Clinical and Pro Bono Programs

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Tag: Federal Tax Clinic

Virus Poses Extra Obstacles for Attorneys With Tax Court Cases

via Bloomberg Tax

By Jeffery Leon and Aysha Bagchi

The limits of the technology at the U.S. Tax Court are making things more difficult for attorneys amid the coronavirus pandemic. Many expect to see a document backlog once the court building reopens. Jonathan Hurtarte/Bloomberg Law

The new coronavirus pandemic is increasing the challenges for attorneys representing clients at the U.S. Tax Court, a place already slow to technological advancement.

Attorneys have long grappled with technological barriers at the court—not being able to electronically file petitions or access many case documents online, for example. But now that the building is shuttered until further notice, tax professionals are facing additional hurdles, and they fear it could get worse the longer the virus outbreak continues.

The court has historically struggled with a backlog of cases, a situation that got worse during the 35-day government shutdown at the end of 2018. Such delays are likely to happen again, tax attorneys said.

Backlog concerns have spurred questions about whether the IRS will have to take special measures to get through cases more quickly, according to Frank Agostino, president of Agostino & Associates, P.C.

“The most frequently asked question is, ‘Will there be a coronavirus-based settlement program or offer-in-compromise?’” he said. An offer-in-compromise would allow taxpayers to settle their debts for less than the original amount owed.

Antiquated Practices

Tax professionals are urging the court to enable e-filing petitions, which could ease some of the strain from processing mailed petitions, and spare individuals from needing to go to crowded post office locations.

“They really need to find a way to ensure public access,” said Anson Asbury, founder of Asbury Law Firm who represents clients before the court.

Hand-mailed petitions and in-person documents are antiquated practices that are hindering the court’s services during the pandemic, said Kelley Miller, a partner in the tax group at Reed Smith LLP who practices in the court.

“The judges and staff at the Tax Court have been working for years to enhance access to online services and improve the interface of the Tax Court’s website, but unfortunately the pandemic hits at a time when the Court was, I believe, focused on introducing some of those changes,” Miller said.

Tax Court Judge L. Paige Marvel previously said the Tax Court could be ready with a new case management system that would allow for petition e-filing this spring. She said rules to permit petition e-filing weren’t in place because there wasn’t a system to enable expanding e-filing to include petitions.

The Tax Court didn’t return a request for comment.

Document Access Troubles

One result of the building closure is that visitors can’t access court documents at the Tax Court’s records room. Those who are unable to get the documents from the actual petitioner or that person’s attorney are left with one potentially prohibitive option: Pay a $0.50 per page charge from the Tax Court and have the documents mailed. The Tax Court has cited concerns about privacy as a reason to preserve those restrictions.

That can be an issue particularly for people interested in reaching out to self-represented petitioners because their contact information can be viewed on their petition, said T. Keith Fogg, who directs Harvard Law School’s Federal Tax Clinic.

“It’s no longer possible to go to the court and sit in the docket room to do research or to call the court and get copies of documents,” Fogg said. “The closing of the court accentuates the problems caused by the Tax Court’s decision not to make its documents public except through a portal that becomes unavailable when it closes.”

Charles M. Ruchelman, member at Caplin & Drysdale Chartered in Washington, pushed back on any move to make all filings public, saying the Tax Court’s system is in place to protect taxpayer privacy, and it would be a big ask for the court to redact all documents for sharing online.

IRS Weighing Relief Options

A lingering concern for tax professionals is the window to file petitions. Under tax code Section 6213, a taxpayer has 90 days to file a petition with the Tax Court after getting a notice of deficiency, after which the IRS can assess the tax if a petition wasn’t filed.

The agency has offered some relief to individuals already during the pandemic, pushing back some deadlines to pay and file taxes, and easing off many enforcement actions. Officials are aware the changes don’t resolve the 90-day issue, and it’s something they are thinking about, IRS Chief Counsel Michael Desmond said late last month on a press call hosted by the American Bar Association tax section.

Petition deadlines “are at the top of our list of things to consider,” he said.

Even with existing relief, facing a tax assessment after missing the 90-day deadline to file a petition may still be very important to a taxpayer who is disputing a large tax bill, said Guinevere Moore, a partner at Johnson Moore who litigates tax issues.

“That’s going to have all sorts of ramifications from a practical business perspective, from a credit perspective, from a lending perspective,” Moore said.

—With assistance from Allyson Versprille.

 

Expect More Litigation Over IRS Penalty Approval Rules

via Bloomberg Tax

by Aysha Bagchi

Street view of the front of the IRS headquarters in Washington.

The U.S. Tax Court is grappling with a legal requirement governing penalties issued by the IRS. Above, the agency’s headquarters in Washington. Photographer: Zach Gibson/Getty Images

Courts are likely to continue examining a requirement that IRS employees get their boss to OK penalty decisions before they are presented to taxpayers, even after the U.S. Tax Court issued a recent string of opinions addressing the issue.

The Tax Court’s 2017 ruling in Graev v. Commissioner interpreted tax code Section 6751(b) as requiring the IRS to obtain supervisory approval in a tax deficiency case by the time it imposes related tax penalties.

Since January, the Tax Court has grappled with multiple aspects of the requirement, trying to establish the exact point in the process when the requirement must be met and which penalties need approval. But recent wins for the agency on large penalty amounts are likely to be appealed and the approval issue is expected to continue to come up in new cases.

Frank Agostino, who represented the petitioners in Graev, told Bloomberg Tax his firm is working on more cases at the Tax Court tied to the approval requirement. Agostino mentioned three specific cases his firm is litigating before the Tax Court, including Grajales v. Commisoner, which questions whether the penalty for taking early withdrawals from qualified retirement plans is subject to Section 6751(b) approval requirements.

“Everyday we find another issue,” said Agostino, founder and president of Agostino & Associates P.C. in Hackensack, N.J.

The court’s interpretation of these issues is significant for the IRS because it can lose out on penalties if judges rule the agency failed to get approval when it should have or got approval too late in the process. The IRS collected billions in accuracy-related penalties from individuals, estates, and trusts in fiscal 2018, according to the IRS’s most recent databook.

