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Music Playing Yeah, Welcome everyone to our next installment of the Practitioner Perspectives series. We have a great panel this afternoon focusing on international information, reporting penalties, and I'm going to get us started by introducing our private sector panelists here. First, we have Melissa Wiley. Melissa is a member in Kaplan and Drysdale's Washington, DC office. Her practice focuses on advising clients on U.S. tax matters, including civil and criminal.

Tax controversy and penalty matters, both the federal and state level. Melissa is a member of the AICPA, IRS Advocacy and Relations, and National Tax Committees among other assignments. So we appreciate Melissa joining us here today.

We also are joined by Kevin Packman. Kevin is a partner in Holland and Knights Miami office. He advises clients on foreign bank account reporting compliance, has represented clients before IRS on various international information reporting matters, among a whole litany of other types of issues and specializations that Kevin's a fellow.

The American College of Trust and Estates, and he is a frequent writer and speaker on a wide range of tax issues. So we are delighted to have both of them with us today. And I'm going to turn it to our Deputy Chief of Appeals, Liz Askey, to introduce our appeals panelists. Liz.

Thanks, Andy. So with us today, we've got Mary Carmen Cuyo.

She's the Director of Area 11. Within our specialized examination programs and referrals function. Area 11 handles all of our international issues, both corporate and individual. Mary Carmen has 28 years of service with the IRS and has been with appeal since 2006. And then with Mary Carmen, we've got Indu Sabaya, who is an appeals team manager in Area 11.

Again, the, the area that handles all of our international issues, Indu has 18 years of service with the IRS, first in compliance at LBJ and I.

Um. And then with appeals for the past four years. And then finally we have Norma Diaz who's joining us again. Thank you, Norma. After the first panel, Norma is a collection appeals team manager in Miami, FL and it has been with the IRS for 25 years. So with that, I'm going to turn it over to our moderator today who is Amy Giuliano, who is a senior advisor with us here in Appeals headquarters and and without whom we would not be having this panel. So thank you for all your hard work, Amy, and I'll turn it over to you.

Thank you, Liz, and thank you Andy for the kind introductions of our panelists. I'm very excited for today's discussion.

Um, I think I'll kick things off with a question for our practitioners. What does reasonable cause look like in the context of international information return penalties?

And Melissa, I think I'd like you to start.

Sure, that's a loaded question, Amy, but I'm going to do my best. Umm, it's also a big question. And you know, for those of you who who were just listening to the first panel more broadly on penalties, a big point that that I think everyone was trying to make both on the practitioner and and on the IRS end was that reasonable cause looks different for every single taxpayer. Reasonable calls looks different. If you are, again, to use my real life example, because I'm a little bit obsessed with this case, the Polish police officer whose mom won the Polish lottery and gave him some money and then he wanted to give some of it to his godson back in Poland got different.

Advice and tried to comply with the advice the best he could versus somebody who has made you know has several foreign trusts and has made multiple large international gifts and and ought to know about things and ought to have filed forms before which is not to say that in either circumstance those people under the specific facts and circumstances shouldn't have acted differently. And so you know the what I try to do when I've got a case before appeals on one of these international penalties and frequently it just the 35 twenties and the 3528.

It's really give you a good idea of what my taxpayer knows, what their background is, what they did to get to the right answer and why it is that they fell short after they fell short. How did they find that out and did they act reasonably quickly and in a reasonable manner and I think.

You know, one of the things that, as a practitioner, I always try to make clear when I'm arguing these cases is that I think we could probably all agree on what should have been done and what the ideal situation might have. But that's not the same thing as what is reasonable. And there is a gap there between what is reasonable and what is perfect behavior.

And I'm I'm trying to explain why what my client did fell into that reasonable bucket and why that perfect behavior is not, you know, something that that everybody can attain or that is is attainable in every single situation. And again, I go back to.

Kevin, I was professing my love for the Internal Revenue Manual and some of the factors that it leaves out so that you can really think about in a step by step way, you know, who is this taxpayer? What did they know? Who did they talk to and does it make sense what they did in their specific situation?

I I think that's fair. Reasonable does not necessarily mean ideal.

Kevin, what are your thoughts?

