number release date internal_revenue_service 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 b09 plr-155933-05 date date - legend legend date decedent trust trust trust spouse grandchild grandchild grandchild year year year year year year year year year year year year -------------------------- ------------------------------------------------------------------------------------------ ------------------------- ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ ----------------------- ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ ----------------------- ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ ----------------------- ----------------------- --------------------------- ---------------------------------- -------------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- plr-155933-05 year year year year year date trust ------- ------- ------- ------- ------- --------------------------- ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ ----------------------- grandchild date trust grandchild accountant date date trust ---------------------------- ------------------ ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ ----------------------- --------------------------------- ----------------------- ----------------- ------------------- ------------------------------------------------------------------------------------------ ------------------- ----------------------- date dear -------------- this is in response to your authorized representative’s letter dated the facts and representations submitted are summarized as follows on date date requesting an extension of time under sec_2642 of the internal_revenue_code and sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to make allocations of generation-skipping_transfer gst_exemption decedent established trust trust and trust trust trust and trust are trusts with gst potential and were established for the benefit of spouse and each of decedent’s respective grandchildren grandchild grandchild and grandchild pursuant to each trust agreement spouse has an ascertainable interest in each trust year year year year year year year year year year year year year year year year and year the benefit of spouse and grandchild the dispositive provisions of trust are identical to those contained in trust trust and trust except for the identity of the beneficiaries decedent made transfers of stock to trust in year through year inclusive on date in year decedent established trust a_trust with gst potential for decedent made transfers of stock to each of trust trust and trust in decedent and spouse relied upon accountant a certified_public_accountant to on date in year decedent established trust a_trust with gst potential plr-155933-05 for the benefit of spouse and grandchild the dispositive provisions of trust are identical to those contained in trust trust trust and trust except for the identity of the beneficiaries decedent made transfers of stock to trust in year through year inclusive prepare their respective form sec_709 united_states gift and generation-skipping_transfer_tax returns gift_tax returns reporting the transfers to the trusts and allocating their respective gst_exemption to those transfers accountant mistakenly believed that decedent and spouse were not required to file gift_tax returns thus no gift_tax returns were prepared or filed for decedent or spouse for year through year inclusive and no allocation of decedent’s or spouse’s respective gst exemptions was made decedent died on date article of decedent’s will provides generally that decedent bequeaths the residue of her estate to the trustee of decedent’s revocable_trust created on date trust decedent amended trust in its entirety on date article of trust as amended provides that if spouse survives decedent the trustee will divide the trust property into separate funds article of trust as amended provides that the trustee will allocate to fund a an amount equal to the remaining trust property less a sum equal to the largest amount that can pass with the least amount of federal estate_tax by reason of the unified_credit after taking account of any adjusted_taxable_gifts made by decedent and the state_death_tax_credit allowable to decedent’s estate but no other credit reduced by payments from or charges to the principal of decedent’s estate or this trust that are not allowed as deductions in computing the amount of federal_estate_taxes on decedent’s estate and the value of any other_property interests that are included in decedent’s gross_estate which pass in a manner that will not qualify for the marital or charitable deductions the remaining trust property will be allocated to fund b article of trust as amended provides generally that decedent intends that fund a will be available for the marital_deduction and that only property which may qualify for the marital_deduction will be allocated to fund a rulings an extension of time under ' g and and to allocate decedent’s and spouse’s respective available gst exemptions with respect to the transfers made to trust trust and trust in year through year the transfers made to trust in year through year and the transfers made to trust in year through year that the allocations will be effective as of the dates of the original transfers and made based on the value of the property transferred to the trusts as of the date of the original transfer and an extension of time under spouse and the executor of decedent’s estate have requested the following plr-155933-05 sec_2642 and sec_301_9100-1 and sec_301_9100-3 to allocate decedent’s remaining available gst_exemption after the allocations made pursuant to a grant of relief with respect to ruling_request above to the fund b gst exempt trust sec_2601 imposes a tax on every gst a gst is defined under ' a as a taxable_distribution a taxable_termination and a direct_skip sec_2602 provides that the amount of the tax is the taxable_amount multiplied by the applicable_rate sec_2641 defines aapplicable rate as the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer sec_2631 in effect at the time of the transfer provides that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure that may be allocated by such individual or his executor to any property with respect to which such individual is the transferor exemption under ' a may be made at any time on or before the date prescribed for filing the estate_tax_return for such individual s estate determined with regard to extensions regardless of whether such a return is required to be filed sec_2632 provides that any allocation by an individual of his or her gst sec_26_2632-1 of the generation-skipping_transfer_tax regulations provides in part that an allocation of gst_exemption to property transferred during the transferor s lifetime other than in a direct_skip is made on form_709 an allocation of gst_exemption to a_trust is void to the extent the amount allocated exceeds the amount necessary to obtain an inclusion_ratio of zero with respect to the trust sec_2642 provides that except as provided in ' f if the allocation of the gst_exemption to any transfers of property is made on a gift_tax_return filed on or before the date prescribed by ' b for such transfer or is deemed to be made under ' b or c the value of such property for purposes of ' a shall be its value as finally determined for purposes of chapter within the meaning of ' f or in the case of an allocation deemed to have been made at the close of an estate_tax_inclusion_period its value at the time of the close of the estate_tax_inclusion_period and such allocation shall be effective on and after the date of such transfer or in the case