Featuring Abbey Garber
The Tax Court was closed for several months due to the COVID-19 pandemic, but taxpayers continued to submit petitions as required by law. As Abbey Garber explains in an article in Law360 Tax Authority (subscription required), this has caused a backlog of Tax Court filings that may lead to premature assessments by the IRS.
When the Tax Court reopened in mid-July, thousands of documents were waiting to be filed. The court has not yet been able to work through the enormous backlog. As of September 23, 2020, the court is still filing documents dated July 17, so there are months of unopened documents waiting to be filed.
A Tax Court case begins with the filing of a petition, which prevents the IRS from assessing the contested tax until the case is resolved with a ruling from the court. In most cases, the consequences of a delay in filing the petition would not be serious; it would just take that much longer for the case to be assigned to an IRS attorney. But, as Garber—who served in the IRS Office of Chief Counsel for more than 30 years—points out in the Law360 article, the lengthy delay this year could result in premature assessments, which could in turn lead to collection actions by the IRS.
In most cases, taxpayers have 90 days to file a petition after the IRS sends a notice of deficiency, also known as a 90-day letter. If the taxpayer does not file a petition within 90 days, the IRS assesses the tax proposed in the notice. If a taxpayer does file a petition, the Tax Court serves it on the IRS. The IRS then programs its computers not to assess the tax. Normally, the IRS waits 105 days after the mailing of the 90-day letter before assessing; the extra 15 days are usually sufficient to allow for mailing and processing delays. But now that it is taking much longer than 15 days for the Tax Court to serve a petition on the IRS, there is a real danger that the IRS will assess the tax and erroneously begin collection efforts that are suspended by law.
To address this issue, the IRS Office of Chief Counsel has created a special email box so that any taxpayers who learn of premature assessments can have the assessments reversed before collection activity ensues.
If you have any questions about Tax Court practice or dealing with the IRS in general, please contact the above author or the Thompson & Knight attorney with whom you regularly work.
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