Much of
the discussion during oral arguments on United States v. Home Concrete &
Supply LLC before the U.S. Supreme Court Jan. 17 centered on the controversial
Treasury Department regulations through which the Internal Revenue Service
sought to negate the impact of several recent court rulings (United States v.
Home Concrete & Supply LLC, U.S., No. 11-139, argued 1/17/12).
The
regulations at issue provide that the extended six-year assessment period for
omissions from gross income applies to tax shelter transactions involving
overstatements of basis. The
regulations, promulgated after the Internal Revenue Service lost several U.S.
Tax Court cases on the issue, have been unpopular among many tax practitioners
and attacked by taxpayers as unconstitutionally retroactive because Treasury
applied it to all tax years for which the assessment period was still open.
However,
at some points during the oral arguments, the justices seemed dismissive of
many of the concerns raised by the taxpayers in challenging the regulation. For
example, Justice Antonin Scalia said he was not sure the presumption against
retroactivity applied to the regulation.
Home
Concrete is an appeal of a U.S. Court of Appeals for the Fourth Circuit finding
that the use of a tax shelter transaction that operated by overstating the
taxpayer's basis in goods sold did not constitute an omission from gross income
triggering the extended limitations period. The ruling deepened an existing
circuit split on the issue. Continue to check back to our blog for coverage on this issue.