of an allocation deemed to have been made at the close of an estate_tax_inclusion_period on and after the close of such estate_tax_inclusion_period sec_2642 provides generally that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in ' b or and an election under ' b or c such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of ' g which was enacted into law on date sec_2642 provides that in determining whether to grant relief under plr-155933-05 this paragraph the secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the secretary deems relevant for purposes of determining whether to grant relief under this paragraph the time for making the allocation or election shall be treated as if not expressly prescribed by statute notice_2001_50 2001_2_cb_189 provides that under ' g b the time for allocating the gst_exemption to lifetime transfers and transfers at death the time for electing out of the automatic allocation rules and the time for electing to treat any trust as a generation-skipping_trust are to be treated as if not expressly prescribed by statute the notice further provides that taxpayers may seek an extension of time to make an allocation described in ' b or b or an election described in ' b or c under the provisions of ' sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in and 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_9100-3 provides the standards used to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute under ' b a regulatory election includes an election whose due_date is prescribed by a notice published in the internal_revenue_bulletin in accordance with ' g b and notice_2001_50 taxpayers may seek an extension of time to make an allocation described in ' b or b or an election described in ' b or c under the provisions of ' requests for relief under ' will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election the requirements of ' have been satisfied therefore spouse and the executor of decedent’s estate are granted an extension of time of days from the date of this letter to make allocations of decedent’s and spouse’s respective available gst exemptions with respect to the transfers made to trust trust and trust in year based on the facts submitted and the representations made we conclude that plr-155933-05 through year inclusive the transfers made to trust in year through year inclusive and the transfers made to trust in year through year inclusive the allocations will be effective as of the dates of the original transfers and the gift_tax value of the transfers to the trusts will be used in determining the amount of gst_exemption to be allocated to the trusts the executor of decedent’s estate is also granted an extension of time of days from the date of this letter to make an allocation of decedent’s remaining available gst_exemption after the allocations discussed above to the fund b gst exempt trust through year transfers should be made on form sec_709 united_states gift and generation-skipping_transfer_tax return and filed with the internal_revenue_service center cincinnati oh a copy of this letter should be attached to the form sec_709 copies are enclosed for this purpose the allocations of decedent’s and spouse’s gst exemptions to the year the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination tax consequences of the transaction under the cited provisions or under any other provisions of the code except as specifically ruled herein we express or imply no opinion on the federal in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives the code provides that it may not be used or cited as precedent this ruling is directed only to the taxpayer requesting it sec_6110 of sincerely heather c maloy associate chief_counsel passthroughs special industries enclosures copy of letter for sec_6110 purposes copy of letter


t c memo united_states tax_court william richard baker jur petitioner v commissioner of internal revenue respondent docket no filed date william richard baker jr pro_se edsel ford holman jr for respondent memorandum opinion ruwe judge this matter is before this court on respondent’s motion for partial summary_judgment which was filed pursuant to rule the issues for decision are whether ‘unless otherwise indicated all section references are to the internal_revenue_code in effect for the taxable years in issue and all rule references are to the tax_court rules of continued - - petitioner’s net_earnings from his law practice are subject_to self-employment taxes and whether payment of those taxes is voluntary at the time the petition in this case was filed petitioner resided in knoxville tennessee petitioner did not file timely a form_1040 u s individual_income_tax_return for taxable years and on date respondent issued a notice_of_deficiency in which he determined the following deficiencies and additions to tax additions to tax_year deficiency sec_6651 a sec_6654 dollar_figure dollar_figure dollar_figure big_number dollar_figure dollar_figure some of the deficiencies were attributable to petitioner’s failure to report or otherwise pay self-employment taxes on date petitioner filed a timely petition to this court on date petitioner executed federal_income_tax returns for taxable years and on the schedules c profit or loss from business attached to those returns petitioner reported net_income of dollar_figure for taxable_year and dollar_figure for taxable_year the schedules c showed that the income was derived from mr baker’s business or profession as an attorney on the schedules se self-employment_tax continued practice and procedure petitioner calculated his self-employment_tax liability to be dollar_figure for taxable_year and dollar_figure for taxable_year on date respondent issued interrogatories to petitioner in which he asked in your petition to the tax_court you indicate that the respondent’s self-employment_tax computation is erroneous please describe in detail why the respondent’s self-employment_tax computation is incorrect and what you believe the correct self-employment computation to be petitioner replied see tax returns---respondent asserts also that self-employment taxes are voluntary and respondent does not volunteer se taxes for or respondent contends that the self-employment_tax is not voluntary and that petitioner is liable for self-employment_tax on the net_earnings from his law practice as reported on petitioner’s belatedly filed and federal_income_tax returns under rule a either party may move for summary_judgment upon all or part of the legal issues in controversy a motion for partial summary_judgment will be granted where there is no genuine issue as to any material fact relevant to the particular issue involved rule b 98_tc_518 affd 17_f3d_965 7th cir the burden is on the moving party respondent to prove the nonexistence of a genuine issue as to any material fact q4e- and that he is entitled to judgment as a matter of law 116_tc_73 in all cases the evidence must be viewed in the light most favorable to the nonmoving party petitioner 94_tc_491 petitioner has failed to respond to respondent’s motion for partial summary_judgment and this court’s order dated date which states that petitioner shall on or before date file a response to the above motion for partial summary_judgment when a motion for summary_judgment is made the nonmoving party cannot rely upon the allegations or denials in its pleading but must demonstrate with specific facts that there 1s a genuine issue for trial 87_tc_1213 shepherd v commissioner tcmemo_1997_555 under rule d if the adverse_party petitioner herein does not respond to the motion for summary_judgment then this court may enter a decision