| CBS Bulletin No. 496(PDF, 129K) |
Jan. 2002 |
| HELLO, WE MUST BE GOING ... This is the LAST ISSUE of the CBS Bulletin |
| Time marches on, and so does the Bulletin. Continually published since 1960, the Bulletin provided Counsel attorneys with recent developments concerning General Litigation issues in the form of case digests and summaries of significant advisory opinions. With advances in computer technology and same-day news reporting, the once-monthly Bulletin gradually became less needed. With this issue, we conclude the Bulletin's long-standing run. |
| CBS Bulletin No. 495(PDF, 115K) | Dec. 2001 |
| Tax Court Restricts CDP Jurisdiction, Overruling Prior Opinions, in Series of Three Decisions |
| Court Does About-Face on Question of CDP Jurisdiction, Will No Longer Look Behind Notice of Determination to Address Whether "Hearing" Was Conducted Reversing Meyer v. Commissioner, 115 T.C. 417 (2000), a majority of the Tax Court stated it would not look behind an Appeals notice of determination in deciding whether it has jurisdiction over a collection due process case. In Lunsford v. Commissioner, 117 T.C. No. 16 (2001) ("Lunsford I"), the court held that, as long as the notice of determination under I.R.C. 6330 is valid on its face and a timely petition for review has been filed, the Tax Court will have jurisdiction to review that determination. |
| CBS Bulletin No. 494(PDF, 467K) | Nov. 2001 |
| Service May Set Off Post-petition Refund Against Prepetition Liability |
| The United States Court of Appeals for the Sixth Circuit has held that where both a prepetition debt owed to the Service and a post-petition claim against the Service were held by the debtor, rather than the debtor-in-possession, the Service could set off the obligations against each other. In re Gordon Sel-Way, Inc., 2001 U.S. App. LEXIS 22938 (6th Cir., October 6, 2001). |
| CBS Bulletin No. 493(PDF, 104K) | Oct. 2001 |
| Trustee Does not "Commence Distribution" Until Bankruptcy Court Approves Final Report |
| In its disposition of a somewhat novel issue, the United States Court of Appeals for the Fifth Circuit decided that a Chapter 7 trustee did not "commence distribution" of assets until the bankruptcy court approved the trustee's final report and accounting, giving the Service's claims priority status. Security State Bank v. IRS (In re Milton Van Gerpen), No. 00-40866 (5th Cir., October 10, 2001). |
| CBS Bulletin No. 492(PDF, 82K) | Sept. 2001 |
| Supreme Court Grants Certiorari in Craft and Young |
| On September 25, 2001, the United States Supreme Court agreed to hear two cases of interest to the Service: United States v. Craft and Young v. United States. The first case, United States v. Craft, 130 F.3d 638 (6th Cir. 1998), and 233 F.3d 358 (6th Cir. 2000), cert. granted, Sup. Ct. No. 00-1831, presents the issue whether a federal tax lien arising from the tax debt of one spouse attaches to the rights of the spouse in property held in a tenancy by the entirety. Many states recognize tenancies by the entirety. In most of those states (Michigan, for example), creditors of one spouse may not reach property held by both spouses as tenants by the entirety. The property is considered to be owned by the marital unit, the entirety, not by the individual spouses. Only debts incurred by the marital unit may be satisfied from entireties property. |
| CBS Bulletin No. 491(PDF, 163K) | Aug. 2001 |
| Objection to Jurisdiction Lost by Delay |
| Department of the Treasury Office of Chief Counsel Internal Revenue Service Discharged Tax May Be Setoff Against Pre-petition Overpayment The Fifth Circuit, deciding In re Luongo, 2001 U.S. App. LEXIS 15986 (5 th Cir. Jul. 18, 2001), held that a bankruptcy court had jurisdiction to resolve the debtor's right to a prepetition tax refund. The court also held that the Service permissibly set off the debtor's prepetition tax overpayment against her discharged prepetition debt, and that the debtor could not defeat setoff by exempting the overpayment under B.C. 522. |
| CBS Bulletin No. 490(PDF, 125K) | July 2001 |
| Discharged Tax May be Setoff Against Pre-petition Overpayment |
| Department of the Treasury Office of Chief Counsel Internal Revenue Service Discharged Tax May Be Setoff Against Pre-petition Overpayment The Fifth Circuit, deciding In re Luongo, 2001 U.S. App. LEXIS 15986 (5 th Cir. Jul. 18, 2001), held that a bankruptcy court had jurisdiction to resolve the debtor's right to a prepetition tax refund. The court also held that the Service permissibly set off the debtor's prepetition tax overpayment against her discharged prepetition debt, and that the debtor could not defeat setoff by exempting the overpayment under B.C. 522. |
| CBS Bulletin No. 489(PDF, 172K) | June 2001 |
| Appeals Officer May Rely on "Literal Transcripts" |
| Stanifird v. Wilcox, 87 AFTR2d - 2001-1058 (D. Az. June 12, 2001), is the first Collection Due Process case to be decided on a motion for summary judgment, and the first to hold that a "literal transcript" may be relied on by the appeals officer in making his decision. |
| CBS Bulletin No. 488(PDF, 144K) | May 2001 |
| Priorities Under Tax Lien Act do Not Extend to Action to Enforce Levy |
