John C. Hom v. Commissioner of Internal RevenueDocket No. 9399-11; T.C. Memo 2013-163; 2013 Tax Ct. Memo LEXIS 166; 106 T.C.M. (CCH) 15 (United States Tax Court, July 8, 2013)

2016 ◽  
Vol 20 (5) ◽  
pp. 412-419
Keyword(s):  
United States ◽  
Tax Court

scholarly journals Interest Relief on Income Tax Debts: Canada Versus the United States

2021 ◽  
Vol 68 (4) ◽  
pp. 931-986
Author(s):  
Michael H. Lubetsky
Keyword(s):  
United States ◽  
Voluntary Disclosure ◽  
Income Tax ◽  
The United States ◽  
The Public ◽  
The Us ◽  
Fair Compensation ◽  
Willingness To Use ◽  
Tax Court ◽  
The Comparative Study

Subsection 220(3.1) of the Income Tax Act authorizes the minister of national revenue to waive or cancel interest on income tax debts. This power is typically exercised in four circumstances: where interest has accumulated owing to circumstances beyond a taxpayer's control; where the interest has accumulated owing to error or delay by the Canada Revenue Agency; where the accumulated interest causes hardship; or in the context of a voluntary disclosure. South of the border, section 6404 of the Internal Revenue Code authorizes the secretary of the Treasury to "abate" interest on tax debts. As a practical matter, discretionary interest relief under section 6404 is available only in very limited circumstances. The restrictive approach to discretionary interest relief is, however, offset by a greater array of interest-relieving provisions, as well as by the power of the secretary to "compromise" tax liabilities on various grounds, some of which overlap with grounds for interest relief recognized in Canada. This article compares the Canadian and US interest relief regimes, with a view to identifying aspects of the US regime that may merit further consideration in Canada. The differences in the US approach that are of particular interest include • a wider, and arguably more coherent, range of relieving provisions applicable to interest, particularly with regard to interest netting and carrybacks; • the jurisdiction of the United States Tax Court to review refusals to abate interest and/or to accept an offer in compromise; • dealing with situations of hardship and extraordinary circumstances under the aegis of the offer-in-compromise regime, which allows for consideration of the underlying tax liability in addition to the interest, and which also allows for relief to be made conditional on the taxpayer's future compliance with filing and payment obligations; • in certain older cases, a willingness to use interest relief to settle longstanding and complex tax disputes; and • the absence of statutory time limits on the power of the secretary to abate or compromise interest. The comparative study also reveals how Canada and the United States place different weight on policy rationales that underlie interest relief. Canada focuses mainly on ensuring that the consequences of non-compliance for individual taxpayers are fair and equitable. The United States, on the other hand, focuses more on rehabilitating non-compliant taxpayers in the long term, as well as ensuring that interest reflects fair compensation for such taxpayers' use of the public treasury's money—both of which could be given greater attention on this side of the border.

The Tax Court of the United States

1954 ◽  
Vol 45 (8) ◽  
pp. 283-286
Author(s):  
Frank Meyer
Keyword(s):  
United States ◽  
The United States ◽  
Tax Court

scholarly journals Implications Of The Selection Of A Method To Allocate State Income Taxes In Order To Determine Net Foreign-Source Income

2010 ◽  
Vol 9 (4) ◽  
Author(s):  
Robert M. Kozub
Keyword(s):  
United States ◽  
Income Tax ◽  
The United States ◽  
Income Taxes ◽  
Income Sources ◽  
State Income ◽  
Gross Income ◽  
State And Local ◽  
Tax Court ◽  
Relationship Of

Internal Revenue Code Sections 861-864 determine the source of income and Sections 861(a) and 862(a) specifically allocate certain items of gross income to sources within or without the United States.  Sections 861(b) and 862(b) state generally how to determine taxable income for a taxpayer with income sources within or without the United States after such source has been determined. Regulation § 1.861-8 provides more information on allocating state and local taxes to U.S. - and foreign-source income.  Regulation § 1.861-8 is based on the factual relationship of deductions to gross income test.  This Regulation provides a concise rule requiring that the deduction for state, local, and foreign income, war profits, and excess profits taxes under Section 164 are definitely related and allocable to the gross income with respect to which such taxes are imposed. Under Regulation § 1.861(e)(6) if foreign-source of a corporation related by ownership to a corporate taxpayer is attributed to the activities conducted by the taxpayer in a state and is subject to state income tax, as in a state unitary income tax, the state tax deduction is allocable to the foreign-source income of the related corporation for purposes of the foreign tax credit used § 904.  This paper first considers the most common methods for allocating state income taxes, the presumptive, analytic, and state-by-state methods.  In the Chevron case, the Tax Court was asked to consider whether any of the following methods comply with the regulations; these methods are the gross income, factor operations, statutory notice, the pro rata, and the example methods.  This paper will also consider the requirements and validity of related regulations.

scholarly journals Amazon Inc., BEPS, and the New Method of Risk Allocation: Comparing U.S. Jurisprudence and OECD Approaches to Risk Allocation in the Post-BEPS Era of Transfer Pricing

2017 ◽  
Author(s):  
Charles Edward Andrew Lincoln
Keyword(s):  
United States ◽  
International Law ◽  
Transfer Pricing ◽  
The United States ◽  
Secondary Source ◽  
Risk Allocation ◽  
Tax Reforms ◽  
Stare Decisis ◽  
Secondary Sources ◽  
Tax Court

Will the United States Tax Court apply Action 9’s recommendations regarding risk allocation for transfer pricing purposes?In short, no.The U.S. Tax Court will not apply the OECD BEPS Action 9 Recommendation regarding risk allocation for three reasons. (1) Two Constitutional reasons: (a) the Constitutional cavalcade of hierarchy regarding international law in the United States—much less the precedential value of a secondary source, such as OECD reports. (b) The concept of stare decisis that is embedded in the common law system of the Anglo-American tradition relies on cases being decided as they have been decided in the past. The tradition of upholding prior precedent is not easily broken—except for egregious reasons, such as regarding slavery. (2) Given the status of international law and international secondary sources in the United States in addition to the concept of stare decisis, the U.S. Tax Court—as all courts in the United States—consistently build on judicial application of law. Four key transfer pricing cases since the 1986 transfer pricing tax reforms in the United States will be shown to support the concept of stare decisis.(3) Finally, the most recent transfer pricing case—Amazon—shows that the Court still upholds the prior precedential cases through stare decisis. Moreover—and perhaps more importantly in the international context regarding other countries’ decision to implement Action 9—had the IRS brought the argument of Action 9 forward, not only would the entire case would have been analyzed differently, but the prospect of bringing Action 9’s reasoning forward, the IRS would have for forfeited all claims to the pricing of the transferred intellectual property (IP) to the “empty company”—as will be shown later.

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