In Eaton Corp. v. Comm’r, No. 5576-12, the Tax Court recently granted the government’s Motion to Compel Production of Documents where the taxpayer asserted a reasonable cause/good faith defense, finding that the taxpayer waived the privilege to protect the documents from disclosure.

In Eaton, the taxpayer opposed the government’s Motion to Compel Production of Documents, arguing that the documents were protected from discovery by the attorney-client privilege, the federal tax practitioner privilege under Code section 7275, and/or the work product doctrine. The documents consisted of the taxpayer’s internal emails, memos, and data compilations prior to entering into an advance pricing agreement with the IRS.  The taxpayer stated that the documents “generally were prepared by its internal and external tax advisors or counsel in the course of adversarial administrative proceedings with the IRS, and reflect confidential communications made by [the taxpayer] for the purpose of obtaining tax or legal advice.” The government argued that the documents were not protected from discovery and even if they were, the taxpayer waived any privilege or protection by asserting that it had reasonable cause for and acted in good faith in reporting its tax liability.

The Court noted that documents that are protected from disclosure by a privilege are beyond the scope of discovery pursuant to Tax Court Rule 70(b) and that in resolving privilege disputes, the Tax Court applies relevant holdings of the Court of Appeals for the DC Circuit. The party asserting privilege bears the burden of establishing that the privilege applies, and once the privilege is established, the party asserting an exception to the privilege bears the burden of showing the exception should apply.

The Court analyzed the documents and concluded that although the documents were protected under the work product doctrine and the attorney-client and tax practitioner privileges, the taxpayer waived work product doctrine and the attorney-client and tax practitioner privilege protections. The Court noted that taxpayers can, in some circumstances, involuntarily forfeit privileges for matters that are pertinent to factual claims made by taxpayers. Courts decide on a case-by-case basis whether fairness requires disclosure of otherwise privileged communications.

The Tax Court relied on its own recent decisions, which adopted the approach of determining whether an implied waiver of privilege occurred.  In a recent decision, the Tax Court found that taxpayers can waive privilege when they put into to issue their subjective intent, good faith, and state of mind in complying with the law and that the Section 6664 reasonable cause defense puts such issues into contention.  The Tax Court also noted that several courts have held that the privilege is waived where a party claims that it acted on a good faith belief that its conduct was reasonable and legal.

The Tax Court analogized the facts in Eaton, where the taxpayer alleged that it was not liable for accuracy related penalties because it had reasonable cause and acted in good faith in reporting its tax obligations, to the facts in the Tax Court’s recent decision in AD Inv. 2000 Fund LLC v. Comm’r, 142 T.C. 248 (2014), in which the Tax Court held that the taxpayer waived privilege by raising the Code section 6664 reasonable cause defense. The Court concluded that its analysis in AD Inv. 2000 Fund v. Comm’r was controlling in Eaton. The Court reasoned:

“Recognizing that a reasonable cause/good faith defense under section 6664(c) is dependent upon a review of all the pertinent facts and circumstances, petitioner’s reliance on the reasonable cause/good faith defense in this case, and the averments in the petition related thereto, call into question a number of factual issues including (but not limited to) petitioner’s knowledge and understanding of the pertinent legal authorities governing APAs and the application of those legal authorities to the relevant facts, whether petitioner provided its attorneys and tax practitioners with accurate information and all of the facts material to its APA request and the negotiations related thereto, and whether petitioner abided by the advice that it received from its attorneys and tax practitioners. Petitioner’s communications with its attorneys and tax practitioners may be the only probative evidence of the state of mind or knowledge of the persons who acted on its behalf and those communications may tend to show, among other material facts, whether those persons in fact considered the APAs to be binding and valid…”

The Court held that the taxpayer waived the privilege to withhold the documents under the Court’s review, noting that the taxpayer’s reasonable cause/good faith defense put into contention the subjective intent and state of mind of those who acted for the taxpayer and the taxpayer’s good faith efforts to comply with the tax law.  The Court also reasoned that it would be unfair to deprive the government of knowledge of the legal and tax advice the taxpayer received. The Court granted the government’s Motion to Compel Production of Documents.

As an obstacle to the investigation of the truth, privileges are often strictly confined within the narrowest possible limits consistent with the logic of its principle. To become privileged, a communication must be made in confidence. To remain privileged, the communication must remain confidential. A disclosure of confidential communications to third parties, including government agencies (i.e., tax returns), constitutes a waiver both as to the disclosed communication and as to other communications relating to the same subject or transaction (“opening the door”).

If otherwise privileged communications are utilized in a manner inconsistent with maintaining their confidentiality, the privilege may be deemed to have been waived. As a general rule, disclosure of privileged communications to a person outside the attorney-client relationship manifests indifference to confidentiality and waives the protection of the privilege. The primary determination is whether there has been an objective attempt to safeguard the confidential nature of the communications.

Taxpayers and practitioners must carefully protect all potentially available privileges from both direct and inadvertent waivers. Eaton held that assertions of reasonable cause for and acting in good faith in reporting a tax liability as a penalty defense served to open up what might otherwise be deemed privileged communications that occurred between the taxpayer and its lawyer/tax practitioner advisors.

KRISTA HARTWELL – For more information please contact Krista Hartwell at or 310.281.3200. Ms. Hartwell is a tax lawyer at Hochman, Salkin, Rettig, Toscher & Perez, P.C. and represents clients throughout the United States and elsewhere involving federal and state, civil and criminal tax controversies and tax litigation. Additional information is available at

Posted by: | May 15, 2015

IRS Audit Techniques Guides

Historically, Internal Revenue Service examiners were assigned to audit taxpayers in many different industries. On one day, an examiner audited a grocery store and on the following day the examiner may have audited a computer retailer or a medical doctor. As a result, experience gained in one audit did not significantly enhance the examiner’s experience for purposes of conducting other audits. More recently, the IRS has been attempting to identify and reduce non-compliance through efficiency, tax form simplification, education, and enforcement. In addition, the IRS has significantly modified its examination process in a manner designed to increase the available resources and experience of its examiners.

IRS Audit Techniques Guides (ATGs). The ATGs focus on developing highly trained examiners for a particular market segment or issue. A market segment may be an industry such as construction or entertainment, a profession like attorneys or real estate agents or an issue like passive activity losses, hobby losses, litigation settlements or executive compensation – fringe benefits. These guides contain examination techniques, common and unique industry issues, business practices, industry terminology, interview questions and procedures and other information to assist examiners in performing examinations.

