Linda Carlisle, Alan Horowitz, Maria Jones and Patricia Sweeney Quoted Regarding 2014's High-Impact Tax Rulings in Law360

"The Biggest Tax Cases of 2014:  Midyear Report"
Law360
07.15.14

Linda Carlisle, Alan Horowitz, Maria Jones and Patricia Sweeney were quoted regarding the most influential tax cases to date in 2014. These high-impact tax rulings will alter how the Internal Revenue Service (IRS) and large corporations conduct business. Regarding the Supreme Court's ruling in U.S. v. Quality Stores Inc., which was considered a loss for employers and employees alike regarding the tax treatment of unemployment benefits, the ruling does lend some certainty to multistate employers who previously grappled with a circuit split between the Sixth and Federal circuits, Horowitz said. "You had nationwide employers who were subject to different rules in different states and they needed to manage their payroll in a way that was efficient," he said. "Even though they'll be subject to the tax, they're better off than they were through the uncertainty that persisted."

In U.S. v. Clarke, the Supreme Court overturned the Eleventh Circuit's ruling, and stated that taxpayers have a right to examine their IRS agents if they can point to specific facts that raise an inference of bad faith. It will be interesting to see how the court's decision will intersect with the IRS's new Information Document Request Procedure, which may increase the number of summonses the agency issues to certain taxpayers, Sweeney said.

In April, following up to the Sabina Loving v. IRS decision, IRS Commissioner John Koskinen urged Congress to pass legislation authorizing the IRS to regulate independent tax return preparers. "In my view, this legislation is something that's needed," Carlisle said. "However, I think it will be very difficult to pass in this legislative environment."

In February, the D.C. District Court ruled that federal law prevents the IRS from collecting excise taxes on certain retrocession insurance policies. The ruling could create a world in which other retrocession arrangements -- including those between U.S. and foreign companies -- aren't covered by the excise tax, Jones said. "This should be a lesson learned for the IRS, as they took an aggressive position that wasn't supported by the law. The industry fought back and tried to reason with the agency, they wouldn't concede, and now the end result may be that they end up in a worse position," she said. "This has been a terrible waste of resources for both the taxpayers and the government."

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