The Tax Section of the Tennessee Bar Association will host an informal roundtable discussion with IRS Area Counsel on:

Tuesday, September 15
10:00 a.m. - 1:00 p.m. CST
at
The Tennessee Bar Center
2nd Floor, Nippert Hall
221 Fourth Avenue North
Nashville, TN

This is a wonderful opportunity to meet with IRS attorneys in a small setting, have your questions answered and listen to the current hot topics regarding federal tax practice in Tennessee.

On February 4, 2009, the Sixth Circuit decided in a criminal tax case that the defendants’ constitutional rights were not violated and admitted the defendants’ incriminating statements made during the civil audit even though the Court found that there were violations of the Internal Revenue Manual. The Sixth Circuit reversed the District Court opinion which held that the statements had to be suppressed.

The case also includes an interesting outline of the history of hidden criminal investigations under the auspices of a civil audit and a discussion of the grounds for a successful Motion to Suppress. See U.S. v. Rutherford, Docket Nos. 07-2312, 07-2313; Doc. 2009-2319 (6th Cir. Feb. 2009).

Deadline Reminder for Universal Settlement for Non-Qualifying FONCE
by Ansley Moses

As many of you may know, the Tennessee Department of Revenue obtained responses to questionnaires last year from all entities registered as exempt from the Tennessee Franchise & Excise Tax pursuant to the exemption provided by T.C.A. 67-4-2008(a)(11) for family-owned non-corporate entities (FONCE). From the information obtained, the Department has indicated that approximately 1,000 registered entities may not actually qualify for the FONCE exemption and that the Department intends to audit potentially non-qualifying entities.

The Department has now published Notice 09-03 (attached) which outlines the terms of a proposed universal settlement offer pursuant to which entities not qualifying for the FONCE exemption may file 2005, 2006 and 2007 returns with a payment of back taxes and interest and seek a waiver of penalties and any other adverse consequences. To qualify to participate in the settlement offer, a taxpayer must submit the back returns, payment, and a letter seeking relief no later than May 31, 2009.

Obviously, there could be many issues as to whether a particular taxpayer qualifies as exempt, and whether, if not exempt, it is advantageous for a taxpayer to participate in the proposed universal settlement offer. Given the relatively short time period during which the settlement offer will be outstanding, members will want to determine as quickly as possible whether they represent clients potentially affected by the FONCE exemption and the proposed universal settlement offer.