Corporation Suspended By State of California Unable to Challenge IRS Collection Determination in Tax Court

No longer possessing a valid charter can create a situation where the entity is unable to file in Tax Court to dispute an IRS finding.  That was the situation for the corporation in the case of Urgent Care Registries, Inc. v. Commissioner, TC Memo 2016-198.

The corporation in this case had filed some income and employment tax returns for 2009 through 2013 but enclosed no payments.  As well, some returns that it should have filed were never filed and the IRS prepared substitutes for returns (SFR).  The IRS assessed the taxes and penalties, and send the taxpayer a Final Notice of Intent to Levy.

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Procedures for Referral of Docketed Tax Court Cases to Appeals Revised by IRS

The IRS has updated and revised the procedures for the use of Appeals for cases that are docketed before the Tax Court in Revenue Procedure 2016-22, revising Revenue Procedure 87-24.

As most practitioners are aware, cases where the taxpayer files a challenge to the IRS’s proposed assessment with the Tax Court are often referred back to Appeals in an attempt to resolve the matter without a need to go to Tax Court.

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Another California Corporation With Retroactively Restored Rights Has Tax Court Petition Thrown Out

The IRS appears to have recognized that corporations who have tax issues with the IRS may also have problems with state taxing agencies.  The IRS also noticed that, in California, the Franchise Tax Board has the right to suspend a corporation's powers, rights and privileges for failure to pay California state taxes. 

One of the lost privileges is the privilege to file suit, an issue we have previously discussed in our post last month on Medical Weight Control case.  The fact that the taxpayer had its corporate status retroactively restored was ruled, by the Tax Court, did not serve to retroactively grant a right to file suit in Tax Court.

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