TAX PROCEDURE
University of Houston Law Center


Summary of Course

This class covers the procedural aspects of dealing with the Internal Revenue Service, the agency that administers the federal tax system. The focus is from the private practitioner's perspective in assisting clients navigate the daunting administrative requirements. The class offers the following principal subjects:

Course Book and Materials

Students and prospective students may download the most book here.  Other persons interested in federal tax procedure issues may download the book free of charge.  I ask those other than my students who download the book to advise me by email that they have downloaded the book and the expected use.  I also ask that, if you find any portion of the book that you believes need correction or clarification, please advise me at the same email address. 

Townsend Tax Procedure (Fall 2011 - No Footnotes) This is the edition for the 2011 class. The class text has no footnotes. I provide a footnoted edition below, but for class I do not want the students to read the footnotes.  Please note that the edition for use in the class has no footnotes.  I do have footnote and endnoted versions of the book here but do not recommend them for the class as the footnotes develop thoughts and provide citations that are not important for the class.
Townsend Tax Procedure Materials (Fall 2008) These are materials (case and law review articles) that I will ask the Students to read outside the text.  I will assign these materials to students in the class.  This is the edition for the 2008 class.  I have made no changes for 2011.
Student Questionnaire Fill in this pdf file, save and email to me at jack@tjtaxlaw.com
For extra reading to round out your tax procedure education (you need to get good at both of these):
   Strunk & White, The Elements of Style (4th ed. 2000)
   Frankfurt on Bullshit (1st ed. 2005)
Strunk & White from Amazon.com

Frankfurt from Amazon.com (although an earlier, less bullshit version from the internet can be downloaded here.

FOR REVISIONS OR ERRATA TO THE BOOK, GO TO UPDATE MATERIALS BELOW.

1.    The course combines text materials, code sections and case and other materials.  The cases are relatively few and are designed to encourage active student participation in the class.  Students will be pre-assigned cases for class presentation.

2.    The text (non-footnoted version for class) is 502 pages.  The text will thus be, on average, less than 50 pages per 2 hour class.  There is more reading, however.  You should generally read the Code Sections that are cited in the text (not in the footnotes for those who may work from the footnoted or endnoted versions).  I expect students to read and understand the key Code Sections.  The Code Sections may add an additional 5-10 pages per class (probably less).  I also will assign cases and articles for you to read for some classes.  The cases and articles are in the download materials above.  Cases will be assigned so that students will know in advance when they will be called upon.

3.   The classes will not require an extraordinary amount of reading for law school.  The classes will, hopefully, require that you think about the larger process of the revenue function of Government and how it interfaces with the citizen.  The class is not designed to teach you a lot of nitpicking rules, with exception upon exception.  You will suffer that punishment when you become a tax lawyer.  Instead, the class will teach you broad principles and introduce you to the highlights of tax procedure.  I hope to engage your thinking and reasoning capacities rather than your memorization capacities.

4.   The digital files that you download are in Adobe Acrobat format.  Many of you will already be familiar with that format because it is ubiquitous in business and on the Code.  For best use of the file, you should have a recent version of the free Acrobat Reader (7 or higher) or a version of Adobe Acrobat (the latter of which is not free). 

5.  In the digital file, you can navigate around in several ways using the Acrobat Reader.  First, you can use the bookmarks feature to see an outline of the book (like a table of contents) that you can then click to move to the relevant text.

6.   If you prefer to review from a hardcopy, you can print out the materials.  My recommendation is that you not print out indiscriminately because the number of pages is great.

Fall 2010 Course Schedule and Assignments  

The class will be taught on Thursday evenings from 7:00 to 8:40 pm.  (if the class determines it wants a ten minute break in the middle, the class will go to 9:20).

