Latest Article: Calculating the Sec 6707A Penalty: When a Return is not THE return--Yari v. Commissioner
David Neufeld today published his latest article in the Leimberg Information Services Inc. Income Tax Newsletter. The article discusses the recent Tax Court decision in Yari v. Commissioner that found that the first filed return is used to calculate the listed transaction penalty even when that return is replaced with a corrected return showing zero tax liability and zero impact from the listed transaction. Accordingly this taxpayer had a $100,000 penalty in a year when he had zero tax liability. The article is reproduced below.
Steve Leimberg's Income Tax Planning Email Newsletter - Archive Message #75
From: Steve Leimberg's Income Tax Planning Newsletter
Subject: David Neufeld on Yari v. Commissioner: When a Return is Not the Return for Purposes of Calculating the Section 6707A Penalty
David Neufeld provides members with his analysis of Yari v. Commissioner. David S. Neufeld is a tax and T&E lawyer in Princeton, NJ. He represents clients throughout the world, doing both planning and controversy work (administrative and Tax Court). David is also an expert witness in civil cases around the country arising from 419 plans. Most notably, David represents the government of the Island of Nevis, for which he has drafted several laws, including the Nevis LLC Ordinance and recent proposed amendments to permit series LLCs and cell captive insurance companies. For more, go to www.DavidNeufeldLaw.com
Now, here is David Neufeld’s commentary:
In Yari v. Commissioner, the Tax Court sided with the Service in upholding a$100,000 penalty under Section 6707A(b)(2)(A) assessed against Yari for failing to report a listed transaction, despite the fact that during the course of the case, Congress passed the Small Business Jobs Act of 2010 that retroactively modified how the penalty should be calculated. Yari is significant for a number of reasons, not the least of which is that is a case of first impression dealing with the proper calculation of penalties under Section 6707A(b). [TO READ MORE CLICK ON "READ MORE" TO THE RIGHT]