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Fourth Circuit Upholds Two-Year Innocent Spouse Limitation Period - Emil Estafanous, CPA : Emil Estafanous, CPA

Fourth Circuit Upholds Two-Year Innocent Spouse Limitation Period

The Fourth Circuit overturned a Tax Court preference and inspected a Treasury law that sets a two-year government of reduction on claims for trusting associate service (Jones, No. 10-1985 (4th Cir. 6/13/11)). This outlines a third time a Tax Court has been overruled on this emanate by a aloft court.

The taxpayer, Octavia Jones, was distant from her husband. After he defaulted on an installment agreement with a IRS to compensate a couple’s corner taxation guilt for a year 2000, a IRS began collection activities opposite a taxpayer. More than dual years later, she requested trusting associate service underneath Sec. 6015(f). Although it resolved that she would differently have been authorised for trusting associate service underneath a contribution of a case, a IRS denied her explain since it was barred by a two-year government of reduction contained in Regs. Sec. 6015-5(b)(1).

The Tax Court postulated a taxpayer’s petition for outline visualisation formed on a progressing preference that a law during emanate is shabby (Lantz, 132 T.C. 131 (2009)). In Lantz, a Tax Court hold that since Congress privately wanting any reduction duration from Sec. 6015(f), joined with a fact that that subsection provides service that can't be performed underneath Sec. 6015(b) or 6015(c), Congress dictated that a two-year reduction would not ask in tie with Sec. 6015(f). Accordingly, a Tax Court hold that Regs. Sec. 6015-5(b)(1) was invalid.

Lantz was subsequently overturned by a Seventh Circuit (Lantz, 607 F.3d 479 (7th Cir. 2010)), that hold that Congress had postulated to a IRS a management to digest suitable concrete and germane procedures to be followed, including deadlines, and that a two-year reduction duration was a reasonable practice of that authority.

A identical preference by a Tax Court has also been overturned by a Third Circuit (Mannella, 631 F.3d 115 (3d Cir. 2011)), that found Sec. 6015(f) to be ambiguous, found zero in a legislative story that clearly demonstrated Congress’ intent, and inspected a regulation.

The Fourth Circuit in Jones analyzed a law underneath a Chevron customary (Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)), and resolved that Sec. 6015 is obscure per a reduction duration germane to Sec. 6015(f) and that a two-year extent in a law is a slight interpretation of a statute.

The justice deserted a evidence that a miss of a specific reduction duration in Sec. 6015(f) means that Congress dictated there to be no reduction period. Instead, a justice found a Code territory to be ambiguous, and that underneath Chevron, it merely indispensable to establish either a regulation’s government of reduction was “a reasonable proceed to solution a statute’s ambiguity,” not either a “chosen proceed is a best one” (Jones, trip op. during 10).

The justice hold that a law was reasonable and therefore valid.

The taxpayer had also requested Sec. 9100 relief, and a justice remanded a box to Tax Court to confirm if she is entitled to such relief. It did not residence a taxpayer’s ask for service underneath a doctrine of estimable ringing since she did not lift a emanate in Tax Court, and issues lifted for a initial time on interest are generally deliberate waived.

In April, Senate Finance Committee Chairman Max Baucus, D-Mont., and members Tom Harkin, D-Iowa, and Sherrod Brown, D-Ohio, wrote to IRS Commissioner Doug Shulman seeking a IRS to examination a two-year government of limitation, that they said, “serves to repudiate estimable service to a really taxpayers a law was designed to reach, such as trusting spouses unknowingly of IRS collection activities since of danger or dishonesty on a partial of a corner filer.” Shulman wrote behind that he has asked for a examination of a IRS manners ruling trusting associate determinations.

About Emil Estafanous, CPA
Certified Public Accountant (CPA) Tax Professional committed in representing taxpayers and resolving their tax problems.

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