05 / 17 / 2017

May v. United States, Case No. 15-16599 (9th Cir. 2017)

In an unpublished opinion (see 9th Cir. Rule 36-3 detailing that disposition is not appropriate for publication and is not precedent except as provided by the rule), the 9th Circuit has now reversed the lower federal court ruling in May, finding that the lower court had erred when it had found that the IRS's imposition of a penalty for non-disclosure of a listed transaction was time-barred under IRC Section 6501(c)(10)(A) because the assessment occurred more than 1 year after May's IRS examining agent came into possession of enough information to justify the penalty.  Id., at 2.

According to the 9th Circuit decision, the meaning of the phrase, "information so required" is to be construed to refer back to an introductory paragraph, which then refers to IRC Section 6011, to explain that in order to commence the running of the statute of limitations period, "is that which is required under section 6011 to be included with a return or statement."  Since this part of the Internal Revenue Code instructs that taxpayers are to make returns or statements according to the forms and regulations prescribed by the IRS, "Congress expressly required taxpayer compliance with the IRS's determination of how listed transactions to be reported."  Since it was undisputed that May neither filed Form 8886 nor sent it to the OTSA, he was found to have "failed to do what was required to start the running of the Section 6501(c)(10)(A) statute of limitations." at 5.  The Court found that statute of limitations barring the collections of taxes otherwise due and unpaid are strictly construed in favor of the Government, citing to Badaracco v. Comm'r, 464 U.S. 386, 392 (1984).  Thus, the IRS' assessment of the penalty was timely.  

The case was remanded to determine if the assessment was time-barred due to application of 6501(c)(10)(B), but the 9th Circuit declined to do so because the district court did not address that issue, "which likely requires findings of fact."  


A wonderful serenity has taken possession of my entire soul, like these sweet mornings of spring which I enjoy with my whole heart. I am alone, and feel the charm of existence in this spot, which was created for the bliss of souls like mine.

I am so happy, my dear friend, so absorbed in the exquisite sense of mere tranquil existence, that I neglect my talents. I should be incapable of drawing a single stroke at the present moment; and yet I feel that I never was a greater artist than now.

When, while the lovely valley teems with vapour around me, and the meridian sun strikes the upper surface of the impenetrable foliage of my trees, and but a few stray gleams steal into the inner sanctuary, I throw myself down among the tall grass by the trickling stream; and, as I lie close to the earth, a thousand unknown plants are noticed by me: when I hear the buzz of the little world among the stalks, and grow familiar with the countless indescribable forms of the insects and flies, then I feel the presence of the Almighty, who formed us in his own image.

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