I think a lot of more Sir said I I would agree with uh there's really nothing she said I disagree with. So what I I would say though is I start with really the the facts and I wanna hear this story before I'm thinking of case law and the IRM or any of those issues because you'll hear a story and you'll know it. It sounds like it could qualify for reasonable cause and if it doesn't well then you're you know this the issues aren't really relevant. But I also remember just listening to listen to this popped into my head and I I'll probably screw it up a little bit but I'm pretty sure there was a.

Face years ago, maybe even went to the Supreme Court where there was a an individual who tried to commit tax evasion. They said he found that that was what their finding was, but there was no omission. So because there was no omission, nothing could happen.

Taking that and applying it here, there's lots of ways that somebody screws something up, but there's a lot of ways that they screw something up and it there was no intent whatsoever.

And if the actions they took to use the word reasonable made sense, then I think you find a way that you try to back up and support the factual story with case law and the IRM.

Into what kind of due diligence is appeals expecting from taxpayers?

So I think that that's really ties into what Melissa and Kevin talked about. You know when when they talk about reasonable cause it's you know it's based on a standard that's you know did somebody take ordinary care and prudence in fulfilling their and trying to fulfill their tax obligations. And so I think that's the the standard that we try to apply when we listen, when we hear these cases and you know and and.

It it really does resonate when when the story, when the taxpayer takes this opportunity to tell their story and they should be. You know, it's really helpful to provide the context around their situation. Not just not just in the part one of the panel there. Something that somebody said that really struck me was that you know, she'll lay out the timeline, tell tell what happened before the actual event, what happened. You know, what happened the day off and then what happened after and and really, you know take the time to to be detailed and specific about what prevented them from complying and how did they.

Handle it afterwards. Um. And you know, and also we understand that this is the first time that a taxpayer may have had a chance to listen to, you know, this is the first time that they've had the opportunity to tell their story. So they should really take advantage of that. And we're here to listen with an open mind to what, to what they want to share with us. So, you know, when did it happen? How did it happen? Well, specifically contributed to being non compliant. How did they handle their affairs around the time that this was happening, you know, and how quickly did they did they, you know, act to rectify the situation?

So I I think that and again when we talk about, uh, reasonable cause and due diligence that we need, I mean we do wanna you know, we want documentation to corroborate what the taxpayer is telling us. We're not, you know, we were talking about what, you know, what kind, what can the taxpayer provide and what's that balance between investigatory work and where we're where we're just corroborating. So we do want the, you know, the story that that the taxpayer is, you know, wanting to to convey to us should have the documentation, you know, to to to back that up.

So I think that's kind of what we're expecting for in terms.

Of the due diligence. And it's also it's a way to humanize the taxpayer and provide as much context as as you possibly can to help us understand because we can't ever stand in the shoes. I mean, you had to let you have to, you know, kind of guide us to, you know, to try to stand in the shoes of the taxpayer. We, you know, we weren't there when these things were happening to them. So that that's really helpful for us.

Absolutely. Thank you. And do um before we move on, I just want to be sure that Melissa and Kevin don't have further thoughts on this.

I thought I saw you nodding. That's why I asked how I was not when I agree I'm very, Yeah, that's great. I mean, I I think that's what we're trying to do is, is to put you in the shoes of the taxpayer and and not to get too hokey about it, but to kind of feel like it was for them when they were in this situation. And you know, especially when we get into this realm of international information return penalties in the individual context, it is hard enough for most people to wrap their heads around the different attachments to their 1040s when they are getting toward things like 54718865.

35 Twenties.

You know, just because somebody has some kind of touch to the international world does not mean they are a sophisticated business person or taxpayer.

It means that they happen to have some connection to another country. It may be where they're from. It maybe where their parents are from, it may be a partner of theirs is there. And to really look at the individual understanding and knowledge of that person. It also you know when when my poor Canadian friends, I have so many Canadian clients because they have so many structures that end up being trusts in the United States that aren't trust in Canada and look and act nothing like trust, you know?

Sit and think with that taxpayer for a minute about if that were you, would you have ever thought that this thing had to be reported for U.S. tax purposes? And I'm not saying that's the be all in the end, all right.

If they had an advisor, hopefully they told the advisor about that. If they didn't you know that next step of why didn't they to really drill down to if what they were doing was reasonable. So I love that that point into about kind of getting into their head and and figuring out where they are.