The ATGs have significantly improved audit efficiency and compliance by focusing on taxpayers as members of particular groups or industries. These groups have been defined by type of business (artists, attorneys, auto body shops, bail bond industry, beauty shops, child care providers, gas stations, grocery stores, entertainers, liquor stores, pizza restaurants, taxicabs, tour bus industry, etc.), technical issues (passive activity losses, alternative minimum tax), and types of taxpayer or method of operation (i.e. cash intensive businesses). As examiners focus on the tax compliance of a particular industry, they have gained experience on specific issues to be examined for a particular type of business, whether or not the issues are set forth on a tax return. Examiners often spend the majority of their time auditing taxpayers in the particular market segment for which the examiner has become a specialist. Some may specialize in examining the construction industry while others may specialize in examining restaurants.

IRS examiners are routinely advised about industry changes through trade publications, trade seminars and information sharing with other examiners. As such, there is an increased understanding of the market segment, its practices and procedures, and the appropriate audit techniques required to identify issues unique to the market segment under examination. Utilizing an ATG, examiners attempt to reconcile discrepancies when income and/or expenses set forth on a taxpayer’s return are inconsistent with a typical market segment profile or where the reported net income seems inconsistent with the standard of living prevalent in a geographical area where the taxpayer resides. As a result, information and experience gained through the examination of returns for other taxpayers becomes the barometer for judging the accuracy of a particular return under examination.

Issues are continually being identified by their unique features requiring specialized audit techniques, technical or accounting knowledge, or the need to comprehend the specific business practices, terminology and procedures. The IRS has published numerous ATGs, including attorneys, auto body/repair shops, bail bondsmen, beauty/barber shops, car washes, child care providers, check cashing establishments, childcare businesses, construction contractors, farmers, restaurants and bars, various segments of the entertainment industry (motion picture/television, athletes and entertainers, music), garment industry, gasoline distributors, grocery stores, insurance agencies, jewelry dealers, liquor stores, mobile food vendors, parking lot operators, pizza parlors, real estate agents/brokers, real estate developers, recycling businesses, scrap metal businesses, taxicabs, the trucking industry, direct sellers and auto dealers.

Once the IRS identifies a particular market segment project, an audit group may develop an ATG based upon the market segment’s unique business activities. The audit guides are used by examiners to develop a pre-audit planning strategy. The ATGs explain the nature of each respective market segment or industry, the type of documentation that should generally be available, and the nature and type of information to search for during a tour of the business premises. They identify potential sources of additional income not otherwise readily apparent from the type of business activity being examined. Copies of many of the ATGs are available at,,id=108149,00.html

The ATGs identify issues to be raised during an audit interview with the business owner/operator, including the need for a detailed discussion about internal controls (weak internal controls in a small business environment does not preclude the necessity of determining the reliability of the books and records since every taxpayer has a method of conducting business and safeguarding business operations), source of funds utilized to start the business, a complete list of suppliers, identification or business records that might be available and the individual that maintains the business records. The examiner will also explore the manner of business operations, including the hours and days it is open, the number of employees, the responsibilities of each employee, identification of the individual that maintains control over inventory (beer, wine, etc.), cash and credit card receipts, and the cash register tapes. Examiners are advised to search out payments of non-business or personal living expenses by the owner/operator from the business operations.

Specific Industry Applications of Audit Techniques. IRS examiners are advised to make specific inquiries based on the type of taxpayers under examination. For example, in the retail liquor industry, examiners are advised to search for off-book inventory including purchases outside of the liquor distributor, i.e. local wholesaler, bottle redemption and check cashing as well as contacting for check with local/state beverage department for pending or completed investigations involving taxpayer and/or known suppliers of the taxpayer. For pizza restaurants, examiners are cautioned to reconcile the difference of the number of boxes sold verses the number of boxes used (less some account for spoilage boxes) as possible additional unreported sales. For gasoline service stations, examiners are advised use the indirect mark-up method of determining income (gallons purchased multiplied by the average selling price as representing total sales) and inquire about imaging reimbursements, incentive agreements, accommodations, blending and rebates.

For restaurants and bars, examiners are advised to inquire about rebates to franchisees from suppliers, compare restaurant averages (sales v. cost), reported net profits as compared to the industry average, spillage, whether “point of sales” machines, using bar averages (pour) to calculate income, etc. With respect to grocery stores, examiners are advised to search for potential sources of unreported income that might include coupon processing rebate fees, cash discounts from vendors, rebates from vendors, receipt of high dollar promotional items from vendors, use of vending machines (i.e. newspaper), pinball machines/arcade games, bottle/can redeeming, money orders, credit card sales, food stamp sales and prepaid telephone cards.

Cash Intensive Businesses. ATGs are designed to focus IRS examiners on the typical methods of operation for businesses operating within a particular market segment. For example, with respect to cash intensive businesses, the audit guides identify the potential for skimming in liquor stores, pizza restaurants, gas stations, retail gift stores, auto repair shops, restaurants and bars.

Since certain businesses do not always deposit all of their cash receipts, the Cash Intensive Business ATG provides various methods by which an examiner may be able to reconstruct total gross receipts and expenditures. Cash intensive businesses may not have much documentation available to verify gross receipts. Purchases may be paid in cash and the purchase invoices may not be retained. Employees may also be paid in cash in order to attempt to avoid payroll taxes.

The most significant indicator that income has been underreported is a consistent pattern of losses or low profit percentages that seem insufficient to sustain the business or its owners. Other indicators of unreported income include a life style or cost of living that can’t be supported by the income reported; a business that continues to operate despite losses year after year, with no apparent solution to correct the situation; a Cash T shows a deficit of funds; bank balances, debit card balances and liquid investments increase annually despite reporting of low net profits or losses; accumulated assets increase even though the reported net profits are low or a loss; debt balances decrease, remain relatively low or don’t increase, but low profits or losses are reported; a significant difference between the taxpayer’s gross profit margin and that of their industry; and unusually low annual sales for the type of business.

If the examiner believes the business may not be reporting all of its income, the examiner may issue a summons to suppliers and other third-parties for records of sales or deliveries to the business, including original purchase invoices, during the period under examination. The examiner may then mark-up the purchases by a reasonable amount based upon ATG industry standards to determine what are known as the audited sales for the business. Absent a reasonable explanation for a discrepancy between audited sales and reported sales, the IRS will determine income tax adjustments (and maybe penalties) based upon the discrepancy.

