Kostelanetz attorneys Caroline D. Ciraolo and Michael Waalkes filed an amicus brief with the U.S. Supreme Court on behalf of the American College of Tax Counsel (“the College”) in Murrin v. Commissioner. Thomas A. Cullinan of Chamberlain Hrdlicka was co-counsel on the brief.
The College’s brief supports Murrin’s petition for a writ of certiorari from the Supreme Court. The case turns on whether the statute of limitations to assess tax and penalties remains open when there has been fraudulent conduct by someone other than the taxpayer.
The Third Circuit and the Federal Circuit are split on this issue, with the Third Circuit holding that the fraudulent conduct of someone other than the taxpayer satisfies the exception to the general statute of limitations for tax and penalty assessments. The Federal Circuit rejects this view, holding that the operative intent under the fraud exception to the statute of limitations is that of the taxpayer.
The College’s brief argues that the Supreme Court should grant certiorari to settle the law and resolve the circuit split on this important issue of federal tax procedure.
While Murrin involves a third-party tax return preparer, the College’s brief notes that letting the Third Circuit ruling stand gives the IRS unlimited time to assess tax even if someone with a more remote connection to the tax return intended to evade tax. This agnostic approach to intent conflicts with the plain meaning and historical understanding of the original enactment.
The College also notes that statutes of limitations are meant to provide parties with finality and repose. If the Third Circuit ruling remains intact, the IRS will be free to assess tax and accuracy-related penalties, ranging from 20% to 40% of the tax due, as well as interest, compounded daily, more than 20 years after returns were filed.
Finally, the College’s brief urges the Court to grant certiorari to place taxpayers across the country on even footing. Under the current circuit split, taxpayers who can pay the disputed tax and penalties in advance of filing suit can seek relief in the Federal Circuit, which only looks to the taxpayer’s intent, whereas those who must seek relief in the prepayment forum of the U.S. Tax Court are left with an unlimited period of assessment based on third-party conduct.
The full amicus brief can be found here.
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 Mike
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.