Right. And I just wanted to add that you know one of the ways that that's helpful is to talk about the background of the taxpayer because I mean when we think about international returns and you know people that conduct international business, you think of you think of them as having some level of sophistication. But that's not always the case. And so I think that's helpful to go into the background of the taxpayer and you know how how come and explain how complex the the the tax law is. And so I I think again it's it's when you paint the picture of the whole person it really helps us.

And I wanted to ask something and I guess ask a question, what starts what you just said and do?

There are taxpayers that are incredibly sophisticated and and you know, they may even have finance background, economics, whatever it is, they're more than a one off in the international.

Uh, world. But they can also have the same mistakes that somebody who's not sophisticated has. And at least for me, I have found that when I get to appeals, oftentimes the level of sophistication.

Removes them from the consideration that somebody.

Who didn't go to college would get, and I don't think that that necessarily is the right result, because again, if it we're focusing just on the facts. Not being sophisticated as a fact in certain situations, but being sophisticated and using a competent advisor is a different fact that should get you to the same end result.

So so your question is, is well, no, it's just correct that if somebody sophisticated you that appeals is looking at that.

Differently, or maybe removing them from some of the more leniency.

That would otherwise be available.

So I don't think that it's necessarily anything that's there's no like silver bullet that removes you or puts you in.

I think there I think again it it, it's the totality of the package that that we look at and we really want to make sure that we understand and it talks about intent, it talks about what's what's.


Simultaneously wonderful about reasonable cause and really problematic is that you can you know you can really mold it and really you know and and and and really shape it to to what to how to kind of put the taxpayer you know to to explain the situation of the taxpayer so and and the IRM does a really nice job of kind of laying out what are the factors that we should look at and and and really contend with and and of course there's gonna be you know variations of how people.

Look at facts and how they present them and and how somebody interprets them. So there's always a little bit level of, you know, kind of subjectivity in in, you know, in, in in this objective standard that we're trying to trying to put forward.

I'm sorry, it's such a fact. Intensive. Umm.

Determination, isn't it? Um, so Mary Carmen, who has ultimate settlement authority for penalty appeal cases?

So, Amy, I I think that's a fantastic question and one where I think there is a lot of misperceptions. I'll say and I'm sure Kevin and and Melissa will will chime in on that end. But ultimately our appeals team managers have the ultimate settlement authority in approving a penalty case. And I think it's important to kind of take a step back and look at what the role of the appeals officer is. So the role of the appeals officer, they have the ultimate responsibility to review the case, to make the settlement recommendation and ultimately to provide the rationale.

For their determination, as most of you know certain of our international information return penalties do require a referral to one of our issue coordinators and really the the real purpose of the coordination process is to ensure that similarly situated taxpayers are treated consistently in appeals. So the role of the coordinator is really limited to reviewing the appeals officers recommendation and either concurring with the proposed settlement and or providing guidance in their non concurrence.

So I I know you're going to reach out now to to Melissa and and Kevin and I'd love to hear what they have to say because you know, it is really important to us what the perception of the practitioners is on this topic.

Yeah, you know, we, we have talked about this before and I think.

Part part of the misconception and you know, when when Andy asked me to do this panel, one of my jokes to him was, was like, are you just going to tell them? I've heard Melissa complaining about penalties for the last several years. Now it's your turn. And he said no, which was nice, but now I'm giving it, giving it back to him. You know, this is something that we as practitioners have been giving feedback to appeals on for a while is that, you know, we, we will have a case and seemingly a good conversation with an appeals officer and in a good place. And they'll say, all right, I have to bring this to the issue coordinator and they'll come back and say something.

Like, you know, I was going to give you full abatement, but I can, I can only give you 5050 or you know, I was told by the powers that be that, that I can't go below 7030 or something of that effect.

And so to the extent that that is not the truth, you know that that's a communication issue that I think we all both practitioners and and government employees want to be more precise about because you know understandably our clients, Kevins and my clients are coming to us and asking us how does this whole process work. That's one of the things that I always want my clients to understand from the get go is the process and what to expect. And so I mean I always tell them that there is an issue coordinator and I tell them what I have heard from Andy and I tell them what I've heard from you in meetings about this that.

That look, there's there's this effort to make them make make the appeal settlements uniform. That similarly situated taxpayers should be treated similarly.

You know, that's, that's.

I will say that's hard to explain to taxpayers because we also go back to this initial notion that we all talked about, which is that every taxpayer is different. And so it's it's hard for us to convey to our client there's somebody sitting over this issue that you will never see, that I will never talk to.

