t c summary opinion united_states tax_court charlene donia strinz n k a charlene montour petitioner v commissioner of internal revenue respondent charlene d strinz n k a charlene montour petitioner v commissioner of internal revenue respondent docket nos 20179-05s 897-06s filed date charlene montour pro_se robert v boeshaar and jessica yu for respondent gerber judge these case sec_1 were heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect docket no 20179-05s concerns the and tax years and docket no 897-06s concerns the tax_year for petitioner when the petitions were filed pursuant to sec_7463 the decisions to be entered are not reviewable by any other court and this opinion shall not be treated as precedent for any other case petitioner sought relief from joint_and_several tax_liability for and she applied for relief under sec_6015 c and f and respondent in determinations denied such relief petitioner timely petitioned this court for review of respondent’s determinations background petitioner at the time of filing her petitions resided in the state of washington she filed joint returns with her former husband3 for and for each year the return was prepared by a professional preparer and reflected a balance of tax due petitioner earned a small amount of wages each year from her work at her husband’s construction company but the underpayments were in substantial part due to income reported on schedules c profit or loss from business for the construction company petitioner was responsible for the household bills and expenditures during the years in issue unless otherwise indicated all section references are to the internal_revenue_code in effect for the taxable years in issue for convenience petitioner’s former husband will be referred to as her husband when the and returns were filed petitioner was aware of the couple’s financial difficulties and that they were having a hard time paying their living_expenses because she worked at her husband’s construction company she was also aware of its financial situation and that it was also having trouble paying its obligations petitioner and her husband had filed for bankruptcy and their unpaid tax_liabilities for and were discharged but the and tax_liabilities were not qualified for discharge petitioner separated from her husband during and obtained a final divorce effective date although separated petitioner and her husband continued to file joint returns throughout the years at issue after the separation petitioner showed her husband’s girlfriend how to run the administrative office of the construction business those duties included handling financial matters typing contracts buying office supplies and related duties in connection with the divorce petitioner’s husband had made an oral promise to pay the federal income taxes but he did not keep his promise there was no legal_obligation under the divorce decree for payment of the income_tax_liability petitioner’s husband did not force her to sign the returns or intimidate her in such a way that she signed under duress petitioner filed for relief from joint_and_several_liability respondent’s determination was that she was not entitled to relief under sec_6015 or c because the assessments were based on underpayments of tax reported due respondent also reviewed all of the factors to be considered for relief under sec_6015 and determined that she was not entitled to equitable relief discussion sec_6015 and c provides for relief from joint_and_several_liability in situations where there is an understatement_of_tax or a deficiency in tax respectively because these cases involve underpayments of tax reported on joint returns petitioner is not entitled to relief under either sec_6015 or c sec_6015 gives the commissioner discretion to grant relief from joint_and_several_liability if taking into account all of the facts and circumstances it is inequitable to hold an individual liable for any unpaid tax and relief is not available under sec_6015 or c as directed by sec_6015 the commissioner has prescribed guidelines in revproc_2003_61 sec_4 2003_2_cb_296 which lists the eight nonexclusive factors that the commissioner will consider in determining whether taking into account all the facts and circumstances it is inequitable to hold the requesting spouse liable for all or part of the deficiency and full or partial equitable relief under sec_6015 should be granted these nonexclusive factors include whether the requesting spouse is separated or divorced from the nonrequesting spouse the requesting spouse will suffer economic hardship without relief the requesting spouse did not know or have reason to know that the nonrequesting spouse would not pay the income_tax_liability the nonrequesting spouse had a legal_obligation to pay the outstanding liability the requesting spouse received a significant benefit from the item giving rise to the deficiency the requesting spouse has made a good_faith effort to comply with income_tax laws in subsequent years the requesting spouse was abused by the nonrequesting spouse and the requesting spouse was in poor mental or physical health when signing the return or requesting relief revproc_2003_61 sec_4 further provides that no single factor will be determinative but that all relevant factors will be considered the appeals officer determined that the first and sixth factors were in petitioner’s favor the second and third were against her and the fourth and fifth were neutral with respect to the seventh and eighth factors the appeals officer determined that petitioner was not abused and no special consideration arises from petitioner’s mental and physical health we will now consider whether there was an abuse_of_discretion in the denial of relief on the basis of the above- listed relief factors after trial and the opportunity to consider petitioner’s testimony it appears that the appeals officer was correct in the analysis of the eighth factor there is no question about whether petitioner was separated or divorced and about her subsequent compliance and so these factors weigh in her favor with respect to economic hardship petitioner is currently employed and she has not established economic hardship in that regard petitioner and her husband were relieved of and income_tax in an amount approaching dollar_figure during their bankruptcy proceeding this factor weighs against petitioner on the basis of petitioner’s testimony it is clear that she had reason to know that her husband would not pay the taxes reported on the returns as she was aware of the internal operations of his business and their personal inability to pay their bills accordingly this factor weighs against petitioner although petitioner’s husband had made an oral promise to pay the tax_liabilities there was no enforceable legal_obligation to do so it was reasonable for the appeals officer to treat this factor as neutral it is not clear that petitioner received a significant benefit from the fact that there were tax underpayments but it is likely that she and her husband lived on the receipts of the business although the taxes were unpaid again it was reasonable for the appeals officer to treat this factor as neutral finally petitioner’s husband was prone to overindulge in alcohol and may have used abusive language but petitioner was not influenced or intimidated by his actions and these conditions did not play a factor in petitioner’s choice to sign joint returns there has been no showing that petitioner’s mental or physical health should play a role in the consideration of whether she should have been granted relief under sec_6015 in view of the foregoing we hold that respondent’s refusal to grant petitioner relief from joint_and_several_liability for the and tax years was justified to reflect the foregoing decisions will be entered for respondent


department of the treasury internal_revenue_service washington d c jul tax_exempt_and_government_entities_division uniform issue list erp rat legend taxpayer a irab financial_institution c account d irae financial_institution f state g state h amount dear t i this letter is in response to a request for a letter_ruling dated date as supplemented by additional information dated date from your authorized representative in which you have requested a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a age ’ represents that she took a distribution of amount from ira b taxpayer a asserts that her failure to accomplish a rollover within the 60-day period prescribed by code sec_408 was due to her medical_condition which impaired her ability to manage her financial affairs taxpayer a further asserts that amount has not been used for any purpose in october taxpayer a was informed by taxpayer a maintained ira b an individual_retirement_account ira under sec_408 of the code taxpayer a represents that in december of she and her husband moved from state g to state h so that they could live in a senior care facility near their son financial_institution c that a certificate of deposit cd in ira b was about to mature they asked taxpayer a how she would like financial_institution c to handle this event taxpayer a instructed financial_institution c to send her these assets so she could deposit them in a local bank financial_institution f on date taxpayer a deposited a check totaling amount into account d taxpayer a attempted to deposit amount into an ira with financial_institution f and assumed she had taken appropriate steps to accomplish this on date taxpayer a’s son discovered account d was a non-ira account and re-deposited amount in ira e on taxpayer a's behalf taxpayer a represents that she has difficulty remembering and managing the family financial affairs which prevented her from discovering her mistake ina timely manner the ruling_request is supported by a letter from her physician that explains taxpayer a’s medical_condition and the affect of several