Posted by: Steven Toscher | November 25, 2022

Edward Robbins, Jr. Quoted in Tax Notes

Ed Robbins quoted in Tax Notes concerning Fahry v Commissioner where petitioner is asserting the Internal Revenue Service does not have assessment authority under the Code for many international penalties. While it sounds like a tax protestor argument, this position has some real statutory legs or shall I say a real lack of statutory legs.

Stay tuned.

Click Here for Article.

Posted by: evanjdavis | November 23, 2022

EVAN DAVIS’ Case to be Argued in the Supreme Court

In early October 2022, the U.S. Supreme Court accepted Evan Davis’s case for argument. The case, a criminal grand jury matter titled In re Grand Jury, Case No. 21-1397, will answer the question: what test should courts use to determine when dual-purpose communications (where a client seeks both legal and non-legal advice) are protected by the attorney-client privilege? Evan, who represents a law firm that provided legal and tax return preparation advice to a client who was expatriating and had complex legal and tax issues, including cryptocurrency related, argued before the Ninth Circuit that so long as the legal advice purpose was “substantial,” the communications should be protected by the attorney client privilege. Then-Judge Kavanaugh authored an opinion adopting this “substantial purpose” test when he was a judge on the D.C. Circuit Court of Appeals. The Ninth Circuit disagreed, holding, as another circuit had done, that the legal advice purpose had to “predominate,” otherwise the dual-purpose communication wasn’t protected by privilege. Evan and a team of fantastic appellate specialists argued in a certiorari petition to the Supreme Court that there was a circuit split that needed to be resolved to give certainty to lawyers and clients throughout the country, so they know whether their communications will be protect. The case made the cut for Supreme Court review, one of just nine accepted out of what reporters have said would normally be around 2,000 cert petitions being reviewed in the October group.  

A number of high-profile amicus briefs will be filed, including by the American Bar Association, supporting Evan’s position. These briefs are emphasizing the importance in not just the tax context, but for all lawyers, to have a strong and predictable attorney-client privilege. Law360 reported on the first amicus brief on November 21, calling In re Grand Jury a “highly watched case.”  Click Here for article (subscription required).

Oral argument is scheduled for January 9, 2023.

Click Here for the Brief

Section 6038 Information Penalties

Simultaneous answering briefs were filed on November 8, 2022, with the Tax Court in the case of Farhy v. Commissioner (Docket No. 10647- 21L).[i] The sole issue pending is the IRS’ authority to assess and forcibly collect IRC Section 6038 penalties. Petitioner argues there is no specific assessment authority for 6038 penalties under the Code to trigger the IRS forced collection powers. Petitioner contends the appropriate collection authority lies in the IRS’ ability to forward the matter to the Department of Justice for a collection suit. The IRS claims, in effect, that the Section 6038 assessment authority may be found in the Code’s “emanations” of power that create “penumbras” of authority within which the IRS can operate even if not explicitly authorized in the Code, accordingly its collection powers remain.

Here the IRS erroneously assessed 6038 penalties pertaining to Forms 5471 for Petitioner. Chapters 63 and 68 of the Code give the IRS the authority to assess the foreign information penalties found in section 6677 and section 6679. But there is no corresponding authority in the Code giving the IRS the authority to assess the section 6038 series of foreign information penalties found in Chapter 61. Since the IRS cannot assess the penalties under the Code, the IRS must request the Department of Justice to sue the taxpayer in District Court to collect the penalties and reduce them to a judgment.

Practice Pointer: Consider Protecting Taxpayer’s Refund Statute

Those who have paid assessed section 6038 penalties should consult with a tax professional regarding filing a protective claim for refund to preserve the statute of limitations for a refund pending the outcome of the litigation. As the briefs were just filed, the Tax Court will need to consider the issue and issue its opinion, and I anticipate the matter will be ongoing for some time. Until the matter is decided with finality, refund statutes are running.

