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D.C. Circuit Reverses Farhy

By Joel N. Crouch on May 3, 2024
In a blog post last year, Any Taxpayer Who Paid An International Information Return Penalty Should Consider Requesting a Refund, we discussed the Tax Court holding in Farhy v. Commissioner that the IRS does not have authority to assess certain international information return reporting. I won’t repeat the facts of Farhy and anyone interested in the facts can read the prior blog post. However, the blog post referenced a possible IRS appeal of the Farhy decision. The IRS did appeal the decision and today, the U.S. Court of Appeals for the D.C. Circuit reversed the Tax Court saying, “We hold that the text, structure, and function of section 6038 demonstrate that Congress authorized assessment of penalties imposed under subsection (b), and so reverse and remand to the Tax Court with instructions to enter decision in favor of the Commissioner.”
The D.C. Circuit opinion can be found HERE .
If you have any tax-related questions please feel free to contact me at jcrouch@meadowscollier.com.