The ATGs acknowledge that “chain” or “franchise” businesses may not participate in skimming to the same extent due to the somewhat intensive internal controls typically required in their operations. Internal controls are often stronger in franchises due to independent audits and verifications performed by the franchisor. Typically, the franchise fee is based on the gross revenue of the business. The franchisee usually must buy products from the franchisor to maintain the franchise. The franchisor also requires maintenance of certain books and records in a format determined by the franchisor and may conduct audits of the franchise operations.

Typical Interview Questions Addressing Accumulated Funds. Taxpayers often assert that unexplained amounts represent accumulations of wealth over a period of time. The examiner can be anticipated to interview the taxpayers regarding their assertions. Common questions include whether the taxpayer keeps more than $1,000 on your person, at your home, at your business, or in any other location?1 What do the accumulated funds consist of? (For example, paper money, coin, money orders, cashier checks, etc.). In what denominations were the funds accumulated? Where are the accumulated funds maintained? How long have the accumulated funds been kept in the foregoing location? What kind of container were the accumulated funds kept in?

Further questions could include how much in accumulated funds did the taxpayer have on hand at the beginning of the year under audit? At the end of the year under audit? How much in accumulated funds does the taxpayer have on hand presently? Over what period of time were the funds accumulated? Do the accumulated funds solely belong to the taxpayer or does it belong to more than one person? Identify each person having ownership of these accumulated funds. Do any of the other owners have access to these accumulated funds? Identify the increase or decrease in accumulated funds for each access. Determine whether each person obtaining access was accompanied by another person. If so, provide the name and relationship of such person(s). Identify the type of records kept to identify the name(s), date(s) and effect on the accumulated funds each time there was an access.

Why were the funds accumulated and not deposited in a financial account? What is the original source of the money included in the accumulated funds? How often are the accumulated funds accessed? What is the effect of each access? Are there additions or withdrawals from the accumulated funds? Was the taxpayer accompanied by another individual when the accumulated funds were accessed? If yes, provide the name and address of the persons involved. Does the taxpayer count the accumulated funds every time they are accessed? If not, provide the dates and purpose for when the funds were counted. Does anyone else know about the accumulated funds? If yes, provide the name, relationship, address, and phone number for the person. Also determine whether these persons have access to the accumulated funds and if so, the manner and circumstances under which their access was made.


Posted by: | May 1, 2015

Clinton Foundation to File Amended Returns, Should You?

The Clinton Foundation recently announced that it will be amending various previously filed annual information returns to, at least in part, reflect donations on a specific, rather than consolidated, basis.[1] IRS Form 990, “Return of Organization Exempt From Income Tax,” is an annual information return filed by organizations exempt from income tax under Internal Revenue Code section 501(a) and 501(c)(3). In certain situations, a central exempt organization can aggregate data from subordinate organizations and report the aggregate information on a consolidated Form 990.[2]

Apparently, the decision to amend various Clinton Foundation returns was, in part, prompted by a review of the Foundation’s otherwise publically available Forms 990 by the Reuters news agency.[3] Reuters news agency reported that the Clinton Foundation was under-reporting or over-reporting donations from foreign governments and in other cases omitting to break out government donations entirely when reporting revenue. In general, all information an exempt organization reports on its Form 990, including various schedules and attachments, must be available for public inspection,[4] although information regarding donors and contributors is not generally available for public inspection.[5]

Did the Clinton Foundation’s tax forms have major errors that resulted in “under- and over-reporting, by millions of dollars” as reported by Reuters? In a statement on its website, the Clinton Foundation responds “No. Total revenue was reflected accurately on each year’s tax form, and there was no under-reporting or over-reporting. We are in the midst of conducting a voluntary external review process and will determine whether to re-file after that process is completed. As far as we know, the only error on our tax forms was that government grants were mistakenly combined with all other contributions for three years. These grants were properly listed and broken out on audited financial statements and donors also were included on the annual donor listing. All total revenue and expenditures on these forms were accurate but as we are committed to transparency and accountability and as such, we expect to re-file.”[6]

If the foregoing is correct, it would appear that the Forms 990 were substantially accurate but the issue relates to consolidating rather than specifically identifying certain donor information. There is no information indicating that the aggregate amount of reported contributions was somehow inaccurate.

Is there any legal duty to correct an error on a previously filed tax return? Taxpayers are required to accurately report their income and deductions on a timely filed return.[7] However, there is absolutely no statutory requirement to file an amended return after an error or omission is discovered on a previously filed tax return. As stated by the U.S. Supreme Court in Badaracco v. Commissioner, an amended return is a “creature of administrative origin and grace” – neither the Code nor the underlying Treasury Regulations require a taxpayer to correct errors discovered in a previously filed tax or information tax returns.[8]

The return preparation and filing process is complex and cumbersome, to say the least. Information must often be obtained from numerous sources, reviewed and coordinated into a return subject to strict filing deadlines. Congress has forever considered tax simplification targeted at reducing taxpayer burden associated with this process. In this process, it is not uncommon for good faith mistakes to occur – whether by oversight, mathematical miscomputations, erroneous legal or factual assumptions, improper characterization of certain items, etc. In such situations, the Treasury Regulations provide that taxpayers “should” (rather than “shall” or “must”) file amended returns in certain circumstances.[9] If an amended return is filed, it must be as accurate as possible in all respects.

The timely filing of an amended return (a “Qualified Amended Return” or “QAR”) may encourage the waiver of potentially applicable penalties otherwise associated with whatever errors are set forth in a previously filed return.[10] A QAR effectively eliminates accuracy-related penalties by removing amounts shown on the amended return from the penalty calculation.

Significantly, even if timely, an amended return does not qualify as a QAR if the errors that are corrected in the amended return relate to a fraudulent position on the original return.[11] Why? In a voluntary compliance system of tax administration, taxpayers should be encouraged to voluntarily amend material errors in previously filed returns, even returns that for some reason may be deemed to include fraudulent positions

Does the return preparer have a duty to amend the return? A practitioner must advise a taxpayer if an error is discovered on a previously filed return.[12] Section 10.21 of Treasury Circular 230 provides that the practitioner must advise the taxpayer of a discovered error and of any consequences associated with the error in the return. However, the ultimate decision as to whether to actually file an amended return correcting any such error rests solely with the taxpayer. “Best practices” suggest that the practitioner render advice regarding methods of avoiding avoid accuracy-related penalties under the Code if the taxpayer acts in reliance upon such advice.[13]

Impact upon the current year? Even if an amended return is not filed to correct an error in a previous year, the current and subsequent years’ returns must be accurate. A practitioner is presumed to have exercised the requisite due diligence with respect to the preparation of a return if the practitioner relies in good faith on the work product of another person. The practitioner should establish relevant facts and the reasonableness of any assumptions or representations, apply the applicable law (including potentially applicable judicial doctrines) to the relevant facts, and arrive at a conclusion supported by the law and the facts.

