Bryan Camp has published an article on the TaxProf Blog, titled “Lesson From The Tax Court: Penalty Approval In Conservation Easement Cases” which discusses Pickens Decorative Stone LLC v. Commissioner, T.C. Memo. 2022-22 (Mar. 17) (Judge Lauber). The article begins as follows:
The §6751(b) supervisory approval requirement for penalties has been a thorn in the side of both the IRS and the Tax Court. Today’s lesson shows us how the IRS penalty approval process in conservation easement audits has forced taxpayers to reach for wilder and less credible attacks in their attempts to avoid penalties by finding IRS procedural foot-faults.
First, in Pickens Decorative Stone LLC v. Commissioner, T.C. Memo. 2022-22 (Mar. 17) (Judge Lauber), the taxpayer argued that when the IRS had publicly committed in a general Notice to seeking penalties against the types of syndicated conservation easement scheme it had engaged in, the IRS was disabled from complying with §6751(b) because the supervisor in the audit had not signed off on that public Notice. Yeah, pull your eyebrows down; the argument lost.
Second, in Oxbow Bend, LLC v. Commissioner, T.C. Memo. 2022-23 (Mar. 21, 2022) (also Judge Lauber), the taxpayer similarly argued the IRS failed to comply with §6751(b) when the Revenue Agent (RA) had failed to secure supervisory approval before telling the taxpayer during a status conference that penalties were “under consideration” when in fact the RA was completing an internal document recommending penalties that very day. That was a loser as well. Details below the fold.
Click here to see the full article: “Lesson From The Tax Court: Penalty Approval In Conservation Easement Cases”
Posted by Marin Larkin, Associate Editor, Wealth Strategies Journal.