And they have some impact on what's going to happen in your case. And you know, I would love to know ways that we can all work together better.

To correct whatever misconceptions there may be about that process.

Yeah and and I think Melissa you you bring up a a fantastic point and and you know it One of the things that I know that the Area 11 leadership team Andy and Liz, you know it's really important and we we we talked to our employees continuously about the importance of speaking with one voice appeal speaks with one voice And you know in that process appeals is going to consider the facts, the law, the circumstances of the of the different parties positions and really ensure that when we're proposing a settlement to the taxpayer we are essentially on the same page and.

And for that reason, if a coordinator let's say does not concur with that appeals officer, that appeals officer has the opportunity to elevate their, you know, maybe the fact that they're not on the same page with our coordinator up to the management change chain and the managers will actually talk about this. And we've seen the process play out and it it works very well. As you know that communication is key and I think it's crucial that our appeals officers here that honestly the misperception out there and how important it is that they necessarily, you know talk to the coordinator.

Let's understand why the coordinator maybe is not concurring and if if they're still not on the same page, there is that elevation process and that's why it's there. It's there for a reason.

Kevin, it'd be helpful to hear from you about sort of your perceptions or experience with the issue coordination process.

When we were.

Doing the, you know earlier discussions for this panel, I will tell you that I personally was shocked to hear what Harry Carman and Andy had said because I my personal experience is up more than once. We're having an appeals officer tell me the issue coordinator was the one making the final determination and had no ability to get to that individual to discuss the actual facts. And the appeals officer were saying, well, I would give you a B&C, but I can't my hands are tied. And you know I I absolutely agree with the the, the.

Comment that there needs to be better communication. Uh, I need to be. Melissa needs to be. We all need as preparers to be in a position to tell our clients this is how it works.

And you know, no surprises along the way.

These cases are so factually, uh, dependent as we've talked about so far. They are so factually dependent and yeah, you you wouldn't. I can understand, you know, the view that OK, am I telling my facts to an appeals officer only to have someone else who's not there listening to that just say, ohh, the answer is this. There's probably room for improvement, not just in the international information penalty realm, but other areas in appeals where we are sure that we're not sending that message there to taxpayers. I think this is very important point that you're raising.

Norma, I know Mary Carmen touched on this a bit already, but you know, any thoughts from you based on sort of your collection appeals, background on why issue coordination is important and how it impacts your consideration, the penalty.

Um, we see this. Some international penalties and collection due process hearings.

And um.

From the collection due processing perspective, there's no difference because we are required to. Um.

To send the international UM penalty on life liability issue to UM Area 11 International for review. So once the appeals officer and international Area 11 makes a determination, then we incorporate that decision into the collection due process hearing and at that point if the taxpayer receives let's say a partial concession or no concession, we can.

Negotiate, um, a collection alternative if the taxpayer wishes to do so, but as far as the umm, the process, the coordination process, everything takes place in Area 11 and we just adopt the decision and the collection due process.

Like we're required to do for a regular exam case issue.

Right. Let's move on to the topic of supervisory approval of penalties, beginning with the question for our practitioners.

Um, Melissa and Kevin, what do you look for in terms of supervisory approval when you're representing a client on a case where an international penalty has been assessed by the service center?

Sure. So I almost always will ask if the appeals officer has looked into that issue in many cases and I love when this happens. So if you take nothing else from this, this is like makes my day when I don't have to ask and the appeals officer comes to the first meeting and says I've already looked it up, it the supervisory approval was was properly obtained, You know I can send to you a fax with the information if you'd like to see it. That is such a helpful, helpful step because as I'm sure most of you know.

A taxpayer over a certain threshold of income isn't entitled to that information. They have to do a foyer request.

It's very, very burdensome and it takes a really long time because there are so many four year requests that I don't know if you've heard, but your agency has not been as well funded as it ought to have been for the past decade. So understandably that whole process takes a long time. So when an appeals officer comes to me and says I know this is an issue, I've already checked and this is fine and I can offer to show it to you, that just makes I think both of our lives and and honestly, ultimately the the lives of the entire Internal Revenue Service.

Um, easier. Because we don't have to go through that step.

And I don't have to tell you I can't settle with you yet because I haven't had my four year request responded to.

