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Eric Rietveld was quoted in the article "Circuit Reverses Farhy on Close Examination of Statute, Context," published by Tax Notes [sub. req'd] on May 6, 2024.

The article discusses how the D.C. Circuit handed the IRS a significant win, reversing a Tax Court decision holding that the agency couldn’t assess international information return penalties, leaning on context clues in its appellate decision. The Circuit reversed and remanded the Tax Court in its May 3 decision in Farhy v. Commissioner. It held that the text, structure, and function of section 6038 supports the IRS’s assessment authority for those penalties.

Eric argued that the holding is based on a close reading of section 6038(b) and does not rely on broad, code-wide implications. He noted that the court did not agree with the government that the IRS has the authority to assess any penalty under section 6201(a) unless a penalty is explicitly excluded.

Eric argued that the reasonable cause prong of the court’s analysis could prove helpful to taxpayers going forward in determining if a particular penalty is assessable.

“If the IRS has the authority to determine whether reasonable cause existed so as to excuse a taxpayer from a penalty, then it is reasonable for the taxpayer (and the IRS) to determine that the IRS has authority to assess said penalty,” Eric said.