Bryan Camp has published an article on the TaxProf Blog, titled “Lesson From The Tax Court: A Lesson Of Interest”, which discusses the outcomes of Kannarkat P. Verghese et al. v. Commissioner, T.C. Memo. 2021-70 (June 7, 2021) (Judge Gustafson) with regards to accumulated interest imposed upon taxpayers during years of audit and litigation with the IRS. The article begins as follows:
Today’s lesson is the taxpayer version of that famous Depression-era song: the accumulation of interest on tax liabilities is relentless, and difficult to reverse. In Kannarkat P. Verghese et al. v. Commissioner, T.C. Memo. 2021-70 (June 7, 2021) (Judge Gustafson), the taxpayers were assessed a deficiency in 2014 for their tax years 1997 and 1998, as a result of over 13 years of audit and litigation between the IRS and three partnerships in which the taxpayers held an interest. The taxpayers promptly asked for most of the accumulated interest to be abated per §6404. They diligently pursued that request through 7 years of administrative and judicial proceedings. Finally, last week, the Tax Court largely upheld the IRS’s refusal to abate the interest, teaching us our lesson. The lesson cost these taxpayers over $80,000 in accrued interest (on liabilities of $54,000). Not to mention attorneys fees. But you can learn this lesson for free. Just click on “continue reading…”
Oh, and we also get a bonus lesson on §6603. Apparently no one told these taxpayers they could suspend the running of interest by making a deposit in the nature of a cash bond. Whoops.
Click here to see the full article: “Lesson From The Tax Court: A Lesson Of Interest”
Posted by Marin Larkin, Associate Editor, Wealth Strategies Journal.