2019 is turning into a banner year for cases in which GSU’s own Philip C. Cook Low Income Taxpayer Clinic and the Harvard Federal Tax Clinic have partnered up to file amicus briefs. On April 2, the United States Second Circuit Court of Appeals reversed the United States Tax Court in Borenstein v. Comm’r of Internal Revenue (No. 17-3900).
This was a case that the clinics had been involved with for some time, as they had filed amicus briefs when the case was in the United States Tax Court as well. For a good discussion on the background of the case before it landed in the Second Circuit, see here and here. In a nutshell, the case involved a very technical application of the statute of limitations applicable to receiving tax refunds and a question over whether taxpayers who request extensions to file their tax returns but who then end up not using the extension experience a 6 month “black hole” in the middle of their refund statute in which they lose their ability to obtain a refund, only to regain it after the six month window has passed.
The roots of this problem go back to Congress’ attempt to remedy unfairness in the refund statute and to legislatively correct a limitations consistency problem from the Supreme Court’s decision in Comm’r of Internal Revenue v. Lundy, 516 U.S. 235 (1996). Normally, taxpayers have a three year lookback period to request refunds if they receive a notice of deficiency (i.e. a notice from the IRS stating that the IRS believes they owe additional tax). However, under prior law, this lookback period was shortened to two years if the IRS sent a notice of deficiency before the taxpayer had filed a tax return. Congress rightfully believed that a three year lookback period should apply regardless of whether the return was filed before the IRS issued a notice of deficiency and accordingly amended IRC § 6512(b)(3) to state that a three year lookback period would apply for refunds if the IRS mailed a notice of deficiency “during the third year after the due date (with extensions) for filing the return” and before the taxpayer had filed the return. Continue reading
The United States Court of Appeals for the Federal Circuit just issued an opinion in BASR Partnership, William F. Pettinati, Sr., Tax Matters Partner v. United States, in which the court determined whether a partnership was entitled to recover its reasonable litigation costs from the government when it submitted a nominal $1 qualified offer to the government in tax controversy litigation and subsequently prevailed at summary judgment. On the surface, this does not seem like the type of case about which low-income taxpayer clinics would normally have a strong opinion. However, during the litigation the government asserted an argument that, if successful, could have severely hindered a common litigation strategy that low-income taxpayers employ in frozen refund litigation. Specifically, the government asserted that, in order to constitute a reasonable offer, a qualified offer must be of a minimal amount that would potentially depend on the amount of tax liability at issue. In other words, the government took the position that nominal offers were potentially unreasonable solely because they were nominal offers, even if a taxpayer believed he or she was likely to prevail and subsequently did prevail.
Accordingly, the Philip C. Cook Low-Income Taxpayer Clinic of Georgia State University College of Law and the Harvard Federal Tax Clinic filed a joint amicus brief in this case solely on the issue of whether taxpayers should be denied reasonable litigation and administrative costs based on the dollar value of a qualified offer. The clinics argued that none of the requirements of I.R.C. § 7430, which governs qualified offers, state that an offer must be of a minimum amount or of a minimum percentage of the taxpayer’s possible liability in order to be valid. The clinics were particularly concerned with the potential impact that a rule requiring a minimum qualified offer amount would have on low-income taxpayers, which motivated them to submit the brief. Low income taxpayers who have had their refunds frozen often submit $1 qualified offers when they believe that they will prevail in a tax court case in order to shorten the time it takes for them to resolve their case and receive their frozen refund. Obtaining these frozen refunds is of critical importance to these vulnerable taxpayers because they often need the tax refunds generated by the earned income tax credit to meet their basic living expenses. Filing a qualified offer puts pressure on the government to consider the low-income taxpayer’s case more quickly than it otherwise would because of the risk that the government would have to pay fees and costs if the taxpayer prevails.
In looking at this issue, the Federal Circuit agreed that a nominal $1 qualified offer can be reasonable. The court based its holding on the standard of review that it applied, which it determined should be abuse of discretion. Under an abuse of discretion standard, the court determined that the trial court did not abuse its discretion when it determined that an offer does not have to be of a minimal amount to be reasonable. While the court did not discuss the impacts to low-income taxpayers directly in its opinion, the clinics are pleased that the court reached this result and that nominal qualified offers will remain a viable litigation too to low-income taxpayers who rely on them to obtain improperly frozen refunds as quickly as possible.
