Tax Law Commons^™

Time To Prune The Flora--Procedural Due Process, The Full Payment Rule And Assessable Penalties: Larson V. United States, Frank G. Colella

William & Mary Business Law Review

In Larson v. United States, the Second Circuit Court of Appeals rejected the opportunity to limit the scope of the Flora “full payment” rule when its strict application in the instant case foreclosed judicial review of the underlying tax controversy. As a result, the decision rubberstamped the IRS’s imposition of assessable penalties without any meaningful judicial review of those actions. The Article argues that the court’s decision to blindly apply the full payment rule, without considering any form of a hardship exception, effectively denied John Larson his right to due process of law as guaranteed by the Fifth Amendment …

Codification Of The Economic Substance Doctrine: Agency Response And Certain Other Unforeseen Consequences, Rebecca Rosenberg

William & Mary Business Law Review

Section 7701(o) of the Internal Revenue Code incorporates the controversial judicial doctrine of economic substance into statutory language. In other words, it “codifies” the doctrine. (The economic substance doctrine generally provides that a tax benefit that goes beyond Congressional intent can be disallowed by the courts, even if the taxpayer meets all of the literal Code and regulatory requirements for claiming the benefit.)

This codification appears to have accidentally dissuaded the relevant agency (the Internal evenue Service, or IRS) from raising economic substance issues—an effect that is contrary to Congress’s intent in enacting the doctrine into legislation. Essentially, Congress imported …