Justia U.S. D.C. Circuit Court of Appeals Opinion Summaries

26 U.S.C. 7623(b)(4) does not contain a "clear statement" that timely filing is a jurisdictional prerequisite to the tax court's hearing the whistleblower's case. In this case, the Irwin presumption has not been rebutted and the filing period in section 7623(b)(4) is subject to equitable tolling.After the IRS denied appellant's application for a whistleblower award, he sought relief from the tax court. The tax court found that his petition was untimely and dismissed it for lack of jurisdiction. Determining that it had jurisdiction, the DC Circuit reversed and remanded for further proceedings because, although the petition was untimely, the filing period was not jurisdictional and was subject to equitable tolling. View "Myers v. Commissioner" on Justia Law

Under the Internal Revenue Code's general rule, the geographic origin of the redemption income would be sourced according to the residence of the taxpayer. However, that general rule is subject to an exception known as the U.S. office rule, where income from any sale of personal property attributable to a nonresident's U.S. office is sourced in the United States (I.R.C. 865(e)(2)).The DC Circuit affirmed the tax court's holding that the U.S. office rule is not satisfied in this case, reasoning that the proper focus in the circumstances is where the redemption itself occurred, as opposed to where the activities causing appreciation of the redeemed partnership interest occurred. Here, the tax court held that the redemption itself should not be attributed to Grecian's U.S. office, and the income should be treated as a foreign source. View "Grecian Magnesite Mining, Industrial, & Shipping Co. v. Commissioner" on Justia Law

After RERI claimed a charitable contribution deduction of $33 million on its 2003 federal tax return, the IRS determined that RERI was not entitled to the deduction and imposed a 40% penalty for underpayment of tax. The DC Circuit affirmed the tax court's decision upholding the IRS's determinations and agreed with the tax court that RERI fell short of the substantiation requirements of the charitable contribution deduction by omitting its basis in the donated property. Therefore, the court did not reach the IRS's further argument that RERI failed to satisfy the substantiation requirements because the appraisal it submitted was not a "qualified appraisal" within the meaning of section 1.170A-13(c)(3) of the Internal Revenue Code. The court also agreed with the tax court's finding that RERI was liable for the 40% penalty reserved for a gross valuation misstatement and rejected RERI's claims to the contrary. View "Blau v. Commissioner" on Justia Law

Plaintiffs, a group of tax return preparers, filed a class action challenging the IRS's requirement that preparers pay a fee to obtain and renew their Preparer Tax Identification Number (PTIN). The DC Circuit held that the IRS acted within its authority under the Independent Offices Appropriations Act in charging tax return preparers a fee to obtain and renew PTINs. The court also held that the IRS's decision to charge the fee was not arbitrary and capricious, because the IRS sufficiently rooted its decision to assess a PTIN fee in justifications independent of those rejected in Loving v. IRS, 742 F.3d 1013 (D.C. Cir. 2014). In this case, the IRS explained that the fee was based on direct costs of the PTIN program. Therefore, the court vacated the judgment of the district court and remanded for further proceedings. View "Montrois v. United States" on Justia Law

A member of the public cannot use a Freedom of Information Act (FOIA) request to obtain unrelated individual's tax records without his consent. The District Court affirmed the dismissal of EPIC's action seeking President Donald J. Trump's income tax records. The court held that the Internal Revenue Code's confidentiality protections extended to the ordinary taxpayer and the President alike. View "Electronic Privacy Information Center v. IRS" on Justia Law

This appeal stemmed from an attempt by Starr, a Swiss-domiciled company, to avail itself of a bilateral tax treaty between the United States and Switzerland to reduce its tax rate on U.S.-source dividend income. The DC Circuit reversed the district court's dismissal of Starr's tax refund claim as raising a nonjusticiable political question and remanded for further proceedings. The court explained that the question as to whether the IRS properly found Starr ineligible for treaty benefits under Article 22(6) of the Treaty did not raise a political question.Because Starr could proceed with its tax refund claim, the court held that Starr did not have a cause of action under the Administrative Procedure Act (APA). Rather, the claim was properly brought under 26 U.S.C. 7422. Therefore, the court vacated the district court's decision as to the APA claim and remanded with instructions to dismiss the claim. View "Starr International Co. v. United States" on Justia Law

The DC Circuit affirmed the tax court's denial of a deduction on income earned by three foreign nationals who participated in the State Department's Summer Work Travel Program in 2012. The court held that appellants did not incur the travel and living expenses at issue in the pursuit of a trade or business, and therefore they may not deduct those expenses under 26 U.S.C. 162(a)(2). In this case, appellants' expenses were personal choices where they voluntarily chose to participate in the Summer Work Travel Program. The court noted that, allowing foreign students who travel to the United States on a "J visa" for temporary employment to deduct their travel expenses when students who are U.S. citizens traveling within the United States to seek temporary employment cannot, would be a peculiar and irrational result. View "Liljeberg v. Commissioner" on Justia Law

AICPA challenged the IRS's Annual Filing Season Program as violating the Administrative Procedure Act (APA). On remand, the district court granted the IRS's motion for judgment on the pleadings based on AICPA's lack of standing.The DC Circuit reversed and held that AICPA has constitutional and statutory standing to challenge the validity of the Program because its members employ unenrolled preparers. On the merits, the court held that the Program did not violate the APA in any of the ways AICPA alleged. In this case, 31 U.S.C. 330(a) authorizes the IRS to establish and operate the Program, and 26 U.S.C. 7803(a)(2)(A) authorizes the agency to publish the results of the Program; the IRS did not violate the APA by failing to follow notice-and-comment rulemaking procedures in promulgating it; and the Program was not arbitrary and capricious. View "American Institute of Certified Accountants v. IRS" on Justia Law

Appellants challenged the tax court's decision affirming the Commissioner's determinations to disallow 26 U.S.C. 45K credits to appellants, to disallow the bulk of appellants' claimed business-expense deductions, and that appellants should be assessed a 20% accuracy penalty under 26 U.S.C. 6662 for the 2006 and 2007 tax years.The DC Circuit affirmed the judgment, holding that appellants were not eligible for the Section 45K credits they claimed for venting or flaring landfill gas; appellants had no rights to the Pontiac landfill after RTC's lease terminated; the tax court's decision to disallow the bulk of appellants' business expense deductions were reasonable and supported by the record; and the tax court properly approved the 20% accuracy-related penalty. View "Green Gas Delaware Statutory Trust v. Commissioner" on Justia Law

After the IRS refused to grant the foreign shipping corporation Good Fortune an exemption to some of its U.S.-based income from taxation, the tax court ruled in favor of the IRS. The DC Circuit reversed, holding that the IRS's interpretation of Internal Revenue Code 883 in the 2003 Regulation was unreasonable and could not stand. Even if the IRS reasonably concluded that sometimes—maybe oftentimes—bearer shares were incapable of proving the residence of their owners, the court held that the 2003 Regulation's categorical bar on considering bearer shares did not follow from that premise. The court explained that the IRS has not justified treating all bearer shares as incapable of proving ownership; and if some corporations' bearer shares were not kept in record form, and thus were not capable of proving the location of an owner, then the IRS should have identified those corporations' shares and tailored its rule accordingly. View "Good Fortune Shipping SA v. Commissioner" on Justia Law