A practitioner may generally rely in good faith without verification upon information furnished by the taxpayer. However, the practitioner may not ignore the implications of information furnished to, or actually known by, the practitioner, and must make reasonable inquiries if the information as furnished appears to be incorrect, inconsistent with an important fact or another factual assumption, or incomplete.[14] There remains a duty of inquiry if the information appears questionable.

Impact on the statute of limitations? Contrary to popular belief, filing an amended return does not extend the applicable period within which the IRS must determine the accuracy of the originally filed return. If errors in the original return are not changed, the general three-year statute of limitations will generally apply. Thereafter, the IRS may no longer determine an additional liability. A six-year statute of limitations applies if the taxpayer omits more than 25% of the income that is reported. In the case of a fraudulent return or if a return is simply not filed, the IRS may assess an additional liability at any time. If the applicabl e statute of limitations expires, the IRS may no longer assess an additional liability for the year involved. However, it must be noted that these statutes of limitations are subject to extension, voluntarily and otherwise.[15]

There is no statutory duty to amend a previously filed return. While it might be advisable to file an amended return, it is not mandatory. The practitioner must advise the taxpayer of errors discovered within a previously filed return and should render advice regarding how to possibly avoid potential penalties associated with such errors.

If the name “Clinton” was not associated with the Clinton Foundation, the consolidation of donor information might be deemed inconsequential not otherwise suggesting an amendment of already filed returns. However, if the taxpayer is an organization affiliated or previously affiliated with a former U.S. President and one or more potential future U.S. Presidents, the organization would likely be advised to amend even the most insignificant errors in its recently filed information returns. Others should balance the materiality of the underlying errors, potential consequences associated with amending the returns (or not), and other relevant facts. Current and future returns must be accurate, whether the earlier returns are amended or not.


[2] The Foundation’s subordinate Clinton Health Access Initiative (CHAI) is apparently also considering amending recently filed Forms 990.

[3] Some have asserted that, among other issues, in relevant years, the Clinton Foundation either filed and obscured consolidating financial information or elected to cease filing consolidating financial information. See

[4] Internal Revenue Code section 6104(b); See IRS Form 4506-A (Request for Public Inspection or Copy of Exempt Organization IRS Form) and

[5] Id.


[7] Filing Past Due Tax Returns, available at

[8] See the U.S. Supreme Court decision in Badaracco v. Commissioner, 464 U.S. 386, 393 (1984) (the filing of an amended return does not start the running of the three-year statute of limitations if the original return was fraudulent. The Court noted that although Treas. Regs. 301.6211-1(a), 301.6402-3(a), 1.451-1(a), and 1.461- 1(a)(3)(i) refer to an amended return, none of them requires the filing of such a return) ; see also Broadhead, TCM 1955-328, affirmed  254 F.2d 169 (CA-5, 1958) (no Regulation requires the filing of amended returns); GCM 35738, 3/21/74 (there is no statutory authority for filing or accepting amended returns).

[9] See, e.g., see Treas. Reg.§ 1.451-1(a) (“If a taxpayer ascertains that an item should have been included in gross income in a prior taxable year, he should, if within the period of limitation, file an amended return and pay any additional tax due.”) and Treas. Reg.§ 1.461-1(a)(3) (“if a taxpayer ascertains that a liability was improperly taken into account in a prior taxable year, the taxpayer should, if within the period of limitation, file an amended return and pay any additional tax due.”); see also Badaracco, 464 U.S. at 392 (citing Hillsboro Nat’l Bank v. Comm’r, 460 U.S. 370 (1983).

[10] Treas. Reg. § 6664-2(c)(3).

[11] Id.

[12] Treasury Circular 230, § 10.21

[13] Treasury Circular 230, § 10.33

[14] Treasury Circular 230, § 10.22 and § 10.33

[15] Internal Revenue Code section 6501

In Knudsen v. Commissioner, T.C. Memo 2015-69, the Tax Curt recently denied the IRS’s motion for summary judgment where the taxpayer challenged a proposed collection levy because the IRS failed to establish that it actually mailed the required notices of deficiency to the taxpayer.  The Tax Court concluded a trial is necessary to determine whether the IRS actually mailed notices of deficiency to the taxpayer.

The taxpayer failed to file 2004 and 2006 tax returns.  The IRS prepared substitute returns [see Code Section 6020(b)] reflecting a deficiency and alleged that it mailed notices of deficiency for 2004 and 2006 to the taxpayer by certified mail. The IRS kept a record of the certified mail numbers but had had no record of notices of non-delivery from the U.S. Postal Service. The taxpayer did not file a petition in Tax Court to challenge the notices of deficiency.  The IRS assessed the tax against the taxpayer and sent the taxpayer a notice of proposed levy regarding the assessed tax for the 2004 and 2006 tax years.

The taxpayer pursued a collection due process hearing requesting, among other things, that the IRS verify that its procedures were followed in connection with the assessments. The IRS Settlement Officer denied the taxpayer’s request for a collection due process hearing. The taxpayer then sent the Settlement Officer a letter claiming, among other things, that he disputes the underlying tax liabilities and penalties on the ground that the IRS never mailed to him and he never received notices of deficiency relating to the tax liabilities.  The Settlement Officer then ran a “Track and Confirm” search on the U.S. Postal Service’s website. The website confirmed that the 2004 notice of deficiency was delivered, but it did not indicate the full address it was delivered to, showing only the city, state and zip code of the delivery. The Track and Confirm website was unable to confirm whether or not the 2006 notice was delivered because the website only keeps tracking data for two years, and the notice was mailed more than two years before the Track and Confirm search was initiated. The Settlement Officer also obtained copies of  “substitute U.S. Postal Service Forms 3877.”  However, the forms did not indicate how many pieces of mail the U.S. Postal Service actually received from the IRS and were not signed manually or by stamp.

The Settlement Officer told the taxpayer that if he wanted to continue with a collection due process hearing, he should send all relevant information and documents to the Settlement Officer by the Settlement Officer’s stated deadline. The taxpayer did not respond to the Settlement Officer and the Settlement Officer issued a final adverse notice of determination sustaining the proposed levy relating to the 2004 and 2006 deficiencies. The taxpayer challenged the notice of determination under Section 6330 and the IRS filed a motion for summary judgment.