Appeals on Divisive Issue

Potential appeals of two recent decisions involving the same legal question—what constitutes an “initial determination” when it comes to assessing whether the IRS got supervisory approval on time—may be the most closely watched going forward.

Eight Tax Court judges signed onto the lead opinion in January 6’s Belair Woods, LLC v. Commissioner, holding that the initial determination occurs when the IRS “formally” notifies a taxpayer of its decision to impose penalties.

But the remaining eight judges disagreed either with the concrete outcome in the case or on whether the initial determination is always the first formal communication of the penalty decision—in this case marked by a 60-day letter informing a partnership of its right to appeal the penalty decision.

The decision from the eight lead judges in Belair was also applied in Tribune Media Co. v. Commissioner to uphold penalties against the Chicago Cubs holding company and former Cubs part-owner Tribune Media Co. In that case, Tribune was hit with a nearly $72.7 million penalty.

“My odds are that both the taxpayers in Belair Woods and Tribune Media will appeal,” said Bryan Camp, a former IRS lawyer who is now a professor at the Texas Tech School of Law.

Waiting for More

In each case, the Tax Court has further issues to resolve before the parties could appeal a final judgment.

Belair Woods LLC unsuccessfully sought an interlocutory appeal, which would have paused the Tax Court’s consideration of the remaining issues to allow for an appeal.

“Given the divided decision of the Tax Court, we think it would be appropriate for an appellate court to review the Tax Court’s decision on the 6751(b) issue and determine whether the standard established by the majority opinion is consistent with the statute and Congress’s intent,” said Michelle Abroms Levin, a shareholder at Sirote & Permutt PC, which represents Belair Woods.

An attorney at Mayer Brown LLP, which represents Tribune Media Co. and the Chicago Cubs holding company, declined to comment when asked if an appeal is planned in that case.

If appealed, Belair Woods would go to the U.S. Court of Appeals for the Eleventh Circuit, while Tribune Media would head to the Seventh Circuit.

The fact that all the judges weighed in on the Belair decision increases the chances that it will get reversed, according to T. Keith Fogg, director of the Federal Tax Clinic at the Legal Services Center of Harvard Law School.

“When you look at fully reviewed opinions that get appealed, they get reversed more than other Tax Court opinions that have also been appealed because they’re controversial—they’re close questions,” Fogg told Bloomberg Tax.

Other recent penalty approval cases that could be appealed include: Laidlaw’s Harley Davidson Sales, Inc. v. Comm’rChadwick v. Comm’r; and Carter v. Comm’r.

“I expect appeals in every case the taxpayers have lost involving 6751(b) where the taxpayers are represented by counsel,” said Carlton M. Smith, who formerly directed the Carodozo School of Law’s tax clinic and now is a retired volunteer at Harvard Law School’s Federal Tax Clinic.

Remembering Dale Kensinger

via Procedurally Taxing

by Keith Fogg

Black and white headshot of Dale Kensinger

Dale Kensinger

On January 15, 2020, Dale Kensinger passed away leaving a big hole at the Tax Clinic at Harvard Law School.  You can find his obituary here.  Until very recently Dale put in a few days a week doing volunteer work at the tax clinic, where he had his own dedicated office as part of the supervising team.

I first met Dale on March 14, 1977, when I started working for Chief Counsel, IRS in Branch 3 of the Refund Litigation Division.  Dale was one of nine attorneys in the branch and was the second most senior.  As a newly minted law school graduate, I remember thinking Dale, who was about 35 at the time, was really old.  He was also extremely knowledgeable, generous with his time and kind.  I was fortunate to start my legal career in a small branch of attorneys that included someone like Dale.

Dale moved on to the Kansas City office of Chief Counsel only nine months after I arrived.  I moved on after just 18 months because of a reorganization that sent all of us to field offices across the country or to other National Office divisions.  Dale worked in the Kansas City office from 1978 to 1999 where he became the Assistant District Counsel.  Other than seeing him at the occasional training program, our paths essentially did not cross during these years though we both worked for the same large organization.

He retired in 1999 and founded the low income taxpayer clinic at University of Missouri – Kansas City.  He also became active in the ABA tax section and quickly rose to leadership in the low income taxpayer committee.  When I retired in 2007 and began teaching at Villanova, I reconnected with Dale through the ABA Tax Section.  Then Dale retired again in 2009 to move from Kansas City to Boston to be near his daughter, Elizabeth.  Following his retirement from the UMKC clinic, Dale became less active with the ABA but he was not finished helping low income taxpayers.

My colleague at the Legal Services Center at Harvard, Dan Nagin, arrived in 2012 to start a veteran’s clinic and quickly found that he had many clients who needed tax assistance.  Dan searched around for someone who could help these clients and connected with Dale.  Dale worked with volunteer students from Harvard to service the veteran clients until Dan could convince the Harvard faculty to formally start a tax clinic.  When the tax clinic formally started in 2015, I came to Harvard as a visitor to get it going and had the incredibly good fortune to have Dale there already to guide me once again.

Dale served three years in the air force during the Vietnam War.  His time as a veteran, his kind and patient nature as well as his deep knowledge of tax practice, allowed him to fix the tax problems of many veterans, and others, during the five years I worked with him in the tax clinic at Harvard.  He not only handled a substantial docket but he mentored students, fellows and me.  The tax clinic misses him on many levels.  His clients miss him deeply and several have commented to me over the past two months how much he helped them and how much they hoped and prayed for his recovery.

Because of his extraordinary service to low income taxpayers in his retirement, Dale was selected in 2018 as the co-recipient of the Janet Spragens Pro Bono Award which is the only annual award given by the Tax Section.  The ABA Tax Section describes the award and the selection criteria as follows:

This award was established in 2002 to recognize one or more individuals or law firms for outstanding and sustained achievements in pro bono activities in tax law. In 2007 the award was renamed in honor of the late Janet Spragens, who received the award in 2006 in recognition of her dedication to the development of low income taxpayer clinics throughout the United States.

