On June 4, 2020, the Tax Court issued a Memorandum Opinion in the case of Koh v. Commissioner (T.C. Memo. 2020-77). The issue before the court in Koh was whether Counsel for the IRS may make an initial determination for purposes of satisfying IRC § 6751(b)(1).
I was ready to write this case off. It is only six pages long, and so imagine how pleased I was to see an actual issue other than a petitioner ignoring the IRS the plague (which it turns out, we, as Americans, don’t like to avoid all that much). Also, congrats to Judge Greaves on an auspicious start to his tax court career. Koh was Judge Greave’s first opinion (and as of the date of this post, his only opinion) since he replaced Judge Vasquez, who went to senior status in 2018, but continues to churn out the opinions. The opinion is short, but it has actual authority, and even an excessively long footnote, which is basically the Tax Court’s version of a parenthetical (which, if you’ve read any other posts, you know I am a fan of).
Having puffed up Judge Greaves in the previous paragraph, he may or may not have been thrown a softball. As my 7-year old, after three inauspicious seasons of baseball, has proven, even the kid who is perpetually relegated to left field to chase bugs and everything else that comes at him (other than the ball, it turns out), gets his first hit someday. I love the little dude to death, but his mom and I are not holding our breath for an athletic scholarship to pay his way through college someday.
A Quick, but Reasoned Opinion
As the Tax Court observes, is not the first time a taxpayer asked the Court to find that IRS Chief Counsel attorneys lack the authority to assert penalties in an answer. The Court rejected this same argument less than three years ago in Roth v. Commissioner, T.C. Memo. 2017-248, *10-*11, aff’d, 922 F.3d 1126 (10th Cir. 2019). The authority of the Chief Counsel (or his delegate) to assert additional penalties in an answer arises from his role as the IRS’ representative in this Court. IRC § 7803(b); IRC § 7452.
It is well established that the IRS may assert penalties in an answer. IRC § 6214(a); Chai v. Commissioner, 851 F.3d 190, 221 (2d Cir. 2017), aff’g in part, rev’g in part T.C. Memo. 2015-42; Graev v. Commissioner, 149 T.C. 485 (2017). It follows, the Tax Court reasoned, that Counsel, the IRS’s representative in this Court, also has this authority. Roth, T.C. Memo. 2017-248 at *11; see Tax Court Rule 142(a); Graev, 149 T.C. at 491-92, 498; Estate of Jung v. Commissioner, 101 T.C. 412, 448 (1993).
Tucked away in the opinion’s only footnote (at 6 pages in total, there couldn’t have been any others), is a nugget that should not be missed. Although not addressed in the petition, the Tax Court answers the corollary question of how Counsel may satisfy IRC § 6751(b)(1)’s supervisory approval requirement.
The Tax Court observes that where the attorney’s immediate supervisor personally approved in writing the assertion of a penalty that was first raised in the answer, as evidenced by the signature of respondent’s associate area counsel on the pleading, the requirement is met. See Roth v. Commissioner, T.C. Memo. 2017-248, at *11, aff’d, 922 F.3d 1126 (10th Cir. 2019).Add to favorites