medications on her memory thinking process and ability to manage her financial affairs including her inability to complete the rollover timely into the proper account based on the above facts and representations you request that the internal_revenue_service service waive the 60-day rollover requirement contained in sec_408 of the code with respect to the distribution of amount sec_408 of the code provides that except as otherwise provided in sec_408 of the code any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if - i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 of the code sec_408 of the code provides that sec_408 of the code does not apply to any amount described in sec_408 of the code received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 of the code from an ira which was not includible in gross_income because of the application of sec_408 of the code sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the secretary may waive the day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 r b date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and the documentation submitted by taxpayer a is consistent with her assertion that her failure to accomplish a timely rollover of amount was due to her medical_condition which impaired her ability to manage her financial affairs therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount from is granted a period of days from the issuance of this letter ira b taxpayer a into a rollover ira provided all other requirements ruling to contribute amount of sec_408 of the code except the 60-day requirement are met with respect to such contribution amount will be considered a rollover_contribution within the meaning of sec_408 of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 of the code sec_408 of the code this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter_ruling has been sent to your authorized representative pursuant to a power_of_attorney on file in this office this ruling please contact if you wish to inquire about i d at - sincerely yours manager employee_plans technical group enclosures deleted copy of this letter notice of intention to disclose notice cc


internal_revenue_service date number info release date conex uil the honorable john cornyn united_states senator occidental tower lbj freeway s uite dallas tx attention aaron christian dear senator cornyn this letter responds to your inquiry dated date on behalf of your constituent ------------------------- he believes the tax code discriminates against senior citizens over age because they must include tax-exempt_bond interest when determining taxable social_security_benefits as a result senior citizens have to pay more income_tax or receive a lower income_tax refund --------------may be referring to the rules under sec_86 of the internal_revenue_code the code the congress enacted this provision in as part of the social_security amendments of publaw_98_21 subject_to certain limitations this provision taxed social_security_benefits above a certain base_amount up to a maximum of one-half of the taxpayer’s total social_security_benefit the omnibus_budget_reconciliation_act_of_1993 obra publaw_103_66 amended sec_86 of the code for and later years by taxing up to percent of the taxpayer’s social_security_benefit after applying certain limitation amounts the taxable_amount of social_security_benefits depends on whether the recipient has income from other sources the law takes into account income from other sources such as tax-exempt_interest when determining the amount of social_security_benefits taxed it does not convert the tax on social_security_benefits into a tax on the tax-exempt_interest for example if the taxpayer’s adjusted_gross_income as modified under sec_86 of the code does not exceed the base_amount then no portion of the social_security_benefits is taxable despite inclusion of the tax-exempt_interest also once the taxpayer reaches the maximum amount of social_security_benefits subject_to tax any additional tax-exempt_interest does not increase the amount of tax i am enclosing two court opinions that support this interpretation of the law i hope this information is helpful if you have additional questions please call me or ------------------of my staff at sincerely janine cook chief employment_tax branch office of division counsel associate chief_counsel tax exempt and governmental entities enclosures


internal_revenue_service cor-115793-00 number info release date uil date the honorable james f sensenbrenner jr u s house of representatives washington d c dear mr sensenbrenner thank you for your letter of date signed by you and a number of your colleagues encouraging the internal_revenue_service to immediately readjust the business standard mileage rate to reflect the recent increase in gasoline prices you note that the increased cost has particularly burdened self-employed taxpayers who use automobiles for business purposes gasoline prices we realize increased gasoline prices are an economic burden however the cost of gasoline is only one part of the business standard mileage rate which includes fixed and operating automobile costs these costs include depreciation or lease payments maintenance and repairs insurance and license and registration fees in addition to gasoline and oil less than one-third of the cents per mile rate comes from the cost of gasoline and oil thus an immediate adjustment in the rate taking into account the recent increase in gasoline prices might not be significant setting the business standard mileage rate the rate is a national average amount determined by an annual study performed by an independent_contractor who is an expert in the cost analysis of business use of automobiles the contractor uses recent data from each state on the component costs of operating the most popular automobiles the contractor then combines this data to achieve a national composite cents-per-mile rate advantages of using the business standard mileage rate reducing a taxpayer’s record-keeping burden is the principal advantage of using the rate gasoline prices rise and fall during the year but taxpayers may continue to use the same rate without having to keep records of actual expenses although rising gasoline prices can be a disadvantage for taxpayers who use the rate falling prices can work to their advantage for example although gasoline prices fell in for all of and through date taxpayers were able to use the rate that reflected the earlier higher prices taxpayer’s options to deduct the ordinary and necessary expenses of using an automobile for business purposes a taxpayer must substantiate the cost date place and business_purpose of each use of the automobile by adequate_records for the cost the taxpayer has two options cid substantiate actual cost by keeping records or by other_sufficient_evidence cid use the business standard mileage rate using the rate gives approximate not actual costs taxpayers can deduct the actual business_expenses of using a personally-owned automobile and this may be advantageous when automobile costs are rising publication travel entertainment gift and car expenses contains further information on how taxpayers should substantiate expenses i have enclosed the relevant pages from that publication i am sending a similar letter to your colleagues i hope this information is helpful please call me at or robert a berkovsky at if you have any questions sincerely charles o rossotti enclosure


internal_revenue_service number release date index number ---------------------------------- -------------------------------------------------------- ---------------------- ------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------- telephone number -------------------- refer reply to cc psi b02 plr-104684-08 date date legend x --------------------------------------------------------- -------------------------------- country ------------------------- date ------------------ dear --------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations for x to elect to be treated as a partnership for federal tax purposes under sec_301_7701-3 the information submitted states that x was formed under the laws of country on date x represents that x is a foreign_entity eligible to elect to be treated as a partnership however x inadvertently failed to timely file a form_8832 entity classification election electing to treat x as a partnership effective date sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the entity makes an election to be treated otherwise if the foreign eligible_entity has more than one owner it may elect to be treated as a partnership pursuant to the rules in sec_301_7701-3 plr-104684-08 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date on which the form is filed sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 provides that the term regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center and elect to be treated as a partnership effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the internal_revenue_code and the regulations thereunder this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent plr-104684-08 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely william p o’shea associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi plr-131719-02 date date legend x a d1 state dear this letter responds to a letter dated date by your authorized representative on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code facts x was incorporated under state law on d1 x's sole shareholder a decided that x would be an s_corporation effective d1 a believed that x's tax adviser had filed x's form_2553 election by a small_business_corporation however x's form_2553 was not filed timely plr-131719-02 x requests a ruling under sec_1362 that its sec_1362 election will be treated as timely made for its taxable_year that began on d1 law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective generally if an s election is made within the first two and one-half months of a corporation's taxable_year then the corporation will be treated as an s_corporation for the taxable_year in which the election is made sec_1362 provides that if an s election is made after the first two and one-half months of a corporation's taxable_year then the corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making the election for the taxable_year or no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make the election then the secretary may treat the election as timely made for such taxable_year and sec_1362 shall not apply conclusion based on the facts submitted and representations made we conclude that x has established reasonable_cause for failing to make a timely s election and that x is eligible for relief under sec_1362 accordingly if x makes an election to be an s_corporation by filing with the appropriate service_center a completed form_2553 containing an effective date of d1 for the election within days following the date of this letter then such election will be treated as timely made a copy of this letter should be attached to the form_2553 filed with the service_center a copy is enclosed for that purpose except as expressly provided herein we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically we express or imply no opinion concerning whether x is an s_corporation for federal tax purposes pursuant to a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative plr-131719-02 this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent sincerely s mary beth collins senior technician reviewer branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes plr-131719-02 cc


department of the treasury internal_revenue_service tege eo examinations mail stop dal commerce st dallas texas tax_exempt_and_government_entities_division date date tax_year ending taxpayer_identification_number person to contact employee identification_number employee telephone number phone fax number release date uil code certified mail - return receipt dear this is a final_determination that you do not qualify for exemption from federal_income_tax under internal_revenue_code the code sec_501 as an organization described in code sec_501 effective october 20xx your determination_letter dated march 19xx is revoked the revocation of your exempt status was made for the following reason s organizations described in sec_501 of the internal_revenue_code and exempt from tax under sec_501 must be both organized and operated exclusively for exempt purposes a hospital organization must also comply with sec_501 in order to be treated as described in sec_501 you are not in compliance with any of the provisions imposed under sec_501 you are a dual status hospital which is a governmental hospital that is also exempt under sec_501 you will retain your status as a governmental hospital upon the loss of your status as exempt under sec_501 if you decide to contest this determination you may file an action for declaratory_judgment under the provisions of sec_7428 of the code in one of the following three venues united_states tax_court the united_states court of federal claims or the united_states district_court for the district of columbia a petition or complaint in one of these three courts must be filed within days from the date this determination_letter was mailed to you please contact the clerk of the appropriate court for rules and the appropriate forms for filing petitions for declaratory_judgment by referring to the enclosed publication you may write to the courts at the following addresses united_states tax_court second street n w washington d c u s court of federal claims madison place n w washington d c u s district_court for the district of columbia constitution ave n w washington d c the taxpayer_advocate_service tas is an independent organization within the irs that can help protect your taxpayer rights tas can offer you help if your tax problem is causing a hardship or you've tried but haven’t been able to resolve your problem with the irs if you qualify for tas assistance which is always free tas will do everything possible to help you visit www taxpayeradvocate irs gov or call if you have any questions about this letter please contact the person whose name and telephone number are shown in the heading of this letter sincerely maria hooke director eo examinations enclosure publication department of the treasury internal_revenue_service tax exempt and government entities irs exempt_organizations examinations date date taxpayer_identification_number form tax_year s ended person to contact id number employee id contact numbers telephone fax manager's name id number employee id manager’s contact number response due_date united parcel service - proof of delivery dear why you are receiving this letter we propose to revoke your status as an organization described in sec_501 of the internal_revenue_code code enclosed is our report of examination explaining the proposed action what you need to do if you agree if you agree with our proposal please sign the enclosed form_6018 consent to proposed action - sec_7428 and return it to the contact person at the address listed above unless you have already provided us a signed form we'll issue a final revocation letter determining that you aren't an organization described in sec_501 after we issue the final revocation letter we'll announce that your organization is no longer eligible for contributions deductible under sec_170 of the code if we don't hear from you if you don’t respond to this proposal within calendar days from the date of this letter we'll issue a final revocation letter failing to respond to this proposal will adversely impact your legal standing to seek a declaratory_judgment because you failed to exhaust your administrative remedies effect of revocation status if you receive a final revocation letter you'll be required to file federal_income_tax returns for the tax_year s shown above as well as for subsequent tax years letter rev catalog number 34809f what you need to do if you disagree with the proposed revocation if you disagree with our proposed revocation you may request a meeting or telephone conference with the supervisor of the irs contact identified in the heading of this letter you also may file a protest with the irs appeals_office by submitting a written request to the contact person at the address listed above within calendar days from the date of this letter the appeals_office is independent of the exempt_organizations division and resolves most disputes informally for your protest to be valid it must contain certain specific information including a statement of the facts the applicable law and arguments in support of your position for specific information needed for a valid protest please refer to page one of the enclosed publication how to appeal an irs decision on tax-exempt status and page six of the enclosed publication the examination process publication also includes information on your rights as a taxpayer and the irs collection process please note that fast track mediation referred to in publication generally doesn’t apply after we issue this letter you also may request that we refer this matter for technical_advice as explained in publication please contact the individual identified on the first page of this letter if you are considering requesting technical_advice if we issue a determination_letter to you based on a technical_advice_memorandum issued by the exempt_organizations rulings and agreements office no further irs administrative appeal will be available to you contacting the taxpayer_advocate office is a taxpayer right you have the right to contact the office_of_the_taxpayer_advocate their assistance isn’t a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate can't reverse a legally correct_tax determination or extend the time you have fixed by law to file a petition in a united_states court they can however see that a tax matter that hasn't been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at internal_revenue_service office_of_the_taxpayer_advocate letter rev catalog number 34809f for additional information if you have any questions please call the contact person at the telephone number shown in the heading of this letter if you write please provide a telephone number and the most convenient time to call if we need to contact you thank you for your cooperation sincerely maria hooke director eo examinations enclosures report of examination form_6018 publication publication letter rev catalog number 34809f schedule number or exhibit form 886-a rev date name of taxpayer tax identification_number year period ended 20xx explanations of items issue whether the tax-exempt status of with provisions of internal_revenue_code sec_501 should be revoked for its failure to comply facts or a0 bed facility was founded in 19xx as a county government owned hospital the initial construction was financed through a local bond issue is governed by the each of the staff at the hospital the board members’ duties for the hospital are to establish administrative policy review finances and approve patient charges and employees’ salaries board_of trustees the zero member board includes zero member from member at large and the current chief of county supervisor districts irs records show they submitted form_1023 seeking tax-exempt status under sec_501 during november of 19xx the administrative file does not contain the organizing document that created body for the entity is the board_of trustees for are hired by the board_of trustees per the by-laws however it does contain the by-laws article of the by-laws state the governing the hospital administrator and medical staff the entity’s initial determination_letter was issued march 19xx granting exemption under sec_501 upon expiration of the advance_ruling