On May 18, 2026, the U.S. Court of Appeals for the Fourth Circuit issued a unanimous published opinion in LaRosa v. Commissioner (No. 24-2034), vacating a U.S. Tax Court decision that a Kostelanetz client is ineligible for innocent spouse relief.
The appeal addressed an issue of first impression, whether erroneous refunds of payments of underpayment interest resulted in an “unpaid tax” under the equitable relief provision of IRC § 6015(f).
Kostelanetz attorneys Caroline D. Ciraolo, Andy Weiner, and Michael Waalkes argued that the erroneous refund liabilities constitute an unpaid tax as demonstrated by the statutory text and scheme and by case law. They further argued that the statute reflects Congress’s intent to relieve a spouse from joint and several liability where equity demands, as in this case. Andy Weiner presented argument before the three-judge panel on March 18, 2026.
Focusing on the statutory text, the Fourth Circuit reasoned “Section 6015(f)(1)(A) makes ‘[a]ny unpaid tax or any deficiency (or any portion of either)’ eligible for relief. Section 6601(e)(1), in turn, supplies a general rule for interpreting ‘[a]ny reference . . . to any tax imposed by this title’—that is, any tax imposed by the Internal Revenue Code as a whole. Under that rule, Section 6015(f)(1)’s use of ‘tax’ ‘shall be deemed also to refer’ to any underpayment interest imposed by Section 6601(a).” The Fourth Circuit accordingly vacated the Tax Court’s decision and remanded for further proceedings on an undecided legal issue and the merits of the client’s claim for innocent spouse relief.
About Caroline
Caroline is a former Acting Assistant Attorney General of the U.S. Department of Justice’s Tax Division, and she has served as president of the American College of Tax Counsel. Her practice focuses on federal and state civil tax controversies, including representation in sensitive audits, administrative appeals, and litigation, providing tax advice, conducting internal investigations, and representing individuals and entities in criminal tax investigations and prosecutions. She also serves as a consulting and testifying expert witness and an independent mediator in tax disputes.
About Andy
Andy focuses his practice on tax controversies, both civil and criminal, at all stages of the administrative and judicial process. A former U.S. Department of Justice attorney, he has briefed and argued approximately 50 tax cases in the U.S. courts of appeals. He is regent of the American College of Tax Counsel for the D.C. Circuit and a frequent writer and speaker on tax issues. He is also an adjunct professor at American University Washington College of Law.
About Michael
Mike is an associate with Kostelanetz LLP. He focuses his practice on civil and criminal tax controversy matters, including audits, promoter investigations, voluntary disclosures, U.S. Tax Court litigation, and criminal tax investigations. Prior to joining the firm, Mike served for two years as a judicial law clerk for Judge Joseph W. Nega of the U.S. Tax Court. Mike is an adjunct professor at Villanova University’s Charles Widger School of Law, where he co-teaches a course on federal tax practice and procedure in the school’s graduate tax program.
