Source: http://federaltaxprocedure.blogspot.com/2015/08/
Timestamp: 2019-04-25 11:02:29+00:00

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I posted a blog on my Federal Tax Crimes Blog that may have some discussion that Federal Tax Procedure enthusiasts may find interesting. The FTC Blog entry is: Ninth Circuit Requires a Filing for Tax Perjury Charge (8/16/15; 8/17/15), here. The Blog discusses the recent opinion in United States v. Boitano, ___ F.3d ___, 2015 U.S. App. LEXIS 14096 (9th Cir. 2015), here.
The criminal tax issue was whether filing of the tax return was an element of the crime of tax perjury, § 7206(1), here. This invites the question of precisely what is a filing of a tax return. In Boitano, the taxpayer signed and submitted the returns to an IRS agent not authorized to receive returns for filing. That agent perceived irregularities in the returns and therefore did not send the returns for processing.
The key for readers of this tax procedure blog is the question of what constitutes a filing (as opposed to the elements of the crime of tax perjury). In many civil audits or other encounters with agents, the agents will sometimes request either delinquent original returns or amended returns. As noted in Boitano, most agents are not authorized to receive returns for filing purposes and thus the mere act of receipt is not a filing. The agents receiving such returns should process those returns which, when processed, would constitute a filing. The issue practitioners face when the agent asks for the return(s) is whether, to insure that the return(s) will be treated as filed, they should (i) file the original returns in the normal manner (usually by mailing to the service center) with a copy to the agent or (ii) deliver the original return(s) to the agent with the expectation the the agent will process the return(s). Readers interested in this issue should review the FTC Blog linked above and consider the following additional matters.
In my practice, I have been wary of giving the agent the original for processing. I can't recall if I have ever done that. I much prefer filing the regular way with a copy to the agent.
n4 * * * * Defendant’s handing the returns to Agent Connors did not constitute filing, and Agent Connor’s forwarding the form (but not the returns) to the service center did not result in the returns being filed. See 26 U.S.C. § 6501; 26 U.S.C. § 6091(b)(4); 26 C.F.R. § 1.6091-2.
I would appreciate readers views and experiences.
In United States v. Home Concrete, ___ U.S. ___, 132 S.Ct. 1836 (2012), here, the Supreme Court held that an overstatement of basis that has the effect of reducing income is not an omission of income for purposes of § 6501(e)(1)(A). The holding was based on the Supreme Court's prior interpretation of the statute in Colony, Inc. v. Commissioner, 357 U.S. 28 (1958), here.
In § 2005(a), the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (P.L. 114-41), Congress legislatively overrule Home Concrete.
However, Congress legislatively overruled Home Concrete by amending § 6501(e)(1)(B) to provide that “An understatement of gross income by reason of an overstatement of unrecovered cost or other basis is an omission from gross income.” This means that, in the foregoing calculation, the $80,000 overstatement of basis is treated as an omission of gross income, so that the omitted income is $80,000 with a resulting gross income omission of 67% and a resulting 6-year statute of limitations. fn735.
Note: I have appended to the end of this blog the legal background for the brouhaha, drawn principally from the bipartisan Senate Finance Committee Report. Readers not familiar with the background might want to reach that before wading into this discussion.
On Saturday, I blogged on a recent denial of a petition for rehearing en banc in Sissel v. U.S. Dept. of Health and Human Services, ___ F.3d ___, 2015 U.S. App. LEXIS _____ (D.C. Cir. 2015), here, denying petition for rehearing en banc from the earlier panel decision in Sissel v. U.S. Deparatment of Health and Human Services, 760 F.3d 1 (D.C. Cir. 2015), here. That blog entry is The Constitution's Command that Revenue Bills Originate in the House - What Does It Mean? (Federal Tax Procedure Blog 8/8/15), here.