period a final_determination letter was issued during october 19xx stating they were not a private_foundation because they are described in sec_170 as a hospital during 19xx the hospital expanded its services to include a clinic inpatient care surgery laundry dietary and laboratory accommodations in 20xx hospital per medicare and medicaid regulations day seven days a week the emergency room is staffed with nurse practitioners who have access to emergency room is open hours a was designated a critical access services residents in county and the counties surrounding the area with zero beds they are patronized by the employs over full-time and part-time employees the medical staff is comprised of zero registered nurses zero respiratory therapists zero nursing assistants and zero nurse practitioner hours daily they also have a physician who makes rounds daily seven days per week physical therapy occupational therapy speech therapy respiratory therapy iv therapy and wound care are provided five to seven days per week depending on the need primary care clinics in operates and form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date name of taxpayer tax identification_number year period ended 20xx explanations of items the medical specialists affiliated with as the chief of staff an oral surgeon and zero nurse practitioners the medical specialist provide care in the hospital and clinics operated by include zero medical doctors one of whom serves the services provided by the hospital include acute care unit swing bed unit emergency room clinical laboratory radiology ct scan therapy respiratory physical occupational speech wound and iv wound care ultrasound sonograms vascular echocardiography pulmonary function evaluations pharmacy picc line services ventilator and trach weaning program oral surgery the services provided by the clinics include annual check-ups wellness visits physicals general medical_care diabetic screening diagnostic lab comprehensive exams immunizations nutrition education preventive health screenings weight loss is amember of an sec_501 not- operations began in 19xx as the vision of administrators from for-profit corporation small less than beds envisioned a network that would support and strengthen voice with rural health advocacy on the local and national level located in the they and provide a the mission of the is to assist member hospitals in being successful health form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items name of taxpayer care providers in their unique rural setting by helping them to achieve collectively what they could not achieve individually tax identification_number year period ended 20xx was selected for examination for possible deficiencies relative to sec_501 which imposes additional requirements on hospitals identified as tax-exempt under sec_501 per provisions of the affordable_care_act aca does not have a form_990 filing requirement by virtue of its status as a governmental entity however that does not preclude its adherence to statutes enacted in response to the aca for sec_501 hospitals since the entity is not required to file form_990 information reported on schedule h of that return was sought from other sources a review of the entity's website did not provide the data nor was there a link or indication of where the data was located other searches were performed which also resulted in sub sec_501 data not being located therefore the searches performed identified deficiencies relevant to the aca requirements and sec_501 specifically preliminary review of the entity did not locate its e community health needs assessment chna on instructions identifying where the chna was located implementation strategy is addressing the chna financial assistance policy fap emergency medical_care policy emcp billing and collection procedures website nor was there a link or on june 20xx along with several information document a letter was mailed to requests idrs to obtain information relative to the items noted above attempts were made to contact administrative personnel to discuss the correspondence mailed to them since there had not been any communication with subsequently a phone call was received from one of his staff personnel conversations with the ceo and had not completed a irs and concerns associated therewith chna did not complete an implementation strategy nor have they complied with the other provisions of sec_501 there were regarding the correspondence they received from the messages were left for the ceo did state and sec_501 states a hospital must comply with the items noted above and addressed in the idrs to retain tax-exempt status under sec_501 during discussions with they were advised that irs records indicate c tax exempt hospital dual status entities when they have received a determination_letter from the irs stating they are exempt under sec_501 as a hospital it was explained that governmental hospitals are described as is both a government hospital and an irc and stated he was not aware was exempt under sec_501 there was discussion regarding why some governmental hospitals prefer to be dual status hospitals stated none of the reasons discussed are applicable to they do not offer b plans form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date name of taxpayer tax identification_number year period ended 20xx explanations of items as their employees are covered by the retirement_plan offered by the state of they do not need the sales and or property_tax exemption nor do they receive a discounted rate from the post office discussions were held to determine resolution for a lack of compliance with sec_501 revocation of the tax exempt status or termination and the ceo advised revocation was the direction for the hospital he states they are not using the public charity status and want to relinquish it and not face any penalties for noncompliance with the statutes discussed law sec_501 r additional requirements for certain hospitals -- in general --a hospital organization to which this subsection applies shall not be treated as described in subsection c unless the organization-- a meets the community health needs assessment requirements described in paragraph b meets the financial assistance policy requirements described in paragraph c meets the requirements on charges described in paragraph and d meets the billing and collection requirement described in paragraph hospital organizations to which subsection applies -- a in general --this subsection shall apply to-- i an organization which operates a facility which is required by a state to be licensed registered or similarly recognized as a hospital and ii any other organization which the secretary determines has the provision of hospital care as its principal function or purpose constituting the basis for its exemption under subsection c determined without regard to this subsection b organizations with more than hospital facility --if a hospital organization operates more than hospital facility-- i the organization shall meet the requirements of this subsection separately with respect to each such facility and ii the organization shall not be treated as described in subsection c with respect to any such facility for which such requirements are not separately met community health needs assessments -- a in general --an organization meets the requirements of this paragraph with respect to any taxable_year only if the organization-- form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items name of taxpayer tax identification_number year period ended 20xx i has conducted a community health needs assessment which meets the requirements of subparagraph b in such taxable_year or in either of the taxable years immediately preceding such taxable_year and ii has adopted an implementation strategy to meet the community health needs identified through such assessment b community health needs assessment --a community health needs assessment meets the requirements of this paragraph if such community health needs assessment-- i takes into account input from persons who represent the broad interests of the community served by the hospital facility including those with special knowledge of or expertise in public health and ii is made widely available to the public financial assistance policy --an organization meets the requirements of this paragraph if the organization establishes the following policies a financial assistance policy --a written financial assistance policy which includes-- i eligibility criteria for financial assistance and whether such assistance includes free or discounted care ii the basis for calculating amounts charged to patients iii the method for applying for financial assistance iv in the case of an organization which does not have a separate billing and collections policy the actions the organization may take in the event of non-payment including collections action and reporting to credit agencies and v measures to widely publicize the policy within the community to be served by the organization b policy relating to emergency medical_care --a written policy requiring the organization to provide without discrimination care for emergency medical conditions within the meaning of section of the social_security act u s c 1395dd to individuals regardless of their eligibility under the financial assistance policy described in subparagraph a limitation on charges --an organization meets the requirements of this paragraph if the organization-- a limits amounts charged for emergency or other medically necessary care provided to individuals eligible for assistance under the financial assistance policy described in paragraph a to not more than the amounts generally billed to individuals who have insurance covering such care and b prohibits the use of gross charges billing and collection requirements --an organization meets the requirement of this paragraph