I note there is no statute of limitations in the Code for a refund of section 6038 penalties paid. The statute of limitations should be under 28 USC 2401(a), which states “every civil action commenced against the United States shall be barred unless the complaint is filed within six years after the right of action first accrues.” However, the IRS could make the argument from the 3rd Circuit in Bedrosian v. U.S. Dep’t of Treasury, 912 F.3d 144, 153 (3d Cir. 2018) that a claim for a return of monies paid toward an FBAR penalty is an action for refund of a tax- related penalty; therefore, the statute of limitations for recovering a Section 6038 penalty would be the same as the normal tax refund statute.

FBAR Penalties

On November 2, 2022, the Supreme Court heard oral argument on whether a non-willful FBAR penalty can exceed $10,000 per form verses

$10,000 penalty per account.   See United States v. Bittner (Supreme Court Docket No. 20-40597). The government claimed that the non- willful FBAR penalty was properly applied to each of the account holder’s foreign accounts. The assessment difference was $50,000 in total versus $2.72 million as assessed by the IRS.

Those who have paid non-willful FBAR penalties based on multiple accounts should consult with a tax professional regarding filing a protective claim for refund to preserve the statute of limitations for a refund.


IRS is required to follow the law as written, just like everybody else. The effort by the IRS falling back on an ipse dixit argument “It is, because I say it is” should be rejected.

[i] The four briefs are Petitioner’s Opening Brief, Respondent’s Opening Brief, Petitioner’s Answering Brief, Respondent’s Answering Brief

The Supreme Court emphasized that it was not inclined “to carve out an approach to administrative review good for tax law only” in Mayo Found. for Med. Educ. & Rsch. v. United States, 562 U.S. 44, 55 (2011).  That the IRS is subject to the Administrative Procedures Act (APA) in the same way as other administrative agencies has become increasingly clear.  In CIC Services, LLC v. IRS, 141 S.Ct. 1582 (2021), the Court held that a material advisor can maintain an action challenging the IRS’s listed transaction notice for micro-captive insurance companies as violative of the APA.   Earlier this year, the Sixth Circuit in Mann Construction, Inc. v. United States, 24 F.4th 1138 (6th Cir. 2022), held that Notice 2007-83, designating as a listed transaction certain employee-benefit plans involving life insurance policies, was invalid because it was issued in violation of the APA’s notice-and-comment rulemaking requirements. 

Click Here for Full Article.

I am very pleased to announce this year’s ABA National Institute on Criminal Tax Fraud & Tax Controversy to be held December 12-14, 2022 at Caesar’s Palace in Las Vegas, Nevada. I am honored again to be serving as Co-Chair with Kathryn Keneally. We look forward to the best programs in the nation on civil and criminal tax controversy and litigation and well—Las Vegas. 

Go online to the following link below. We are able to offer a 20% discount for friends of our firm. If you are signing up, please contact Sharon Tanaka at for the discount code.

Click Here to Register

We have an amazing line up of speakers and panels this year including —

Tax Court Judge Mark V. Holmes and former IRS Chief Counsel Michael Desmond will be on a panel discussing recent Supreme Court decisions and the changes to the tax litigation landscape caused by application of the Administrative Procedure Act.

IRS Deputy Chief Counsel for Operations Drita Tonuzi and Tax Division Southwestern Section Chief Cynthia Messersmith will be discussing IRS and Department of Justice civil enforcement priorities.

The National Institute on Criminal Tax Fraud and the National Institute on Tax Controversy, combined together in one event, comprises the yearly gathering of the criminal tax controversy and criminal tax defense bar. The program brings together high-level government representatives, judges, corporate counsel, and private practitioners engaged in all aspects of tax controversy, tax litigation, and criminal tax prosecutions and defense. 

I am very pleased that members of our firm will be participating in the following panel presentations:

Steven Toscher
What the IRS Enforcement Will Look Like in the Future

Edward Robbins, Jr.
Lacey Strachan
Criminal Tax Workshop

Sandra Brown
Criminal Enforcement Priorities

Michel Stein
BBA Partnership Examinations – Problems and Opportunities

Evan Davis
The Benefits and Burdens of Plea Agreements

We are pleased to announce that Jonathan Kalinski will be speaking at the upcoming Los Angeles Estate Planning Council seminar “Lawyers, Guns & Cryptocurrency,” Wednesday, November 16, 2022, 11:45 a.m. – 1:30 p.m. (PST) at the The California Club (538 S Flower St, Los Angeles, CA 90071).

