As CPAs in tax practice, we often encounter complex situations involving tax refunds and the intricacies of procedural requirements. The case of Carole S. Gauler, Personal Representative of the Estate of Paul L. Klein v. United States of America, Case No. 3:24-cv-00082-ART-CSD, heard in the United States District Court for the District of Nevada, provides a timely reminder of the critical importance of establishing proper jurisdiction in tax refund suits, particularly in the context of disruptive events like the COVID-19 pandemic. This article will delve into the facts of this case, the taxpayer’s arguments, the court’s analysis, and the key takeaways for tax practitioners.

This Chief Counsel Advice memorandum addresses the deductibility of theft losses under Internal Revenue Code (“Code”) § 165 for five hypothetical taxpayers (Taxpayers 1 through 5) who were victims of various scams in 2024. The memorandum aims to determine if these taxpayers sustained a theft loss deductible in 2024, considering the specific facts of each scenario and the relevant tax law.

The plaintiffs in both Hammill Manufacturing Co. v. United States and R.L. Morrissey & Associates, Inc. and American Ring Manufacturing, Inc. v. United States are making several claims regarding why their claims for refund under the Employee Retention Credit (ERC) should be granted. These claims can be broadly categorized into arguments for direct refund and challenges against IRS Notice 2021-20.

This case, Estate of Kalikow v. Commissioner of Internal Revenue, CA2, Case No. 23-7957, revolves around a dispute over the estate tax implications of a settlement payment to remedy the trustees’ failure to distribute all of the trust’s net income to Pearl Kalikow during her lifetime. The United States Court of Appeals for the Second Circuit affirmed the Tax Court’s judgment, holding that the settlement liability did not reduce the value of the trust’s assets included in Pearl’s estate.

In CF Headquarters Corporation v. Commissioner, 164 T.C. No. 5, filed March 4, 2025, the U.S. Tax Court addressed whether a corporation (CF Headquarters Corporation) had to include $3,107,500 in grant proceeds in its gross income for 2007 and whether it was liable for a 20% accuracy-related penalty under I.R.C. § 6662(a). The court, in Chief Judge Kerrigan’s opinion, held that the grant proceeds were includible in gross income but that the corporation was not liable for the accuracy-related penalty.

In Appeal of A. Markowski, the Office of Tax Appeals (OTA) considered A. Markowski's appeal of the Franchise Tax Board's (FTB) denial of his refund claim for the 2017 tax year. The key issues in this appeal were whether Markowski was provided proper notice of tax due, whether the FTB was required to obtain and review Markowski’s tax return before issuing its proposed assessment, and whether Markowski received taxable income from a California source in the 2017 tax year.

In Martino v. Commissioner, CA 11, Case No. 24-11438, March 3, 2025, the Eleventh Circuit Court of Appeals upheld the Tax Court’s decision to deny Joseph Martino’s claimed alimony deductions for the 2017 and 2018 tax years. The court found that payments made by Martino to his ex-wife, Cindy Roberts, did not meet the requirements for deductible alimony under Section 71 of the Internal Revenue Code.

The Treasury Department announced in a news release on March 2, 2025, that they will not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners concerning the Corporate Transparency Act.

According to the U.S. Department of the Treasury’s March 2, 2025, announcement, they will not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners for not complying with the Corporate Transparency Act. Furthermore, the Treasury Department intends to issue a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.

In United States of America v. Allen R. Davison, the U.S. District Court for the District of Kansas (Case No. 24-CV-02144, February 27, 2025) addressed the government’s action to reduce civil tax penalties to judgment against Allen R. Davison, a former CPA and attorney, related to his involvement with Cash Management Systems, Inc. (CMS) and its "tool plan" tax shelters. The court granted the government’s motion for summary judgment, preventing Davison from relitigating the penalties.

On February 27, 2025, FinCEN announced that it will not issue fines, penalties, or take enforcement actions against companies that fail to file or update Beneficial Ownership Information (BOI) reports by the current deadlines.

The IRS has released Notice 2025-15 providing guidance on issuing certain health insurance coverage statements to individuals under provisions added to the law by the Paperwork Burden Reduction Act.