Throughout the 50+ years of his career as a tax lawyer, Dale provided a model of caring about finding the right answer through his legal skills and caring about his clients with his interpersonal skills.  At the tax clinic we are reminded daily of Dale’s work as we try to finish what he started with the clients he was representing.  We were very fortunate to have him as a colleague and a role model for so many years.  I will miss our regular talks about baseball, politics, difficult clients, difficult IRS employees and wonderful granddaughters.  Our thoughts and condolences go out to his family at this time.

Clinic Stories: Prepping for the U.S. Court of Appeals

via Harvard Law Today

Through Harvard Law School’s Federal Tax Clinic, students have the unique opportunity represent low-income taxpayers in disputes with the IRS, both before the IRS and in federal court. Working individually and in teams, they represent taxpayers involving examinations, administrative appeals collection matters, and cases before the United States Tax Court and federal district courts.

In this video, we follow Adeyemi “Yemi” Adediran ’21, a second year student in the Clinic, as he prepares to argue an appeal on behalf of a military veteran with PTSD in the United States Court of Appeals for the 7th Circuit, in Chicago. The veteran’s appeal to the Seventh Circuit centered on his eligibility for innocent spouse relief under the Internal Revenue Code. Over a three year period, the veteran’s wife embezzled $500K from the Appleton, Wisconsin Blood Bank—where she worked as a bookkeeper. She was arrested and sentenced to jail, but because the couple filed taxes jointly and embezzled money is taxable, they were both legally responsible for back taxes on the money.

As an important part of his preparation, Adediran participated in a mooting session before a panel of “judges” including Keith Fogg, clinical professor and director of the Federal Tax Clinic, and Clinical Professor Daniel Nagin, vice dean for experiential and clinical education and faculty director of the WilmerHale Legal Services Center at Harvard Law School (LSC), of which the Tax Clinic is a part.

You can read more about the Federal Tax Clinic and other LSC clinics and services at legalservicescenter.org.

Wis. Man Liable for Tax After Ex-Wife’s Theft, 7th Circ. Told

Via Law360

By: Yvonne Juris

A Wisconsin military veteran should not get relief from tax liability on income his ex-wife embezzled, since he must have known of the ill-gotten funds after she was arrested, convicted and jailed, the government told the Seventh Circuit.

Rick E. Jacobsen is seeking so-called innocent spouse relief for taxes, interest and penalties owed on the embezzled income for 2011. His claim that he lacked actual knowledge of crimes committed by his ex-wife, Tina Lemmens, does not hold water since Jacobsen had access to bank statements showing the embezzled money, the U.S. said. The actual knowledge legal standard is used to determine whether a person must have been aware of a specific act.

Lemmens, an accountant, already had been convicted in November 2011 and incarcerated for embezzling close to $500,000 from her employer before the pair, who were still married at the time, filed their joint income tax return for 2011.

Jacobsen’s contention that it would have been “fruitless” to look at the bank statements because the ill-gotten funds had been disguised as legitimate should be rejected, the U.S. said, since Jacobsen had access to all related tax forms and bank statements and could have tracked down which funds were embezzled.

His additional argument that he did not know the “precise amount” of embezzled income was likewise meritless, since he could have also determined that with relevant bank and tax statements, the U.S. said.

“A man who knows that his wife has been convicted of embezzling large amounts, and who has access to bank statements showing the deposits of the embezzled income, cannot avoid the conclusion that he ‘knew or had reason to know’ about the embezzled income,” the U.S. said.

Jacobsen, a factory worker who also ran a joint home inspection business with Lemmens, had argued on appeal from the U.S. Tax Court that he had no background in accounting or finance and that he wouldn’t have been able to tell which funds were embezzled and which were legitimate. Since he lacked the financial savvy to use joint bank statements to determine what funds were ill-gotten, he did not posses actual knowledge of the embezzled money, which entitled him to spousal relief for 2011 under Internal Revenue Code Section 6015(f) , Jacobsen argued.

Jacobsen, who has post-traumatic stress disorder and experienced a mental breakdown following Lemmens’ arrest and their divorce, claimed he was unaware of her scheme until her arrest in June 2011, according to court documents. While his business income went into their joint account, his wages as a machine operator went into a separate personal checking account. He never reviewed bank statements and left it up to his wife to manage their finances, he said.

Jacobsen requested spousal relief for tax years 2009 through 2011 but the IRS denied the request in 2015, according to court documents. He sued in Tax Court later that year. The court found he was exempt from taxes for 2009 because the debt owed for that year had been discharged in bankruptcy, according to court documents. The court also found he was eligible for innocent spouse relief for 2010, but ruled that he did not meet the threshold for spousal relief for 2011 since he had actual knowledge of the stolen funds by that time.

In arriving at a decision for the 2011 year, the Tax Court found that out of the seven factors that determine eligibility for relief, four were in his favor, including compliance with income tax laws in later years, a divorce from the spouse who embezzled and poor mental and physical health. The other two — economic hardship and legal obligation — were deemed neutral. However, the Tax Court found that his knowledge of embezzled income that should have been reported on the 2011 return outweighed the other factors.

Carlton M. Smith of the Federal Tax Clinic at Harvard Law School, who represents Jacobsen, told Law360 that the lower court put too much weight on the actual knowledge factor in light of the fact that Jacobsen qualified for four of the seven factors and that the original purpose of spousal relief was to offer protection against a spouse who fails to report embezzled funds.

“The taxpayer concedes that the court is not bound to consider all factors as having the same weight, and that even as many as two or three positive factors can be outweighed by one negative factor,” Smith said. “However, the taxpayer argues that four positive factors can’t be outweighed by one negative factor when there are only seven factors.”

The U.S. Department of Justice declined to comment.

Jacobsen is represented by T. Keith Fogg and Carlton M. Smith of the Federal Tax Clinic at the Legal Services Center of Harvard Law School.

The IRS is represented by Bethany B. Hauser of the U.S. Department of Justice, Tax Division.