NOTE TO STUDENTS - THIS CLASS ASSIGNMENT LIST HAS MATERIAL CHANGES AS OF 10/13/11(AFFECTS CLASSES STARTING ON 10/20/11)

Unit 1
8/25
Introduction to Class
Ch. 1 Purpose and Scope
Ch. 2 Organization and Structure of the Federal Revenue Function
Ch. 3 Taxpayer Access to Information - FOIA and the Privacy Act
Ch. 4 Confidentiality and Disclosure of Tax Return Information
Unit 2
9/1
Ch. 5 Returns
   Read the Williams v. Commissioner and Badaracco Cases
Ch. 6 Statutes of Limitation (through p. 136 - IV. Overpayments starts on following page)
Case Assignments: -
  Badaracco - All Students
  Williams v. Commissioner - All Students
Unit 3
9/8
Ch. 6 Statutes of Limitations balance of Chapter (starting with p. 137 V. Overpayments)
Ch. 7 Interest
Case Assignments
   Brockamp - Block, Chavez, Currin, Endara, Foster, Tamez, White
   Estate of Branson - Grier, Kumar, Laidlaw, Nobles, O'Neil, Powell, Suntharam
Taylor
Unit 4
9/15
Ch. 8 Penalties
    Read Addington, Boyle, and Streber
Case Assignments:
   Addington - Grier, Kumar, Laidlaw, Nobles, O'Neil
   Boyle - Block, Chavez, Currin, Endara, Foster
   Strebert - Powell, Suntharam, Tamez, White
Unit 5
9/22
Ch. 9 The Examination Function
Case Assignments:
   Powell - Powell, Suntharam, Tamez, White
   Gertner - Grier, Kumar, Laidlaw, Nobles, O'Neil
   Frederick - Block, Chavez, Currin, Endara, Foster
Unit 6
9/29
 

 Ch. 9 The Examination Function (cover any carryover matters)
Ch. 10. Appeals
Ch. 11 Notice of Deficiency
Ch. 12 Litigation
   For those interested in the dynamics of tax cases before Appellate Courts, download the following discussion.
Extra Material on the Courtroom Experience:
   Dress appropriately.
   Opening Arguments.
   Expert qualification.

7
10/6
 
Ch. 13 Assessment Procedures & Ch. 14 Collection Procedurs (to p. 417 - XIV Outsourcing the Collection Function)
   Drye - Block, Chavez, Currin, Endara, Foster
   Rodgers - Tamez, White, Grier, Kumar, Laidlaw
  Williams - Nobles, O'Neil, Powell, Suntharam, Taylor
8
10/13
Ch. 14 Collection Procedures  (from p. 417 - XII.  Outsourcing the Collection Function to End of Chapter)
 
9
10/20
Ch. 15 Partnership and S Corporation Audit and Litigation Procedures
Ch. 16 Overpayments
10
10/27
Ch. 17.  Miscellaneous
Case Assignments
   Compaq Computer Cases (Tax Court and Fifth Circuit)- All students
11
11/3
Function at JAT House
 
12
11/10
Ch. 18  Trends in Enforcement Efforts
Ch. 19  Ethics, Malpractice and Tax Procedure
Total text pages - 9 (but see extra reading materials)
   Read the two articles in the class materials file -- All Students.
      Richardson, Audit Avoidance via Intent Modification -- Is Fred Corneel onto Something ... or Not, 2001 TNT 131-93
      Corneel, Audit Avoidance: A Response to David Richardson, 2001 TNT 131-91
   Also read the excerpt from an article I prepared which can be downloaded here.  These excerpts track the scenario in the articles and present some other related materials.
13
11/17
1. Injunctions in Tax Litigation (pp. 370-372). I want to address injunctions in tax litigation because, as some of you may know, one of the issues the Supreme Court has agreed to address in the health case in which it just accepted certiorari is whether the Tax Injunction Act ("TIA") (Section 7421) precludes consideration of the challenges to the mandate prior to the assessment of penalties.  We will discuss the TIA so that you can be fully knowledgeable about the general background (if not the specific instance arising in the health care act, if it arises there at all).
2. Read the Principal Life Insurance Case which I have emailed to the class.  If you did not get a copy, email me and request one.  In some ways, this is an esoteric case, but it pulls together certain key concepts, including the ubiquitous Section 6213(a), the so called prohibition on assessment that has been a standard theme in the class.  I encourage each student to work their way through this gem of a decision.  This is a specific assignment and therefore may be a subject for the examination.
14
12/1
Review Class
  Tax Procedure Exam -

Update Materials. These materials are intended for students of the course for supplemental reading (i.e., in addition to the coursebook and the supplement to the coursebook).

