Dick Adams <rdadams[at]smart.net> wrote:
- quote -

I think it does. In Macher it looks like the tax claim was
a priority claim and non-dischargeable. So the court
discharge the tax liability, or even order a reduction. But
the court thought it was unreasonable for the IRS to refuse
to process an offer in compromise simply because the
taxpayer was in bankruptcy.

Note that the court did not require the IRS to compromise
the tax due - only to process it under its normal
procedures. The IRS had taken the position that it would
not even consider an offer in compromise from anyone in
bankruptcy.

- quote -

Several bankruptcy courts (and at least one or two district
courts in bankruptcy appeals) have ruled on this. Some
agree with Macher, others do not.

Those who disagree with Macher say that the bankruptcy code
has specific rules for dealing with tax claims, so those
should be followed in preference to ordering the IRS to
process an offer in compromise.

I'm not sure I agree with that - at this point I agree with
Macher. But I haven't taken the time to research it in
detail.

- quote -

Unlike the tax court, there are many separate bankruptcy
courts. The only "directives" would be decisions of higher
courts. There is one district court case I found on this
point, and it agreed with Macher. But on my brief research
I could find no appellate cases.

- quote -

There have been several. The bankruptcy court in Georgia
agreed with Macher in the Holmes case in 2003. This
decision was affirmed by the federal district court in 2004.

Also in 2004 the bankruptcy court in Nebraska agreed with
Holmes.

The bankruptcy court in DC disagreed in 2005 in the case of
1900 M Restuarant Associates, Inc.

In 2006 the Pennsylvania bankruptcy court also disagreed
with Macher. That same year the bankruptcy court in Ohio
followed suit and agreed with 1900 M Restaurant.

- quote -

I think you're right. In general the IRS will look at the
court cases and determine if they think other courts will go
along. Sometimes they acquiesce right away. Sometimes they
go all the way to the Supreme Court - sometimes they win and
sometimes they lose. But I think most of the time they're
trying to be reasonable.

In my opinion one of the worst examples of this was the
Crown case in 1977, affirmed by the 7th Circuit (in Chicago)
in 1978.

In that case a rich guy made a large loan to a relative.
The terms were that no interest would be due, but the lender
could demand repayment at any time. The donor was basically
passing taxable income from himself to a relative in a lower
tax bracket.

The IRS went after these guys for gift tax. The court (and
others afterward) held that under §2512, "the value thereof
at the date of the gift shall be considered the amount of
the gift."

If the value is based on the date of the gift, an interest
free loan that had to be repaid at any time had a value of
zero, because there was no way to determine in advance how
long the borrower would be able to keep the money.

Eventually the Supreme Court overturned Crown. I believe
the Court was wrong and Crown was right based on a strict
construction of the statute. But they just couldn't stand
the fact that something of real value could be given without
a gift tax being incurred.

The real stupid part about all this, though, is that it was
completely unnecessary. Under the Grantor Trust rules in
§671 etc., the IRS could have treated the donor as the owner
of all taxable income from the gift, thus increasing income
tax collections every year, not just one time as the gift
tax would be. This would have been a much stronger case,
and would not have caused the Supreme Court to enter such a
bad (in my opinion) decision.

The effect continues to this day to create a loophole that
didn't have to exist. Now someone can make a no-interest
loan that is gift-tax free as long as the effective value
(e.g. interest earned) is less than the annual exemption
amount. And he will apparently be able to transfer that
taxable income from his higher bracket to a lower bracket.

If the IRS had gone after income tax rather than gift tax in
Crown, we wouldn't have that loophole today.

Stu

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"Joey" <zhousw[at]gmail.com> wrote:

- quote -

Go to a law library and look at the CCH or PH tax materials.
You'll see citations to cases, and also notes for
acquiescenses and non-acquiescenses.

There might be something at the IRS website at irs.gov, but
I'm not aware of it if there is.

Stu

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Joey wrote:

- quote -

That doesn't really surprise me. Google is your friend.

- quote -

Try Googling for: nonacquiescence AOD
or: nonacquiescence AOD <some recent year
Alternatively,
http://www.taxalmanac.org/index.php/...s_on_Decisions
(found through a Google similar to the above) is probably a
decent place to start, although you'll have to click through
the recent AODs.

Phoebe

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Joey" <zhousw[at]gmail.com> wrote:

- quote -

Go to irs.gov and type "nonacquiesce" in the search box. I
received 67 hits.

--
Drew Edmundson, CPA
Cary, NC

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Joey" <zhousw[at]gmail.com> wrote:

- quote -

The most current one is "North Dakota State Univrsity v.
United States" which may be an exercise in futility.

There is a case "U.S. v. Roland Harry Macher" where the
Bankruptcy ordered the IRS to process Macher's Chapter 11
plan as though it was an offer in compromise.

The reason I recall this case is that the Commissioner went
to the House Ways and Means Committee about it. The issues
that come to mind are:
1) Given the Bankruptcy Court has the authority to tell the
IRS that it has voided the tax liability, why wouldn't
it also have the authority to tell the IRS to process a
reduction in the tax liability?
2) Given a conflict between the IRS and the Bankruptcy Court,
why would Congress side with the IRS especially since this
appears to be a "you can't tell me what to do" argument?
3) Given the controversity and the IRS taking a nonacquiesce
position, has the Bankruptcy Court issued any directives
on future matters of this nature?
4) Has a similar case occurred since Macher?
5) What procedures does the IRS want followed in such cases?

It is my unresearched opinion that nonacquiescence is the
Service's way of saying "Let's not fight this issue because
it may not arise again" or "Let's keep going to court until
we win."

I suspect the Service nonacquiest on the home office issue
until it got to Dr. Soliman's home office deduction.

Dick

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I have recently visited a number of tax blogs in search of a
"tax controversy," but have not been successful.
Specifically, I am looking for a recent case where the
Commissioner of the IRS did not acquiesce to the tax court's
decision.

I am a graduate student major in accounting at chicago
writing a paper for a tax research class. Any help will be
appreciated. My e-mail is included below if you wish to
contact me.

zhousw[at]gmail.com

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