This seminar will address the challenges of administering estates that contain the unusual assets of cryptocurrency and other digital assets, and firearms, and how estate planners can better anticipate and prepare for these challenges. 

Click Here for more information.

Sandra Brown was recently quoted in Forbes on the recent decision in Green Valley Investors, LLC v. Commissioner, 159 T.C. No. 5 (November 9, 2022), where the United  States Tax Court invalidated IRS Notice 2017-10, pertaining to the listing and reporting requirements for syndicated  conservation easements.  

Check out the great article–“IRS Loses Battle in War on Conservation Easements” authored by Guinevere Moore in Forbes at the following link:

Posted by: Steven Toscher | November 4, 2022


We are very pleased to announce that our friend and partner Robert Horwitz has been recognized for his outstanding contributions in the field of taxation by the California Lawyers Association 2022 Annual Meeting of the Tax Bar and Tax Policy Conference, November 2-4, 2022.

Robert has over 40 years of experience as a tax attorney specializing in the representation of clients in civil and criminal tax cases, including civil audits and appeals, tax collection matters, criminal investigations, administrative hearings and in civil and criminal trials and appeals in federal and state courts. He has served as a member of the Executive Committee of the Taxation Section of the State Bar of California and was Chair of the Taxation Section for 2015-2016 year. He was previously Chair of the Tax Procedure and Litigation Committee of the State Bar Taxation Section.

Posted by: Steven Toscher | November 2, 2022

UCLA 38th Annual Tax Controversy Institute

We are very pleased to report that the 38th Annual UCLA Extension Tax Controversy Institute which took place on October 27 at the Beverly Hills Hotel was a resounding success. After two years of video conferences, the annual gathering of top Government representatives and private practitioners was back in person and in full force. 

We want to thank the great staff of UCLA Extension, our sponsors, our special out of town guests and all the panel participants for making this the best Institute ever. 

A special shout out to our friends at the IRS for their assistance in putting together the program. The panel programs this year were outstanding. With Keynote presentations from the Taxpayer Advocate- Erin Collins, the Chief of Criminal Investigation- Jim Lee and Deputy Commissioner, SBSE Collection & Operations Support- Darren Guillot, and the IRS Commissioner Charles “Chuck” P. Rettig, the program had to be a success. The program can be found at the following link:

Click Here for the Program

There is so much more to say about the program and the great panels, but for this post let us conclude with another congratulations to both Paula M. Junghans, this year’s recipient of the Bruce I. Hochman Award, and to Charles P. Rettig, our retiring IRS Commissioner, who received the Chillin and Grillin Award which is given each year to a retiring IRS employee. For those who were in attendance, you know how deserving and special the recognition was for both honorees

Thank you all for making this year’s Institute the best ever. 

Steven Toscher and Sandra Brown, Co-Chairs
UCLA Extension Tax Controversy Institute

We are pleased to announce that Steven Toscher, Michel Stein and Evan Davis will be speaking at the upcoming Spidell webinar “Cryptocurrency Tax Compliance in the Rollercoaster Bitcoin World,” Tuesday, November 15, 2022, 10:00 a.m. – 12:00 p.m. (PST).

This course will provide tax counsel, accountants, and other advisers with a critical first look at recent IRS enforcement actions on taxpayer compliance and reporting obligations for cryptocurrency transactions. The panel will discuss the IRS position on the tax treatment of cryptocurrency, analyze IRS monitoring to increase compliance, consider criminal investigations and prosecutions for failing to report crypto transactions accurately. The panel will define proper reporting and tax treatment for “mining” and exchanging cryptocurrency along with tactics in managing IRS examinations and audits.

Click Here for more information.

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