Landmark Tax Cases, Explained
Every decision below was pulled and read from the published opinion. Each page gives the citation, the facts, the question the court answered, the holding, the reasoning, and what the ruling means for a taxpayer dealing with the IRS today.
Collection, Liens and Levies
United States v. National Bank of Commerce
One co-owner owed the IRS $856.61. The Supreme Court held the IRS could levy the whole joint account and sort out ownership later.
United States v. Craft
State law said the husband owned no separate interest in the marital home. The Supreme Court said the federal tax lien attached to it anyway.
United States v. Rodgers
A widow lived in a Texas homestead her late husband's tax debt was attached to. The Supreme Court said the home could be sold, but only after a judge weighs the equities.
Drye v. United States
An heir who owed the IRS disclaimed his mother's estate so it would pass to his daughter. The Supreme Court held the tax lien had already attached.
G. M. Leasing Corp. v. United States
Revenue officers seized luxury cars off the street and broke into an office for records. The Supreme Court upheld the first and condemned the second.
EC Term of Years Trust v. United States
The IRS took over $3 million from a trust to pay someone else's taxes. The trust sued too late, then tried a refund suit instead. The Supreme Court said no.
Polselli v. Internal Revenue Service
A revenue officer summoned the bank records of a debtor's wife, his lawyers and a company he used. Nobody got notice. A unanimous Supreme Court said none was required.
Collection Due Process
Boechler, P.C. v. Commissioner
A law firm filed its Tax Court petition one day late. A unanimous Supreme Court held the 30-day CDP deadline is not jurisdictional and can be equitably tolled.
Commissioner v. Zuch
Jennifer Zuch fought the IRS for years over $50,000 in payments. When her later refunds wiped out the balance, the Supreme Court held the Tax Court could no longer hear her case.
Vinatieri v. Commissioner
A sick, low-income taxpayer had $14 in cash and a car worth $300. Appeals sustained the levy because she had unfiled returns. The Tax Court said that was an abuse of discretion.
Hoyle v. Commissioner
A taxpayer said he never got a notice of deficiency. Appeals checked a box. The Tax Court said the verification requirement means more than that.
Innocent Spouse
Cheshire v. Commissioner
A wife knew about her husband's $229,924 retirement payout and how it was spent. She trusted him on the tax. The Fifth Circuit said that was not enough.
Porter v. Commissioner
The IRS denied a mother of two relief from a $1,070 penalty tax on her husband's IRA withdrawal. The Tax Court changed its standard of review and granted relief.
Lantz v. Commissioner
A widow who did nothing wrong lost her chance at innocent spouse relief because of a regulatory deadline. The Seventh Circuit upheld it. Congress later rewrote the rule.
Penalties
United States v. Boyle
An executor did everything right except check the filing date himself. His lawyer missed it. The Supreme Court upheld a $17,124.45 penalty.
Neonatology Associates, P.A. v. Commissioner
Physicians bought an insurance product sold with big tax promises. They relied on the insurance agent. The Tax Court said that was not reasonable reliance.
Graev v. Commissioner
The Tax Court reversed itself after a Second Circuit decision and held that proving written supervisory approval of a penalty is part of the IRS's burden in a deficiency case.
Farhy v. Commissioner
The Tax Court held the IRS had no power to assess penalties for failing to report foreign corporations. The D.C. Circuit reversed.
Statutes of Limitation
Badaracco v. Commissioner
Taxpayers who filed fraudulent returns later filed honest amended ones and waited. The Supreme Court held the IRS could still assess at any time.
United States v. Home Concrete & Supply, LLC
The IRS said inflating basis was the same as leaving out income, which gave it six years to assess. The Supreme Court said no. Three years later, Congress said yes.
United States v. Brockamp
Taxpayers disabled by senility and alcoholism missed the refund deadline on money they never owed. The Supreme Court said courts could not extend it. Congress responded the next year.
Commissioner v. Lundy
Robert Lundy overpaid through withholding, never filed, and got a notice of deficiency. The Supreme Court said the Tax Court could not refund his overpayment. Congress changed the rule a year later.
Bankruptcy and Tax
United States v. Whiting Pools, Inc.
The IRS seized a pool company's trucks and inventory. The next day the company filed Chapter 11. The Supreme Court ordered the IRS to give the property back.
Young v. United States
A couple filed Chapter 13, dismissed it, and filed Chapter 7 once three years had passed. The Supreme Court held the clock stopped while the first case was pending.
In re Fahey (Fahey v. Massachusetts Department of Revenue)
Four debtors filed late state tax returns, waited more than two years, and filed Chapter 7. The First Circuit said their taxes could not be discharged at all.
In re Griffith (Griffith v. United States)
A debtor lost in Tax Court, then moved his business interests into a new company and into a tenancy by the entirety with his new wife. The full Eleventh Circuit held his tax debt could not be discharged.
FBAR
Bittner v. United States
The government wanted $2.72 million from a man who filed five late but accurate reports covering 272 accounts. The Supreme Court said the most it could seek was $10,000 per report.
Norman v. United States
A school teacher said she never read her return and was following her mother. The Federal Circuit held that recklessness is enough for the willful FBAR penalty and upheld $803,530.
United States v. Horowitz
A doctor and a public health analyst kept nearly $2 million in Swiss accounts and never asked their accountant about it. The Fourth Circuit said that was reckless, and reckless is willful.
United States v. Rum
A Florida business owner hid $1.1 million in a numbered Swiss account, told the bank he was a U.S. taxpayer, and told the IRS nothing. The Eleventh Circuit upheld a 50 percent penalty.