Normally, denials of rehearing (whether panel or en banc) are summary one-liners. But the judges got stirred up in this case. All who expressed an opinion agreed that as to the bottom-line result -- the ACA did not violate the Origination Clause. But, the dissenting judges thought that the reasoning to the result was worthy of the Court's en banc consideration. I won't get back into the Origination Clause again. I did not say much about it in the prior blog and will not revisit that decision.
One of the great scholarly works of the early twentieth century was Max Farrand's The Records of the Federal Convention of 1787. Published in 1911, Farrand's work gathered the documentary records of the Constitutional Convention into four volumes--three of which are included in this online collection--containing the materials necessary to study the workings of the Constitutional Convention. According to Farrand's introduction, at the close of the convention, the secretary, William Jackson, delivered all the materials to the president of the convention, George Washington, who turned these papers over to the Department of State in 1796. In 1818, Congress ordered that the records be printed. which was done under the supervision of the Secretary of State John Q. Adams, in 1819.
Farrand's Records remains the single best source for discussions of the Constitutional Convention. The notes taken at that time by James Madison, and later revised by him, form the largest single block of material other than the official proceedings. The three volumes also includes notes and letters by many other participants, as well as the various constitutional plans proposed during the convention.
Farrand's collection of the records of the Constitutional Convention are important source materials. Hence, it is frequently cited in cases and scholarly discussions of the convention and the meaning of the Constitution coming out of the Convention.
Two days later, a coalition of delegates came together to strike the Clause from the draft of the Constitution, and succeeded in doing so by a vote of 7-4. 2 Farrand's Records at 210-11 (Aug. 7, 1787); id. at 214 (Aug. 8, 1787). The Clause's opponents saw it as a needless landmine, one that could seriously weaken the new national government by investing too much power in what they viewed as the less independent, less expert, and less responsible of the two chambers of Congress, while generating pointless gridlock and mortally weakening the Senate. See, e.g., id. at 224 (Aug. 8, 1787) (summarizing objections of Pinkney, Mercer, and Madison, the last of whom "was for striking it out: considering it as of no advantage to the large States as fettering the Govt. and as a source of injurious altercations between the two Houses"); id. at 274-80 (Aug. 13, 1787) (summarizing additional objections of Wilson, Morris, Madison, Carrol, Rutledge, and McHenry to a similar version of the Origination Clause five days later).
The Constitution provides (Article I, § 7): “All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.” This provision is referred to as the Origination Clause.
The D.C. Circuit recently denied rehearing en banc in a case involving the Affordable Care Act which was drafted in the Senate and passed by the Senate as a substitute for a revenue raising bill that did originate in the House. Sissel v. U.S. Dept. of Health and Human Services, ___ F.3d ___, 2015 U.S. App. LEXIS _____ (D.C. Cir. 2015), here, denying petition for rehearing en banc from the earlier panel decision in Sissel v. U.S. Deparatment of Health and Human Services, 760 F.3d 1 (D.C. Cir. 2015), here.
In denying rehearing, concurring and dissenting opinions discussed the application of the Origination Clause. Both the concurring and dissenting opinions found that the Origination Clause was not violated. The dissenting opinion just thought that the issue was worthy of en banc review.
1. Under a purposive approach, the bill's primary purpose was to regulate health insurance and not to raise revenue. The revenue in question was to spur conduct (acquisition of health insurance) rather than raise revenue (although raising revenue was an incidental effect, the Origination Clause is not implicated by such incidental effects).
2. The Senate amendment adding the ACA was a bill that originated in the House and thus met the requirements of the Origination Clause.
3. The ACA raised revenue for specific program purposes and not for general revenue purposes and thus met the requirements of the Origination Clause.
n14 Since the Senate amendments must be passed by the House, the House can has a procedure – called “blue-slipping” to reject and return to the Senate revenue bills that were not originated in the House. This process is described in the Wikipedia entry titled Blue slip at: https://en.wikipedia.org/wiki/Blue_slip. Of course, for bills that did originate in the House and were simply amended in the Senate (as the ACA), even by full substitution, the blue-slip process would not apply.

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