The Tax Court denied the IRS’s motion for summary judgment. The Tax Court stated,  “the key issue before us at this stage, which has been repeatedly raised by petitioner, is whether respondent ever mailed to petitioner the notices of deficiency on which respondent’s tax assessments and proposed levy are based. This is a question that involves not the amounts of petitioner’s underlying tax liabilities but rather the legality of the assessments made against him.  As explained, this issue has been repeatedly raised by petitioner and is inherent in the verification requirement of section 6330(c)(1); i.e., it is an issue raised by statute in every CDP case.”

The Tax Court noted that Section 6330(c)(1) places the burden on the IRS “to take the initiative and verify that a notice of deficiency was properly mailed to the taxpayer.” The Tax Court also reasoned that in deficiency cases, the IRS has the burden of proving by “competent and persuasive evidence that a notice of deficiency was properly mailed to a taxpayer” and that the same standard applies in collection due process cases.

The Tax Court identified the standard for proving that a notice of deficiency was mailed: “the Commissioner’s act of mailing may be proven by evidence of his mailing practices corroborated by direct testimony and documentary evidence. The Commissioner’s and the U.S. Postal Service’s compliance with established mailing procedures may raise a presumption of official regularity in favor of the Commissioner and may be sufficient, absent evidence to the contrary, to establish proper mailing of a notice of deficiency. If this presumption is not rebutted, the burden of going forward would shift to the taxpayer.” The Tax Court stated the taxpayer raised a factual issue and the IRS has filed to adequately address it because “a defective Form 3877 does not trigger the presumption of regularity,” and thus the IRS’s motion for summary judgment was denied.

KRISTA HARTWELL – For more information please contact Krista Hartwell at or 310.281.3200. Ms. Hartwell is a tax lawyer at Hochman, Salkin, Rettig, Toscher & Perez, P.C. and represents clients throughout the United States and elsewhere involving federal and state, civil and criminal tax controversies and tax litigation. Additional information is available at


In a recent case of first impression, the U.S. Tax Court held that in “stand alone” innocent spouse cases under I.R.C. section 6015(e)(1) the Court has discretion to allow the petitioner to withdraw the petition without entering a decision because petition does not invoke the Court’s deficiency jurisdiction.[1]  The taxpayer filed a Form 8857, Request for Innocent Spouse Relief, seeking relief from joint and several liability for 2007 and 2008.  The IRS denied relief.  The taxpayer timely petitioned, but later filed a motion to dismiss, seeking to voluntarily withdraw the petition.  The IRS did not object.

Typically cases before the Tax Court involve petitions to redetermine deficiencies under I.R.C. section 6213.  When the Court’s jurisdiction to redetermine a deficiency is invoked I.R.C. section 7459(d) provides:

“If a petition for a redetermination of a deficiency has been filed by the taxpayer, a decision of the Tax Court dismissing the proceeding shall be considered as its decision that the deficiency is the amount determined by the Secretary.  An order specifying such amount shall be entered in the records of the Tax Court unless the Tax Court cannot determine such amount from the record in the proceeding, or unless the dismissal is for lack of jurisdiction.”[2]

Essentially this means that a taxpayer cannot withdraw a petition in cases brought under I.R.C. 6213 in order to avoid a decision.[3]

Congress has expanded Tax Court jurisdiction to cases that do not require a redetermination of a deficiency.  These include collection due process actions and stand alone innocent spouse cases.  Previously the Tax Court held that a taxpayer can withdraw their petition when challenging the validity of a lien because there was no deficiency involved.[4]  In determining that the taxpayer could withdraw the petition, the Court looked to Federal Rule of Civil Procedure rule 41(a), which allows voluntary dismissal under certain circumstances.

In holding that the petitioner could withdraw her petition, the Tax Court distinguished its opinion in Vetrano v. Comm’r.[5]  In that case the petitioner invoked innocent spouse as an affirmative defense in a deficiency case.  In that scenario, under I.R.C. section 7459(d), the Court must enter a decision.

One important effect the Davidson decision has is that by withdrawing the petition, I.R.C. section 6015(g)(2), which makes the Court’s decision on innocent spouse res judicata, does not apply.[6]  The withdrawal has the same result as if the case was never brought.[7]  Despite this, the petitioner could not reinstitute the case before the Tax Court because the time to petition had now expired.

JONATHAN KALINISKI – For more information please contact Jonathan Kalinski at Mr. Kalinski is a former trial attorney with the IRS Office of Chief Counsel litigating Tax Court cases and advising IRS Revenue Agents and Revenue Officers on a variety of complex tax matters. Jonathan received his LL.M. in taxation from New York University and served as an Attorney-Adviser to the United States Tax Court. He is a tax attorney at Hochman, Salkin, Rettig, Toscher & Perez, P.C. and represents clients throughout the United States and elsewhere involving federal and state, civil and criminal tax controversies and tax litigation. Additional information is available at

[1]Davidson v. Comm’r, 144 T.C. No. 13 (2015)

[2]Id. at pg. 3

[3]Estate of Ming v. Comm’r, 62 T.C. 51 (1974)

[4]Wagner v. Comm’r, 118 T.C. 330 (2002)

[5]Vetrano v. Comm’r, 116 T.C. 272, 280 (2001)

[6]Davidson v. Comm’r, 144 T.C. No. 14, 10 (2015)


Does filing a false return start the six year clock or does it start at the time of the taxpayer’s last act of tax evasion? A taxpayer’s last act of tax evasion may occur many years after the tax return was (or should have been) filed. Some courts have concluded that the six year statute doesn’t start to run until the last act of tax evasion. That means you may have to worry for many years beyond six years from the date the return was (or should have been filed) filed.

Section 6531 provides the periods of limitation on criminal prosecutions and states, “No person shall be prosecuted tried, or punished for any of the various offenses arising under the internal revenue laws unless the indictment is found or the information instituted” within 6 years “after the commission of the offense” “for the offense of willfully attempting in any manner to evade or defeat any tax or the payment thereof.”[i]

In United States v. Irby,[ii] the 5th Circuit held the six year statute starts on the last act of evasion. Mr. Irby used nominee trusts to conceal his assets, delaying when his six years commenced. Years later, he could be prosecuted and convicted because his indictment, which occurred ten years after his failure to file, occurred within six years from his last act of tax evasion.