Errata (page numbers are to the edition without footnotes or endnotes) - I recommend that you make appropriate annotations to the copy of the book you will use for the examination (either hardcopy or digital):

Book Page Number Correction Comment
170 (at par. B.1.) The overpayment rate is 4%. The book is in error in stating that it is 10%
171 (at par. B.2.b.) Should be 2010 rather than 2008 in line 3.  
371-372 (at par. VII.A.) The IRS claims the right to setoff a refund against an unassessed tax liability in some cases.  Accordingly, the question in Example 2 could be answered Yes instead of No. Normally, the IRS can only take enforced collection measures against assessed tax liabilities.  Indeed, the use of the administrative enforcement collection measures in Section 6331 ff. require an assessment.  However, the right to setoff is in Section 6402(a) and the text of Section 6402(a) does not require a predicate assessment.  Accordingly, at least where the IRS has issued a notice of deficiency making a claim of an additional, as yet unassessed, tax liability, the IRS claims that it can make the setoff.  The IRS has prevailed in one case.
     

Update for Examination

To the Tax Procedure Class:

I had the following question from a student:

“I had a quick question I wanted to ask before the exam. When we talk about tax refunds and interest on over payments does the statute of limitations run from the actual filing date, like in your exam March 15th, or do we consider it from April 15th? I wasn't sure if the deemed filing date applied to refunds and interest on overpayments.”

If I understand the question correctly, the question is when the statute of limitations begins to run. Just to reprise the rules, the general rule is that statute runs from the filing date. Two special rules modify that general rule as follows:

(i) returns filed before the original due date are deemed filed on the original due date. Hence an individual return due April 15 is deemed filed on April 15 if filed before April 15. Calendar year corporate returns are due March 15, so if they are filed prior to March 15, they are deemed filed on March 15.

(ii) returns timely mailed to the IRS and received after either original due date or, if an extension was requested, the extended due date are deemed filed on the date of mailing.

Now, as to interest, interest on overpayments normally accrues from the original due date of the return as to overpayments actually paid in by the original due date. This is subject to the 45 day grace period where no interest is paid if the refund is made within 45 days of (a) the original due date of the return for a return filed on or before the original due date of the return, or (b) the date of filing a return after the original due date. [Note this has been corrected slightly from what is in your book at p. 170 (nonfootnoted version of the book).]

If this answer does not answer the concerns the student or any of you may have, please let me know and I will try to respond. I need to hear from you by 12 noon today simply to have a cut off point. Remember, the examination is tomorrow.

I wish you the best. It has been my honor and privilege to teach and learn with you.

Jack Townsend

-----------------------

In a follow through question to the one addressed above, a student asked: “I could not tell from your email if the two special rules modify the date of filing with regards to the statute of limitation on refunds?”

My answer is:

The two special rules affect the statute of limitations on refund claims because they establish the starting date – a deemed starting date --- for the limitations period to run. Again, the first special rule says returns filed before the original due date are deemed filed on the original due date. For example, a 1040 return filed on March 1 is deemed filed on April 15. The statute of limitations on deficiencies and overpayments starts April 15. The second special rule says that returns mailed timely (either before the original due date or during the extension period) but actually received by the IRS and filed untimely (either after the original due date or the extended due date) are deemed filed on the date of mailing. For example, a 1040 mailed to the IRS on October 1, 2010 during the extension period and received and actually filed by the IRS on November 1 (16 days after the extended due date of October 15) are deemed filed on October 1, the date of mailing. The statute of limitations on deficiencies and overpayments starts to run on October 1, 2010, the deemed file date. (The same analysis would apply to a 1040 filed before the original due date and received and filed by the IRS after the original due date.)
 

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