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A 360-Degree View: August & September 2018

by | Sep 11, 2018 |

Wrapping Up August – and Looking Forward to September

Top August Posts You Might Have Missed

Alta Wind: Federal Circuit Reverses Trial Court and Kicks Case Back to Answer Primary Issue

IRS Announces That CAP Will Continue

IRS Issues Long-Awaited Initial Guidance under Section 162(m)

 Upcoming Tax Controversy Activities in September

Our lawyers will present on key tax topics during the month of September. We hope to see you.

September 12, 2018: Elizabeth Chao, Britt Haxton, Kristen Hazel, Sandra McGill, Nina Siewert and Diann Smith are presenting on various state and local, US and international tax topics at the Tax in the City® event in Seattle, WA, including a presentation about Post-Wayfair. Please click here to register.

September 19, 2018: Linda Doyle, Kristen Hazel, Becky Martin and Jane May are presenting “Anatomy of a Whistleblower Case” at the inaugural Dallas Tax in the City® event in Dallas, TX. Please click here to register.

September 19, 2018: Laura Gavioli, Kristen Hazel, Alysse McLoughlin, Denise Mudigere and Marty Pugh are presenting are presenting on various state and local, US and international tax topics, including a presentation about Partnership Audit Rules and a presentation about Post-Wayfair, at the inaugural Dallas Tax in the City® event in Dallas, TX. Please click here to register.

September 19, 2018:  Steve Kranz and Eric Carstens are speaking at the Tax Executives Institute Seattle Chapter Meeting regarding the South Dakota v. Wayfair Supreme Court decision in Seattle, WA.

September 20, 2018: Mary Kay Martire is presenting “Audits and Beyond—Tips, Traps, and War Stories” at the Taxpayers’ Federation of Illinois’ Annual Conference in Rolling Meadows, IL.

September 20, 2018: Catherine Battin is presenting “So Wayfair Happened—What’s Next?” at the Taxpayers’ Federation of Illinois’ Annual Conference in Rolling Meadows, IL.

September 24, 2018: Tom Jones is presenting “Tax Law Developments Affecting Middle Market Captives” at the Self Insurance Institute of America in Austin, TX.

September 27, 2018: Andrew Roberson, Mark Thomas and Todd Welty are presenting on “Common Issues in Trusts and Estate Tax Controversies” at McDermott’s 2018 Trusts and Estates Controversy Forum in Chicago, IL.



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Tax Court Judicial Conference This Week in Chicago

by | Mar 26, 2018 |

The Tax Court’s 2018 Judicial Conference starts tomorrow morning on the campus of Northwestern University’s Pritzker School of Law. For prior coverage, see here. The many panels taking place tomorrow and Wednesday include:

  • Mediation in the Tax Court
  • Discovery and Stipulations Process
  • Litigating Individual Cases
  • Large Case Litigation
  • Whistleblower Jurisdiction
  • A Trip Through the Tax Court’s Exotic Jurisdictions
  • Ethical Issues in Representing Clients
  • The Future of Tax Court Practice and Litigation

I will be participating on the Discovery and Stipulations Process panel along with Tax Court Judges Kathleen Kerrigan and Joseph Goeke, Peter Reilley (Special Counsel IRS), and Jenny Johnson Ware (Johnson Moore).



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How Do You Interpret Terms Used in Statutes?

by | Feb 26, 2018 | ,

Statutes in the Internal Revenue Code (Code), like statutes in other areas of the law, are filled with terms that invite differing interpretations. As a general rule, a statutory term should be given its normal and customary meaning. This might entail resorting to common dictionary definitions from Webster’s or Black’s Law Dictionary. It might also entail looking to the established meaning of the term in the relevant industry. But what if the Code provides a specific definition of a term that varies from the ordinary meaning?

In Digital Realty Trust, Inc. v. Somers, S.Ct. No. 16-1276 (Feb. 21, 2018), the parties disputed the meaning of the term “whistleblower” as set forth in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The statute at issue specifically defined the term “whistleblower” to mean “any individual who provides … information relating to a violation of the securities laws to the [Securities and Exchange] Commission.” The question before the Court was whether the statute extended to an individual who had not reported a violation of the laws to the Commission fell within the definition of a whistleblower.

The Court answered the question in the negative: “‘When a statute includes an explicit definition, we must follow that definition,’ even if it varies from a term’s ordinary meaning. Burgess v. United States, 553 U.S. 124, 130 (2008) (internal quotation marks omitted).” Thus, because the specific definition of “whistleblower” in the relevant statute required providing information to the Commission, an individual who did not do so failed to meet the definitional requirements of the statute.