You know, given the case law out there currently, obviously there was a reason for the proposed regs that just came out. It's irresponsible of any practitioner I think at this point to go into one of these appeals without asking if that step has has been taken. So for better or for worse, I'm always including it in my protests. If my taxpayer is entitled to it, as a matter of right, I will specifically ask for it. And in other cases I'm I'm hopeful that the appeals officer will work with me to get that.

From my perspective, I'd say that probably.

You know, a little before COVID became a time when I would start focusing on the request as well. Earlier in my career, I didn't really focus on it so much. But as the case law started coming out and it was clear it was an issue, that's when it became part of my protests.

You know, and I'll I'll just add quickly to that, that it may seem, it may seem kind of annoying, it may seem like this silly little argument. If you really believe that your taxpayer has reasonable cause, why are you bothering with this?

And the answer is, if nothing else, I don't want to get sued by my client for not raising something that might have helped, right. And so hopefully what we're doing here in the context of of this training is bringing to you the perspective of what we as practitioners are up against and what may be motivating some of the questions that we have and some of the things that cause us to ask for certain things.

Thank you for that.

In the Norma.

Andy, go ahead. Yeah. Amy, I was just gonna ask, you know, Murray, Carmen or Indu on that point, is that something that our appeals officers will do, you know, formal affirmatively or unilaterally verify the 6751 B compliance? Maybe you could speak to that a little.


Do you want me to take that Mary Carmen we yes so. So that is definitely something that we've emphasized to our teams is to proactively search for the OR or or verify that the supervisory penalty is is there in either in the in the case file or it's been sent to us. And right now we've worked with, you know we've we've worked we've since since identifying it the IRM for sending cases to appeals has recently been updated and now it requires that the evidence of supervisory approval be provided by.

Of the campus on on cases that they're sending to appeals.

And so I I think that that is definitely something that that has it's it's it's evolved over over time. But I think we're all very comfortable with saying OK, if their supervisory approval we'll go ahead with the case and and if and if it's not then you know that that.

That's that's a reason for abatement. So we we, you know, while while it's a reasonable cost, it's like if if it's not there, we don't even if it's not there, then there's not even a reason to go toward, you know, even go forward with a reasonable cost because it's already, you know, it doesn't meet the supervisory approval. So it's almost like a, you know, it's it's it's a first step for us in order to to be more efficient in working the case. Yeah, it does seem like it'd be a best practice. Yeah. Thank you and do for pointing that out.

Back to you, Amy.

Norma, do you have a reaction from your collection appeals perspective here?

My second one on Linda was saying we we follow the same process, we will verify.

And umm, And if we find that, um, we need to?

Recommend abatement um on a collection due process here and we will communicate with Area 11.

And follow whatever process is required.

Thank you. But let's turn to recent court decisions that may impact this area. So I just wanted to, I'm sorry, I wanted to just kind of touch upon.

The, the supervisory approval there are there are some slight differences in the way that it's applied. You know whether it's a an automatic an automatically calculated penalty that's done through electronic means like the 54715470 Twos, those don't require supervisory approval. So if it's if it's if it's that issue then they you know then we we wouldn't worry about that.

However in the 35203520 a foreign foreign foreign trust context filter manually applied. So we definitely will you know we'll take the step of of looking for the supervisory approval and making sure that it's.

Know that it's there. And if the taxpayer will, will will we will provide it for the taxpayer. For ones that you know don't are aren't part of the TFA, you know don't meet the requirements for the TFA. Others, if they meet the requirement of the TFA, we can kind of provide it as part of the the, the, the file. But so anyway, I just wanted to point out that there are some differences in the way that it is applied. So didn't want to leave the topic without without pointing, bringing that to everyone's attention. Thank you and I'm so glad you did. I know that's an important distinction between them manually versus systemically assessed.

Penalties, I appreciate that. Thank you.

So there's a recent Tax Court decision, Sparky versus Commissioner. The Tax Court concluded in the CDP case that collection efforts for IRC 6038 B penalties assessed for both an initial and continuing failure to file Forms 5471. We're not authorized because there is no assessment authority for IRC 6038 B penalties, and as a result, the court held that the government could not proceed with collection of the 5471 penalties via the levy proposed in the CDP notice.

Um, Kevin and Melissa, I think I'll turn to you first for sort of your reaction to this recent decision.

Or several years now, there have been articles written by various practitioners saying that this was the ultimate outcome and it was just a matter of getting through the court system.

