John Irvine v. United States
2013 U.S. App. LEXIS 18514
| 5th Cir. | 2013Background
- Taxpayers invested in AMCOR limited partnerships in the 1980s and claimed losses on their returns.
- FPAA adjustments in 1990–1991 disallowed partnership deductions for the AMCOR partnerships.
- During 1999–2000, the Whites, Irvines, and Kraemer individually settled with the IRS; settlements affected only portions of deductions.
- IRS assessed additional tax and §6621(c) penalty interest after settlements; taxpayers paid and filed refund claims in 2002–2003.
- In August 2008, taxpayers filed suit for refunds; district court granted summary judgment on statute of limitations and penalty-interest timeliness.
- On appeal, the Fifth Circuit held: jurisdiction over penalty-interest claims exists and those claims are meritorious; however, §7422(h) bars jurisdiction over the statute-of-limitations claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §7422(h) bars the refund claim for statute of limitations. | Whites and Irvines rely on §6501/§6229 extensions; claim is nonpartnership. | Government argues the claim is a partnership item under TEFRA, barred by §7422(h). | Yes; §7422(h) bars the limitation claim. |
| Whether penalty interest refunds are jurisdictionally cognizable and timely. | Taxpayers rely on Weiner that penalty-interest claims can be litigated and are timely. | Duffie limits; jurisdiction hinges on whether a tax-motivated determination existed. | Yes; district court has jurisdiction and penalties were erroneously assessed; claims timely. |
| Whether the penalty-interest determination is substantive or computational for §6230 timing. | Penalties depend on substantive tax-motivated determinations; timing should follow §6230. | If substantive, §6230 does not apply; otherwise §6230 applies. | Penalty interest is a substantive item; §6230 timing does not apply to bar claims. |
Key Cases Cited
- Duffie v. United States, 600 F.3d 362 (5th Cir. 2010) (teaches treatment of partnership items and penalty interest limitations under TEFRA)
- Weiner v. United States, 389 F.3d 152 (5th Cir. 2004) (TEFRA partnership items and taxation under §6229/§6501 interplay; authority for jurisdictional analysis)
- Prati v. United States, 603 F.3d 1301 (Fed. Cir. 2010) (holds §6501 and §6229 operate in tandem for limitations extensions in partnership items)
- Andantech, L.L.C. v. Comm’r, 331 F.3d 972 (D.C. Cir. 2003) (discusses interplay of partnership items and limitations periods)