IRS Resumes Field Exams & Collections

irs-sealThe Internal Revenue Service is back and has released guidance on the resumption of field audits and collection activities. Here are some highlights:

  • If you received an audit report requesting a response in 10 days but were unable to respond because of the shutdown you may still respond.  However, your auditor also should re-establish contact before taking additional actions in your case.
  • If you received a 30 day letter, you should continue to adhere to the deadline.  You may contact your auditor to discuss your options.
  • Failure to pay and failure to file penalties are statutory and are charged from the due date of the return until the date of payment.  These penalties will not be abated during the period of the shutdown.

Please visit for more information or read the FAQs here:

FAQs: Resumption of Field Exam Activities

FAQs: Resumption of Field Collections Activities

Revised Due Dates for Tax Court Filings

us_tax_courtBecause of the government shutdown which began October 1, 2013, and ended October 16, 2013, revised due dates apply for the following United States Tax Court filings.

Pretrial Memoranda

  • Pretrial memoranda for Regular and Small Tax Case sessions beginning October 28, 2013, are due by “October 24 if possible.” If filed, parties are asked to bring courtesy copies to calendar call.
  • Pretrial memoranda for Regular and Small Tax Case sessions beginning November 4, 2013, are due by October 31, 2013.
  • Due dates for pretrial memoranda in cases calendared for trial November 12, 2013, and thereafter are unchanged from those provided in the Standing Pretrial Order and Standing Pretrial Notice.

Opening, Answering & Reply Briefs

  • Opening, Answering & Reply Briefs with an original due date between October 1 and October 16 are due November 8, 2013.
  • Opening, Answering & Reply Briefs with an original due date between October 17 and November 4 are due November 15, 2013.


  • Answers with an original due date between October 1 and October 16 are due November 8, 2013.
  • Answers with an original due date between October 17 and November 4 are due November 15, 2013.


  • Decisions with a due date between October 1 and November 21 are due November 22, 2013.

All Other Items & Actions

  • All other items to be filed or actions required to be taken with an original due date between October 1 and October 16 are due October 25, 2013.
  • All other items to be filed or actions required to be taken with an original due date between October 16 and October 27 are due October 28, 2013.

Please be reminded that statutory deadlines for filing petitions were not extended during the government shutdown.

Read the Tax Court’s official guidance here:
Tax Court Announcement Final 10.17.13

U.S. Tax Court Reopens Today

UnknownThe United States Tax Court reopens today with the end of the government shutdown. Electronic forms may be filed and hand-delivered petitions will be accepted. Tax Court sessions scheduled to begin on October 21, 2013 will be held as previously scheduled.

Additional information will be posted with details about cancelled trial sessions and grace periods for suspended due dates.

Read more here:
US Tax Court Startup Interim Announcement

Tax Court Reverses Itself on Qualified Appraisals for Façade Easements

UESThe proper standard for a qualified appraisal in the façade easement context has been vigorously contested by the IRS in recent years. In a rare reversal on reconsideration, the Tax Court adopted the Second Circuit Court of Appeals’ view of the necessary elements for a qualified appraisal in the context of these easement deductions. In short, the Court affirmed that the regulatory standard for a qualified appraisal requires only a method of valuation and a basis for valuation.

The decision under reconsideration was Friedberg v. Commissioner , TC Memo. 2011-238. In the reversal the Tax Court observed its practice of following the precedent of the U.S Court of Appeals to which a case may be appealed, first established in Golsen v. Commissioner, 54 T.C. 742 (1970).

In 2002, the taxpayers, Mr. Friedberg and Ms. Moss, purchased a townhouse in Manhattan’s Upper East Side Historic District for $9,400,000. In 2003, the National Architectural Trust (NAT) contacted Mr. Friedberg and asked him to donate a façade easement. Mr. Friedberg agreed and contacted an appraiser, recommended by NAT, who appraised the value of the easement. The appraisal concluded that the total loss of value, including the easement and the value of unused development rights, was $3,775,000. The taxpayers deducted that amount on their 2003 tax return as a charitable donation of a qualified conservation easement. The Commissioner challenged the deduction with a statutory notice of deficiency. The taxpayers filed a petition in the Tax Court.

The Tax Court issued an opinion following cross-motions on summary judgment. One of the questions decided in favor of respondent was that the taxpayers had failed to provide a qualified appraisal under Treas. Reg. §1.170A-13(c)(3)(ii). In reaching that determination, the Court followed its findings in Scheidelman v. Commissioner, T.C. Memo. 2010-151 (Scheidelman I) where it found that

“the mechanical application of a percentage diminution to the fair market value before donation of a façade easement does not constitute a method of valuation as contemplated under section 1.170A-13(c)(3)(ii).”

Though Friedberg and Moss lost on that issue, not all of the argued issues were decided, including whether the appraisal was “qualified” as to the valuation of the unused development rights. The parties continued discovery on that question.