where appropriate against that party king v commissioner supra pincite shepherd v commissioner supra we could enter a decision against petitioner without elaboration however we shall address the contentions petitioner raised in his petition and in the interrogatories in his petition petitioner claimed that the self-employment_tax deficiency was erroneously included in the notice_of_deficiency issued by respondent in response to interrogatories issued by respondent petitioner argued that self-employment taxes were voluntary and that he was therefore not reguired to make payment for those taxes it is well established that the obligation to pay self- employment_taxes is mandatory so long as the requirements of sec_1401 are met kanes v commissioner tcmemo_2000_ see also 455_us_252 665_fsupp_813 n d cal tyng v commissioner tcmemo_1985_399 affd without published opinion 809_f2d_930 d c cir in hanes this court rejected a taxpayer’s argument that the self-employment_tax was a voluntary contribution id we also stated self-employment_tax is assessed and collected as part of the income_tax must be included in computing any income_tax deficiency or overpayment for the applicable tax period and must be taken into account for estimated_tax purposes see sec_1_1401-1 income_tax regs petitioner has a mandatory obligation to pay self-employment taxes if the requirements of sec_1401 are met a genuine issue of material fact is not presented with respect to the voluntariness of the self-employment_tax sec_1401 and b imposes a percentage tax on self- employment income of every individual for the benefit of old age survivors disability insurance and hospital insurance self- employment income is defined as the net_earnings from self- - - employment derived by an individual during any taxable_year sec_1402 net_earnings_from_self-employment is then defined as the gross_income derived by an individual from any trade_or_business carried on by such individual less the deductions allowed by this subtitle which are attributable to such trade_or_business sec_1402 hanes v commissioner supra in his motion for partial summary_judgment respondent takes the position that petitioner is liable for self-employment_tax on petitioner’s net profits from his law practice on petitioner’s form sec_1040 for taxable years and he reported that net profits were derived from his business or profession as an attorney petitioner’s income_tax returns reported net profits from self-employment of dollar_figure for taxable_year and of dollar_figure for taxable_year on schedules se of those returns petitioner reported a self-employment_tax due of dollar_figure for taxable_year and of dollar_figure for taxable_year respondent has agreed that those calculations correctly reflect petitioner’s self-employment_tax liability for the taxable years at issue on the basis of petitioner’s failure to respond to respondent’s motion for partial summary_judgment and on the basis of the circumstances above we find that a genuine issue of material fact does not exist regarding petitioner’s liability for - j- the self-employment taxes reported by petitioner on his and tax returns accordingly an appropriate order will be issued qranting respondent’s motion for partial summary_judgment


department of the treasury internal_revenue_service washington d c o f f i c e o f c h i e f c o u n s e l number release date cc it a tl-n-6345-00 uilc date internal_revenue_service national_office service_center advice memorandum for pennsylvania district_counsel attention david a breen from heather maloy by george baker associate chief_counsel income_tax accounting cc it a subject significant service_center advice this responds to your request for significant advice dated date in connection with a question posed by the centralized quality review site in philadelphia issue whether an individual may deduct a fee charged by a credit card company for using a credit card to pay the individual’s personal income taxes due conclusion we conclude that no deduction is allowed under sec_212 for a fee charged by a credit card company for using a credit card to pay the individual’s personal income taxes due rather the fee should be considered as a nondeductible personal_expense under sec_262 facts sec_6311 provides that the secretary may not pay any fee or provide any other consideration under any contract for_the_use_of credit debit or charge cards for the payment of income taxes sec_301_6311-2t a of the temporary procedure and administration regulations provides that internal revenue taxes may be paid_by credit card or debit card as authorized under these regulations sec_301_6311-2t e provides that the government may not impose any fee or charge on persons making payment of taxes tl-n-6345-00 by credit card or debit card this does not prohibit the imposition of fees or charges by issuers of credit cards or debit cards or by any other financial_institution or person participating in the credit card or debit card transaction you state that customer service representatives receive many taxpayer inquires concerning the deductibility of this fee discussion sec_212 of the internal_revenue_code provides that in the case of an individual there shall be allowed as a deduction all the ordinary and necessary expenses paid_or_incurred during the taxable_year in connection with the determination collection_or_refund_of_any_tax section l of the income_tax regulations states that expenses paid_or_incurred by an individual in connection with the determination collection_or_refund_of_any_tax whether the taxing authority be federal state or municipal and whether the tax be income estate gift property or any other tax are deductible thus expenses paid_or_incurred by a taxpayer for tax counsel or expenses paid_or_incurred in connection with the preparation of the taxpayer’s tax returns or in connection with any proceedings involved in determining the extent of the taxpayer’s tax_liability or in contesting the taxpayer’s tax_liability are deductible although the legislative_history concerning sec_212 is brief s rep no 83rd cong 2d sess provides that sub sec_3 of sec_212 is designed to permit the deduction by an individual of legal and other expenses paid_or_incurred in connection with a contested tax_liability whether the contest be federal state or municipal taxes or whether the tax be income estate gift property and so forth any expenses_incurred in contesting any liability collected as a tax or as a part of the tax will be deductible sec_262 provides that except as otherwise provided for in this chapter no deduction shall be allowed for personal living or family_expenses sec_1 b further provides some examples of personal_living_and_family_expenses such as premiums_paid for life_insurance by the insured cost of insuring a dwelling owned and occupied by the taxpayer as a personal_residence and expenses of maintaining a household we have not found any precedent that we believe dictates a specific conclusion on this issue consequently we are left to draw inferences from the statute its history and the following principles derived from certain precedents in revrul_89_68 1989_1_cb_82 the service concluded that fees paid for the preparation and submission of a ruling_request concerning the deductibility of a tl-n-6345-00 medical_care expense and the user_fee paid in connection with the ruling_request were paid in connection with determining the extent of the individual’s tax_liability deductible under sec_212 although not discussed this revenue_ruling makes clear that the deduction of an expense under sec_212 for determining the extent of the taxpayer’s personal liability for income_tax