The case is Rick E. Jacobsen v. Commissioner of Internal Revenue, case number 18-3371, in the U.S. Court of Appeals for the Seventh Circuit.

–Additional reporting by Vidya Kauri. Editing by Robert Rudinger.

Read more at: https://www.law360.com/articles/1174833/…

Innocent Spouse Relief in a Tax Case

By: Oladeji M. Tiamiyu J.D. ’20

Tim* never could imagine how complicated his taxes would become. A disabled veteran following physical injuries from military service, Tim found a steady job. He later discovered his former wife embezzled a large sum of money from her employer.

Embezzlement, though illegal, is subject to similar tax requirements as other forms of income. Since the late 1930s, individuals filing joint tax returns are jointly liable for omitted income or understatements on a tax return. The creation of innocent spouse relief revealed a clear Congressional intent to sever joint liability when one’s spouse accrues unlawful taxable income without the other’s knowledge. The relevant statutory recognition of innocent spouse relief is Section 6015 of the Internal Revenue Code, specifically sections 6015(c) and 6015(f). Section 6015(c) allows divorced or separated individuals to be responsible only for the portion of joint tax liabilities that is attributable to their activity. Section 6015(f) is an equitable vehicle that uses the totality of circumstances to consider whether innocent spouse relief should be granted.

The IRS was initially willing to grant Tim innocent spouse relief until his wife alleged during divorce proceedings that he had known of her embezzlement. As a result, the IRS assessed Tim a liability of over $100,000 in taxes, interest, and penalties.

Tim’s case has now reached the 7th Circuit Court of Appeals. Although granting innocent spouse relief for one year, the tax court denied relief following his former wife’s criminal conviction. In denying that relief, the tax court overlooked a host of important factors that weighed in his favor. The 7th Circuit will need to better balance the government’s interest in collecting taxes with the equitable principal of relief for individuals lacking knowledge of illegal income accrued by a spouse.

Tim’s background and his actions show that he did not have knowledge of the embezzlement.  His former wife handled their financial matters, while Tim had limited knowledge and experience in finance, accounting, and taxes. In addition, there is no evidence that he ever knew of her criminal conviction before the return in dispute was filed. He provided his financial information to her tax preparer.

Helping Tim receive the relief he deserves has been a great legal experience. Most of my work focused on writing the legal brief that will be submitted to the 7th Circuit, participating in mediation with the Tax Division of the Department of Justice, and communicating with our client to set procedural expectations. The government shutdown added complexities to our work because the mediation process was delayed. I am humbled by the procedural and substantive legal issues that my co-law student advocate—Rocky Li ‘20—and I have had exposure to. We have benefited from working with Keith Fogg and Carlton Smith, our clinical supervisors who are also among the nation’s leading tax experts. If Tim does not settle, our team is optimistic that the 7th Circuit will recognize the injustice he has been subjected to.

Oladeji M. Tiamiyu is a 2L at Harvard Law School

*Name and some identifying details have been changed to protect client confidentiality.

Can District Courts Hear Innocent Spouse Refund Suits?

Via Procedurally Taxing

Source: Flickr

By: Carl Smith

This is an update on two cases discussed by Keith Fogg in a recent post. The post primarily discussed the case of Chandler v. United States, 2018 U.S. Dist. LEXIS 174482 (N.D. Tex. Sept. 17, 2018) (magistrate opinion), adopted by judge at 2018 U.S. Dist. LEXIS 173880 (N.D. Tex. Oct. 9, 2018). Chandler was a district court suit in which an individual sought a refund for overpaying her equitable share of taxes on a joint return, taking into account innocent spouse relief under section 6015(f). In Chandler, the district court granted a DOJ motion to dismiss for lack of jurisdiction, holding that only the Tax Court could hear suits involving innocent spouse relief. Keith wondered whether there would be an appeal of this ruling of first impression with respect to innocent spouse refund suit jurisdiction.

In his post, Keith also mentioned the existence of a similar innocent spouse refund suit under section 6015(f) pending in the district court for the District of Oregon, Hockin v. United States, Docket No. 3:17-CV-1926. In that case, a similar DOJ motion to dismiss for lack of jurisdiction was pending, arguing that district courts cannot hear refund suits involving innocent spouse relief.

The update, in a nutshell, is that Chandler was not appealed, but Hockin has been set up as a test case, where nearly all the filings are in and linked to below.

Both under the original innocent spouse provision (section 6013(e), which existed from 1971 to 1998) and the current innocent spouse provision (section 6015, enacted in 1998), the district courts and the Court of Federal Claims had occasionally, and without objection from the DOJ, entertained suits for refund filed solely on the grounds that a taxpayer paid more than was required after the application of the innocent provisions.

Although the DOJ had apparently never done so before in any innocent spouse refund suit going back all the way to the 1970s and 1980s, in the summer of 2018, DOJ trial division lawyers in both Chandler and Hockin submitted motions to dismiss for lack of jurisdiction, arguing that, because Congress in 1998 enacted a stand-alone innocent spouse Tax Court action at section 6015(e) in which the Tax Court can find an overpayment under section 6015(b) or (f), the Tax Court is the sole court in which innocent spouse refund suits can now be filed (i.e., via section 6015(e)), and so neither the district courts nor the Court of Federal Claims has jurisdiction to entertain innocent spouse refund suits. The DOJ motions acknowledged only one rare exception to this position: Where there was a pending refund suit in a district court or the Court of Federal Claims (presumably on other issues) at a time when a taxpayer also filed a suit in the Tax Court under section 6015(e), the statute provides that the Tax Court innocent spouse suit should be transferred over to the court hearing the refund suit. Section 6015(e)(3).

In July, Keith and I were alerted to the existence of the motion in Hockin – but not the one in Chandler – by pro bono counsel for Ms. Hockin, J. Scott Moede, the Chief Deputy City Attorney of the Portland, Oregon Office of the City Attorney. Mr. Moede had taken on the Hockin case in his role as a regular voluteer with the Lewis & Clark Low-Income Taxpayer Clinic in Portland. That clinic suggested that Mr. Moede contact the Harvard Federal Tax Clinic because of the Harvard clinic’s interest in innocent spouse cases.