Meanwhile, in Scheidelman v. Commissioner, 682 F.3d 189 (2d Cir. 2012) (Scheidelman II), the Second Circuit vacated the Tax Court on the qualified appraisal standard referenced in the Friedberg opinion. The Court of Appeals held that Huda Scheidelman had obtained a qualified appraisal under the regulations because her appraisal adequately specified the appraiser’s method of, and basis for, determining the easement’s fair market value.

Friedberg and Moss were still hashing out interrogatories and depositions when the Second Circuit decided Ms. Scheidelman’s case. They filed a motion for reconsideration of the Court’s earlier ruling under Tax Court Rule 161. The Tax Court granted the motion.

On reconsideration, the Tax Court found that the appellate opinion “specifically alter[ed] the underlying law” applied in the 2011 Friedberg decision. The Tax Court held that under Scheidelman II

“any evaluation of accuracy is irrelevant for purposes of deciding whether the appraisal is qualified pursuant to section 1.170A-13(c)(3)(ii)(J), Income Tax Regs.”

Accordingly, the Court re-examined the two elements necessary for a qualified appraisal under Treas. Reg. §1.170A-13(c)(3): (1) a method of valuation and (2) a specific basis for the valuation. With regard to the first element, the Court found that Mr. Freidberg’s appraiser provided sufficient information to enable the Commissioner to evaluate his underlying methodology. Thus it included a method of valuation. The Court then considered and found that the appraisal included “some research and analysis” which was enough to establish a specific basis for the appraisal. The legal standard met, the Court reversed its holding in favor of the government and granted summary judgment for the taxpayers on the question of whether they had obtained a qualified appraisal.

The case is hardly over for Friedberg and Moss though. The Court specifically did not opine on the reliability and accuracy of the appraisal, reserving that factual determination for trial. Nonetheless, the Court’s reconsideration reversed its legal ruling in favor of the government and re-established the appraisal as qualified under the regulations. Whether the merits of the appraisal will withstand the scrutiny of a trial remains to be determined.

Read the opinion here:
Friedberg v. Commissioner, TC Memo. 2013-224

IRS is Keeping a Light On for You: Oct. 15 Filing Deadline Not Changed by Shutdown

IRS_logoWe recently explained the persistence of the federal tax law as it applies to the U.S. Tax Court during the government shutdown. The same rule applies to tax filing deadlines. The continuing government shutdown does not affect the federal tax law and all taxpayers should continue to meet their normal tax filing obligations.

The Internal Revenue Service issued a recent press release reminding us that the October 15 deadline remains in effect for taxpayers who requested a six-month extension to file their tax return. As required by law, individuals and businesses should keep filing their tax returns and making deposits with the IRS, even if there might not be anybody there to respond to your call.

October 15 is the last day for most people to file, but some groups still have more time, including members of the military and others serving in Afghanistan or other combat zone locales. These folks typically have 180 days after they leave the combat zone to both file returns and pay any taxes due.

Taxpayers in parts of Colorado affected by flooding, landslides and mudslides, and who already filed for the automatic extension, also have more time – until Dec. 2, 2013 – to file and pay.

Taxpayers can still file their returns electronically using IRS e-file or the Free File system. Payments accompanying paper and e-filed tax returns will be accepted and processed as the IRS receives them. However, if you’re expecting a refund they will have to get back to you. Tax refunds will not be issued until normal government operations resume.

While you must still file, and may file electronically, you will not be able to reach live IRS personnel for assistance on the phones at Taxpayer Assistance Centers. If it’s any consolation, and most automated toll-free telephone applications will remain operational.

Tax Court Filing Deadlines during Government Shutdown

us_tax_courtFacing a deadline to file a petition to challenge your Statutory Notice of Deficiency or seek a Redetermination of Collection Due Process Hearing while the federal government is shut down?

Your deadline is not extended.

Statutory Filing Deadlines

The Tax Court lacks the authority to extend statutory filing deadlines imposed in the Internal Revenue Code. So, even though you may not hand deliver the petition to the Tax Court (since it is closed), you still must file by the statutory deadline.

Accomplish your filing and preserve your rights by timely mailing the petition. The post office is still open during the shutdown.

You may also deliver the petition by an approved private express delivery company (FedEx, UPS, etc.). Note that the standard for determining compliance with the deadline by mail is a timely USPS postmark. However, the standard for timely filing for express companies is a certificate of delivery. Confirm that the delivery company you are using will deliver or issue a certificate of delivery to an office that is closed, such as the Tax Court, before relying on that option to file your petition.

Other Tax Court Due Dates Extended

Due dates previously set by Tax Court Rule or Order for filing a document, completing discovery, or any other act shall be extended. All such due dates on or after October 1, 2013, shall be extended by the number of days that Court operations are suspended, up to a maximum extension of 5 days from the date the Court resumes operations. If the extended due date falls on a Saturday, Sunday, or a “legal holiday”, the due date shall then be the next succeeding day that is not a Saturday, Sunday, or a legal holiday.

Read the Tax Court guidance here:
Tax Court Government Shutdown Public Statement