The issue of whether the six-year statute of limitations for section 7201 offenses begins to run from the date the tax return was due or following the last affirmative act of tax evasion was a question of first impression for the Court in Irby. The 5th Circuit previously held in United States v. Williams,[iii] that the limitations period for a prosecution under section 7201 in which no tax return was filed begins to accrue on the day the tax return is due. In Williams, the Court specifically declined to address whether the effect of the last affirmative act of evasion on the statute of limitations: “We express no opinion relative to the effect of affirmative acts occurring subsequent to the [tax return] filing date.”[iv]

The jury found Mr. Irby guilty of violating section 7201—willfully attempting to evade or defeat tax. Mr. Irby last failed to file his taxes in 2001, so his violation of section 7201 was time barred by the six year statute of limitations unless the period began to accrue following his last affirmative act of evasion.  In holding that the six year statute begins to accrue following the last affirmative act of tax evasion, the Court reasoned that the language of Section 6531(2) provides that taxpayers must be indicted within six years of when the crime of “willfully attempting in any manner to evade or defeat any tax or the payment thereof” was completed.[v] The 5th Circuit also noted that other circuits have considered the issue and concluded that the statute of limitations for section 7201 offenses runs from the later date of either when the tax return was due or the defendant’s last affirmative act of tax evasion.[vi] The Court in Irby focused its reasoning on the decisions in United States v. Dandy[vii] and United States v. Ferris:[viii]

In Dandy, the Sixth Circuit addressed facts similar to those at issue here, where the defendant did not file tax returns for 1982 and 1983, but the last act of evasion did not occur until 1985. Dandy, 998 F.2d at 1355-56. The  Dandy court found that the statute of limitation runs from the last evasion act “because it is these evasive acts . . . which form the basis of the cimes alleged in . . . [the] indictment.” Id. at 1356. In Ferris, the First Circuit supported the rule by pointedly stating, “[t]he defendant, however, by deceitful statements continued his tax evasion through [date of last act of evasion].” Ferris, 807 F.2d at 271 (noting that Habig supports this result because, “[t]he [Supreme Court] held that it made no sense to assert that ‘Congress intended the limitations period to begin to run before appellees committed the acts upon which the crimes were based’” (quoting Habig, 390 U.S. at 224-25)).

The 5th Circuit also noted that no circuit has rejected the last affirmative act of tax evasion rule and reasoned that “one element of the section 7201 offense is the commission of an affirmative act seeking to evade tax liability, which can be shown through the individual’s willful failure to file a tax return…or through continued evasive acts intending to avoid the payment of taxes.” The 5th Circuit held that the District Court in Irby did not err in concluding that Mr. Irby’s section 7201 violation was not time barred because Mr. Irby’s last act to evade the payment of his taxes was in 2006 and he was indicted in 2011.

KRISTA HARTWELL – For more information please contact Krista Hartwell at or 310.281.3200. Ms. Hartwell is a tax lawyer at Hochman, Salkin, Rettig, Toscher & Perez, P.C. and represents clients throughout the United States and elsewhere involving federal and state, civil and criminal tax controversies and tax litigation. Additional information is available at


[i] 26 U.S.C. § 6531(2).

[ii] United States v. Irby, 703 F.3d 280 (5th Cir. Miss. 2012).

[iii] United States v. Williams, 928 F.2d 145, 149 (5th Cir. 1991).

[iv]  Id.

[v] United States v. Irby, 703 F.3d 280, 283 (5th Cir. Miss. 2012).

[vi] Id. at 283-284 (citing United States v. Anderson, 319 F.3d 1218, 1219-20 (10th Cir. 2003) (“Section 7201criminalizes not just the failure to file a return or the filing of a false return, but the willful attempt to evade taxes in any manner.”); United States v. Carlson, 235 F.3d 466, 470 (9th Cir. 2000)United States v. Wilson, 118 F.3d 228, 236 (4th Cir. 1997)United States v. Dandy, 998 F.2d 1344, 1355-56 (6th Cir. 1993) (“To hold that the statute of limitations for income tax evasion . . . began to run on the date the returns were filed would reward defendant for successfully evading discovery of his tax fraud for a period of six years subsequent to the date the returns were filed.”); United States v. Winfield, 960 F.2d 970, 973-74 (11th Cir. 1992) (per curiam); United States v. DiPetto, 936 F.2d 96, 98 (2d Cir. 1991)United States v. Ferris, 807 F.2d 269, 271 (1st Cir. 1986)United States v. Trownsell, 367 F.2d 815 (7th Cir. 1966) (per curiam)).

[vii] United States v. Dandy, 998 F.2d 1344, 1356 (6th Cir. 1993)

[viii] United States v. Ferris, 807 F.2d 269, 271 (1st Cir. 1986).

In a Tax Court Memorandum Opinion released February 26, 2015, the Tax Court held that a taxpayer had fully reported his tip income for tax years 2009 – 2011, rejecting the Service’s determination that the taxpayer had underreported his tip income based on its reconstruction of the taxpayer’s tip income.[i]  During the tax years at issue, the taxpayer, who was a bartender at MGM Grand Hotel and Casino in Las Vegas, self-reported his tip income based on daily contemporaneous records that the taxpayer kept of the tips that he received.   Although the Tax Court found the Service’s method of reconstructing the taxpayer’s income to be reasonable, the Tax Court held that the taxpayer’s records more accurately reflected the taxpayer’s actual tip income.

Tips that employees receive are taxable as compensation for services under Internal Revenue Code § 61(a).[ii]  The Employment Tax Regulations require tipped employees to maintain a daily record or other similarly reliable evidence of their tips.[iii]  A taxpayer’s daily record should include the taxpayer’s name and address, the employer and the establishment’s name, the amount of cash tips and charge tips received from customers or from other employees for each work day, the amount of any tips paid out to other employees through tip sharing or similar arrangements and the names of such employees, and the date that each entry is made.[iv]

The IRS has initiated programs to enhance compliance among tipped employees, which involve a voluntary agreement between an employer and the IRS in which the IRS and the employer determine the amount of tips that employees generally receive and should report.  Participants in these programs are relieved of their recordkeeping requirements and the IRS will not challenge the tip income reported by participants under the terms of the program.[v]  One such program is the Gaming Industry Tip Compliance Agreement Program (GITCA), which sets an automatic tip rate for participating employees in the gaming industry—the employer’s payroll department multiplies the number of hours worked by participating employees by the applicable tip rate to arrive at taxable tip income that is then reported on the participants’ Forms W-2.[vi]

