John Crim v. Cmsnr. IRS, No. 21-1260 (D.C. Cir. 2023)
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The Internal Revenue Service assessed penalties pursuant to 26 U.S.C. Section 6700 against Appellant in connection with his promotion of a tax shelter scheme. Appellant filed a motion to recuse and disqualify all Tax Court judges on separation of powers grounds. The Tax Court denied the motion and granted summary judgment for the IRS, rejecting Appellant’s statute of limitations defenses. On appeal, Appellant contends that the presidential power to remove Tax Court judges violates the separation of powers and that assessment of Section 6700 penalties was time-barred by 26 U.S.C. Section 6501(a) or by 28 U.S.C. Section 2462.
The DC Circuit affirmed. The court explained that here Congress sought only to “ensure that there is no appearance of institutional bias” when the Tax Court adjudicates disputes between the IRS and taxpayers. Appellant has not demonstrated that congressional action has undermined the separation of powers analysis adopted in Kuretski. The court further held that Section 6501(a) is inapplicable to the assessment of Section 6700 penalties. Section 6700 penalties are assessed against individuals who represent, with reason to know such representation is false, that there will be a tax benefit for participating in or purchasing an interest in an arrangement the individual assisted in organizing. The conduct penalizable “does not pertain to any particular tax return or tax year.” Accordingly, the court held that Appellant’s separation of powers claim is barred under the analysis in Kuretski.
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