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Fifth Circuit Rejects Substantial Authority Defense to Penalties
By McDermott Will & Emery on May 23, 2016
Posted In Appellate Courts, Uncategorized
Prudent taxpayers analyze the relevant tax law while structuring and implementing transactions. The most obvious reason to do so is to ensure that the taxpayer’s proposed tax treatment is accepted by the Internal Revenue Service (IRS). Another reason is to ensure that, if such treatment is not accepted, the taxpayer will not be subjected to...
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Auer Deference Debate Remains Unresolved
By McDermott Will & Emery on May 20, 2016
Posted In Appellate Courts, Trial Courts, Uncategorized
As we previously discussed, the issue of deference is a hot topic in the tax arena. Unfortunately, the Supreme Court of the United States recently passed on the opportunity to address the continuing validity of what is commonly known as Auer deference. This level of deference sometimes applies when an agency interprets its own regulations....
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Update on APA Challenges to Notice of Deficiency
By Jeffrey M. Glassman and McDermott Will & Emery on Apr 21, 2016
Posted In Appellate Courts, Court Procedure Matters, Uncategorized
In an earlier blog post, we discussed the US Tax Court’s ruling in QinetiQ U.S. Holdings, Inc. v. Commissioner, No. 14122-13 (Dec. 27, 2013). The taxpayer had argued that the Internal Revenue Service’s (IRS’) notice of deficiency containing a one-sentence reason for the deficiency determination violated the Administrative Procedure Act (APA) because it was “arbitrary,...
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Update on Deference to IRS Positions
By Jonathan D. Lockhart, Jeffrey M. Glassman and McDermott Will & Emery on Apr 20, 2016
Posted In Court Procedure Matters, IRS Guidance, Trial Courts, Uncategorized
As we discussed here, and in our recent article in The Federal Lawyer, deference to Internal Revenue Service (IRS) pronouncement is an important issue for taxpayers and their advisors. Our prior writings dealt generally with the three levels of deference in tax cases and how they have been applied by the courts. A recent Tax...
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Supreme Court Denies Review in Highly Contested Foreign Tax Credit Case
By Damon M. Lyon and McDermott Will & Emery on Apr 19, 2016
Posted In Appellate Courts, Tax Refunds, Trial Courts, Uncategorized
On April 18, 2016, the Supreme Court denied certiorari in the foreign tax credit dispute involving Albemarle Corp. We have previously written about the case here, here, and here, which involved the timeliness of claims for refund pursuant to Internal Revenue Code (IRC) section 6511(d)(3)(A)’s 10-year limitations period. Generally, a taxpayer must file a claim...
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Death of the CAP Program?
By Kevin Spencer and McDermott Will & Emery on Apr 13, 2016
Posted In IRS Audits, IRS Guidance, Uncategorized
According to participants in a recent webcast, the Internal Revenue Service’s (IRS) Large Business & International Division (LB&I) is no longer accepting applicants for its Compliance Assurance Process (CAP) program. CAP is a real-time audit program that seeks to resolve the tax treatment of all or most return issues before the tax return is filed. ...
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Ax v. Commissioner: The Tax Court Reaffirms that It Is Not Subject to the APA
By Jeffrey M. Glassman and McDermott Will & Emery on Apr 12, 2016
Posted In Appellate Courts, Court Procedure Matters, Trial Courts, Uncategorized
On April 11, 2016, the US Tax Court issued its T.C. opinion in Ax v. Commissioner. The notice of deficiency in the case determined that certain premium payments made to a captive insurance company were not established by the taxpayer to be (1) insurance expenses and (2) paid. But this is not a run of...
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IRS Release IPU Materials on Transfer Pricing
By McDermott Will & Emery on Apr 11, 2016
Posted In IRS Audits, IRS Guidance, Transfer Pricing Resource, Uncategorized
As we noted in our initial post, the Internal Revenue Service (IRS) began publishing job aids and training materials developed by its International Practice Units (IPUs). On April 6, 2016, the IRS released another IPU on section 482, available here. The most recent IPU covers the three requirements under section 482: (1) two or more...
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Release of “Panama Papers” May Encourage New Wave of OVDP Submissions
By Daniel J. Bell, Jonathan D. Lockhart, Leigh-Alexandra Basha and McDermott Will & Emery on Apr 8, 2016
Posted In IRS Audits, IRS Guidance, Uncategorized
On April 3, 2016, the International Consortium of Investigative Journalists (ICIJ) indicated that it acquired sensitive documents that belonged to the Panamanian law firm, Mossack Fonseca & Co., about the offshore holdings of some of the world’s most prominent and wealthy individuals. The leak has received substantial mainstream media coverage due to the identity of...
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IRS Requires “Whole Story” from Taxpayers Seeking to Qualify under Streamlined Filing Compliance Procedures
By Jonathan D. Lockhart and McDermott Will & Emery on Apr 7, 2016
Posted In IRS Audits, IRS Guidance, Uncategorized
The Internal Revenue Service (IRS) recently modified the non-willfulness certification form that individual taxpayers must submit to enroll in the streamlined filing compliance procedures (SFCP). One requirement under the SFCP is that that the taxpayer certify that his or her failure to disclose foreign assets was not due to willful conduct. Before the recent change,...
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