Paul L. Caron
Dean
Pepperdine Caruso
School of Law
Tax Practice And Procedure
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Lesson From The Tax Court: The Finality Rule For §7430 Qualified Offers
When you litigate against the IRS you may win but not prevail. That is, even though §7430(a) promises that a “prevailing party” can recover costs and attorneys fees, it’s hard to be a "prevailing party" within the meaning of the statute. If the government's ultimately losing position was substantially justified at the relevant time, the…
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Lesson From The Tax Court: The Tax Liabilities You Leave Behind
We all know you can’t take it with you. But what happens to the “it” after you die? Ideally, you will have paid all your debts, and your Estate will distribute your “it” to the objects of your affection. The IRS will probably not be one of the objects of your affection. However, few of…
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Lesson From The Tax Court: The Proper Baseline For Offers In Compromise
Paying taxes can be painful. When money is tight and other needs are pressing, sending money to the federal government understandably sinks on the taxpayer’s priority list. But not the government’s! Congress wants to make sure that paying taxes remains at the top of every taxpayer’s priority list. That is why it gives the IRS…
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Lesson From The Tax Court: The Innocence Requirement In § 6015(c) Proportional Relief
Section 6015 allows taxpayers to obtain relief from an otherwise joint and several liability. The statute contains three related provisions allowing relief. Siblings. First is the eldest child, traditional innocent spouse relief. It was formerly in §6013(e) and is now found in §6055(b). Second is the quite middle child, a proportionate relief provision that basically…
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Lesson From The Tax Court: The Presumption Of Regularity
No, today’s lesson has nothing to do with your gastrointestinal system. But it does relate to what comes out of the bureaucratic process. The presumption of regularity affects a broad range of IRS work product, such as Notices of Deficiencies, Certificates of Assessments and, in today’s case, Penalty Approval forms. In Long Branch Land LLC…
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A Year Of Lessons From The Tax Court (2021)
Here is a chronological listing of all the Lessons From The Tax Court I posted in 2021, with links to, the Lesson, the primary case discussed and its author. I have also listed the primary Code sections mentioned or discussed in the Lesson. At the end of the chronological listing, you will find a table…
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Lesson From The Tax Court: Taxpayers Behaving Badly (2021)
This will be my last new post until January. I will be spending my days (except for Christmas Day) grading exams. Grades are due Monday, January 3th and then I resume teaching on January 11th, so you will likely see my next Lesson From The Tax Court on January 18th (the day after MLK holiday).…
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Lesson From The Tax Court: Taxpayer ‘Filed’ Return Even Though IRS Could Not Process It
Case law gets made when things go wrong. When things go right, a taxpayer will file a return, the IRS will process the return, and the taxpayer will receive any claimed overpayment as a refund. Today's lesson arises from a breakdown between filing and processing. It teaches us the difference between those concepts. In James…
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Lesson From The Tax Court: Who Is An IRS Employee’s Immediate Supervisor For §6751 Penalty Approval?
Today’s lesson involves yet more litigation over IRS compliance with the penalty approval process required by the formerly toothless §6751(b)(1). In Sand Investment Co., LLC, et al. v. Commissioner, 157 T.C. No. 11 (Nov. 23, 2021) (Judge Lauber), the Tax Court continues teaching us the scope and operation §6751(b), a series of lessons it started…
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Lesson From The Tax Court: How To Mess Up Your Checkbook IRA
The idea that freedom means control over your own destiny s arguably the most defining characteristic of American culture. It is most certainly the basis on which various companies promote “checkbook IRAs.” If you Google that term you will find a gaggle of companies urging people to take full control of their retirement funds, to…
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Lesson From The Tax Court: Not Every Decision Comes With An Opinion
Once a taxpayer petitions the Tax Court to contest a Notice of Deficiency (NOD), the Tax Court will issue a decision in the case. The taxpayer has no option to nonsuit the case like plaintiffs can do in state courts or in federal district courts. It’s what I call the Hotel California rule: the taxpayer…
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Lesson From The Tax Court: Whistleblower Died, But His Claim Survived
The IRS has long been authorized to award informants a fee for information. Informants unhappy with their awards, however, have not always had easy access to judicial review. That changed in 2006 when Congress modified §7623 to permit taxpayers to ask the Tax Court to review “any determination regarding an award.” §7623(b)(4). Tax Reform and…
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Lesson From The Tax Court: Of Distributive Shares And The CDP Mashup
Sometimes our biggest problems are self-created. In Taryn L. Dodd v. Commissioner, T.C. Memo. 2021-118 (Oct. 5, 2021) (Judge Lauber), the taxpayer was attempting to repudiate a tax liability she had self-reported but had not paid. Her multi-year slog through Collection Due Process (CDP) involved three trips to the Tax Court. Only in the third trip do…
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Classic Lesson From The Tax Court: Sex And Deductions
I was going to title this week’s blog “The Concept of Inherently Personal.” But I could not resist trying to put some clickbait in the title. Today I want to discuss two classic cases from Tax Court. They explore the never-ending balancing act needed to decide when an expense is deductible when it has both…
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Lesson From The Tax Court: The Many Rooms Of Tax Court Power
All federal courts (except the Supreme Court) are created by Congress. Congress defines the extent to which each federal court can invoke the power of the federal government to coerce the parties before them. The fancy legal term for that power is “jurisdiction.” Like all other federal courts, the Tax Court is a court of…