only if the organization does not engage in extraordinary collection actions before the organization has made form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items year period ended tax identification_number name of taxpayer 20xx reasonable efforts to determine whether the individual is eligible for assistance under the financial assistance policy described in paragraph a regulatory authority --the secretary shail issue such regulations and guidance as may be necessary to carry out the provisions of this subsection including guidance relating to what constitutes reasonable efforts to determine the eligibility of a patient under a financial assistance policy for purposes of paragraph c f_r sec_1_501_r_-1 sec_1_501_r_-1 sec_1_501_r_-1 definitions currentness a application the definitions set forth in this section apply to sec_1_501_r_-2 through r -7 b definitions- amounts generally billed agb means the amounts generally billed for emergency or other medically necessary care to individuals who have insurance covering such care determined in accordance with sec_1_501_r_-5 agb percentage means a percentage of gross charges that a hospital facility uses under sec_1 r - b to determine the agb for any emergency or other medically necessary care it provides to an individual who is eligible for assistance under its financial assistance policy fap application period means the period during which a hospital facility must accept and process an application_for financial assistance under its fap submitted by an individual in order to have made reasonable efforts to determine whether the individual is fap-eligible under sec_1_501_r_-6 authorized body of a hospital facility means- i the governing body that is the board_of directors board_of trustees or equivalent controlling body of the hospital organization that operates the hospital facility or a committee of or other party authorized by that governing body to the extent such committee or other party is permitted under state law to act on behalf of the governing body billing and collections policy means a written policy that includes all of the elements described in sec_1 r -4 b i date provided means in the case of any billing statement written notice or other written communication that is mailed the date of mailing the date that a billing statement written notice or other written communication is provided can also be the date such communication is sent electronically or delivered by hand emergency medical_care means care provided by a hospital facility for emergency medical conditions emergency medical conditions means emergency medical conditions as defined in section of the social_security act u s c 1395dd extraordinary collection action eca means an action described in sec_1_501_r_-6 financial assistance policy fap means a written policy that meets the requirements described in sec_1 r -4 b hospital facility means a facility that is required by a state to be licensed registered or similarly recognized as a hospital multiple buildings operated under a single state license are considered to be a single hospital facility plain language summary of the fap means a written_statement that notifies an individual that the hospital facility offers financial assistance under a fap and provides the following additional information in language that is clear concise and easy to understand form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items tax identification_number year period ended name of taxpayer 20xx vi a statement of the availability of translations of the fap fap application form and plain language summary of the fap in other languages if applicable widely available on a web site means- i the hospital facility conspicuously posts a complete and current version of the document on- a the hospital facility's web site b if the hospital facility does not have its own web site separate from the hospital organization that operates it the hospital organization's web site or c a web site established and maintained by another entity but only if the web site of the hospital facility or hospital organization if the facility or organization has a web site provides a conspicuously-displayed link to the web page where the document is posted along with clear instructions for accessing the document on that web site ii individuals with access to the internet can access download view and print a hard copy of the document from the web site- a without requiring special computer hardware or software other than software that is readily available to members of the public without payment of any fee b without paying a fee to the hospitality facility hospital organization or other entity maintaining the web site and c without creating an account or being otherwise required to provide personally identifiable information and iii the hospital facility provides individuals who ask how to access a copy of the document online with the direct web site address or url of the web page where the document is posted c f_r sec_1_501_r_-2 sec_1_501_r_-2 sec_1 r --2 failures to satisfy sec_501 currentness a revocation of sec_501 status except as otherwise provided in paragraphs b and c of this section a hospital organization failing to meet one or more of the requirements of sec_501 separately with respect to one or more hospital facilities it operates may have its sec_501 status revoked as of the first day of the taxable_year in which the failure occurs in determining whether to continue to recognize the sec_501 status of a hospital organization that fails to meet one or more of the requirements of sec_501 with respect to one or more hospital facilities the commissioner will consider all relevant facts and circumstances including but not limited to the following whether the organization has previously failed to meet the requirements of sec_501 and if so whether the same type of failure previously occurred the size scope nature and significance of the organization's failure s in the case of an organization that operates more than one hospital facility the number size and significance of the facilities that have failed to meet the sec_501 requirements relative to those that have complied with these requirements form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items year period ended tax identification_number name of taxpayer 20xx the reason for the failure s whether the organization had prior to the failure s established practices or procedures formal or informal reasonably designed to promote and facilitate overall compliance with the sec_501 requirements whether the practices or procedures had been routinely followed and the failure s occurred through an oversight or mistake in applying them whether the organization has implemented safeguards that are reasonably calculated to prevent similar failures from occurring in the future whether the organization corrected the failure s as promptly after discovery as is reasonable given the nature of the failure s whether the organization took the measures described in paragraphs a and a of this section before the commissioner discovered the failure s b minor omissions and errors- in general a hospital facility's omission of required information from a policy or report described in sec_1_501_r_-3 or sec_1_501_r_-4 or error with respect to the implementation or operational requirements described in sec_1_501_r_-3 through r -6 will not be considered a failure to meet a requirement of sec_501 if the following conditions are satisfied i such omission or error was minor and either inadvertent or due to reasonable_cause ii the hospital facility corrects such omission or error as promptly after discovery as is reasonable given the nature of the omission or error such correction must include establishment or review and if necessary revision of practices or procedures formal or informal that are reasonably designed to promote and facilitate overall compliance with the requirements of sec_501 reasonable_cause for purposes of this paragraph b the fact that a hospital facility has established practices or procedures formal or informal reasonably designed to promote and facilitate overall compliance with the sec_501 requirements prior to the occurrence of an omission or error is a factor tending to show that the omission or error is due to reasonable_cause c excusing certain failures if hospital facility corrects and discloses a hospital facility's failure to meet one or more of the requirements described in sec_1_501_r_-3 through r -6 that is neither willful nor egregious shall be excused for purposes of this section if the hospital facility corrects and makes disclosure in accordance with rules set forth by revenue_procedure notice or other guidance published in the internal_revenue_bulletin for purposes of this paragraph c a willful failure includes a failure due to gross negligence reckless disregard or willful neglect and an egregious failure includes only a very serious failure taking into account the severity of the impact and the number of affected persons whether a failure is willful or egregious will be determined based on all of the facts and circumstances a hospital form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a explanations of items rev date tax identification_number year period ended name of taxpayer 20xx facility's correction and disclosure of a failure in accordance with the relevant guidance is a factor tending to show that the failure was not willful d taxation of noncompliant hospital facilities- in general except as otherwise provided in paragraphs b and c of this section if a hospital organization that operates more than one hospital facility fails to meet one or more of the requirements of sec_501 separately with respect to a hospital facility during a taxable_year the income derived from the noncompliant hospital facility ‘noncompliant facility income’ during that taxable_year will be