| The Tax Lien Act, I.R.C. § 6323, does not control the determination of claim priority when the Government has a judgment under I.R.C. § 6332(d) against a person who failed or refused to honor a levy, the Ninth Circuit held in Law Offices of Jonathan A. Stein v. Cadle Company, 2001 U.S. App. LEXIS 8723 (9 th Cir. May 10, 2001). In this case, the taxpayer owed a large amount of delinquent taxes. |
| CBS Bulletin No. 487(PDF, 134K) | April 2001 |
| Title & Status Insufficient for TFRP - Must Have Authority |
| The court of appeals in United States v. Bisbee, 2001 U.S. App. LEXIS 6017 (8 th Cir. Apr. 9, 2001) awarded attorneys' fees to a defendant, finding the Service's legal position in assessing the Trust Fund Recovery Penalty lacked a reasonable basis in fact. The court disagreed with the Service that the defendant's title and status, plus occasional payments of taxes when excess funds were available, was sufficient to find the defendant to be a responsible officer. |
| CBS Bulletin No. 486(PDF, 114K) | March 2001 |
| Failure to File & Pay Sufficient to Deny Discharge |
| The Eleventh Circuit held that a debtor's failure to file tax returns and pay taxes, without any other affirmative conduct to evade or defeat taxes, was sufficient to deny the debtor a discharge in bankruptcy under B.C. § 523(a)(1)(C). |
| CBS Bulletin No. 485(PDF, 58K) | Feb. 2001 |
| Service Announces Nonacquiescence in Vinick |
| The Service has decided to nonacquiesce as to whether actual, exercised authority over a company's financial matters, including the duty and power to determine which creditors to pay, is necessary for a finding that a taxpayer is a responsible person under the Trust Fund Recovery Penalty, I.R.C. § 6672. In Vinick v. United States, 205 F.3d 1 (1 st Cir. 2000), the issue was the liability of an officer and co-owner of a corporation for unpaid withholding taxes. |
| CBS Bulletin No. 484(PDF, 122K) | Jan. 2001 |
| Indirect Transferee Liable for Taxes |
| Holding substance controls over form, the Tenth Circuit found a petitioner who indirectly received assets from a company later assessed with tax liability, but without means to pay, was a fraudulent transferee. Scott, Transferee v. Commissioner, 2001 U.S. App. LEXIS 75 (10 th Cir. Jan. 4, 2001). |
| CBS Bulletin No. 483(PDF, 190K) | Dec. 2000 |
| First Circuit Weighs in on Equitable Tolling |
| Joining with the Third, Seventh, Eighth, Ninth, and Tenth Circuits, the First Circuit agreed with the Government that the three-year statutory priority period of B.C. § 507(a)(8)(A)(i) should be automatically tolled for those periods in which the debtor was in a prior bankruptcy. Young v. United States, 2000 U.S. App. LEXIS 30156 (1 st Cir. Dec. 1, 2000). Three other circuits (the Fifth, Sixth and Eleventh) have permitted equitable tolling on a case-by-case basis under B.C. § 105(a). |
| CBS Bulletin No. 482(PDF, 79K) | Nov. 2000 |
| There's a New Lien in Town |
| CBS Branch 1 has approved a modification to Form 668-H, Notice of Federal Estate Tax Lien, to permit that form to be used for the consensual lien created and recorded in connection with an election under I.R.C. § 2057, in addition to the consensual lien created and recorded in connection with a section 2032A election. Until the existing form is reprinted, the phrase "and/or section 2057" will be added by pen and ink to the Notice paragraph of Form 668-H. |
| CBS Bulletin No. 481(PDF, 134K) | Oct. 2000 |
| Interview Standards Not Required for Summonses |
| In an unpublished decision, the Sixth Circuit affirmed that the Service is not required when issuing summonses to follow the taxpayer interview safeguards established by I.R.C. § 7521(b). In Cypress Funds, Inc. v. United States, 2000 U.S. App. LEXIS 27048 (6 th Cir. Oct. 20, 2000) (unpublished), the Sixth Circuit affirmed the enforcement of the Service's summons against the taxpayer's Motion to Quash. |
| CBS Bulletin No. 480(PDF, 88K) | Sept. 2000 |
| Cases |
| Bankruptcy Code Cases: Chapter 13: Confirmation of Plan In re Weiss, 251 B.R. 453 (Bankr. E.D.Pa. 2000) - Chapter 13 debtor, whose disposable income exceeded his debts, was required to pay post-petition interest on the Service's unsecured claim. |
| CBS Bulletin No. 479(PDF, 143K) | Aug. 2000 |
| Reminder: Pre-review of Lien Foreclosure Suit Letters |
| Chief Counsel Notice N(34)700-2, Judicial Approval for Principal Residence Seizures, issued on February 5, 1999, contains procedures for the new judicial proceeding for court approval of principal residence seizures found in I.R.C. section 6334(e)(1). The Notice provides that pre-review of all suit letters seeking a section 6334(e)(1) proceeding is required by Branch 1 (Collection, Bankruptcy & Summonses). |
| CBS Bulletin No. 478(PDF, 181K) | July 2000 |
| Sixth Circuit Denies Equitable Tolling in Bankruptcy |
| Adding to a growing minority of circuits, the Court of Appeals for the Sixth Circuit denied priority status to federal taxes under the "plain language" of B.C. § 507(a)(8)(A)(i) and § 523(a)(1)(A), finding taxes assessed more than three years prior to the debtor's Chapter 7 bankruptcy filing to be dischargeable despite the debtor's intervening Chapter 13 case in Palmer v. United States, 2000 U.S. App. LEXIS 16115 (6 th Cir. July 14, 2000). The court also ruled that although tolling is within the bankruptcy court's power under B.C. § 105(a), tolling was not warranted in this case. |
