• Monte Silver, Tax lawyer

National Taxpayer Advocate - 2020 ANNUAL REPORT TO CONGRESS - dedicates 2 pages to our case.





The National Taxpayer Advocate - an independent organization within the IRS - dedicated 2 pages of its report to congress to our cases! Here is the exact quote. Patience. We will win!


"In Silver v. IRS, the U.S. District Court for the District of Columbia held that a taxpayer had standing to challenge the IRS’s failure to carry out evaluations under the Regulatory Flexibility Act (RFA) and the Paperwork Reduction Act (PRA) when issuing regulations, and that the AIA did not bar the suit. Footnote 59


Significance: Like Bullock (discussed above), Silver illustrates that the IRS sometimes makes or changes rules without considering taxpayer burden, as required by the APA. This case is significant because it suggests that a broad range of tax regulations may be subject to challenge on the same bases (i.e., a failure to conduct analysis under the RFA or PRA). Footnote 60


In 2016, the Government Accountability Office reported that only two of over 200 regulations issued by Treasury between 2013 and 2015 included an RFA analysis. Footnote 61


Summary


As part of the Tax Cuts and Jobs Act (TCJA), Congress enacted certain “transition tax” provisions applicable to “controlled foreign corporations” owned by “United States persons.” Footnote 62


Mr. Monte Silver, an American citizen, and Monte Silver, Ltd., the controlled foreign corporation through which he practiced law in Israel (collectively, Mr. Silver), challenged the validity of regulations implementing the transition tax. Although Mr. Silver reported no transition tax liability, he alleged the IRS did not follow procedures mandated by the APA, the RFA, or the PRA — rules designed to protect small businesses from burdensome and costly regulations — when it issued the regulations.


The government moved to dismiss. It argued that Mr. Silver had no standing because he suffered no injury, and that any injury he sustained was due to the TCJA and not the regulations. It also argued that his suit was barred because invalidating the transition tax regulations would restrain “the assessment or collection of any tax,” in violation of the AIA. Footnote 63


The court found that Mr. Silver had standing because he was injured by compliance costs (recordkeeping and collection of information) that were traceable to the government’s failure to follow procedural rules. Although the TCJA itself may have imposed the burden, a procedural violation that reasonably increased the risk of injury to Mr. Silver was enough to establish that the IRS’s violation (and not the statute) caused the injury for purposes of standing. Finally, the AIA was not applicable because Mr. Silver was merely asking the court to compel the agency to conduct RFA and PRA analyses. The court said it would not have to analyze whether a stay of enforcement of the regulations would violate the AIA unless Mr. Smith prevailed on the merits.


FOOTNOTES




59 Silver v. IRS, 2019 U.S. Dist. LEXIS 220193 (D.D.C. Dec. 24, 2019).

60 Stuart J. Bassin, Rethinking Validity Challenges to Tax Regulations, 166 TAX NOTES FEDERAL 573 (Jan. 27, 2020).

61 Government Accountability Office (GAO), GAO-16-720, Treasury and OMB Need to Reevaluate Long-standing Exemptions of Tax Regulations and Guidance 22 (2016).

62 See generally Pub. L. No. 115-97 § 14103(a), 131 Stat. 2054, 2195 (2017) (codified at IRC § 965)

63. IRC § 7421(a)."



To see the full report, see https://www.taxpayeradvocate.irs.gov/wp-content/uploads/2021/01/ARC20_FullReport.pdf


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