Coffey v. Commissioner of Internal Revenue, No. 18-3256 (8th Cir. 2020)Annotate this Case
The Eighth Circuit reversed the tax court's grant of appellees' motion for summary judgment in an action where the Commissioner determined that because Judith S. Coffey was not a bona fide resident of the United States Virgin Islands (USVI), she and James L. Coffey owed federal income tax for the 2003 and 2004 tax years. The Coffeys invoked the three-year statute of limitations in 26 U.S.C. 6501(a), and the USVI intervened.
The court held that the statute of limitations in section 6501(a) begins only when a return is filed. In this case, because the Coffeys did not meticulously comply with requirements to file with the IRS, the court concluded that the statute of limitations never began. The court rejected the Coffeys' and the USVI's contentions that filing returns solely with the Virgin Islands Bureau of Internal Revenue began the three-year statute of limitations in section 6501(a). The court explained that without a filing, the documents are not an honest and genuine attempt to satisfy the tax law and are not filed returns.
Court Description: [Benton, Author, with Smith, Chief Judge, and Kobes, Circuit Judge] Civil case - Appeal from the U.S. Tax Court. Taxpayers filed only U.S. Virgin Island returns and claimed the Virgin Island's Economic Development credit; The IRS audited the documents transmitted by the Virgin Islands Bureau of Internal Revenue and determined that the taxpayers were never bona fide Virgin Islands residents and could not claim the credit; in the Tax Court, taxpayers asserted the three-year statute of limitations, and the Tax Court granted their motion for summary judgment, concluding the statute of limitations began to run when the IRS received documents from the Virgin Islands Bureau of Internal Revenue. The IRS appeals. Held: the Tax Court erred in granting taxpayers' motion for summary judgment; because the taxpayers did not meticulously comply with the Internal Revenue Code, the statute of limitations in section 6501(a) never began to run; returns filed with the Virgin Islands Bureau of Internal Revenue are not returns filed with the IRS; without a filing with the IRS, the documents taxpayers submitted to the Virgin Islands Bureau of Internal Revenue were not an honest and genuine attempt to satisfy the tax law of the U.S. and were not filed returns.
The court issued a subsequent related opinion or order on February 12, 2021.