Penalties Under the Code
Tax Opinions / Memorandum Opinions / Penalties Under the Code

Oropeza v. Commissioner
T.C. Memo. 2020-111

On July 21, 2020, the Tax Court issued a Memorandum Opinion in the case of Oropeza v. Commissioner (T.C. Memo. 2020-111). The primary issue before the court in Oropeza v. Commissioner was whether IRS secured timely written supervisory approval, as required by IRC § 6751(b)(1), for three penalties determined in the notice of deficiency for petitioners’ 2012 tax year. The Initial Determination in Oropeza v. Commissioner In November 2015, the IRS sent petitioners a Letter 5153 with an attached Form 4549-A (Income Tax Discrepancy Adjustments or Revenue Agent’s Report (RAR)). The RAR proposed to increase by $1,070,200 petitioner husband’s distributive share of his company’s income. In a schedule captioned “Accuracy-Related Penalties under IRC § 6662(a),” the RAR asserted a 40% penalty attributable to one or more of the following: (1) a gross valuation misstatement, (2) a non-disclosed transaction lacking economic substance, and (3) undisclosed foreign financial assets. See IRC §…

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July 21, 2020
Procedural Issues
Tax Opinions / Full Tax Court Opinions / Procedural Issues

Barnhill v. Commissioner (155 T.C. No. 1)

On July 21, 2020, the Tax Court issued its opinion in Barnhill v. Commissioner (155 T.C. No. 1). The issue presented in Barnhill v. Commissioner is whether a taxpayer, who receives a Letter 1153 (Trust Fund Recovery Penalty (TFRP) Letter), and who timely appeals the TFRP, but who does not receive a meaningful opportunity to challenge his liability for the TFRP (because the taxpayer, for instance and as here, did not receive subsequent correspondence scheduling a meeting to challenge the liability) may thereafter challenge the underlying liability for the TFRP in a CDP proceeding. Background to Barnhill v. Commissioner Petitioner was the director of a Chesterfield, Virginia corporation, Iron Cross, Inc, who failed to collect or pay over employment taxes for ten – yes, ten - quarters from June 2010 through September 2012.  Although it is unclear from the Tax Court opinion the exact nature of Iron Cross (and they…

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July 21, 2020