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TAX TRENDS

and that, in at least two circumstances, governs when a delinquent return return sent to the IRS agent in 2005
the law allows taxpayers to hand-carry has been “filed” and that it should were a return.
a return to an IRS office. Consequently, be considered to be “filed” under the
the court found that even for a timely ordinary meaning of that term. Reflections
return, an IRS service center was not The IRS argued that delinquent According to a dissent, because Seaview
the only place a partnership can file returns delivered to IRS officials cannot admitted that it could not prove that its
its returns. be considered “filed” because of case law return ever reached the Ogden service
Because the Code and the regulations requiring “meticulous compliance by center, it was undisputed that Seaview
did not specify how a delinquent return the taxpayer with all named conditions” had failed to file its return, either on
is “filed,” the Ninth Circuit reasoned to secure the benefit of the statute of time or late, to the correct location in
that the required procedure should limitation (Lucas v. Pilliod Lumber, 281 the regulations. Thus, under the plain
follow the ordinary meaning of the U.S. 245, 249 (1930)). Seaview’s return, text of the Code and the regulations, as
term. The court found that the Supreme the IRS contended, did not meet this well as applicable precedent, the dissent
Court held in Lombardo, 241 U.S. 73 standard because it was not sent to a concluded that Seaview never filed its
(1916), a nontax case, that a document service center, as required by Regs. Sec. 2001 partnership return and the limita-
is filed when it is delivered to the proper 1.6031(a)-1(e). However, the Ninth Cir- tion period for the IRS to adjust the
official and that this definition of “filed” cuit brushed this argument aside, finding return had not expired.
had been adopted by the Tax Court in that since Regs. Sec. 1.6031(a)-1(e) did What exactly did the dissent find
Hotel Equities Corp., 65 T.C. 528 (1975). not apply to delinquent returns, Seaview wrong with the majority’s reasoning?
The court also noted that in Hanson, 2 had met the meticulous-compliance In short, everything. In its conclusion
F.3d 942 (9th Cir. 1993), it had held that standard because it had filed the return to its opinion, the dissent stated that
a return has been filed if it was delivered under the ordinary meaning of “filed.” “[t]he majority misconstrues the
to and received by the IRS, regardless With regard to whether the copies statutes and regulations, improperly
of whether the IRS ever processes of the returns sent in 2005 qualified as fashions its own delinquent-return
the return. Thus, under the ordinary returns under the Beard tests, the Ninth filing regime, is wrongly predicated
meaning of “filed,” the court concluded Circuit disagreed with the Tax Court on nonbinding internal IRS guidance,
that a delinquent partnership return is that the document did not purport incorrectly applies a form of implicit
“filed” under former Sec. 6229(a) when to be a return. The court first found equitable estoppel, misreads the record,
an IRS official authorized to obtain that the Tax Court had erred in basing and — contrary to basic rules of our
and process a delinquent return asks its decision on Seaview’s intent in jurisprudence — disregards Supreme
a partnership for such a return, the delivering the return copies to the IRS. Court, out-of-circuit, and Tax Court
partnership delivers the return to the Citing Badaracco, 464 U.S. 386 (1984), authority” (slip op. at 77).
IRS official in the manner requested, the court stated that the inquiry of Seaview Trading, LLC, No. 20-72416
and the IRS official receives the return. whether a document was a return was an (9th Cir. 5/11/22)
The Ninth Circuit then considered objective inquiry rather than a subjective
what effect the IRS’s internal guidance inquiry of the filer’s intent.
with respect to filing a delinquent In making the objective deter- Procedure & Administration
return had on the question of whether mination, the Ninth Circuit looked
a delinquent return must be filed with at the context of the exchange in IRS may enforce lien to pay
a service center. The court described 2005, in which the IRS agent asked off deceased life partner’s tax
a number of situations in which for Seaview’s 2001 return, and, in debts
internal guidance of the IRS requires response, Seaview faxed copies of its A district court held that the IRS can
or encourages an IRS agent to request 2001 Form 1065. Based on this context, enforce a tax lien against a house a
a taxpayer to file a return with the IRS the court found that the copies of the taxpayer owned and resided in to satisfy
agent rather than mailing the return Form 1065 delivered to the IRS agent the tax debts of her deceased life partner
to a service center. While admitting “unambiguously” purported to be a because the IRS had a property interest
that IRS internal guidance does not return. Furthermore, it noted that the in the house under state law.
have the force of law and does not IRS treated the copies of the Form
confer rights on a taxpayer, the court 1065 as such. Finding that the other Background
concluded that the guidance confirmed three Beard tests were met, the court Laura Dombrowski and Ronald Mathe-
its determination that no regulation concluded that the copies of Seaview’s son were life partners, having what was

52 August 2022 The Tax Adviser