Working with summer students, in August, Keith and I put together a draft of a proposed amicus memorandum for Hockin arguing that the DOJ position was both ahistorical and contrary to the 1998 and 2000 legislative history of section 6015(e) that seemed to make clear that Congress enacted section 6015(e) to be added on top of all existing avenues for judicial review of innocent spouse issues, not to repeal or replace any prior avenues for judicial review.

Further, in the draft memorandum, we pointed out that the Trial Section’s motion in Hockin took a position directly contrary to the position that the DOJ Appellate Section had taken in three cases that the Harvard clinic had recently litigated. In those three cases, the DOJ Appellate Section urged the appellate courts not to worry about holding that a person who filed a late Tax Court suit under section 6015(e) must have her suit dismissed for lack of jurisdiction. The DOJ Appellate Section said that such a taxpayer could always still get judicial review of the IRS’ decision to deny innocent spouse relief by paying the tax in full, filing a refund claim, and suing for a refund in the district court or the Court of Federal Claims.

In both Hockin and Chandler, the taxpayers received a notice of determination denying innocent spouse relief, but did not try to petition the Tax Court within the 90 days provided under section 6015(e). Rather, after later making either partial (Chandler) or full (Hockin) payment, the taxpayers filed refund claims and brought refund suits in district court that were timely under the rules of sections 6511(a) and 6532(a) (though, for Hockin, the lookback rules of section 6511(b) limit the amount of the refund to only a portion of what Ms. Hockin paid). Thus, except for the full payment (Flora) rule problem in Chandler, the taxpayers had done exactly what the Appellate Section said they should do to get judicial review of innocent spouse relief rulings other than through section 6015(e).

In August, we sent a draft copy of the memorandum to the DOJ attorney in Hockin and asked whether the DOJ would object to a motion by the Harvard clinic to file it. This draft memorandum apparently triggered the DOJ’s desire to explore mediation in the case. So, the case was assigned to a magistrate for mediation, and further filings on the motion (including the amicus motion) were postponed.

Then, in September and October, the magistrate and district court judge, respectively, issued rulings in Chandler granting the DOJ’s motion to dismiss for lack of jurisdiction. That is how Keith, Mr. Moede, and I learned of the existence of the Chandler case presenting the identical jurisdictional issue. Although Ms. Chandler was represented by counsel, that counsel had filed no papers in response to the DOJ motion to dismiss in her case. Naturally, this led to the magistrate and judge in Chandler relying entirely on the DOJ’s arguments and citations in ruling for the DOJ.

In his recent post on Chandler, Keith raised the question whether the Chandler district judge ruling would be appealed to the Fifth Circuit. The first piece of news in this update is that Ms. Chandler decided not to appeal. Frankly, give the Flora full payment problem in the case, I think an appeal on the issue of whether the district court otherwise would have had jurisdiction would have been pointless.

But, the second piece of news is that, in November, mediation failed in the Hockin case. So, Hockin is now set up as a possible appellate test case, depending on the district court’s ruling.

The DOJ has now not objected to the Harvard clinic’s filing of an amicus memorandum in Hockin. That memorandum was filed on November 26.

On December, 21, Ms. Hockin (through Mr. Moede) filed her response to the DOJ motion. In her response, Ms. Hockin argued not only that the district court had jurisdiction over section 6015 innocent spouse relief refund suits, but also that she had raised in her refund claim two additional arguments: that she had never filed a joint return for the year and that the IRS should be bound to give her innocent spouse relief for the year because it had given her such relief for the immediately-following taxable year. As noted in the Harvard memorandum, the “no joint return” argument has been considered in district court refund lawsuits even predating the enactment of the first innocent spouse provision in 1971.

The DOJ will be allowed to file a reply by January 11.

On February 5, oral argument on the motion will be heard before a magistrate who was not involved in the mediation. Ms. Hockin has agreed to have this magistrate decide the jurisdictional motion without the involvement of a district court judge, but the DOJ has not yet similarly consented. If the DOJ does the same, and the magistrate dismisses the case, this would allow a direct appeal from the magistrate to the Ninth Circuit. If the DOJ does not consent, the magistrate’s ruling will have to be reviewed by a district court judge before a party could appeal any adverse ruling to the Ninth Circuit.

You can find here for Hockin, the DOJ’s motion, the Harvard clinic’s amicus memorandum, and Ms. Hockin’s response.

Finally, you may be aware of the recent amendment of 28 U.S.C. section 1631that allows district courts and the Court of Federal Claims to transfer to the Tax Court suits improperly filed in the former courts. That amendment would not help Ms. Hockin, since her district courts suit was filed long after the 90-day period to file a Tax Court suit under section 6015(e) expired. So, her case, if transferred, would have to be dismissed by the Tax Court for lack of jurisdiction because the suit was untimely filed in the district court for purposes of the Tax Court’s stand-alone innocent spouse case jurisdictional grant. For Ms. Hockin, her only chance now for getting a refund attributable to the innocent spouse provisions is for the courts to agree that district courts have jurisdiction to consider innocent spouse refund suits.

Tax Clinic Student Amy Feinberg ’18 argues in the U.S. Court of Appeals for the Fourth Circuit

Via Harvard Law Today

In December, Amy Feinberg ’18 became the second Federal Tax Clinic student to argue an appeal in a federal circuit court since the Clinic opened at Legal Services Center of Harvard Law School in 2015.

For Feinberg, appearing before the U.S. Court of Appeals for the Fourth Circuit was also the first time she had ever been in a courtroom. Second on the docket that day, she had to wait nearly an hour to put forward her client’s case, even though Feinberg was “hyped and ready to go” almost since she arrived in Richmond, VA., the night before.

Clinical Professor of Law Keith Fogg, who directs the Federal Tax Clinic, notes that many attorneys can be practicing for 10 or more years before they get the kind of experience that Feinberg, and her predecessor Jeff Zink ’17, have gotten while enrolled in the Clinic.

