The U.S. District Court for the District of Colorado reiterated
in a Jan. 13 decision that the IRS has the ability to make an
adjustment in a taxable year that is closed for assessment purposes
to reflect the correct tax owed, which is separate and apart from
the IRS’s ability to make an assessment of tax.
In Hamilton v. U.S., No. 13-cv-00051-REB-KMT (D. Colo.
2016), the individual taxpayer claimed charitable contribution
deductions for certain years. The taxpayer executed a restricted
consent to extend the statute of limitations for the charitable
contribution deductions, and it appears from the facts that the IRS
made adjustments to other items to offset the tax benefit of the
deductions.
In the court case, the taxpayer argued that because he had executed
a restrictive consent, the IRS may not redetermine the correct
amount of tax for any items other than the charitable contribution
deductions. The IRS argued that such a restricted consent does not
prevent the IRS from making adjustments to tax.
The court agreed with the IRS, citing the Supreme Court’s
decision in Lewis v. Reynolds, 284 U.S. 281 (1932). The court
summarized Lewis by saying that “the [IRS] is not required to
refund any assessment for tax that was in fact owed.” In
addition, a restricted consent may restrict the IRS’s ability
to make a “deficiency assessment,” but it does not
affect the IRS’s ability to make an adjustment to tax
owed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