is allowed even if the liability so determined does not arise in connection with any trade_or_business or income producing activity of the taxpayer the analysis in revrul_58_180 1958_1_cb_153 is instructive that revenue_ruling considered whether sec_212 permitted a deduction of a fee for an appraisal to establish a casualty_loss sustained by residential property as a result of subsoil shrinkage due to a prolonged drought the ruling first noted that a prior revenue_ruling established that such a loss constituted a casualty_loss but that the taxpayer had to prove both that the loss resulted from subsoil shrinkage and the amount of the resulting loss the ruling then concluded that an appraisal fee to establish the deductible casualty_loss was deductible under sec_212 79_tc_846 is also instructive the taxpayers sought to deduct dollar_figure paid for documents used to create a family_trust to ensure the orderly transfer of assets to their children although the payment entitled them to advice from a lawyer and a cpa no legal or accounting advice was sought in the year of payment further the taxpayers conceded that tax considerations did not influence the decision to create the family_trust as no part of the fee was shown to be related to determining the extent of any_tax liability the tax_court found no basis for allowing a deduction under sec_212 based on the foregoing authority congress intended to allow a deduction to an individual in connection with determining the extent of the tax_liability or in contesting the tax_liability it is our opinion however that this authority does not support a broader interpretation of sec_212 to allow a deduction for the expenses involved in paying that liability after its extent has been determined once the full extent of the taxpayer’s liability is determined the obligation to pay that liability does not depend on the nature of the income giving rise to it further the taxpayer may discharge that liability using any assets the taxpayer personally controls again without regard to the nature of the income giving rise to the liability the payment of the liability cannot further affect the determination of the extent of the taxpayer’s liability consequently the approach in revrul_58_180 that of first finding a necessary component of determining liability and then allowing deduction of a fee paid in connection with resolving that necessary component of liability does not support deductibility of the credit card fee like the fee in luman tl-n-6345-00 the credit card fee should be viewed as incurred in a transaction unrelated to determining the extent of the taxpayer’s liability we think the expenses of paying one’s liability fall outside the scope of sec_212 thus we feel that the payment of a credit card fee should be considered as the payment of a nondeductible personal_expense similar to the personal expenses that are not deductible by reason of sec_262 if you have any additional questions please contact george baker at


whistleblower 14377-16w petitioner v commissioner of internal revenue respondent docket no 14377-16w filed date p has moved to proceed anonymously in this whistleblower action involving his claim that a corporate taxpayer evaded paying nearly dollar_figure million in taxes motion p a self- described analyst of financial institutions learned of the cor- porate taxpayer’s claimed tax abuse from publicly available sources such as securities_and_exchange_commission forms 10-k p has pending before the court a total of cases involving numbered whistleblower claims and as many a sec_50 separate taxpayers p also has four cases pending before the irs involving six taxpayers p has moved to proceed anonymously because he fears that if his identity as a tax whistleblower is disclosed he will suffer both economic and personal harm held while we are mindful of our legal sys- tem’s general solicitude for confidential informants p has not made a sufficient fact-specific case for anonymity see rule a tax_court rules_of_practice and procedure on bal- ance p’s interest in protecting his anonymity is outweighed by the public’s interest in identifying serial claimants of whistleblower awards filing petitions in the tax_court held further we will deny the motion sealed for petitioner jonathan d tepper for respondent opinion halpern judge petitioner brought this action pursuant to sec_7623 for us to review respondent’s denial of his claim for a so-called whistleblower award concurrently all section references are to the internal_revenue_code_of_1986 as whistleblower 14377-16w v commissioner with filing the petition petitioner moved pursuant to rule a to proceed anonymously motion and we temporarily sealed the record in the case pending resolution by the court of the motion respondent objects to our granting the motion for the reasons stated we will deny the motion background petitioner assigned error to respondent’s determination to deny him a whistleblower award he avers among other things that the corporate taxpayer with respect to which he is claiming a whistleblower award taxpayer understated its income by numerous improper actions including failing to report millions of dollars in income received from the sale of gift cards in all petitioner claims taxpayer evaded paying nearly dollar_figure million in taxes in a declaration in support of the motion he states that he discovered the materials and facts relevant to his whistleblower claim in his capacity as an analyst of financial institutions he prays for anonymity because he legitimately fears that if his identity as a tax whistleblower is disclosed he will be blacklisted from his profession and he and his family will suffer severe financial harm following receipt of the motion we conferred with the par- ties by telephone to solicit respondent’s position on granting the motion and to inform petitioner that we were aware of now other cases before the court in which he is appealing the commissioner’s determination to deny him a amended and all rule references are to the tax_court rules_of_practice and procedure we use male-gender personal pronouns to refer to peti- tioner and to the anonymous whistleblowers in the cases we cite for con- venience and without intention to identify their actual genders nevertheless we have changed the caption of the case to accord peti- tioner anonymity in case he wishes to appeal our denial of the motion at least four united_states courts of appeals have held that orders denying leave to proceed under a pseudonym are immediately appealable as collat- eral orders see 127_fedappx_409 10th cir 214_f3d_1058 9th cir 6_f3d_233 4th cir s methodist univ ass’n of women law students v wynne jaffe 599_f2d_707 5th cir if within days of our issuing our order denying the motion petitioner does not file with the clerk of the court a notice of appeal we will change the caption back to reflect the pe- tition as filed united_states tax_court reports whistleblower award the cases involve in excess of two dozen taxpayers and all appear to have resulted not from petitioner’s employment by or other close relationship to the target taxpayer but from his examination of publicly avail- able materials such as securities_and_exchange_commission sec forms 10-k we informed petitioner that the public has an interest in knowing the identity of persons using the courts and that in deciding motions to proceed anony- mously the court must resolve the competing societal interests at stake see eg 137_tc_183 balancing societal interests of protecting identity of confidential informant with people’s right to know who is using courts fol- lowing our teleconference we ordered respondent