subject_to tax noncompliant facility income- i in general for purposes of this paragraph d the noncompliant facility income derived from a hospital facility during a taxable_year will be the gross_income derived from that hospital facility during the taxable_year less the deductions allowed by chapter that are directly connected to the operation of that hospital facility during the taxable_year excluding any gross_income and deductions taken into account in computing any unrelated_business_taxable_income described in sec_512 that is derived from the facility during the taxable_year analysis and government position the aca enacted march 20xx added new mandatory requirements on hospital organizations to retain their exemption under sec_501 most of the provisions were effective upon passage of the aca the chna requirements became effective for tax years beginning after march 20xx and stated the hospital must conduct a chna and implementation strategy at least once every three years for tax years beginning after march 20xx the chna would have be conducted no later than its year ended december 20xx for them to be compliant operates on a calendar_year ending december annually the final regulations were issued on december 20xx effective for tax years beginning after december 20xx and states the documents required must be made widely available on policy was not enforceable for the period examined but was a requirement when the exam was initiated therefore the data requested should have been on have made some of the documents sought for the year under audit automatically available website for the current periods and that would website this sec_501 states hospitals required to follow its provisions will not be recognized as an entity described in sub sec_501 unless it meets the criteria enumerated in sub sec_501 b c and d those sections state the entity must have a chna fap limit the amounts charged for emergency or other medically necessary care provided to patients eligible for assistance under its fap prohibit the use of gross charges and states the hospital cannot engage in extraordinary collection actions before reasonable efforts have been made to determine whether the patient is eligible for assistance under the hospital's fap sec_501 further states this law is applicable to organization’s that operate a facility required to be licensed registered or recognized as a hospital and any other organization determined to have the provision of hospital care as its principal function or purpose constituting the basis for its exemption under sub sec_501 form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service schedule number or exhibit form 886-a rev date explanations of items tax identification_number year period ended name of taxpayer 20xx sec_1_501_r_-1 provides definitions of terms pertinent to sec_501 regarding amounts that can be charged patients billing policies fap applications governing body of the hospital and other pertinent items it provides clarity sec_1_501_r_-2 states hospitals failing to meet one or more of the requirements of this section could have it sec_501 status revoked effective the first day of the taxable_year in which the failure occurs the entity does have a website which was reviewed during the pre-audit phase of the examination and as the exam progressed the website did not meet the final regulations nor was there any indication the temporary and or proposed_regulations had been followed or met aware of their responsibility to comply with sec_501 in fact the ceo stated they were not during conversations with the entity and review of their operations it was established they were not in compliance with the provisions of sec_501 furthermore they were not aware of their statutory obligation to do so as was not aware of its exemption under sec_501 the entity's ceo stated they were agreeable to termination of the c status since they were not aware for its existence nor was a tangible benefit being derived from the status the entity was established as governmental hospital and has been operating as such they were concerned about the assessment of penalties due to their lack of compliance upon review of the procedures to terminate which results in a prospective action and a subsequent request for retroactive termination of the exempt status along with discussions with counsel it was determined revocation of their exempt status was applicable and appropriate based upon the facts the entity will retain its status as a governmental hospital upon loss of its status as a public charity taxpayer’s position the taxpayer has stated they will agree to revocation of their status as an sec_501 hospital since they would remain a governmental hospital conclusion is a hospital that was selected for an examination to determine its compliance with the aca provisions under sec_501 the entity is a governmental hospital that is also exempt under sec_501 of the code this type entity is referred to as a dual status hospital is not in compliance with any of the provisions imposed under sec_501 of the code the entity stated they were not aware of the sec_501 exemption and were not availing themselves of benefits afforded under that subsection therefore revocation of their exempt status is proposed effective for the year beginning january 20xx as this is the first taxable_year failure to comply with sec_501 was noted it was determined the entity form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service


internal_revenue_service number release date index number --------------------------------------------------- --------------------------------- --------------------- ---------------------------- - department of the treasury washington dc person to contact ----------------------- - id no ------------- telephone number --------------------- refer reply to cc corp b05 - plr-137258-03 date october ------------------------------------------------------- ------------------------------- ------------------------------------ legend taxpayer ----------------------------------------------------------- sub ------------------------------------------------------------------- ------------------------------------------------------------ sub ------------------------------------------------------------------------------------ ------------------------------------------------------------ sub ------------------------------------------------------------------ ------------------------------------------------------------ sub ------------------------------------------------------------ date date date company official ---------------------------------------- --------------------------------------- ------------------------------------- ----------------------------------- --------------------------------------------------------- --------------------------------------------------------------------- -- ------------------------------- this letter responds to a letter dated date requesting on behalf of --------------------------------------------------------------------- tax professional ---------------------------------------------------------------------------- x dear -------------- taxpayer an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election the extension is being requested for taxpayer to file an election under sec_1_1502-21 of the income_tax regulations to relinquish the entire carryback period for the consolidated_net_operating_loss cnol of the consolidated_group of which taxpayer is the common parent for the tax_year ended date the material information submitted for consideration is summarized below taxpayer is the common parent of a consolidated_group group as of date except for four subsidiaries all members of the group had been members of the group for at least x years the four subsidiaries that joined the group in the x-year period prior to date were sub sub sub and sub each of these four subsidiaries was acquired by taxpayer in a transaction for which a sec_338 election was made taxpayer intended to relinquish the carryback period for its consolidated group’s cnol for its year ending date the tax_return for the year ending date was timely filed with extension on date consistent with a valid election having been made all other relevant returns have also been filed and future returns will be filed consistent with a valid election having been made however for various reasons a valid election was not filed on date which is after date it was discovered that a valid election was not filed subsequently this request was submitted under sec_301_9100-3 for an extension of time to file a valid election the period of limitations on assessment under sec_6501 has not expired for the taxable_year for which the valid election should have been filed or for any subsequent taxable_year s relinquish the carryback period with respect to a cnol for any consolidated_return_year sec_1_1502-21 provides that a consolidated_group may elect to sec_301_9100-1 through provide the standards the the election is made in a separate statement entitled this is an election under sec_1_1502-21 to waive the entire carryback period pursuant to sec_172 for the insert consolidated_return_year cnols of the consolidated_group of which insert name and employer_identification_number of common parent is the common parent sec_1 b i provides that the statement must be signed by the common parent and filed with the group’s income_tax return for the consolidated_return_year in which the cnol arises under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making regulatory elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_1_1502-21 therefore the commissioner has discretionary authority under sec_301_9100-3 to grant an extension of time for taxpayer to file the election provided taxpayer establishes it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by taxpayer company official and tax professional explain the