While the case the Farhad case didn't address all the filings other than the 5471, the logic would apply the 5470 twos 8860 fives 8050 Eights 92688658938 and the 3524 Gifts not for trust activity.

And so.

I envision that this would be a new hazard that appeals would want to consider and that there will be more cases working their way through.

Thank you, Kevin. What's that? Yeah. Yeah. My condolences in advance to those of you who are on the collection appeal side because I think you're going to see a lot of these. And you know, you can thank the Tax Court, not us. This is not, not something that I personally did. But until Congress fixes those statutes, I think you know any, again, any practitioner who is worried about them, their malpractice insurance going up is going to make this argument on behalf of their client. You know, we've had a lot of clients coming to us and talking about while I already paid it, should I seek a refund and for various reasons, I'm not sure that's exactly the way to go, but.

What we are telling clients who are seeing these penalties is.

Just sending out an assessment notice is not is not enough according to Farki. So if there are collection efforts made on on these penalties, you know we're going to be requesting collection due process hearings. And again my condolences to Norma and and her colleagues because like Kevin mentioned, this is not just a 5471 issue on the statutes for for many other of the international reporting forms are the same way.


Any reaction from our appeals panelists?

So I'll, I'll chime in here. So I can tell you that that we're looking at this Farhad decision currently and we're looking at the implications. So as as as Kevin said there are the logic could potentially be extended. I think we're looking at the implications of this opinion on the cases we currently have in our appeals inventory. I also think that it's important for practitioners and and you know we've already received some practitioners who have raised the the Farhi issue on on some of the cases we currently have in Area 11.

And you know, they're they're saying, well, the Farhi opinion applies and so.

It it's important that for practitioners to understand, I think that it's important for them to provide the analysis as to why it applies. In Area 11. We have a variety of cases like Norma mentioned, we work sometimes the liability portion of the CDP case or the collection due process case. But we also review cases that are coming for example from the service center of or from field compliance where the penalty has been assessed by a campus or the penalty has been assessed by field compliance. Those those cases are are considered by appeals as well.

Um, and so I I think as an as appeals is looking at the case and looking at the implications of the case and whether hazard you know need to be considered in the in the different factual scenarios that are presented before us.

Yeah. So I will, I, I would add, Melissa, no, no need to apologize for us. It's all part of the job here. And I actually, I think, you know, you probably all probably agree that's what keeps us interested in tax law is the changing nature of it.

And then the scratch our heads and say OK, how does this apply in a different context? What hazards would have, would it give rise to here? So yeah, apologies, not necessary. We will work our way through this just as you all as practitioners will.

No. And I think you know your point about you know us as practitioners having the responsibility to be thorough and responsible in explaining the implications of this case to our clients is important that this isn't just a get out of jail free card for 5470 ones in the way that that some other decisions are viewed. You know one one of the things that.

I'm sure you've seen this, so I'm not telling you anything crazy that you've never heard of before. But especially in the international information return context, and especially during the pandemic when things were going like this in terms of communication between the service and taxpayers, I had a ton of clients end up getting collection notice after collection notice for penalties with reasonable cause abatement requests sitting out there. And 90 times out of 100, I would tell those clients to just go to CDP and see if they can get a bite at the reasonable cause apple one, because you're going to end up in appeals anyway because that's the first time harkening back to what we talked about in the first.

Have That's the first time you're going to get a person to sit down and listen to your story.

And I think this most latest decision is, is just another reason why you will increasingly see those penalty cases before you. Because you're the folks who can look at these, apply the law, have a conversation, figure out what the real implication of the case law is and hopefully work with us to arrive at a reasonable settlement for our clients.

Well, Melissa, I I hopefully, hopefully um the delays of COVID have have improved and I can say we've appeals has implemented A paperless process that is now permanent with penalty appeals cases with all of the campuses. And so the the purpose really is to get these cases into appeals much faster because we were seeing quite a bit of a lag on the front end. So hopefully these cases are making their way to appeals before the taxpayer even has to to start the CDP process. I mean that's really their penalty can, their penalty appeal should really be considered.

Um, before they even have to go and file for the CDP process?

So I will keep all Amen to that very carbon.

Mary Carmen, if I could ask you about one more case in this area. How is appeals handling non willful F bar cases in the wake of the Bittner Supreme Court decision that the penalty applies perform rather than per account?