to respond in writing to the motion setting forth the particulars of his objection and we ordered petitioner to reply addressing not only respondent’s grounds but also why petitioner’s use of the tax_court to pursue his numerous whistleblower claims is not a matter of public interest that should weigh against keeping his identity anonymous we also ordered petitioner to inform us of how many whistleblower claims that are not the subject of petitions to the tax_court he has pending before the internal_revenue_service irs the parties com- plied with our order respondent’s grounds for objecting respondent’s principal objection is that petitioner has failed to set forth a sufficient fact-specific basis for pro- tecting his confidentiality that would override the public’s strong legitimate interest in having access to the record in this case respondent adds that petitioner has no need for anonymity because he obtains the information upon which he bases his whistleblower claims from publicly available sources accessible on the internet and not from confidential or insider sources respondent lists seven failures by peti- tioner to comply with the requirement of rule a to pro- vide a sufficient fact-specific basis for anonymity those are petitioner’s failures to identify his current employment and how disclosure would affect that employment iden- tify the specific circumstances of his discovery of the mate- rials and facts submitted to respondent in support of his whistleblower 14377-16w v commissioner whistleblower claim disclose that his information is based on publicly available documents such as sec 10-k filings identify his relationship if any to taxpayer provide information concerning present or prospective clients identify his professional credentials and how those creden- tials would be affected by a denial of anonymity and sup- port his allegation that if his identity were known he would be blacklisted with respect to the balancing of societal interests respondent states it is in the public’s best interest to understand the circumstances sur- rounding these filings including the frequency of filings by a single peti- tioner that may be based not upon insider information but upon pub- lically available information this type of information is valuable to the public in understanding how individuals are using the court system including evaluating whistleblower proceedings before the u s tax_court petitioner’s reply petitioner claims that he is a retired certified_public_accountant c p a and his primary occupation is assisting his spouse in managing and operating a registered invest- ment advisory business he further claims disclosure would have a negative impact on my domestic relationship with my spouse posing a threat to our domestic circumstances and would impair my ability to assist with the business and earn income from the management of the practice he fears that disclosure of his identity might alienat e busi- ness partners who might have relationships with taxpayers he identifies he also fears retribution from political figures close to those taxpayers petitioner answers respondent’s claim that he failed to identify the circumstances of his discovery of materials leading to his whistleblower claims by identifying financial statements forms 10-k and other available data as the source of his identification of publicly held restaurant compa- nies that may have violated tax rules relating to the recogni- tion of gift card income he concedes my analysis ema- nated from public information he adds the most impor- tant source of information utilized by petitioner includes the extensive data often encompassing thousands upon thou- united_states tax_court reports sands of pages which taxpayers identified by peti- tioner would have filed with the sec he concedes that he has no relationship to any taxpayer that he has identified to the irs other than as an invest- ment analyst and claimant he does not identify present or prospective clients stating i nformation relating to petitioner’s current or prospective clients is highly confidential he does add that the invest- ment advisory business relies on relationship s with normal everyday private citizens and small businesses he states that he no longer holds a license as a c p a and his only certification is a serie sec_65 certification as a reg- istered investment adviser in response to respondent’s claim that petitioner has failed to provide support for his claim that revealing his whistle- blower activities will cause him to be blacklisted petitioner points to no specific risk but makes only generalized claims for example petitioner does not believe that there is justification for singling peti- tioner out given the history and practice as to these matters and that doing so would lend a chilling effect to any future whistleblowers relying on industry expertise specialized knowledge and analysis of public information or data in filing whistleblower claims consistent with governmental policy objectives petitioner believes that this would cut sharply against the very purpose and intent of the tax whistleblower laws by curtailing public participation in support of those laws in response to our order that petitioner inform us of how many whistleblower claims he has pending before the irs that are not the subject of petitions to the tax_court he answers that he has four ‘submissions’ and associated claims pending before the internal_revenue_service he adds that one submission involves three claims associated with one taxpayer two submissions involve one claim each associated with two taxpayers and the fourth involves one taxpayer also he believes that there are claim numbers issued in connection with submissions that were supple- mental to his cases before the court discussion rule concerns itself with privacy protections for filings in whistleblower actions paragraph a of the rule allows whistleblower 14377-16w v commissioner petitioners in whistleblower actions to move the court for permission to proceed anonymously the movant must set forth a sufficient fact-specific basis for anonymity id we will permit a whistleblower to proceed anonymously if the whistleblower presents a sufficient showing of potential harm that outweighs counterbalancing societal interests in knowing the whistleblower’s identity whistleblower 16w v commissioner 148_tc_103 in only five reports have we addressed a whistleblower’s motion to proceed anonymously in 137_tc_183 we considered the claim of a whistleblower who feared that professional stigma retalia- tion and economic distress would result from the disclosure of his identity he had provided information to the irs con- cerning a former employer’s alleged tax underpayments id pincite assuming that he had acquired that information not by chance but in the normal course of employment and that he was privy to internal deliberations and communica- tions regarding the events that allegedly gave rise to the underpayment we found that revealing his status as a tax whistleblower in these circumstances would not only invade the whistleblower’s legitimate privacy interest as a confiden- tial informant but also would likely cause severe damage to his standing in the professional community that provided his customary source of livelihood and could well jeopardize his employment id pincite in calculating the societal interest of the people’s right to know who is using their courts we took into account that we were disposing of the case on respondent’s motion for summary_judgment on a threshold legal issue that did not depend to any appreciable extent on the whistleblower’s identity id pincite we