Document Summaries for the week of Sept. 5, 2022
Tax document summaries for the week of Sept. 5–9, 2022, covering individuals and tax-exempt oganizations.
Taxpayer liable for frivolous return penalties
The Tax Court granted summary judgment to the IRS after finding that a taxpayer failed to timely file federal income tax returns for every year from 2003 to 2016 and was liable for frivolous return penalties for submissions he subsequently made to the IRS for those years. The court also concluded that an IRS settlement officer did not abuse her discretion in sustaining a proposed levy against the taxpayer. Clarkson, T.C. Memo. 2022-92 (9/7/22).
No deduction allowed where easement deed retains potential to extract certain minerals
The IRS Office of Chief Counsel advised that if the donor of a conservation easement owns both the surface estate and a qualified mineral interest that has never been separated from the surface estate, and the deed retains any possibility of surface mining to extract the subsurface minerals, the conservation easement does not satisfy the requirements of Sec. 170(h) even if the donee would have to approve the surface-mining method. According to the Chief Counsel's Office, such a contribution is not treated as made exclusively for conservation purposes under Sec. 170(h)(5). CCA 202236010 (9/9/22).
IRS announces tax relief for Arizona severe storms
The IRS announced that victims of severe storms occurring between July 17 and July 18, 2022, and that reside or have a business in the Salt River Pima-Maricopa Indian Community now have until Nov. 15, 2022, to file various individual and business tax returns and make tax payments. AZ-2022-08 (9/8/22).
IRS revokes 22 organizations' tax-exempt status
The IRS announced the revocation of the tax-exempt status of twenty-two Sec. 501(c)(3) organizations for failing to meet the applicable Code requirements for tax-exempt status. As a result, contributions made to the organizations by individual donors are no longer deductible under Sec. 170(b)(1)(A). Announcement 2022-18 (9/6/22).
After revocation of tax-exempt status, organization files declaratory judgment suit
The IRS served notice to potential donors that an organization known as Goodcity, NFP, located in Payson, Ariz., recently filed a timely declaratory judgment suit under Sec. 7428, challenging the IRS's revocation of its status as an eligible donee under Sec. 170(c)(2). According to the IRS, protection under Sec. 7428(c) begins on the date that the notice of revocation is published in the Internal Revenue Bulletin and ends on the date on which a court first determines that an organization is not described in Sec. 170(c)(2); and, in the case of individual contributors, the maximum amount of contributions protected during this period is limited to $1,000, with a husband and wife being treated as one contributor. Announcement 2022-19 (9/6/22).