NewsNotes

Lesli S. Laffie, J.D., LL.M.

Tax Court Petition Filing * Electronic Filing * Innocent Spouse Litigation * Interactive Income Tax Receipt * Tax Bite in the Eight-Hour Day (Chart)

Court Decisions

Tax Court Petition Filing

The Service's failure to stamp a Tax Court petition filing deadline on a deficiency notice did not render the deficiency invalid, according to Eric E. Smith, 114 TC No. 29. The Tax Court ruled that the failure to provide a date was insufficient to toll the statute of limitations.

In March 1999, the taxpayers received a deficiency notice concerning their timely filed 1995 return. The notice did not list a Tax Court petition filing deadline. In response to notification from the taxpayers' attorney, the taxpayers received another copy of the notice with a stamped petition filing deadline of June 3, 1999. The taxpayers timely filed a Tax Court petition contesting the deficiency.

Sec. 6212(a) provides that a taxpayer has 90 days after the mailing of a deficiency notice to file a petition for redetermination with the Tax Court. The Internal Revenue Service Restructuring and Reform Act of 1998, Section 3463(a), required that deficiency notices include the last day a Tax Court petition contesting the deficiency can be filed.

The taxpayers argued that the lack of such a date on their original deficiency notice invalidated it; the Service responded that the omission was a "technical but harmless violation"; further, the notice was valid because the taxpayers received it without prejudicial delay.

Looking to Tenth Circuit decisions (to which an appeal would lie), and citing Scheidt, 967 F2d 1448 (10th Cir. 1992), the Tax Court held that the failure to include a petition filing deadline did not invalidate the deficiency notice, because the taxpayers received the notice and timely filed a petition.

From the IRS

Electronic Filing

According to IRS officials, the paper signature jurat will be eliminated for electronically filed (e-filed) Federal individual income tax returns during the 2001 filing season. Taxpayers who e-file will not have to file a paper copy of Form 8453, U.S. Individual Income Tax Declaration for Electronic Filing. Instead, a self-selected, five-digit personal identification number (PIN), together with two "shared secrets" (tax liability and prior-year adjusted gross income) and the taxpayer's name and Social Security number, will constitute a valid signature.

The new electronic signature program will be available nationwide during the 2001 filing season. Approximately 6.8 million taxpayers participated in the IRS's PIN pilots during the 2000 filing season, almost a 500% increase from 1999. The IRS decided not to continue to mail postcards with PIN numbers to taxpayers, due to cost and administrative concerns. For the long term, the IRS is working to develop a digital signature.

In 2001, 23 new forms will be accepted through the IRS's e-file program; 39 additional forms will be added in 2002. New for the 2001 filing season on the electronic Form 1040 will be space for preparer notes, statements and elections, features that had been requested by many practitioners. Returns of taxpayers with foreign addresses will be accepted in 2001.

The 23 additional forms to be accepted in the Form 1040 e-file program for 2001 include:

• Form 2106-EZ—Unreimbursed Employee Business Expenses
• Form 2350—Application for Extension of Time to File U.S. Income Tax Return
• Form 2688—Application for Additional Extension of Time to File U.S. Individual Income Tax Return
• Form 3468—Investment Credit
• Form 3800—General Business Credit
• Form 5884—Work Opportunity Credit
• Form 6478—Credit for Alcohol Used as Fuel
• Form 6765—Credit for Increasing Research Activities
• Form 8379—Injured Spouse Claim and Allocation
• Form 8801—Credit for Prior Year Minimum Tax
• Form 8820—Orphan Drug Credit
• Form 8824—Like-Kind Exchange
• Form 8826—Disabled Access Credit
• Form 8830—Enhanced Oil Re-covery Credit
• Form 8834—Qualified Electric Vehicle Credit
• Form 8835—Renewable Electricity Production Credit
• Form 8844—Empowerment Zone Employment Credit
• Form 8845—Indian Employment Credit
• Form 8846—Credit for Employer Social Security & Medicare Tax
• Form 8847—Credit for Contributions to Selected Community Development Corp. and Schedule A, Receipt for Contribution to a Selected CDC Form 8859—District of Columbia First-Time Homebuyer Credit
• Form 8861—Welfare-to-Work Credit

Innocent Spouse Litigation

Chief Counsel Notice N(35)000-338 (6/5/00) announces a change in the IRS's litigating position on judicial review of its spousal relief determinations. In light of the Tax Court's recent decisions in Michael B. Butler, 114 TC No. 19, Diane Fernandez, 114 TC No. 21 and Fredie Lynn Charlton, 114 TC No. 22 (see NewsNotes, "Innocent Spouse Relief," TTA, July 2000, p. 460), the IRS will no longer contest the jurisdiction of the Tax Court, district courts (including bankruptcy courts) or the Court of Federal Claims to review a Service denial of equitable innocent spouse relief under Sec. 6015(f). For eligible spouses, this should make the initial decision to elect innocent spouse relief easier.

Technology

Interactive Income Tax Receipt

A new IRS service, Interactive Income Tax Receipt, allows taxpayers to determine how much of their tax dollars went to various government programs (e.g., national defense, Social Security, Medicare or unemployment benefits). Available at www.irs.gov/hot , a user enters in the window provided the total Federal income tax paid for 1999. Below is a sample of the results, using "12155" ($12,155):

The items in the first two columns stay constant; only the dollar share changes as the Federal income tax paid changes. The program also contains examples of specific Federal budget items.