Listed Transaction Notice and the IRS’s Failure to Follow Notice-and-Comment Rulemaking Procedures –
In a case being followed by tax practitioners and others throughout the country, the Sixth Circuit Court of Appeals in a unanimous opinion, reversed a district court ruling in the matter of Mann Construction, Inc. v. United States, No. 21-1500 (6th Cir. 2022).
Representing Mann Construction, Weston Hurd partner Samuel J. Lauricia III stated “We are pleased with the Sixth Circuit’s well reasoned opinion and ultimate decision and the fact that it comports with the legal position regarding the nature and effect of Notice 2007-83 that we have argued for quite some time.”
The dispute centered on a purported listed transaction and the IRS’s failure to follow notice-and-comment rulemaking procedures when it issued Notice 2007-83. Lauricia and fellow Weston Hurd attorneys (Walter A. (Scott) Lucas, Matthew C. Miller, Randy L. Taylor, and Robert E. Goff), argued the notice violated the Administrative Procedure Act’s (APA) notice-and-comment rulemaking requirements when the listed transaction Notice was issued without an opportunity for a formal comment period. In its March 3 opinion, the Sixth Circuit concurred stating, “Because the IRS’s process for issuing Notice 2007-83 did not satisfy the notice-and-comment procedures for promulgating legislative rules under the APA, we must set it aside.”
Notice 2007-83 is one of at least 30 other notices identifying listed transactions that resulted in the IRS imposing voluminous penalties on taxpayers over the last approximately 20 years. Many, if not all of the other notices, like Notice 2007-83, were issued without the IRS following the APA’s notice-and-comment rulemaking requirements.
The Court’s opinion can be found by clicking: Mann Construction, Inc. v. United States