In Sabolic v. Commissioner, T.C. Memo 2015-32, the taxpayer had opted out of the GITCA for tax years 2009 – 2011 and instead self-reported his tips to his employer and maintained a daily log of the tips he received.[vii]  For tips that he earned from credit cards and room charges, the MGM Grand’s system generated a receipt stating how much the taxpayer had earned.  For cash tips, the taxpayer personally kept track of his cash tips for each shift, except for leftover change that he would tip the cashier.  In addition to keeping a daily personal tip diary, the taxpayer would add up his cash tips and his charged tips at the end of each shift and enter them into MGM Grand’s system when he punched out, which would then be reported to MGM Grand’s payroll department and reported on his W-2.  The Taxpayer would then “tip out” a portion, generally 10% to 20%, of his tips to the barbacks who helped him during his shifts.  The taxpayer’s tip diaries showed that the petitioner received tips of $21,849, $24,212, and $22,950 for tax years 2009 – 2011, respectively, and his Forms W-2 reported tip income of $18,110, $23,941, and $21,926 for tax years 2009 – 2011, respectively.[viii]  When reporting these amounts on his returns, the taxpayer deducted 10% for the amount he tipped out to other employees.[ix]

The IRS issued the taxpayer a notice of deficiency, which asserted that the taxpayer underreported his tips by $19,729, $19,000, and $20,284 for tax years 2009 – 2011, respectively, based on its reconstruction of the taxpayer’s tip income using a well-established indirect method for computing tip income, and imposed an accuracy-related penalty.[x]  The IRS argued that the taxpayer’s records were inadequate because (1) the logs were recorded in whole numbers; (2) the taxpayer did not keep track of how much he actually tipped the barbacks; (3) the logs appeared to be missing days; and (4) the taxpayer’s logs did not precisely match up with the information in his Forms W-2.[xi]

Finding no evidence to support the discrepancy asserted by the IRS, the Tax Court rejected each of the IRS’ arguments against the reliability of the taxpayer’s records.  Although there was a small discrepancy between the taxpayer’s personal log and the W-2 amounts and the taxpayer did not maintain a record of the precise amounts that he tipped out to other employees, the Tax Court found the taxpayer’s explanations to be credible and the taxpayer’s logs to be a “substantially accurate” account of his tip income for the tax years at issue.[xii]

Although the IRS’ asserted deficiency based on its indirect method of computing the taxpayer’s income was presumed to be correct, the Tax Court held that the taxpayer satisfied his burden of proving the IRS wrong through his “habitual careful recordkeeping” and his detailed, credible testimony regarding how he kept track of his tips, the nature of the bar he worked at, and the typical tipping behaviors of his patrons.[xiii]

LACEY STRACHAN – For more information please contact Lacey Strachan at Ms. Strachan is a tax attorney at Hochman, Salkin, Rettig, Toscher & Perez, P.C. and represents clients throughout the United States and elsewhere involving federal and state, civil and criminal tax controversies and in tax litigation. Additional information is available at

[i] Sabolic v. Comm’r, T.C. Memo 2015-32.

[ii] IRC § 61(a); Treas. Reg. § 1.61-2(a)(1).

[iii] Treas. Reg. § 31.6053-4(a)(1).

[iv] Treas. Reg. § 31.6053-4(a)(2).

[v] Ann 2001-1, 2001-1 CB 277.

[vi] Rev. Proc. 2007-32.

[vii] Sabolic v. Comm’r, T.C. Memo 2015-32 at *4.

[viii] Id. at *5-*6.

[ix] Id.

[x] Id. at *8.

[xi] Id. at *12-*13.

[xii] Id. at *14.

[xiii] Id. at *10, *14-*16.

Deductions are a matter of legislative grace, and taxpayers bear the burden of proving entitlement to any claimed deduction.[i] A taxpayer must identify each deduction available, show that he or she has met all requirements therefor, and keep books or records that substantiate the expenses underlying the deduction.[ii] The mere fact that a taxpayer claims a deduction on an income tax return is not sufficient to substantiate the underlying expense.[iii] Rather, an income tax return “is merely a statement of the * * * [taxpayer’s] claim * * *; it is not presumed to be correct.”[iv]

Ordinary and Necessary Business Expenses. Internal Revenue Code Section 162(a) allows a taxpayer to deduct all ordinary and necessary business expenses paid or incurred during the taxable year. However, a taxpayer’s personal or living expenses are not deductible.[v] Pursuant to Code Sections 67 and 162(a), an employee taxpayer may deduct as miscellaneous itemized deductions all of the ordinary and necessary unreimbursable business expenses paid or incurred during the taxable year in carrying on the trade or business of the taxpayer’s employment.[vi]  “To qualify as an allowable deduction under [section] 162(a) * * * an item must (1) be ‘paid or incurred during the taxable year,’ (2) be for ‘carrying on any trade or business,’ (3) be an ‘expense,’ (4) be a ‘necessary’ expense, and (5) be an ‘ordinary’ expense.”[vii]  An expense satisfies the second element only if it is “directly connected with or pertaining to the taxpayer’s trade or business.”[viii] An expense qualifies as necessary if it is “appropriate and helpful” to the taxpayer’s business[ix] and as ordinary if the underlying transaction is a “common or frequent occurrence in the type of business involved.”[x] A taxpayer must establish these essential elements with credible evidence.[xi]

Personal Expenses Not Deductible. While business expenses are generally deductible, personal, living, and family expenses are typically nondeductible.[xii] A business expense claimed as a deduction must be incurred primarily for business rather than personal reasons.[xiii] Where an expense exhibits both personal and business characteristics, the “test[] requires a weighing and balancing of all the facts * * * bearing in mind the precedence of section 262, which denies deductions for personal expenses, over Section 162, which allows deductions for business expenses.”[xiv]

Personal / Business Expenses. In the personal/business context, a taxpayer must provide evidence from which the government can reasonably apportion the expenses between business and personal use. A taxpayer must generally have “adequate records” for all his or her claimed deductions, and has to have extra evidence for some deductions (the ones listed in Section 274(d)).[xv]   While it is within the purview of a Court to estimate the amount of allowable deductions where there is evidence that deductible expenses were incurred, there must be some basis on which an estimate may be made.

