The IRS Not Expected to Refund Money In Two 2011 Cases

The Tax Court heard two cases in the last half of 2011 that had similar holdings regarding when the IRS should grant extensions.

In the first, Charles Dickow was the executor of Margaret W. Dickow’s estate. He sought a refund of estate taxes claiming two things: (1) that the IRS erred in holding that IRC §6511(b)(2)(A) bars a second extension of an estate tax filing deadline and (2) that because the IRS did not explicitly inform Dickow that his filing had been denied, the IRS was equitably estopped from refusing the refund claim.

In Dickow v. U.S., the tax court held that Dickow’s refund request was untimely because it was filed more than three years after the extension due date and his request did not fall under one of the good-cause exceptions in the Treasury Code. The court also rejected Dickow’s equitable estoppel argument and said that doctrine could not be used to extend the time to file a tax refund claim. Even if the doctrine did apply, the IRS’ failure to explicitly notify Dickow did not rise to the level of affirmative misconduct that he needed to prove.

In another case with a similar holding, The executor could not access funds from the estate until eight years after the decedent’s death due to international probate issues. The executor called the IRS and got some erroneous information about interest on the funds. “Section 6404(e)(1) allows the IRS to abate the assessment of interest to the extent that any unreasonable error or delay in payment of tax is attributable to an officer or employee of the IRS being erroneous or dilatory in performing a ministerial or managerial act.” 

In Estate of Telesmanich v. Commissioner, The court held that the IRS employee’s incorrect information was not considered a ministerial act and Telesmanich failed to show that the incorrect information was the actual reason he delayed paying the taxes. He couldn’t access the funds to pay the taxes regardless.

See Dayna E. Roane, Two Estate Tax rulings Uphold IRS Regulatory Interpretations, Journal of Accountancy, Nov. 2011; see also Dickow v. U.S., docket no. 10-2151 (1^st Cir. 8/19/11), aff’g 740 F. Supp. 2d 231 (D. Mass. 2010); see also Estate of Telesmanich v. Commissioner, TC Memo 2011-181.

Special thanks to Jim Hillhouse (Professional Legal Marketing  (PLM, Inc.)) for bringing this article to my attention.