ECC 201348015
Third Party Communication: None
Date of Communication: Not Applicable
UILC: 6702.00-00, 6501.00-00
Release Date: 11/29/2013
ID: CCA_2013091913550728
From: * * *
Sent: Thursday, September 19, 2013 1:55:07 PM
To: * * *
Cc:
Bcc:
Subject: RE: statute of limitations on assessment of section 6702
penalty
We made the argument that no SOL applies in briefs submitted in a couple of cases where taxpayers raised the SOL as a bar to assessment of the penalty. The Tax Court did not need to decide the issue. Crites v. Commissioner, T.C. Memo. 2012-267 and O'Brien, T.C. Memo. 2012-326 have a little discussion of what we argued.
Obviously, we don't want to get into this situation if we can make an assessment w/i three years of a frivolous submission.
IRS Emailed Advice: No SoL for Friv Return Penalty
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jcolvin2
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Famspear
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Re: IRS Emailed Advice: No SoL for Friv Return Penalty
Very interesting.
I confess that I haven't really thought about the statute of limitations issue for 6702 penalties -- until I read this.
I confess that I haven't really thought about the statute of limitations issue for 6702 penalties -- until I read this.
"My greatest fear is that the audience will beat me to the punch line." -- David Mamet
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jcolvin2
- Grand Master Consul of Quatloosia
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Re: IRS Emailed Advice: No SoL for Friv Return Penalty
The IRS takes the position that there is no statute of limitations governing many penalties which are not keyed to returns, specifically including the §§ 6700, 6701 and pre-amendment 6707 penalties (but not the post-2004 version of 6707). The section 6702 penalty apparently falls within this class.
While there is no statute of limitations in the Code specifically applicable to these penalties (although 6702 does seem based on the filing of a return, albeit a frivolous return), some taxpayers have argued that the general federal five year statute of limitations governing “proceedings for the enforcement” of penalties in 28 U.S.C. § 2642 is applicable.
The IRS managed to convince the courts in Mullikin v. United States, 952 F.2d 920 (6th Cir. 1991); Lamb v. United States, 977 F.2d 1296 (8th Cir. 1992); and United States v. Capozzi, 980 F.2d 872 (2d Cir. 1992) that the general federal “catchall” statute of limitations for penalties set out in 28 U.S.C. § 2642 was not applicable to tax penalties, on the grounds that the act of the “assessment” of such penalties by the Internal Revenue Service was not part of “proceedings for the enforcement” of such penalties. However, the logic of these opinions was questioned by a spirited dissent in Mullikin, 952 F.2d at 933 n.1 (“It would seem quite odd to say that the very act that initiates the actions leading to the collection of the penalty, a stream of events that must at some point be a proceeding, is not itself part of the proceeding.”). Moreover, the logic of Mullikin, Lamb and Capozzi was rejected by the court in 3M Company v. Browner, 17 F.3d 1453, 1458-1460 (D.C. Cir. 1994); See also FEC v. Williams, 104 F.3d 237 (9th Cir. 1996)(“for purposes of [28 U.S.C.] § 2462 ‘enforcement’ comprises ‘assessment.’”); But see Hargrove & Constanzo v. Comm’r, 240 F.R.D. 652 (E.D. Cal. 2006) (purporting to harmonize 3M Company and Mullikin/Capozzi).
While there is no statute of limitations in the Code specifically applicable to these penalties (although 6702 does seem based on the filing of a return, albeit a frivolous return), some taxpayers have argued that the general federal five year statute of limitations governing “proceedings for the enforcement” of penalties in 28 U.S.C. § 2642 is applicable.
The IRS managed to convince the courts in Mullikin v. United States, 952 F.2d 920 (6th Cir. 1991); Lamb v. United States, 977 F.2d 1296 (8th Cir. 1992); and United States v. Capozzi, 980 F.2d 872 (2d Cir. 1992) that the general federal “catchall” statute of limitations for penalties set out in 28 U.S.C. § 2642 was not applicable to tax penalties, on the grounds that the act of the “assessment” of such penalties by the Internal Revenue Service was not part of “proceedings for the enforcement” of such penalties. However, the logic of these opinions was questioned by a spirited dissent in Mullikin, 952 F.2d at 933 n.1 (“It would seem quite odd to say that the very act that initiates the actions leading to the collection of the penalty, a stream of events that must at some point be a proceeding, is not itself part of the proceeding.”). Moreover, the logic of Mullikin, Lamb and Capozzi was rejected by the court in 3M Company v. Browner, 17 F.3d 1453, 1458-1460 (D.C. Cir. 1994); See also FEC v. Williams, 104 F.3d 237 (9th Cir. 1996)(“for purposes of [28 U.S.C.] § 2462 ‘enforcement’ comprises ‘assessment.’”); But see Hargrove & Constanzo v. Comm’r, 240 F.R.D. 652 (E.D. Cal. 2006) (purporting to harmonize 3M Company and Mullikin/Capozzi).