Approximations of Expenses. Under Cohan v. Commissioner[xvi], if a taxpayer claims a deduction but cannot fully substantiate the expense underlying the deduction, the Court may generally approximate the allowable amount, bearing heavily against the taxpayer whose inexactitude in substantiating the amount of the expense is of his own making. The Court must have some basis upon which to make its estimate, however, else the allowance would amount to “unguided largesse.”[xvii]

If a taxpayer’s records are lost or destroyed because of circumstances beyond his control, the taxpayer may instead substantiate the expenses with other credible evidence.[xviii] Here again, although the Court generally may estimate amounts, any estimate must have a reasonable evidentiary basis.[xix]

As we approach tax filing season, it must be remembered that taxpayers (and return preparers) are required to sign their return under penalties of perjury. Information set forth within the tax return must be as accurate and complete as possible – a tax return does not represent an offer to negotiate with the government.

The mere failure to possess all required substantiation should not preclude the ability to claim otherwise deductible expenses if there is a sufficient basis to estimate the amount of such expenses. Finally, acknowledging amounts estimated within the return as estimates should avoid a later difficult discussion regarding the failure to do so.

Form 8275 – Disclosure Statement. In closing, remember that information set forth on the IRS Form 8275 – Disclosure Statement not otherwise adequately disclosed elsewhere within the tax return can avoid certain penalties. Form 8275 is filed with the income tax return to avoid the portions of the accuracy-related penalty due to disregard of rules or to a substantial understatement of income tax if the return position has a reasonable basis. (See also IRS Rev. Proc. 2015-16 for information that can be disclosed elsewhere in the tax return).

[i] U.S. Tax Court Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992).

[ii]  Roberts v. Commissioner, 62 T.C. 834, 836 (1974).

[iii] Wilkinson v. Commissioner, 71 T.C. 633, 639 (1979).

[iv] Roberts v. Commissioner, 62 T.C. at 837.

[v] Code Sec. 262.

[vi] Lucas v. Commissioner, 79 T.C. 1, 6 (1982).

[vii] Commissioner v. Lincoln Sav. & Loan Ass’n, 403 U.S. 345, 352 (1971).

[viii] Sec. 1.162-1(a), Income Tax Regs.

[ix] Welch v. Helvering, [*32] 290 U.S. at 113

[x] Deputy v. du Pont, 308 U.S. 488, 495 (1940).

[xi] See sec. 1.6001-1(a), Income Tax Regs.

[xii] Code Section  262(a).

[xiii] See Walliser v. Commissioner, 72 T.C. 433, 437 (1979).

[xiv] Sharon v. Commissioner, 66 T.C. 515, 524 (1976) (citing costs of commuting and ordinary clothing as examples of expenses helpful and necessary to an individual’s employment that are “essentially personal” and hence nondeductible), aff’d per curiam, 591 F.2d 1273 (9th Cir. 1978).

[xv] Section 272(d) generally provides “No deduction or credit shall be allowed– (1) under section 162 or 212 for any traveling expense (including meals and lodging while away from home), (2) for any item with respect to an activity which is of a type generally considered to constitute entertainment, amusement, or recreation, or with respect to a facility used in connection with such an activity, (3) for any expense for gifts, or (4) with respect to any listed property (as defined in section 280F(d)(4)), unless the taxpayer substantiates by adequate records or by sufficient evidence corroborating the taxpayer’s own statement (A) the amount of such expense or other item, (B) the time and place of the travel, entertainment, amusement, recreation, or use of the facility or property, or the date and description of the gift, (C) the business purpose of the expense or other item, and (D) the business relationship to the taxpayer of persons entertained, using the facility or property, or receiving the gift. The Secretary may by regulations provide that some or all of the requirements of the preceding sentence shall not apply in the case of an expense which does not exceed an amount prescribed pursuant to such regulations.

[xvi] Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930),

[xvii] Williams v. United States, 245 F.2d 559, 560 (5th Cir. 1957); Vanicek v. Commissioner, 85 T.C. 731, 742-743 (1985).

[xviii] See Malinowski v. Commissioner, 71 T.C. 1120, 1124-1125 (1979). But cf. sec. 1.274-5T(c)(5), Temporary Income Tax Regs., 50 Fed. Reg. 46022 (Nov. 6, 1985) (providing that for deductions governed by section 274, taxpayer may substantiate the deductions by a reasonable reconstruction of the expenditures or uses).

[xix] See Villarreal v. Commissioner, T.C. Memo. 1998-420, 76 T.C.M. (CCH) 920, 921-922 (1998).

Cono Namorato is an extraordinary individual with an outstanding character and the highest integrity. He is amazingly well qualified to lead the Tax Division with his deep knowledge and understanding of the Internal Revenue Code, the Treasury Regulations and relevant case authorities involved in a wide range of both civil and criminal tax related issues.

Mr. Namorato knows, understands and respects the history and traditions of the Tax Division and its relationship with the Internal Revenue Service. When it occurs, everyone should be extremely proud of his Nomination to become the next Assistant Attorney General for the Tax Division, Department of Justice.




Office of the Press Secretary 


February 24, 2015

President Obama Announces More Key Administration Posts

WASHINGTON, DC – Today, President Barack Obama announced his intent to nominate the following individuals to key Administration posts:


Cono R. Namorato – Assistant Attorney General for the Tax Division, Department of Justice


President Obama said, “I am honored that these talented individuals have decided to serve our country. They bring their years of experience and expertise to this Administration, and I look forward to working with them.”

President Obama announced . . .

Cono R. Namorato, Nominee for Assistant Attorney General for the Tax Division, Department of Justice. Cono R. Namorato is currently a Member of the law firm Caplin & Drysdale, a position he has held since 2006 and previously from 1978 to 2004. From 2004 to 2006, Mr. Namorato served as Acting Deputy Commissioner for certain designated matters and as Director of the Office of Professional Responsibility for the Internal Revenue Service (IRS) in the Department of the Treasury. Before beginning his career at Caplin & Drysdale, Mr. Namorato held various positions within the Tax Division of the Department of Justice (DOJ), including Deputy Assistant Attorney General from 1977 to 1978, Assistant Chief and then Chief of the Criminal Section from 1973 to 1977, and Supervisory Trial Attorney and Trial Attorney from 1968 to 1973. Mr. Namorato began his career in 1963 as a Special Agent for the Criminal Investigation Division of the IRS in the Brooklyn District. He is a Fellow of the American Bar Foundation and a fellow of the American College of Tax Counsel. Mr. Namorato has headed various tax-related committees and subcommittees for the American Bar Association, serving as Chair of the Tax Section’s Subcommittee on Criminal Tax Policy, Chair of the Committee on Tax Litigation, and Co-Chair of the Committee on Complex Criminal Litigation of the Litigation Section. Mr. Namorato received a B.B.A. from Iona College and a J.D. from Brooklyn Law School.



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