This case involves Dolores J. Murphy, as Trustee of the Charles M. Murphy Administrative Trust, seeking a refund of tax penalties and related interest imposed by the IRS for the late filing of the 2016 and 2017 tax returns for the trust, as well as penalties assessed in the 2021 tax year and declaratory relief (Dolores J. Murphy et al. v. United States, US DC ED CA, Case No. 1:24-cv-00260, February 19, 2025). The government moved to dismiss the refund claim related to the 2016 tax year as untimely under Federal Rule of Civil Procedure 12(b)(1) and both the 2016 and 2017 claims under Rule 12(b)(6), asserting that Murphy had not set forth any facts that would constitute reasonable cause for the late filing. The government also sought dismissal of the requests for declaratory relief as statutorily barred and dismissal of the claims related to the 2021 tax year as moot or jurisdictionally barred. The court denied in part and granted in part the government’s motion to dismiss.

In Robert Donlan, Jr. and Kegan Donlan v. Commissioner of Internal Revenue, 164 T.C. No. 3, the U.S. Tax Court addressed the issue of whether a petition filed using the court’s online petition generator, which does not bear a handwritten signature, is considered properly signed under the Tax Court Rules of Practice and Procedure. The Commissioner filed a Motion to Dismiss for Lack of Jurisdiction, arguing that the petition was not properly signed. The Tax Court denied the Commissioner’s motion, holding that a person’s name on a signature block on a paper that the person authorized to be filed electronically constitutes the person’s signature, as per Tax Court Rule 23(a)(3).

Following the stay issued in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.), beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are back in effect.  FinCEN has posted information on the https://www.fincen.gov/boi website and released FIN-2025-CTA1, “FinCEN Extends Beneficial Ownership Information Reporting Deadline by 30 Days; Announces Intention to Revise Reporting Rule” to explain these developments.

In Blum v. Commissioner, TC Memo 2025-18, the Tax Court addressed a dispute concerning the disallowance of a $78.5 million tax shelter loss, penalties, and the validity of notices issued by the IRS. The central issues revolved around the petitioners’ participation in a Bond Linked Issue Premium Structure (BLIPS) tax shelter, the IRS’s notification procedures, and various legal arguments raised by the Blums.

The Cannon Corporation and Subsidiaries ("Cannon") appealed a Tax Court decision that upheld the Commissioner of Internal Revenue’s determination of a tax deficiency for the 2011 tax year. The central issue was whether Cannon, as a designer of energy-efficient buildings, could retroactively report Section 179D deductions for the 2007-2010 tax years on its 2011 tax return as an accounting method change, and whether its equitable estoppel, equitable recoupment, and duty of consistency claims were valid. The Court of Appeals affirmed the Tax Court’s judgment, finding that Cannon could not claim the deductions as an accounting method change and that its equitable claims lacked merit.

Judge Jeremy Kernodle of the US District Court for the Eastern District of Texas has issued a stay of the injunction against enforcement of the Beneficial Ownership Reports required by the Corporate Transparency Act he had previously issued in the case of Smith v. Treasury. He indicates the stay is being issued in light of the Supreme Court’s order in McHenry v. Texas Top Cop Shop, Inc.

The stay order can be downloaded via this link.

This case, Green Valley Investors, LLC v. Commissioner, T.C. Memo. 2025-15, involves a consolidated proceeding of four related cases concerning noncash charitable contribution deductions claimed by four partnerships for tax years 2014 and 2015. The partnerships in these cases are Green Valley Investors, LLC (Green Valley), Big Hill Partners, LLC (Big Hill), Tick Creek Holdings, LLC (Tick Creek), and Vista Hill Investments, LLC (Vista Hill). Bobby A. Branch served as the tax matters partner for each of the partnerships. The partnerships had each claimed charitable contribution deductions for the donation of conservation easements totaling approximately $90 million. The Internal Revenue Service (IRS) disallowed the deductions, asserting that the conservation easement deeds did not comply with the requirements of section 170 of the Internal Revenue Code (IRC), and also assessed accuracy-related penalties.

Here’s a summary of the provisions in each of the four bills that were unanimously approved by the House Ways & Means Committee on February 12, 2025

This revenue procedure, Rev. Proc. 2025-16, provides guidance on depreciation deductions for passenger automobiles placed in service in calendar year 2025, as well as income inclusion amounts for lessees of passenger automobiles with a lease term beginning in 2025. The procedure includes tables that reflect inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code.