Practice Point: Taxpayers and their advisors must constantly review and interpret provisions of the Code, including the meaning of specific terms used by Congress. The Supreme Court’s holding in Digital Realty Trust confirms that if a specific definition is provided then it must be followed even if that definition is contrary to the normal and customary meaning or the established meaning in the relevant industry.



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When Can a Taxpayer Dismiss a Tax Court Case as Moot?

by and | Oct 13, 2017 | , ,

Faced with the prospect of potential tax liability after an unsuccessful audit, taxpayers are faced with the options of filing a petition in the US Tax Court (Tax Court) prior to paying the liability or paying the liability, making a claim for refund, and (if denied or more than six months have passed) suing the government for a refund in local district court or the Court of Federal Claims. For taxpayers that select the Tax Court route, sometimes a question later arises as to whether they can seek to dismiss their case in order to refile in a different forum. The problem that arises is that Internal Revenue Code (Code) Section 7459(d) provides that if a Tax Court petition in a deficiency proceeding is dismissed (other than for lack of jurisdiction), the dismissal is considered as a decision that the deficiency is the amount determined by the Internal Revenue Service (IRS).

Taxpayers have attempted to avoid this rule in the past, presumably so that they could refile a lawsuit in another forum either because they believe that forum would be more favorable or because they desire a jury trial (Tax Court cases are bench trial; no juries are allowed). More than 40 years ago, the Tax Court rejected this tactic in Estate of Ming v. Commissioner, 62 TC 519 (1974),  holding that under Code Section 7459(d), a taxpayer who petitions the court for a redetermination of a deficiency may not withdraw a petition to avoid the entry of decision. Specifically, the court held: “It is now a settled principle that a taxpayer may not unilaterally oust the Tax Court from jurisdiction which, once invoked, remains unimpaired until it decides the controversy.” Since Ming, the Tax Court has distinguished its holding in collection due process cases which involve the review of the IRS’s collection action, not the redetermination of a tax deficiency. See Wagner v. Commissioner, 118 TC 330 (2002). The Tax Court has further extended Wagner to non-deficiency cases involving whistleblower claims under Code Section 7623(b)(4) and stand-alone innocent spouse cases under Code Section 6015(e)(1). See Jacobson v. Commissioner, 148 TC No. 4 (Feb. 8, 2017); Davidson v. Commissioner, 144 TC 273 (2015). (more…)



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A 360-Degree View: September and October 2017

by | Oct 5, 2017 |

Wrapping Up September – and Looking Forward to October

Upcoming Tax Controversy Activities in October:

October 12, 2017: Cate Battin, Kristen Hazel, Britt Haxton, Jane May, Sandra McGill, Diann Smith and Elizabeth Chao are hosting and presenting at the inaugural Tax in the City® event in Seattle, Washington. They will cover topics such as attorney-client privilege and the ethics of social media (CLE/CPE), recent developments around US Tax Reform, and updates on state and local tax issues for Seattle and the surrounding areas.

 October 25, 2017: Todd Welty and Lowell Yoder are speaking at the TEI 72nd Annual Conference in Toronto, Ontario, and will present “Repatriation: Strategy, Practice and the Road Ahead.”

November 2, 2017: Laura Gavioli, Kristen Hazel, Michael Louis, Cym Lowell, Damon Lyon, Denise Mudigere, Dave Noren, Kristina Novak, Andrew Roberson, Jay Singer, Mark Thomas and Michael Wilder are speaking at the TEI Global Tax Symposium in Houston, Texas, and covering the following topics: Multilateral Instruments & European Developments, Country by Country Reporting, Repatriation Strategies and the IRS Repatriation Campaign, Disclosures for Global Tax Strategies, and Treasury Center/Currency Issues. (more…)



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Motion Practice – Moving for Summary Adjudication

by | Sep 6, 2017 | , ,

Summary judgment is a common practice in all courts, including courts hearing tax disputes. Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Full or partial summary judgment is appropriate where there is no genuine issue of material fact and a decision may be rendered as a matter of law on the issue presented. Summary judgment can be obtained by a party upon the filing of a motion if the pleadings and other evidence in the record, including any affidavits or declarations in support of or against the motion, demonstrate that no factual dispute exists. Each court has its own particular rules on motions for summary judgment, but all are grounded on the essential requirement that the pertinent facts not be in dispute. The party moving for summary judgment bears the burden of showing that no genuine issues exists as to any material fact and that it is entitled to judgment as a matter of law, with all factual materials and inferences drawn from them considered in the light most favorable to the nonmoving party. To defeat a motion for summary judgment, the nonmoving party must do more than merely allege or deny facts; it must set forth specific facts showing a genuine dispute for trial. Thus, facts that are not properly supported or that are irrelevant or unnecessary will not be counted.