Other students in the Clinic have had the opportunity to file amicus briefs and help prepare appeals for court.  All students work directly with clients and carry a docket of cases. And almost all have the opportunity to negotiate directly with the IRS and state tax authorities – experiences that many lawyers seldom get.

Continue reading

My experience at HLS’s Federal Tax Clinic

Portrait photo of Varsha Bhattacharya LL.M. '18

Varsha Bhattacharya LL.M. ’18

By Varsha Bhattacharya LL.M. ’18

I am a tax lawyer, hailing from India. I did my first law degree in India and worked there for four years with a law firm prior to coming to Harvard. While many factors went in to my decision to do my LL.M. this year, the primary one was to gain a different experience by placing myself in unfamiliar situations. Consequently while beginning my LL.M. year this August, one of my main aims while choosing courses was to pick as wide a variety as possible. This led me to apply for a clinical course, which Harvard alumni had strongly recommended to me.

Coming into the Federal Tax Clinic, I was not sure what to expect. At my law firm back in India, I dealt mostly with corporate clients. However, I represented some individuals in their tax cases and also undertook some pro bono work in conjunction with a non-profit organization, and I remembered those as being some of my most memorable assignments because of the personal connection they involved. I wondered if working at the clinic would feel similar.

During my first few days at the clinic, I was a little overwhelmed because the entire system was new to me. Not only the body of tax law, but also the manner in which courts and administrative proceedings work in the United States is different. However, after initial hiccups, things were smoother and rewarding.

I have found the environment at the clinic to be quite encouraging. The attorneys heading the clinic are extremely supportive, and are helpful irrespective of the sort of questions posed to them. Their welcoming attitude to discussions has helped clarify a lot of fundamental issues I had, as have been the discussions we have had in the lunch sessions talking about our cases. Hailing from a different jurisdiction and culture has felt less of a hurdle, and more of an attribute, because it helped bring in a different perspective to issues such as interpretation of provisions etc.

Additionally, and very significantly, I realized that a lot about getting the work right lies in caring about the client. The moment I call a client, hear their story, and feel a direct connection with them; as their representative I feel a greater responsibility to give them the best chance in their cases. While not every endeavor on behalf of a client is successful, and it can be disheartening when you cannot make headway, it pays off when there is a positive result for even one client.

I would whole-heartedly recommend taking a clinical course to anybody studying at HLS. It has been a valuable learning experience. I sincerely believe that I will leave HLS with a practical experience that a lot of my peers may not gain. While the structure of the clinic comes with certain challenges (mostly lack of continuity in cases as students keep changing every term), I feel that the benefits far outweigh any issues that may arise.

Helping low-income clients navigate the IRS

Tax Clinic students fight for clients’ rights, file potentially precedent-setting appeals

Via Harvard Law Today

The client worked at a minimum wage retail job earning $13,000 a year and was the family’s sole breadwinner. Because she and her aging mother had agreed to foster a relative’s child whose parents had been incarcerated, she filed a federal tax return claiming the earned income tax credit and advanced child tax credit, both of which are designed to benefit low-income households.

Then an IRS audit ruled her ineligible for those benefits – which would have brought an additional $5,000 into the household – saying the child’s foster care status did not qualify her as a dependent for purposes of these credits. But thanks to tenacious legal research and petition-filing by a Harvard Law School student working in the Tax Clinic of the Legal Services Center at HLS, the IRS ruling was overturned and the client received much needed additional income.

Leveling the playing field

Low-income clients come to Harvard’s Tax Clinic because they need an advocate to fight for their legal rights – rights that are meaningless if clients lack access to a lawyer to stand up for them.

Tax debt and the liens which the IRS files can prevent clients from getting jobs, while fixing tax problems allows them to reenter the job market and has a positive impact on their credit ratings.

Tax Clinic clients are military veterans, immigrants, or survivors of domestic violence. They find themselves under audit or in Tax Court because they have been victimized by scoundrel fly-by-night tax preparers who submit faulty returns on their behalf. Or they have survived abusive domestic relationships only to discover that spouses kept them in the dark about nefarious, unreported financial dealings that have potentially devastating tax consequences. Still others are vets who fail to file tax returns after losing jobs or businesses because they suffer from service-related post-traumatic stress disorder.

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Helping Low-Income Clients Navigate the IRS

Via Federal Tax Clinic

Professor Keith Fogg, right, who heads the Tax Clinic, with Fellow Audrey Patten

Professor Keith Fogg, right, who heads the Tax Clinic, with Fellow Audrey Patten

Tax Clinic students and faculty fight for clients’ rights, file potentially precedent-setting appeals.

The client worked at a minimum wage retail job earning $13,000 a year and was the family’s sole breadwinner. Because she and her aging mother had agreed to foster a relative’s child whose parents had been incarcerated, she filed a federal tax return claiming the earned income tax credit and advanced child tax credit, both of which are designed to benefit low-income households.

Then an IRS audit ruled her ineligible for those benefits – which would have brought an additional $5,000 into the household – saying the child’s foster care status did not qualify her as a dependent for purposes of these credits. But thanks to tenacious legal research and petition-filing by a Harvard Law School student working in the Tax Clinic of the Legal Services Center at HLS, the IRS ruling was overturned and the client received much needed additional income.

Leveling the playing field

Low-income clients come to Harvard’s Tax Clinic because they need an advocate to fight for their legal rights – rights that are meaningless if clients lack access to a lawyer to stand up for them.

Tax debt and the liens which the IRS files can prevent clients from getting jobs, while fixing tax problems allows them to reenter the job market and has a positive impact on their credit ratings.

Tax Clinic clients are military veterans, immigrants, or survivors of domestic violence. They find themselves under audit or in Tax Court because they have been victimized by scoundrel fly-by-night tax preparers who submit faulty returns on their behalf. Or they have survived abusive domestic relationships only to discover that spouses kept them in the dark about nefarious, unreported financial dealings that have potentially devastating tax consequences. Still others are vets who fail to file tax returns after losing jobs or businesses because they suffer from service-related post-traumatic stress disorder.

