Docket No. 7288-19. Filed January 13, 2022.

This case reviews whether the supervisor lacked the authority to supply timely approval of penalties.

A partnership acquired roughly 260 acres of land in Alabama. Later,the partnership granted to the National Wild Turkey Federation Research Foundation a conservation easement over the land. Then, the partnership donated a fee simple interest in the land to a pass-through entity wholly-owned by the Wild Turkey Federation Research Foundation and filed their partnership return showing the charitable contribution of over $10,4 million. as well as a charitable contribution deduction of over $3,4 million. The IRs selected the return for examination.

The Internal Revenue Service disallowed the deduction and determined penalties for gross valuation misstatement under section 6662(h) and (in the alternative) substantial valuation misstatement under section 6662(e) and penalties under section 6662(b)(1) and (2) and section 6662A.

The taxpayer’s argument was that the manager “lacked authority to supervise the examination and that her approval of the penalties on that date was meaningless” since her designation as acting team manager expired on July 7, 2018.

The court disagreed and stated that “Although the manager’s appointment was initially set
to expire on July 7, 2018, the IRS extended her appointment to September 30, 2018″.
The taxpayer followed this statement by arguing that the completion of this “appointment extension” form reflects an “effort to cure unauthorized action by Government employees through retroactive delegations of authority. The IRS and the court disagree and conclude that the taxpayer had no clear evidence of their argument.

The court concluded that even if the manager somehow lacked authority to serve as RA “acting team manager,” she properly approved the penalty determinations as to the “immediate supervisor.”


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