The Tax Court Sticks to Its Guns and Will Apply Farhy to Cases Appealable to Circuits Other than the DC Circuit by: ROBERT S. HORWITZ
Posted by Hochman Salkin Toscher Perez P.C. 
Posted on Thursday, December 05, 2024
On April 17, 2023, Cory Stigile and Michael Greenwade blogged about the Tax Court’s decision in Farhy v Commissioner, 160 T.C. 399 (2023), holding that the IRS lacks the authority to assess or administratively collect penalties under IRC §6038(b) for failure to file Form 5471. On May 3, 2024, the D.C. Circuit reversed the Tax Court and held that the IRS is authorized to assess and administratively collect such penalties. Farhy v Commissioner, 100 F.4th 223. In the wake of the D.C. Circuit’s decision, the IRS moved the Tax Court to reconsider its opinion in Mukhi v Commissioner, 162 T.C. No. 8 (April 8, 2024), which followed its earlier Farhy decision. On November 18, 2024, the Tax Court issued its opinion granting the motion for reconsideration and, on reconsideration, reaffirmed its holding that the IRS lacks authority to assess and administratively collect the IRC §6038(b) penalty. Mukhi v Commissioner, 163 T.C. No. 8.
For more information contact Robert Horwitz at horwitz@taxlitigator.com.