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T. Keith Fogg named clinical professor of law

Via Harvard Law Today

Credit: Bob Laramie

Credit: Bob Laramie

Keith Fogg, an expert in tax law and procedure and director of Harvard Law School’s Federal Tax Clinic at the Legal Services Center, has been named clinical professor of law at HLS.

For more than 30 years, Fogg worked in the Office of Chief Counsel of the Internal Revenue Service. He joined the faculty of Villanova Law School, and has been a visiting professor at Harvard Law School. He developed a course for the Georgetown LL.M. program, Federal Taxation of Bankruptcy and Workouts, which he taught there for 15 years as an adjunct. He has also taught as an adjunct professor at William and Mary and University of Richmond law schools and as a visiting professor at University of Arizona.

“Keith brings years of experience within the government to his pioneering development of clinical opportunities in tax law, and shares with students and colleagues his remarkably broad and detailed knowledge of tax law and policy, in theory and in practice,” said Martha Minow, dean of Harvard Law School. “As a contributor to teaching, writing, policy making, and the improvement of actual law-in-practice, Keith is fabulous, and I will watch with delight as he grows the tax clinic here.”

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Reflection on the Federal Tax Clinic

By Jimin He, J.D. ’17

Jimin He, J.D. '17

Jimin He, J.D. ’17

My two semesters at the Federal Tax Clinic have been a humbling experience. Unlike my clients, who hover around the poverty line and have incurred significant tax liabilities relative to their income, financial security is never truly a pressing concern in my day-to-day life. An equally humbling realization is just how powerless I can be as a student attorney. While my clients always appreciate what I have done for them, most of them they will not be able to escape circumstances, such as poverty, that brought them to the Clinic in the first place. Nor are they better equipped to deal with a vast and complicated bureaucracy, which at times seems indifferent to the plight of the low-income taxpayers. It once took me, with assistance from the IRS taxpayer’s advocate, more than two weeks to effectuate an address change for a client so she could receive her refund check.

Despite this occasional feeling of powerlessness, I firmly believe in the mission of the Clinical and Pro Bono Program, both as a pedagogical tool and a practical training curriculum for law students. While the work we do at the various clinics brings an undeniable benefit to our clients, we should not lose sight of the institutional barriers that must also be dismantled and force us to search for systemic solutions. This semester, I am working on filing a brief with the Fourth Circuit, hoping to relax the strict Tax Court case law on jurisdictional requirements for timely filings. The brief is part of the Clinic’s ongoing effort to bring impact litigation cases across the country to improve access to justice for low-income taxpayers. I am grateful that the Clinic has given me an opportunity to try to make a difference through both individual representation and strategic litigation.

Reflecting on the First Year of the Harvard Low-Income Tax Clinic

Via Boston Bar Association

Daniel Nagin, Clinical Professor of Law, Faculty Director of WilmerHale Legal Services Center

Daniel Nagin, Clinical Professor of Law, Faculty Director of WilmerHale Legal Services Center

Daniel Nagin, Faculty Director of the Legal Services Center & Veterans Legal Clinic of Harvard Law School, recently sat down with us to talk about how the Low Income Taxpayer Clinic there has fared in its first year. With financial support from the Boston Bar Foundation, the IRS, and the Disabled American Veterans Charitable Service Trust, and the donation of time and resources of members of the private bar, the Low Income Taxpayer Clinic aims to increase access to legal aid for low-income taxpayers with legal problems related to taxes.

One of the priority populations the Clinic serves is low-income veterans.  This year, tax attorneys from the Legal Services Center, Greater Boston Legal Services, the Massachusetts Department of Revenue and the IRS led a series of trainings at the BBA with the goal of recruiting pro bono attorneys to accept overflow cases from the Clinic. Nagin said over 35 attorneys and tax professionals signed on to our pro bono panel as a result of these trainings.  In October, the Clinic also arranged a lunch time program at the BBA with the National Taxpayer Advocate, Nina Olson.

These are the questions we asked about the Clinic’s successes and plans for its future:

Q: How would you sum up the Clinic’s first year?

A: There has been tremendous momentum due to a number of intersecting forces. First, there are a substantial number of people who have tax controversies with the IRS and no recourse. Understandably, they feel intimidated, overwhelmed, and often they have no idea that there are defenses available to them. Another force has been the interest from the private bar. There are many attorneys looking to do pro bono work in the area of tax law. We are gratified to the BBF’s partnership in bringing these forces together.

Q: What plans do you have for the Clinic’s future?

A: We are seeing an increasing number of taxpayers with issues with the Massachusetts Department of Revenue, so that is one area of our work that we are trying to build out. In the future we hope to address not only federal tax issues, but related state issues. Unfortunately, like many other segments of the community, low-income veterans often have not only one legal problem but multiple legal problems. So, we also have a substantial number of clients who are referred internally at the Legal Services Center from the Veterans Legal Clinic to the Tax Clinic when they contact us about veterans’ law issues but also have tax issues.

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Lessons Learned with the Federal Tax Clinic

By Jonathan Holbrook, J.D. ’16

When I began working in Professor Keith Fogg’s Federal Tax Clinic, I already knew that I was interested in tax and would be practicing in the field after graduation. But I did not know how the clinic would operate, nor exactly how my clinical experience would relate to future practice. I now move forward from a semester in the Tax Clinic with three major takeaways: a better idea of how part of the IRS functions; a set of practical lawyering skills; and an understanding of how to use those skills to help low-income taxpayers.

Working with the Federal Tax Clinic meant learning a great deal about how the IRS works, the pressures it is under, and how taxpayers interface with its system. The cases I worked on offered an opportunity to interact with IRS employees and to strategize about how best to persuade them of our client’s case. It was particularly interesting to discuss clinical work with other students in the Clinic. Together, we were able to put into practice what we learned in the Clinic’s accompanying class sessions.

As part of the Clinic we were also able to attend the Tax Court when it visited Boston. We observed and assisted as Professor Keith Fogg helped pro se taxpayers prepare their cases. It was a valuable opportunity to see cases at a different stage than we saw in our day-to-day clinical work, as well as to get a taste of tax litigation.

