Our recent post on potential changes to the Tax Court’s procedure rules has been republished in the Corporate Tax Newsletter – USA by The International Law Office. See here for the article.
In a press release this morning, President Trump announced his intent to nominate Emin Toro to serve as a judge on the United States Tax Court (Tax Court). This is the latest in a wave of nominations to high-level tax positions within the government, as we have previously covered here and here.
Mr. Toro is currently a partner in the Washington, DC, office of Covington & Burling LLP. His practice focuses on the needs of multinational companies, including both tax controversies and counseling. Mr. Toro’s experience includes audits, administrative appeals, litigation and transfer pricing matters. He received his JD from the University of North Carolina School of Law in 2000 and clerked for the Honorable Karen LeCraft Henderson, US Court of Appeals for the District of Columbia (2000–2001) and the Honorable Clarence Thomas, US Supreme Court (2002–2003).
Tax controversy practitioners are undoubtedly aware of the gradual movement over the years to conform certain Tax Court procedure rules (Tax Court Rules) to those of the Federal Rules of Civil Procedure. In many ways, this makes sense to ensure uniformity of tax cases regardless of whether a taxpayer litigates his tax dispute in a refund forum in the US District Court or the US Court of Federal Claims, or prior to payment of tax in the Tax Court. Below we note a few important areas of divergence between the different rules, and point out situations where the Tax Court Rules do not address a particular matter. These matters were discussed at the recent Tax Court Judicial Conference held in Chicago last week.
As we have discussed before, amicus briefs are not uncommon in other courts. However, the Tax Court does not have specific rules on the topic and, instead, permits each judge to decide a case-by-case basis whether to permit the filing of an amicus brief. Although the Tax Court has discussed standards for filing amicus briefs in unpublished orders, given the nationwide importance of many issues that arise in Tax Court litigation, it may be time for the court to issue specific rules addressing the issue. Continue Reading Are Changes Looming over the Tax Court’s Procedure Rules?
We have all heard the famous quote about doing the same thing over and over again and expecting different results. The Court of Appeals for the Fifth Circuit applied this concept in its March 8 opinion in Annamalai v. Comm’r, No. 17-60255. There, the issue was whether the taxpayers could extend into perpetuity the 90-day deadline to file an appeal by filing successive motions to vacate a Tax Court decision. Under the facts presented, the answer was no.
Taxpayers have 90 days after a decision of the Tax Court to file an appeal. If a party makes a timely motion to vacate or revise the Tax Court’s decision, the 90 days runs from the later of either entry of the order disposing the motion or entry of a new decision.
In Annamalai, the taxpayers filed successive motions to vacate a Tax Court decision. After the Tax Court entered a final decision in favor of the government, the taxpayers unsuccessfully moved to vacate the decision. Rather than filing a notice of appeal within 90 days after the denial, the taxpayers filed another motion to vacate that did not raise any substantially new grounds or arguments. After the Tax Court denied the second motion, the taxpayers filed the notice of appeal. The notice of appeal was filed 117 days after the ruling on the first motion and 83 days after the ruling on the second motion.
The Fifth Circuit dismissed the taxpayers’ appeal, which it noted involved a jurisdictional issue of first impression. The court agreed with the general principle that tolling motions may not be tacked together to perpetuate the prescribed time for appeal. As such, the 90-day period ran from the ruling on the first motion, and the appeal was thereby untimely and dismissed.
The Fifth Circuit declined to address the issue of whether a second motion to vacate on substantially different grounds and new arguments would be acceptable. The court noted that it is acceptable in the civil context, suggesting it may be permitted.
Practice Point: Absent intervening events such as new case law directly on point, motions to vacate or reconsider are rarely granted in tax cases. Indeed, filing a motion to vacate or reconsider may provide an opportunity for the court to bolster its prior opinion and lessen the chances of success on appeal. In a situation where a motion to vacate or reconsider is pursued, taxpayers should take care to ensure that all arguments supporting such a motion are properly placed before the court and that an appeal is filed within the statutory-prescribed period if the motion is denied.
Robin Greenhouse and Kevin Spencer recently authored, “US District Court To French Tax Authorities: Pas De Probleme” for Law360. The article discusses a case involving IRS summons and taxpayers’ rights in context of the US-France Treaty.
Read the full coverage on Law360.
In late 2017, we provided a brief overview of statutes of limitation in the international tax context. At that time, we noted a forthcoming article on the subject. We are pleased to report that our expanded article on the subject has been published in the January-February 2018 edition of the International Tax Journal. The full article can be viewed here.
Wrapping Up February – and Looking Forward to March
Top February Tax Controversy 360 Blog Posts
Upcoming Tax Controversy Activities in March
Our lawyers appear are making the following Tax Controversy speeches in March:
March 15, 2018: Mary Kay Martire will be speaking at Tax in the City® in McDermott’s Chicago office about the upcoming oral argument before the US Supreme Court in the case challenging the Quill physical presence requirement for sales tax nexus.
The White House announced on March 2 that the president intends to nominate Michael J. Desmond, a prominent tax lawyer, to be the Chief Counsel for the Internal Revenue Service (IRS) and Assistant General Counsel in the Department of Treasury. Subject to approval by the Senate, Mr. Desmond’s new roles will entail providing legal guidance and interpretive advice to taxpayers, the IRS, and the Department of Treasury.
Mr. Desmond clerked for Judge Ronald S.W. Lew of the United States District Court from 1994 until 1995. Mr. Desmond went on to serve as a trial attorney for the Department of Justice Tax Division and as tax legislative counsel for the Department of Treasury’s Office of Tax Policy. After leaving the public sector, Mr. Desmond became a partner with Bingham McCutchen LLP in the Washington, DC office until he opened the Law Offices of Michael J. Desmond in 2012. While operating his own practice, Mr. Desmond has represented clients at every stage of the tax controversy process. He has been a frequent author and speaker on tax topics. More information about Mr. Desmond can be found at his firm’s website.
Mr. Desmond is a very well-known and respected tax practitioner. He is a fixture in the tax community. We congratulate him on his nomination.
If you have traded Bitcoin or other crypto-currencies, you probably know that their taxation may be as uncertain as your potential for reward or loss. Since 2014, the Internal Revenue Service (IRS) has publicized how it believes these investments should be treated for US federal income tax purposes. If you have failed to report your virtual currency transaction, the result in Coinbase, a recent IRS “John Doe” summons enforcement case, should convince you that it is time to ensure you are compliant with tax laws. The IRS may be coming for your Bitcoins!
IRS Guidance – Bitcoins Are Property
In IRS Notice 2014-21, 2014-16 IRB 938, the IRS explained that so-called “virtual currencies” that can be exchanged for traditional currency are “property” for federal income tax purposes. As such, a taxpayer must report gain or loss on its sale or exchange, measured against the taxpayer’s cost to purchase the virtual currency. In the notice, the IRS also made clear that “virtual currencies” are not currency for Internal Revenue Code (IRC) section 988 purposes. Continue Reading The IRS May Be Coming for Your Bitcoins
On February 26, 2018, the US Tax Court announced that Judge Maurice B. Foley has been elected Chief Judge to serve a two-year term beginning June 1, 2018. Judge Foley will replace Chief Judge Paige Marvel.
Judge Foley was appointed to the US Tax Court by President Clinton on April 9, 1995. He was reappointed by President Obama on November 25, 2011, for a second term ending November 24, 2026. He received a bachelor of arts degree from Swarthmore College, a JD from Boalt Hall School of Law at the University of California, Berkeley, and a master of laws in taxation from Georgetown University Law Center. Continue Reading New Chief Judge of US Tax Court