con- cluded that the public’s interest in knowing his identity was relatively weak id and for that and other reasons we determined to grant his motion to proceed anonymously in whistleblower 10949-13w v commissioner tcmemo_2014_94 at we accepted as true that u s department of justice attorneys had informed the whistleblower that the taxpayers he had identified were connected with organized crime and terrorism and could resort to physical force or harm in connection with their activities also we accepted as true that he had received a death threat from one of the tax- payers through its counsel id we found that the harm that united_states tax_court reports could befall him outweighed the societal interest in knowing his name id at we determined to grant his motion to proceed anonymously id in whistleblower 11332-13w v commissioner tcmemo_2014_92 at we accepted as true that when the whistleblower had raised to the target taxpayer concerns over its tax structure the target had used physical force and armed men to intimidate him and to prevent disclosure we also accepted as true that he had received a death threat through the target’s counsel and that the government had offered to place him in the witness protection program id at finding a risk of extreme physical harm to him and his family we determined to grant his motion to proceed anony- mously id at in whistleblower 13412-12w v commissioner tcmemo_2014_93 at the whistleblower an ex-employee of the target taxpayer alleged no physical threat but alleged the risk of financial retaliation loss of pension benefits social and professional stigma and economic duress although we voiced our reservations about the likelihood of the prospect of financial retaliation we found that the nature of the potential harm to him outweighed the societal interest in knowing his identity we determined to grant his motion to proceed anonymously id at in whistleblower 12568-16w v commissioner 148_tc_103 the whistleblower claimed to have learned of fraudulent actions by the target taxpayer during his prior employment by an entity related to the target taxpayer he alleged pos- sible retaliation against him and his family resulting in pos- sible physical harm to himself professional and personal ostracism economic loss and danger to his family id pincite we determined to grant his motion to proceed anony- mously taking into account that in the early stage of a whistleblower case the societal interest in knowing the whistleblower’s identity may be relatively weak see id pincite we cautioned however that as the case pro- gressed the balance that we initially found to weigh in favor of anonymity might change with the public’s interest in learning the whistleblower’s identity outweighing his contin- ued concern for anonymity id pincite unlike the claimants in three of the reports summarized above whistleblower 10949-13w whistleblower 11332-13w whistleblower 14377-16w v commissioner and whistleblower 12568-16w petitioner makes no plausible claim that he was or may be threatened physically nor does he claim an employee relationship during which he was privy to internal deliberations and communications regarding the possible underpayment_of_tax the revelation of which cir- cumstances we said in whistleblower 14106-10w v commis- sioner t c pincite would likely severely damage a whistleblower’s professional standing in the community in which he customarily earns his living and could well jeop- ardize his employment and petitioner is at no risk of the loss of employment-related benefits such as retirement bene- fits see whistleblower 13412-12w v commissioner tcmemo_2014_92 unlike the claimants in the five reports summarized above petitioner has not identified a taxpayer who upon learning petitioner’s identity would have the power to and might be expected to act against him and while we acknowledge our legal system’s general solicitude for confidential informants see whistleblower 14106-10w v commissioner t c pincite and we accept that petitioner may suffer some embarrassment or annoyance from our denying the motion his fears of marital discord the alienation of unnamed busi- ness partners and retribution from unnamed political figures are speculative and thus petitioner has not provided us with a sufficient fact-specific justification for permission to proceed anonymously see rule a nevertheless given the early stage of this case we might otherwise be inclined to weigh the people’s interest in knowing who is using the courts as so weak as to give petitioner the benefit of the doubt at least temporarily see whistleblower 12568-16w v commissioner t c pincite but petitioner is an unusual claimant to our whistleblower jurisdiction he has so far brought whistleblower cases in the tax_court he has in his supporting papers identified numbered whistle- blower claims whistleblower claims with a separate proc- essing number assigned by the irs and he has in those papers identified by name taxpayers and included by ref- erence without naming them more he also has pending before respondent four submissions involving it appears united_states tax_court reports six numbered whistleblower claims and six taxpayers he also admits that he has before respondent numbered claims supplemental to claims in cases already before the court each of those as-yet-unresolved supplemental claims is potentially the source of another adverse determination and a resulting petition to the court petitioner’s recourse to publicly available materials to identify supposed tax abuses imposes no natural limit other than his own industri- ousness on the number of cases he could bring his lack of an employment or other close relationship to the taxpayers he identifies suggests that he has no familiarity with a tax- payer’s basis or rationale for taking what petitioner considers an abusive position for those reasons serial claimants of whistleblower awards may disproportionately burden the court with petitions only superficially meritorious moreover the phenomena of potential claimants of whistleblower awards searching publicly available documents for evidence of tax abuse is not insignificant apparently a cottage industry has sprung up involving mining publicly available documents for the chance to claim a bounty from the irs unless we identify serial filers by name the public will be unable to judge accurately the extent to which the serial filer there is not necessarily a one-to-one correspondence between numbered whistleblower claims and the number of taxpayers identified to the irs by a whistleblower on a single irs form_211 application_for award for origi- nal information see internal_revenue_manual pt date multiple taxpayers identified in a single claim may each receive a separate claim number and while one adverse whistleblower deter- mination will generally give rise to no more than one tax_court petition ie one whistleblower case the determination may address more than one numbered claim each of which itself may identify more than one tax- payer with respect to whom the petitioner seeks a whistleblower award see 143_tc_274 whistleblower of- fice may issue as to a given claim more than one determination the new york times reported on date since the law was strengthened in it has spawned a cottage indus- try of whistleblower lawyers and private investigators they have gen- erated hundreds of claims alleging tens of billions of dollars in tax eva- sion in a few cases hedge funds have actually invested in the cases paying whistleblowers cash up front in exchange for a percentage of any award they ultimately collect david kocieniewski whistle-blower awarded dollar_figure million by i r