Tax Court In Brief | Decrescenzo v. Comm'r | Challenge To Notice Of Deficiency And Penalties For Frivolous Arguments

Published date18 January 2023
Subject MatterTax, Income Tax, Tax Authorities
Law FirmFreeman Law
AuthorFreeman Law

The Tax Court in Brief - January 9th - January 13th, 2023

Freeman Law's "The Tax Court in Brief" covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

For a link to our podcast covering the Tax Court in Brief, download here or check out other episodes of The Freeman Law Project.

Tax Litigation: The Week of January 9th, 2022, through January 13th, 2023

  • Vassiliades v. Comm'r, T.C. Memo 2023-1 | January 9, 2023 | Panuthos, J. | Dkt. No 12283-20S.
  • Simpson v. Comm'r, T.C. Memo. 2023-4| January 9, 2023 | Jones, J. | Dkt. No. 16923-16
  • Wondries v. Comm'r, T.C. Memo. 2023-5| January 9, 2023 | Kerrigan, J. | Dkt. No. 13345-19 (deficiencies for deduction of farm and ranch expenses evaluation of activity not engaged in for profit).

Decrescenzo v. Comm'r, T.C. Memo. 2023-7| January 12, 2023 | Halpern, J. | Dkt. No. 16784-18

Summary: Taxpayer and petitioner, Joseph Decrescenzo ("Petitioner") belatedly filed returns of income for seven years at issue (2007-2013). The IRS determined various differing deficiencies as to the years at issue and notified Petitioner of the determinations. The notice of proposed changes included total adjustments on Form 5278 and two sub forms; Form 4549B, Income Tax Examination Changes, Form 886-A, Explanation of Items. The notice contained calculations in support of the determinations for each year, although the calculation method differed some among the years at issue. Petitioner appealed the determinations to the IRS Office of Appeals (Appeals). During the evaluation of Petitioner's returns, Petitioner and an Appeals officer signed two separate IRS Forms 872, Consent to Extend the Time to Assess Tax, extending the time to assess tax for the years at issue. Within that limitations period, the IRS mailed the notice of deficiency to Petitioner. The Notice included, "We have determined that you owe additional tax or other amounts, or both, for the tax year(s) identified above. This letter is your NOTICE OF DEFICIENCY as required by law. The enclosed statement shows how we figured the deficiency." The notice letter and enclosures consisted of 70 pages that unambiguously identified Petitioner. Petitioner claimed that the notice was deficient based on process failures by the IRS in determining the alleged deficiencies and additions to tax.

Key Issues: Whether the notice of deficiency was valid, and whether Petitioner should be liable for sanctions for making frivolous arguments?

Primary Holdings: Yes and yes. The...

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