circumstances that resulted in the failure to timely file a valid election the information establishes that taxpayer reasonably relied on a qualified_tax professional who failed to make or advise taxpayer to make the election the request for relief was filed before the failure to make the election was discovered by the internal_revenue_service and that the government will not be prejudiced if relief is granted see sec_301_9100-3 and v based on the facts and information submitted including the representations that have been made we conclude that taxpayer has established it acted reasonably and in good_faith in failing to timely file the election the requirements sec_301_9100-1 and in this case the time for filing the election is fixed by the regulations ie taxpayer should file the election in accordance with sec_1_1502-21 no opinion is expressed as to the tax effects or consequences of filing the are satisfied and granting relief will not prejudice the interests of the government accordingly we grant an extension of time under sec_301_9100-3 until days from the date on this letter for taxpayer to file the election with respect to the relinquishment of the entire carryback period for the cnol for the tax_year ended date as described above the above extension of time is conditioned on taxpayer’s consolidated group’s tax_liability if any not being lower in the aggregate for all years to which the election applies than it would have been if the election had been made timely taking into account the time_value_of_money no opinion is expressed as to taxpayer’s consolidated group’s tax_liability for the years involved a determination thereof will be made upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that taxpayer’s consolidated group’s liability is lower sec_301_9100-3 taxpayer’s returns must be amended to attach the election statement required by sec_1_1502-21 a copy of this letter should be attached to the election statement election late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-3 we relied on certain statements and representations made by the taxpayer and its representatives however all of the essential facts must be verified in addition notwithstanding that an extension is granted under sec_301 to file the election penalties and interest that would otherwise be applicable if any continue to apply the code provides that it may not be used or cited as precedent letter is being sent to your authorized representative ken cohen _________ ken cohen senior technician reviewer branch office of associate chief_counsel this ruling is directed only to the taxpayer s requesting it sec_6110 of in accordance with the power_of_attorney on file with this office a copy of this sincerely corporate


t c memo united_states tax_court john j maloney and mary frances maloney petitioners v commissioner of internal revenue respondent docket no filed date gregory r noonan for petitioners george d curran for respondent memorandum findings_of_fact and opinion foley judge in a notice_of_deficiency issued on date respondent determined deficiencies additions to tax and civil_fraud penalties relating to john and mary maloney's and federal income taxes the parties have settled all issues relating to the tax_year among the issues relating to the tax_year is whether the period of limitation on assessment has expired we conclude that assessment is barred and therefore the other issues are moot all section references are to the internal_revenue_code in effect for and all rule references are to the tax_court rules_of_practice and procedure findings_of_fact at the time john maloney and mary maloney filed their petition they resided in perkiomenville pennsylvania mr maloney is a mechanical engineer and from approximately to he operated a sole_proprietorship and employed the accounting services of robert butler each year mr maloney provided mr butler with check stubs bank statements and information relating to his accounts_receivable and payable mr butler used this information to prepare balance sheets income statements trial balances general ledgers cash disbursement journals and ultimately petitioners' federal_income_tax returns mr maloney believed that mr butler used the accrual_method of accounting to prepare these records and returns from through mr maloney was the project engineer for a prison being constructed in montgomery county pennsylvania during this period mr maloney on a monthly basis billed the county which in turn paid him by check in the county paid mr maloney dollar_figure in early the county issued mr maloney two forms stating that in it paid him dollar_figure and dollar_figure and a corrected form_1099 stating it paid him dollar_figure mr butler prepared mr maloney's general ledgers and tax_return on their return petitioners elected accrual as the method_of_accounting and reported dollar_figure of gross_receipts in the county paid mr maloney dollar_figure in early the county issued mr maloney a form_1099 stating that in it paid him dollar_figure petitioners on their return reported dollar_figure of schedule c gross_receipts but did not identify their method_of_accounting during the internal_revenue_service irs interviewed mr maloney in connection with a federal grand jury investigation into the county's prison construction_project mr maloney provided the workpapers that his accountant had prepared and fully cooperated with the investigation which continued through in the county paid mr maloney dollar_figure mr butler recorded on the general ledger dollar_figure in early the county issued a form_1099 stating that it paid mr maloney dollar_figure in after receiving this form mr butler changed the amount of gross_receipts reflected on the general ledger from dollar_figure to dollar_figure subsequently the county issued two corrected forms each stating that in the county paid mr maloney dollar_figure on their return petitioners reported schedule c gross_receipts of dollar_figure claimed an overpayment of dollar_figure and did not identify their method_of_accounting on date petitioners filed an amended return which mr butler had prepared on the amended_return petitioners elected the accrual_method of accounting increased their taxable_income from the original return by dollar_figure and stated that they owed dollar_figure the following chart is contained in the explanation portion of the amended_return 1099s schedule c difference dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure -dollar_figure total dollar_figure dollar_figure big_number in essence petitioners calculated their unreported income by subtracting the amount mr maloney believed they overreported on their return ie dollar_figure from the amount that they underreported on their return ie dollar_figure in april of a federal grand jury indicted mr maloney and mr butler on numerous counts in pertinent part the indictment states count the grand jury further charges that on or about date john j maloney did willfully make and subscribe a federal_income_tax return for the year which tax_return he did not believe to be true and correct as to every material matter in that the return stated that his taxable_income for this year was dollar_figure when in fact and as he then well knew his taxable_income was dollar_figure in violation of title_26 united_states_code sec_7206 count the grand jury further charges that on or about date john j maloney did willfully make and subscribe an amended federal_income_tax return for the year which tax_return he did not believe to be true and correct as to every material matter in that the return stated that his taxable_income for this year was dollar_figure when in fact and as he then well knew his taxable_income was dollar_figure in violation of title_26 united_states_code sec_7206 a jury returned a verdict of guilty with respect to both of the above counts and in september of judgment was entered and mr maloney was sentenced mr butler pleaded guilty to three counts of violating sec_7206 assisting the false filing of a return and one count of violating u s c conspiracy to defraud the government on date respondent issued the notice_of_deficiency that petitioners now contest opinion sec_6501 provides that generally the amount of any_tax must be assessed within years of the filing of a return sec_6501 however provides that if the taxpayer files a false_or_fraudulent_return with the intent to evade tax the amount of the tax due may be assessed at any time respondent concedes that the notice_of_deficiency was issued after the expiration of the 3-year period but contends that petitioners filed false or fraudulent original and amended returns and therefore assessment is not barred respondent must establish by clear_and_convincing evidence that petitioners filed a false_or_fraudulent_return with the intent to evade tax 39_tc_988 davis v commissioner tcmemo_1991_603 respondent may prove such intent by circumstantial evidence davis v commissioner supra which may include substantial_understatement of income inadequate books_and_records failure_to_file returns concealment of assets failure to cooperate with tax authorities and participation or concealment of illegal activities chin v commissioner tcmemo_1994_54 see 99_tc_202 we must first determine to what extent if any mr maloney's conviction under sec_7206 collaterally estops petitioners from asserting exculpatory facts the doctrine_of collateral_estoppel precludes the relitigation of any issue of fact or law that is actually litigated and necessarily determined by a valid and final judgment 440_us_147 84_tc_636 because the intent to evade tax is not an element of the crime charged under sec_7206 a conviction under this section does not establish as a matter of law that a taxpayer intended to evade tax wright v commissioner supra pincite mcculley v commissioner tcmemo_1997_285 kaissy v commissioner tcmemo_1995_474 while respondent has established that mr maloney is estopped from denying that he willfully attested to a return that he believed understated his taxable_income respondent has not established that mr maloney intended to evade tax cf mcculley v commissioner supra concluding that the taxpayer who had been convicted under sec_7206 did not intend to evade tax because she did not know that embezzlement income was taxable kaissy v commissioner supra concluding that the taxpayer who had been convicted under sec_7206 did not intend to evade tax because he relied on his accountant mr maloney knew that on their return he and mrs maloney understated their income mr maloney believed however that on their return they had overstated their income by approximately the same amount and that cumulatively during the years that he worked for the county he reported his total gross_receipts in addition the typical indicia of an intent to evade tax are not present mr maloney maintained excellent records provided all pertinent information to his accountant and subsequently to the irs cooperated with the irs's investigation and did not employ any scheme artifice or device to conceal income accordingly the 3-year statute of limitation bars assessment and all other issues raised by the parties are moot to reflect the foregoing decision will be entered under rule