s n y times date http www nytimes com business whistle-blower-awarded-104-million-by-irs html whistleblower 14377-16w v commissioner phenomenon has affected the work of the tax_court because the public would not know whether any particular petitioner of an adverse whistleblower determination had filed petitions appealing other adverse whistleblower determinations finally addressing motions by all whistleblowers to proceed anonymously requires special handling by the court for example the record is sealed temporarily the normal proce- dures for electronic_filing and electronic service cannot at this time be used the case must be assigned to a judicial_officer earlier than normal in order to address the motion and in some cases trials and hearings may need to be closed to the public to protect the whistleblower’s anonymity the public may wish to know the extent to which petitioners with numerous whistleblower claims require such special han- dling conclusion on the facts before us mindful of our legal system’s gen- eral solicitude for confidential informants but balancing peti- tioner’s weak for anonymity against the public’s interest in knowing who is using the tax_court to bring serial whistleblower claims we find that the public’s interest in knowing prevails as stated we will deny the motion fact-specific justification an appropriate order will be denying petitioner’s motion issued f we note that although the commissioner has obligated himself to use his best efforts to protect the identity of whistleblowers that obligation is not absolute and in some circumstances the commissioner may need to reveal a whistleblower’s identity for example if the whistleblower is to be called as a witness in a judicial proceeding see sec_301_7623-1 proced admin regs the risk to a whistleblower that he will not remain anony- mous is present from the time he submits a whistleblower claim to the irs


id office uilc cca_2008092417511118 ------------- number release date from -------------------- sent wednesday date pm to ------------------ cc ---------------------------------------- subject fw your views on plan revocation ------- in response to your first question the rule on who is authorized to sign a consent to extend the time to assess tax on an employee plan is directly tied to who is authorized to sign the plan's returns see revrul_83_41 1983_1_cb_349 providing that the service will generally apply the rules applicable to the execution of the original returns to consents to the extension of time to make an assessment therefore whoever is authorized to sign the annual returns eg forms schedule p form of the relevant taxpayer including the taxpayer's agent or a fiduciary of the t p such as a trustee is the proper person to sign the form_872 by relevant taxpayer i mean the one under examination and against whom the tax would be assessed irm dollar_figure is the chapter devoted to consents to extend the assessment_period and irm dollar_figure explains in some detail consents w respect to employee_plans reads it form_872 or 872-a is used to extend the statute for assessment of taxes under chapter qualified_pension etc plans of the code the statutory period for assessment of the sec_4975 excise_tax on a disqualified_person may be extended when necessary by securing an executed form_872 or 872-a for each year in which transactions occur that give rise to the excise_tax the consent must always be obtained from the person upon whom the tax is imposed even though the period of limitations is determined by the due_date of the annual return form series or the date the return is filed whichever is later form_5500 is filed by the employer maintaining the plan or the plan_administrator and the consent must be signed by the employer or plan_administrator if schedule p annual return of fiduciary of employer benefit trust is filed with the form_5500 the schedule p is a jurat signed by a plan trustee and filed by the employer or the plan_administrator that allows the trustee under penalties of perjury to treat the information in the form_5500 as the trustee’s return_information the consent for the trust must be signed by the trustee presumably the same principles apply for a consent to extend income as opposed to excise_taxes while it's not authoritative or precedential there may be some informational value to you in looking at a fsa wl concerning the effectiveness of form sec_872 signed by an assistant treasurer on behalf of a corporate employer purporting to extend the assessment periods for income and sec_4975 excise_taxes on an employees-retirement plan and 401_k_plan the applicable returns were filed on schedule p of the form_5500 the conclusion of the fsa was that the form sec_872 were ineffective because the treasurer was not a_trust fiduciary and hence not the person w authority to sign the schedule p as to the particular question of whether a sponsoring and participating employer in a multiple-employer plan may by virtue of that status execute a consent that would be effective for the assessment of taxes resulting from the disqualification of the plan i'm inclined to think the answer is no given the above in other words for a multiple- employer plan the plan_administrator or the trustee as applicable must consent it would seem to me that for a one-employer plan by contrast the employer that maintains the plan--the sponsor i suppose--signs and files the annual returns for the plan and would thus be the one to sign a consent but i also recognize that i don't know enough about employee_plans generally the filing_requirements they're subject_to and the facts of your case to know whether a sponsoring employer can in certain multiple- employer situations sign and file the plan's returns or even if they can whether that's the situation here i noticed that the form_5500 has a space for an employer plan_sponsor to sign as well as a space for an administrator to sign the form instructions unfortunately don't provide any real clarity as to who signs under what circumstances except to say at one point that for multiple-employer plans participating employers do not file individually for these plans so i'll limit anything definitive to the basics if the consent is for hypothetical taxpayer x it should be signed by whoever has the authority to sign returns for x that may be adequate for your purposes otherwise please contact me and we can discuss further


t c memo united_states tax_court ronald a caselli petitioner v commissioner of internal revenue respondent docket nos filed date david m kirsch for petitioner rachel l hester and pamela g kartha for respondent memorandum opinion cohen judge respondent determined deficiencies of dollar_figure and dollar_figure in petitioner’s federal_income_tax for and respectively respondent also determined civil_fraud penalties under sec_6663 of dollar_figure and dollar_figure for and respectively after concessions the sole issue remaining for decision is whether an s_corporation may revoke its election of deducting certain employment_tax expenses for and and claim sec_45b credits solely by the request of one of its shareholders acting solely in his capacity as a shareholder which will in effect enable the shareholder to nullify the s corporation’s election unilaterally and retroactively unless otherwise indicated all section references are to the internal_revenue_code in effect for the years in issue and all rule references are to the tax_court rules_of_practice and procedure background these consolidated cases were submitted fully stipulated under rule the stipulated facts are incorporated as our findings by this reference petitioner resided in california