The decision of whether to file a motion for summary judgment must be carefully made. In some cases the decision may be fairly straightforward because both sides agree on the pertinent facts and the issue is purely legal. However, in other cases, the factual record may not be as clear and the parties may differ on which facts are material and which properly remain in dispute. Further, a motion for summary judgment by one party may result in a cross-motion for summary judgment by the other party. Thus, the party initially moving for summary judgment needs to be confident that it will not need additional facts or supporting information from witnesses before seeking summary adjudication. (more…)



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A 360-Degree View: July and August 2017

by and | Aug 4, 2017 | , , , ,

Wrapping up July—and Looking Forward to August

Tax Controversy Activities in August:

August 7, 2017: Elizabeth Erickson and Kristen Hazel will be representing McDermott Will & Emery at the 2017 US Captive Awards in Burlington, Vermont. McDermott has been shortlisted in the Law Firm category.

August 8, 2017: Tom Jones is presenting an update on Captive Insurance Tax in Burlington, Vermont, at the Vermont Captive Insurance Association Annual Conference “Mission: Possible”— the largest captive insurance conference in the US by number of paid attendees.

August 18, 2017: Todd Welty is speaking at the Texas Society of Certified Public Accountants Advanced Estate Planning Conference about:

  • Current developments in federal transfer taxes
  • Current state of federal tax reform
  • Proposed changes to state death tax laws and the impact of those changes on estate
  • Gift and trust planning
  • Consistent basis regulations
  • The state of valuation discounts
  • Recent rulings on defined value clauses and charitable gifts

August 23, 2017: Tom Jones is presenting an update on Annual Federal & State Tax at the North Carolina Captive Insurance Association Annual Conference in Charlotte, North Carolina.

Wrapping up July:

Our July 2017 blog posts are available on taxcontroversy360.com, or read each article by clicking on the titles below. To receive the latest on state and local tax news and commentary directly in your inbox as they are posted, click here to subscribe to our email list.

July 14, 2017: Tracking Tax Guidance and Court Cases

July 17, 2017: New IRS CbC Resource

July 18, 2017: Courts Rejects Challenge to OVDP Transition Rules

July 19, 2017: Tax Court Rejects IRS Reliance on “Cursory” Analysis in Revenue Ruling

July 21, 2017: John Doe Intervenes in Virtual Currency Summons Enforcement Case

July 24, 2017: BEWARE: Whistleblowers Can “Out” You to the IRS!

July 26, 2017: Virtual IRS Appeals – A New Frontier?

July 27, 2017: IRS Rules (Again) That Taxpayers Are Not Entitled to Claimed Refined Coal Credits

July 28, 2017: Tax Court Hands Eaton a Complete Victory on the Cancellation of its Advance Pricing Agreements

July 31, 2017: Senate Attempts to Repeal Chevron Deference



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Chief Special Trial Judge Panuthos to Step Down, Effective September 1, 2017

by | May 16, 2017 | ,

Last week, the US Tax Court (Tax Court) announced that Chief Special Trial Judge (STJ) Peter J. Panuthos has decided to step down as Chief STJ, effective September 1, 2017. STJ Lewis R. Carluzzo will take over as Chief STJ beginning September 1, 2017. STJ Panuthos has been Chief STJ for the past 25 years, and has a long list of accomplishments, including assisting in the expansion of pro bono services to unrepresented taxpayers. The Tax Court’s press release provides more background on STJs Panuthos and Carluzzo.

STJs are an important part of the Tax Court, and perform many different functions for the Court. The statutory authority for STJs is found in Internal Revenue Code (Code) Section 7443A(a), which authorizes the Chief Judge of the Tax Court to appoint STJs. Code Section 7442A(b) provides that the Chief Judge may assign a variety of proceedings to be heard by STJs, any declaratory judgment proceeding, any proceeding under Code Section 7463 (relating to small tax case procedures), any proceeding where the amount in dispute does not exceed $50,000, lien/levy proceedings, certain employment status proceedings, whistleblower proceedings and any other proceedings which the Chief Judge may designate. Although STJs may potentially hear a wide variety of matters, most cases conducted by STJs related to small tax proceedings where the amount in dispute is less than $50,000. These cases are conducted as informally as possible and the rules of evidence are relaxed; however, the trade-off is that these types of cases are not appealable by either party and may not be treated as precedent for any other case (although there is no prohibition against citing such cases for their persuasive value). For more information on the statutory and Tax Court rules on STJs, see here.



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Court Procedure and Privilege – A Year in Review

by | Jan 3, 2017 | ,

This past year has seen a number of important developments in the areas of Tax Court procedure, federal court procedure, and privilege and non-disclosure. As the below cases and posts demonstrate, taxpayers’ reliance on experts, their efforts to protect privileged information, and their efforts to limit sweeping government discovery requests continue to be tested and closely scrutinized.

(more…)



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