Jurisdictional Uncertainty in Trust Fund Recovery Penalty Cases

12.16.2013
Tax Notes, p. 963
Article

Jurisdictional Uncertainty in Trust Fund Recovery Penalty Cases

In their article for Tax NotesCharles M. Ruchelman discusses Kaplan v. United States and trust fund recovery penalties. To view the full article, please click on the link above.

Excerpt taken from the article "Jurisdictional Uncertainty in Trust Fund Recovery Penalty Cases," Tax Notes, Dec. 2, 2013, p. 963.

The taxpayer in Kaplan v. United States initiated an action in the U.S. Court of Federal Claims for a refund of three $100 payments made toward $86,902.76 in trust fund recovery penalties. The government argued, and the court agreed, that the taxpayer failed to satisfy the ‘‘full payment rule,'' as modified by the divisible tax exception, by not providing sufficient proof that the three $100 payments accurately equaled the divisible amount for each of three quarters. The court dismissed the taxpayer's challenge for lack of subject matter jurisdiction under section 6672.1

The court's dismissal under that rationale should be of concern to tax practitioners. It may create unexpected challenges for taxpayers who contest the trust fund recovery penalty and could ultimately create judicial and litigant inefficiencies by requiring a taxpayer to restart the administrative refund process with the IRS, only to end up back before the same court.

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