Kostelanetz attorneys Megan L. Brackney, Victor Suthammanont, and Mac Norman co-wrote an article for Tax Notes’s Procedurally Taxing blog entitled “Do Promoter Penalties Trigger the Right to a Jury Trial After Jarkesy?”
The article explores whether, in light of the Supreme Court’s holding in SEC v. Jarkesy, (603 U.S. 109), that defendants in SEC fraud penalty proceedings have the right to a jury trial, the imposition of §6700 penalties for allegedly promoting abusive tax shelters triggers the same right.
In the 2024 landmark case, the Supreme Court ruled that defendants have the right to a jury trial in an Article III court if the SEC seeks to impose civil penalties for anti-fraud provisions of securities laws. Jarkesy did not address tax penalties, including §6700 tax promoter penalties, but taxpayers are now citing the case in their attempts to contest the IRS’s ability to assess tax penalties without a jury trial.
Megan, Victor, and Mac explain that “the promoter penalty is similar in many — if not all — material aspects to the SEC penalties discussed in Jarkesy” and implicate common-law “private rights” that must be heard in an Article III court before a jury. Thus, the “public rights” exception to the jury-trial right does not apply, notwithstanding that revenue collection is ordinarily considered a public right.
Read the complete article here.
About Megan
Megan is a tax controversy attorney with a distinguished track record of delivering exceptional results for clients facing complicated and difficult tax issues. The current Chair-Elect of the American Bar Association Section of Taxation, she is also a frequent speaker and contributor to local and national conferences on taxation, ethics in tax practice, IRS penalties, and civil tax controversy.
About Victor
Victor served for a decade as an enforcement attorney in the U.S. Securities and Exchange Commission, including as a Senior Trial Counsel and as the Enforcement Counsel to Chair Gary Gensler. Prior to his extensive experience in the SEC’s Division of Enforcement, Victor represented and advised clients in private practice in complex commercial disputes and litigations, as well as in internal and governmental investigations.
About Mac
Mac focuses his practice on U.S. tax litigation matters and has broad experience in transactional work and international tax planning.