Another great Crest question, Amy. So we have identified in Area 11 International all of the cases to which the Bittner decision affects. And so we are currently working through some of the procedural and administrative issues on how these assessments are going to be finalized and handled consistent with that opinion. So it never a dull moment in Area 11 International, I can tell you that.

That we are, we are working through the administrative and procedural issues just to to finalize them and close them up.

Want to hear it? I um, I think I'd like to check with Andy and Liz to see, you know, how, if there are any questions in the text chat that you'd like to pose to our panelists or sort of any.

Observations or reactions you'd like to share.

Liz, anything uh, I saw a question a little bit earlier, um you somebody cited to the IRM on how we approach approvals, you know, getting the evidence that the penalty was approved appropriately. Is somebody asked whether that just applied to international penalties? I think the answer is no, but.

Hindu or no so it it does not just apply to international it it applies to all all appeals cases.

I saw a couple of comments in there. Folks were interested in that discussion on Farhi and you know, we're asking what do Melissa and Kevin think of Farhi? Would you have argued the case that way?

Look I.

We're all kind of tax nerds here. This is like a different level of tax murdery. Like there's a big part of me that was disappointed that I didn't see that piece that was off in the statute and I didn't raise it before. But absolutely, you know.

It's it's a little bit like I remember when I was going to law school and somebody asking me like, well, you can't be a criminal lawyer, right? Like how could you defend somebody that you know did it? Well, in my case, a lot of times I defend people that I know did it. And. And the reason you do that is the integrity of the system, right. And so yeah, we are always looking for ways and I know this again sounds hokey and maybe a little unbelievable, but as practitioners, you know, a big part of what we do is, is ensuring the integrity of the system that it's working the way it ought to. And I think that ultimately that is better for the system. It is better for all of us, which is a very long winded.

Way of saying I'm jealous. I didn't think of that argument before. And yes, if I had been that smart, I I would have used it.

Uh, Kevin and other observations on far here. Any other points you want to make about that?

Umm I I, I agree uh with with Melissa's comment in that you know it wasn't something that I I have raised in the past umm there was a a Bill of Rights that tax you know Nina Olson issued many years ago and she had encouraged all practitioners to cite to the Bill of Rights when we went to appeals. So that hopefully they'll be case law coming out in regards to that. I I don't know offhand that that has happened but that was something that I did for a number of years site to her Bill of Rights because I found that a lot of the cases you know you could.

Find a couple of the rights that have been violated.

Yeah, There's a point also in the text chat about, you know, well ultimately the potential is there for the government to appeal the Farhi case, you know, Yeah, sure that is there, right.

You know, we and appeals don't have the luxury of saying well, you know, we'll sit on our hands here, you know, and do nothing in the interim. So as a, I think Mary Carmen pointed out, certainly a lot of discussions on our side about, you know, what impact the Farhi case has on pending cases or cases yet to come to appeals.

So back to you, Amy.

Thank you, Auntie. Um, since it seems we have a couple more minutes. Mary Carmen, I wanted to ask you about recent appeals, interim guidance on when first time abatement applies.

Thanks, Amy. And I think Andy alluded to this earlier in the conversation and it was actually raised by the practitioners.

They they came to us and they said, hey, there's an inconsistency potentially between what IRM 20 says and what IRM 8 says. And we closely looked at it. And essentially the IRM that was issued, I believe it was in December essentially reconciles what IRM 20 says with respects to 5470 ones and 5470 twos where the taxpayer is ultimately eligible for first time abatement on the underlying 11/20 and 1065.

And it's essentially saying that it would be extended if it meets you know the certain requirements that for systemically assessed penalties that it would essentially be extended to the 5471 and or the 5472. But I I think it's I think the the beauty of this interim guidance is really that.

We you all raised it. We heard you. Um. And so by all means continue to raise your concerns. That's what we're here for, Um, essentially. And and if and if there's something that needs to get done, we will work to get it done and fixed.

I I appreciate that so much and I I hope you know that you know on the practitioner side our ability to talk to folks like you and raise these issues and then see it addressed in real time in a matter of months is so heartening. I know it's not easy to move through the system that you have to work through and just know that your efforts are are seen and and very much appreciated.

Thank you for that. I know I've personally.


I've personally really enjoyed this conversation between appeals and the our practitioners today. Thank you to all of our panelists for taking the time to be with us and for your thoughtful insights that you've shared.

Thank you appeals for listening in.

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