t c summary opinion united_states tax_court michael stephen frate petitioner v commissioner of internal revenue respondent docket no 7295-03s filed date michael stephen frate pro_se monica d armstrong for respondent pajak special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petition was filed unless otherwise indicated section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority respondent issued to petitioner a notice_of_determination concerning collection action s under sec_6320 and or notice_of_determination this court must decide whether respondent abused his discretion in determining that the filing of the notice_of_federal_tax_lien was appropriate some of the facts in this case have been stipulated and are so found petitioner resided in atlanta georgia at the time he filed his petition petitioner did not timely file his form_1040 u s individual_income_tax_return for in addition petitioner did not timely file federal_income_tax returns for through on date respondent prepared a substitute for return for taxable_year on date respondent issued to petitioner’s employer pwj incorporated pwj a form 668-w c notice_of_levy on wages salary and other income wage levy in the amount of dollar_figure on date respondent sent to petitioner a notice_of_federal_tax_lien filing and your right to a hearing under sec_6320 notice of lien on date respondent received petitioner’s request for a collection_due_process_hearing appeals_office hearing in response to the notice of lien in his request for an appeals_office hearing petitioner claimed that his tax_liability for had been satisfied by a prior wage levy on or about date petitioner sent a tax_return form to respondent on or about date petitioner submitted tax returns for the years through on date petitioner met with a settlement officer for petitioner’s appeals_office hearing at his appeals_office hearing petitioner presented to the settlement officer photocopies of several payroll check stubs for petitioner which reflected tax levy deductions totaling dollar_figure wage levy deductions the settlement officer informed petitioner that no payments from the wage levy deductions had been received by the internal_revenue_service irs petitioner asserted that pwj’s bookkeeping service business service associates bsa was under criminal investigation for fraud and embezzlement and that petitioner’s wage levy deductions may have been embezzled by bsa petitioner requested that his account be credited in the amount of the wage levy deductions the settlement officer explained to petitioner that no statutory or administrative authority allowed the irs to credit an account when the irs has not received payment petitioner requested and was allowed time to retain professional representation on date petitioner and his representative louis sheffield enrolled_agent mr sheffield met with the settlement officer mr sheffield presented a letter on the stationery of wen-don corporation formerly pwj signed by paul w jones iii mr jones as the former president of pwj that letter claimed that pwj’s payroll_taxes had been embezzled during the meeting mr sheffield and petitioner both stated that if petitioner’s account was not credited in the amount of the wage levy deductions petitioner would seek judicial review on date respondent sent to petitioner the notice_of_determination at issue here respondent determined that all applicable law or administrative procedures had been met that there was a balance due for taxable_year and that the filing of the lien is sustained on date petitioner filed his petition he stated that dollar_figure was disputed and that dollar_figure was paid via the wage levy by his employer he further stated that it appears that my employer never paid these funds to the government the record does not reflect any payments by petitioner of his then liability of dollar_figure examination of petitioner’s tax_return commenced in when respondent prepared the substitute for return simanonok v commissioner tcmemo_2002_66 sec_7491 is not applicable in this case because examination of petitioner’s tax_return commenced prior to date the effective date of sec_7491 the burden_of_proof is on petitioner rule a sec_6321 imposes a lien in favor of the united_states on all property and rights to property of a person when demand for payment of that person’s liability for taxes has been made and the person fails to pay those taxes the lien arises when the assessment is made sec_6322 sec_6323 requires the secretary to file notice_of_federal_tax_lien if such lien is to be valid against any purchaser holder of a security_interest mechanic’s_lienor or judgment lien creditor lindsay v commissioner tcmemo_2001_285 affd 56_fedappx_800 9th cir sec_6320 provides that the secretary shall furnish the person described in sec_6321 with written notice of the filing of a notice of lien under sec_6323 the notice required by sec_6320 must be provided not more than business days after the day the notice of lien is filed sec_6320 sec_6320 further provides that the person may request administrative review of the matter in the form of an appeals_office hearing within the 30-day period beginning on the day after the 5-day period described above sec_6320 provides that the appeals_office hearing generally shall be conducted consistent with the procedures set forth in sec_6330 d and e sec_6330 provides for review with respect to collection issues such as spousal defenses the appropriateness of the commissioner’s intended collection action and possible alternative means of collection sec_6330 provides that the existence or amount of the underlying tax_liability may be contested at an appeals_office hearing if the taxpayer did not receive a notice_of_deficiency for the taxes in question or did not otherwise have an earlier opportunity to dispute such tax_liability 114_tc_604 114_tc_176 sec_6330 provides for judicial review of the administrative determination in the tax_court or a united_states district_court we find that petitioner did not raise any reviewable collection issue at his appeals_office hearing petitioner did not contest the existence or amount of the underlying tax_liability petitioner failed to raise a spousal defense make a valid challenge to the appropriateness of respondent’s intended collection action or offer alternative means of collection these issues are now deemed conceded rule b petitioner alleges that his wage levy deductions may have been embezzled this is based on mere assertions by petitioner in a written representation by his representative mr sheffield and in a letter from mr jones the former president of pwj no evidence was introduced that bsa actually embezzled the wage levy deductions on this record petitioner failed to prove that the wage levy deductions were embezzled or if they were who embezzled them we note that mr jones stated in his letter that bsa embezzled pwj’s payroll_taxes on the other hand mr jones claimed that separate payments were made by pwj to bsa for petitioner’s taxes in addition the purported payments were made by wen-don corporation not by pwj the settlement officer had suggested to petitioner that he contact his employer and obtain copies of the checks front and back evidencing the wage levy deductions so that they may be traced petitioner did not seem too interested in doing so at that time only a limited number of separate checks for wage levy payments were put in evidence at trial these checks from wen-don corporation signed by mr jones the former president of pwj do not match the so- called pwj records of wage levy deductions at trial petitioner suggested that respondent should seek recovery from bsa or pwj for the wage levy deductions not paid over to the irs and that petitioner should be credited for such deductions clearly respondent can take action to enforce the lien under sec_7403 where there is a refusal to pay any_tax we have found the following provision significant sec_6332 refers to the surrender of property subject_to levy it provides that any amount other than costs recovered under this paragraph shall be credited against the tax_liability for the collection of which such levy was made sec_6332 respondent’s position is that if no payment is made to the irs petitioner remains liable for his tax debt we agree on the issue before us we conclude that respondent did not abuse his discretion with respect to the notice_of_determination contentions we have not addressed are irrelevant moot or without merit reviewed and adopted as the report of the small_tax_case division decision will be entered for respondent