The clinics are incredibly grateful for the hard work of Georgia State University College of Law student (now graduate) Reena Patel and Harvard Law School student (now graduate) Amy Feinberg, who did excellent work assisting in the preparation of this brief.
Don’t forget to complete your application for the College of Law’s in-house clinics today.
The joint application for the HeLP, Investor Advocacy, and Tax Clinics is located here.
Why should Georgia State Law students take a clinic? Christopher Pugh, JD ’16 says law students should experience a clinic to try out new areas of law:
Pugh said, “I joined the Investor Advocacy Clinic here at Georgia State to gain experience in arbitration, an expanding field of law. Through the clinic’s direct work with real clients, clinic students can experience all stages of dispute resolution and skills in case management, client selection and even law firm management. The practical skills students learn in the clinic are exactly what employers are looking for.
Apply by February 28 for the fall 2018 in-house clinics. Applications available here.
Click here to learn why Michael McLaughlin, JD ’14, now an attorney at Jones Day in Atlanta, believes law students should join a clinic.
McLaughlin says, “Try a clinic to practice being a lawyer. I would participate again in the Investor Advocacy Clinic because it is such a unique law school experience. Unlike a typical law school class where work is assigned individually, you work side by side with your classmates and the Clinic’s Director to accomplish your tasks. Unlike a typical law school class where education occurs solely in the classroom, you personally interact with members of the community by providing investor representation and education. And unlike a typical law school class where you feel like a student, the Clinic provides an atmosphere for you to feel like a lawyer.”
Learn more about the three Georgia State Law in-house clinics, the Health Law Partnership Clinic (HeLP), Investor Advocacy Clinic, and Tax Clinic, including how to apply during these events:
- Monday, February 12 12:00-1:00 pm: Preparing to Practice Panel: HeLP, Investor Advocacy and Tax Clinics, Room 241. Meet with new and experienced lawyers who will share how working in the HeLP Legal Services Clinic, the Investor Advocacy Clinic, and the Philip C. Cook Low-Income Taxpayer Clinic can help students make the move from student to successful attorney and obtain meaningful employment. Food will be served.
- Wednesday, February 14, 12:00-1:00 pm and 5:00 – 6:00 pm: Experiential Course Fair, law school atrium. Meet with representatives of College of Law experiential courses, including the in house clinics, to learn more about opportunities at the College of Law.
- Wednesday, February 21 5:00-6:00 pm: Preparing to Practice Panel: HeLP, Investor Advocacy and Tax Clinics, Room 246. Meet with new and experienced lawyers who will share how working in the HeLP Legal Services Clinic, the Investor Advocacy Clinic, and the Philip C. Cook Low-Income Taxpayer Clinic can help students make the move from student to successful attorney and obtain meaningful employment. Food will be served.
Try a Clinic Because it’s the Best Thing You’ll Do in Law School
GSU law alum Cassandra Bradford, who participated in both the Investor Advocacy Clinic and the Philip C. Cook Low Income Taxpayer Clinic before graduating reflected upon her clinic experiences when she was still in law school. She said to fellow students:
“Participating in clinics was the best thing I have done in law school. Even if you work at a law firm, you rarely get the opportunity to practice law and handle your own cases while having a mentor and supervisor to guide your steps. I got to learn the essential lawyering skills that are not taught in law school, like how to build a good client relationship and how to handle a difficult situation. Clinics offer the chance to dive into a field and see if you really have a passion for something, and helped me decide what I want to do.”
The Philip C. Cook Low Income Taxpayer Clinic helps taxpayers with IRS controversies. It is also an active member of the community, educating taxpayers. On Friday, January 26, 2018, Tax Clinic Associate Professor Tameka Lester presented as part of IRS Earned Income Tax Credit (EITC) Day. Along with United Way CEO Milton J. Little, Jr., Congressman John Lewis, and other community leaders, Professor Lester discussed how the EITC helps taxpayers. #EITCawarenessday