Working with the Federal Tax Clinic also helped me develop practical lawyering skills and, in particular, a sense of legal judgment. In my classes thus far, examinations have typically involved synthesizing a defined set of rules, then applying them to discrete scenarios. It is a relatively straightforward process to determine whether the answer is “yes,” “no,” or “maybe.” In the real world, some clients’ issues match that model. With some base level of knowledge, it is possible to mechanically match the scenario up to the rules to produce the right answer. But the most interesting questions are those for which there is no preexisting, easily-accessible answer. In my experience with the clinic, I ran into many such situations. I suspect that is because: (1) low income taxpayers typically settle their cases with the IRS before litigation; and (2) low-income taxpayers have relatively few interested commentators producing secondary source materials relating to their problems. Thus, working with the Clinic meant often making judgment calls in filling out forms, drafting letters and offering advice. By the end of the semester, I had become much more comfortable making such judgment calls.

A final key aspect of the clinical experience was learning from the clients. Hearing about their multiple jobs, disabilities, split-up families, struggles to pay or receive child support and incomprehensible communications from the IRS made real what had previously only been a theoretical understanding of the challenges facing low-income taxpayers. Helping the Clinic’s clients work through their issues with the tax system and come into compliance felt very meaningful.

In sum, the fall semester was a very challenging and educational experience. The Clinic let me do more than I thought was possible. Whatever path my career takes, I’ve gained the skills to be a better lawyer and the tools to effectively help low-income taxpayers through pro bono work. I am grateful to the school and to Professor Fogg for making the Clinic possible.

Clinic student advocates for low income taxpayers

By Amanda Klopp, J.D. ’16 

I first became interested in the problems that low income taxpayers face while working with HLS TaxHelp. TaxHelp is a student practice organization that operates in the spring semester and assists low income taxpayers with completing their current year tax returns. While many taxpayers came to TaxHelp with relatively easy tax returns and walked away receiving refunds, other taxpayers came with more complicated issues. Sometimes, taxpayers had problems that we could not help them with, like tax debt from prior years or unfiled prior year returns. These problems could spur threatening notices from the IRS, prevent taxpayers from receiving refunds, and affect taxpayers’ feelings of economic security. Therefore, when I found out the LSC was starting up the Federal Tax Clinic, I was excited to delve into these more complicated issues that would have a big impact on taxpayers’ financial wellbeing.

When beginning in the Federal Tax Clinic, I was particularly interested to know more about the challenges and types of disputes that low income taxpayers most often face. However, I didn’t expect that there would be so much substantive and procedural knowledge required to navigate the waters of the tax controversy system. Fortunately, the Director of the Federal Tax Clinic and our clinical supervisor, Professor Keith Fogg, had an enormous wealth of experience from more than thirty years in the IRS Office of Chief Counsel and from directing a low income taxpayer clinic at Villanova Law School. Through the clinical seminar and daily clinical work, Professor Fogg guided me through the opportunities and hazards the tax controversy system can present.

Each week, I learned about the different types of relief available to taxpayers by filling out the forms and petitions that low income taxpayers would have to fill out themselves in order to obtain relief – and concurrently realized how difficult relief is to obtain without representation. By working through clinical cases, I became familiar with the panoply of IRS correspondence and protocol that accompanies all tax controversies – and realized that such would certainly overwhelm the average taxpayer. By discussing clinical experiences with each other, we created a shared knowledge base of the options available to taxpayers in controversies, the various considerations that came with each option, and the potential ethical concerns that could arise. Soon, we began to strategize about the trajectory of our cases and spot where issues might arise right from the intake meeting.

The Federal Tax Clinic also gave me a great opportunity to advocate on a case-by-case basis and on a more global scale. In the course of the clinic, I wrote a detailed request to the IRS to reconsider the results of an audit, based on new information regarding the taxpayer’s liability. I also had the opportunity to assist in writing an amicus curiae brief for the Tax Court, which advocated for interpreting a filing deadline to be subject to equitable tolling. Other students wrote requests to the IRS for offers in compromise, which are requests to settle taxpayers’ debt for less than the full amount owed. Several students collaborated to submit comments and suggestions to the Tax Court regarding proposed changes to the Tax Court’s Rules of Practice and Procedures and Tax Court forms. These different experiences illustrate that the clinic’s mission is two-fold: to help improve individual taxpayers’ economic circumstances and to encourage policy changes that will hopefully lead to better outcomes in the tax controversy system for all low income taxpayers.

Visiting Professor of Law T. Keith Fogg will teach new Federal Tax Clinic

The Office of Clinical and Pro Bono Programs is excited to announce the new Federal Tax Clinic, which will be part of the WilmerHale Legal Services Center in Jamaica Plain. The clinic will help defend the most vulnerable taxpayers while giving students the opportunity to learn tax practice and procedure.

Keith Fogg, Visiting Clinical Professor of Law, Federal Income Tax Clinic, Harvard Law School

Keith Fogg, Visiting Clinical Professor
of Law, Federal Income Tax Clinic,
Harvard Law School

The Federal Tax Clinic will begin in the 2015 fall semester and will be taught by Visiting Professor of Law, T. Keith Fogg.

Professor Fogg teaches at the Villanova University School of Law, where he also directs the Federal Tax Clinic. He is a national authority on tax procedure. He co-authors a blog with Professor Les Book entitled Procedurally Taxing, which focuses on current tax procedure issues and serves as the editor of the ABA Tax Section publication “Effectively Representing Your Client before the IRS.” Professor Fogg also authors the collection chapters in “IRS Practice and Procedure” created by Michael Saltzman and currently edited by Les Book.

He was chosen as the IRS Chief Counsel Robert H. Jackson National Attorney of the Year in 2007 and the ABA Tax Section Janet R. Spragens Pro Bono Award winner in 2015.  He is a past chair of the ABA Tax Section Pro Bono and Tax Clinics Committee and a current member of the ABA Tax Section governing council.

For more information, students can visit our Clinical Podcast webpage to listen to the information session about the new Federal Tax Clinic.