at the time he filed his petitions during and petitioner was one of the three shareholders of apple gilroy inc agi an s_corporation operating multiple restaurants the restaurants owned by agi hired tipped employees whose earnings came partly from customer tips and agi was required to pay taxes on these tips as part of its federal_insurance_contributions_act fica tax_payments under sec_45b an employer working in the food and beverage industry is allowed to claim business tax_credits for the portion of the fica_taxes it paid on the employee tips fica tip credits agi filed its and forms 1120s u s income_tax return for an s_corporation on date and date respectively it did not claim any fica tip credits for either year on its form_1120s or file form_8846 credit for employer social_security and medicare taxes paid on certain employee tips instead it deducted its payments of the fica tip taxes on its forms 1120s agi never filed an amended form_1120s for either year petitioner filed his and form sec_1040 u s individual_income_tax_return on date and on date respectively on both of these returns he claimed flowthrough deductions deriving from agi on date the internal_revenue_service irs sent a notice_of_deficiency to petitioner for petitioner timely petitioned this court on date on date petitioner filed a form 1040x amended u s individual_income_tax_return for claiming a refund of dollar_figure deriving from agi’s fica tip credits petitioner’s form 1040x included a form_8846 which showed petitioner as the taxpayer electing the fica tip credits petitioner’s form 1040x did not include an amended schedule_k-1 shareholder’s share of income deductions credits etc from agi on date the irs sent a notice_of_deficiency to petitioner for a notice of claim disallowance was attached to the notice of deficiency which disallowed petitioner’s claim_for_refund on the form 1040x petitioner timely petitioned this court on date on date petitioner filed an amended petition for claiming for the first time that he was also entitled to the flowthrough fica tip credits with respect to his interest in agi for discussion petitioner argues that we should hold that agi may claim credits under sec_45b by filing amended returns for and because agi has never filed any amended returns petitioner is essentially requesting an advisory opinion based upon a future contingency normally we would decline such a request however since there is little development of the law concerning sec_45b in cases or otherwise it is useful and expedient to discuss the provision and its application to the facts before us sec_45b allows an eligible_employer upon its election to claim a business_tax_credit in the amount of fica_taxes that it paid on employee tips in excess of the minimum wage to qualify for the fica_tip_credit an employer must have employees who receive tips from customers for providing food or beverages for consumption and must be deemed to have paid fica_taxes on the tips in excess of the minimum wage sec_45b additionally the employer must not have already claimed a deduction for the fica tax payment sec_45b the irs prescribes form_8846 for eligible employers to claim any fica tip credits i r s news_release ir-2007-155 date petitioner claims that as one of agi’s shareholders he is entitled to a proportionate flowthrough of the tax_credits arising from agi’s fica tax_payments however the parties dispute whether agi was itself entitled to the fica tip credits for and the parties agree that for both years agi was an employer of employees who received tips from customers for providing food or beverages for consumption and agi had paid fica_taxes on these tips they disagree on whether agi’s choice of deducting its fica tax_payments for and prevents it from now claiming any fica tip credits for either year the answer seems quite straightforward sec_45b explicitly provides that n o deduction shall be allowed under this chapter for any amount taken into account in determining the credit under this section sec_45b titled election not to claim credit further provides that t his section shall not apply to a taxpayer for any taxable_year if such taxpayer elects to have this section not apply for such taxable_year in combination these two provisions suggest that when agi chose to deduct its fica tax_payments it had made an election not to claim any fica tip credits indeed agi never claimed or intended to claim fica tip credits for or consequently on the basis of agi’s reporting position petitioner is not entitled to any flowthrough fica tip credits for either year petitioner agrees that agi elected not to claim any fica tip credits nonetheless he asserts that agi now seeks to change its election and may claim the fica tips credit pursuant to sec_45b by filing amended returns the evidence in the record contradicts his assertion agi has never stated its intention to change the election it made more than nine years ago petitioner’s assertion in effect is that agi’s election could be changed unilaterally by his request made in his capacity as a shareholder respondent’s position by contrast is that any election regarding sec_45b should be made by agi directly not through a shareholder’s request petitioner in his sole capacity as one of agi’s shareholders cannot change agi’s election of not claiming any fica tip credits we agree with respondent as a general_rule any election affecting the computation of items derived from an s_corporation shall be made by the corporation sec_1363 sec_1_1363-1 income_tax regs further indicates that individual shareholders cannot make such an election any elections other than those described in paragraph c of this section affecting the computation of items derived from an s_corporation are made by the corporation and not by the shareholders separately this general_rule is subject_to two exceptions namely elections under sec_617 relating to deduction and recapture of certain mining_exploration_expenditures and elections under sec_901 relating to foreign tax_credits sec_1363 the parties agree that the election under sec_45b in this case does not fall into either of the statutory exceptions sec_45b specifically provides that t his section shall not apply to a taxpayer for any taxable_year if such taxpayer elects to have this section not apply for such taxable_year emphasis added while s_corporations are generally not considered to be taxpayers employment_taxes are the liabilities of the employer which is the taxpayer in this context petitioner’s position is not tenable in the face of the plain text of sec_1363 and sec_45b petitioner is essentially asking us to create a new precedent which will endow each individual shareholder with the power to change an s corporation’s tax election unilaterally such a unilateral change if allowed would not only affect the tax_liabilities of the requesting shareholder but could also affect the tax_liabilities of the shareholders who have not consented to such a change petitioner himself highlighted the danger of this approach by assuring us that a ny change to agi’s tax items for the years and will not have any effect on other agi shareholders because of their special circumstances and by attempting to persuade us that there is no unfairness in this particular case we decline to create a new precedent for the foregoing reasons petitioner is not allowed to claim any fica tip credits flowing from agi we have considered all remaining arguments made by both parties for a result contrary to that expressed herein and to the extent not discussed above they are irrelevant to our decision or without merit to reflect the foregoing decisions will be entered under rule