Professional Tax Research Solutions from the Founder of Kleinrock. tax research
Parkers Tax Library
Accounting News Tax Analysts professional tax research software Like us on Facebook Follow us on Twitter View our profile on LinkedIn Find us on Pinterest
CPA software
Professional Tax Software
tax and accounting
Tax Research Articles Tax Research Parker's Tax Research Articles Accounting Research CPA Client Letters Tax Research Software Client Testimonials Tax Research Software tax research

Accounting Software for Accountants, CPA, Bookeepers, and Enrolled Agents

CPA Tax Software



Ninth Circuit Permits Equitable Recoupment for Late Refund Claim.
(Parker Tax Publishing October 8, 2014)

Taxpayer was not prohibited from seeking equitable recoupment due to untimely refund claim; Tax Court's denial of equitable recoupment was found to be erroneous. Revah v. Comm'r, 2014 PTC 488 (9th Cir. 9/17/2014)

In a collections due process hearing relating to an untimely refund claim,Yaaokv Revah argued that the IRS improperly refused to consider the fact that equitable recoupment applied to offset his income tax liabilities. Yaakov had sought to carry back net operating losses to offset income from earlier years and claim the resulting refunds. The IRS found that Yaakov attempted to take the net operating losses in the wrong year, and thus denied the deductions. However, the IRS denied the subsequent refund claims because they were untimely filed.

Yaakov argued that even though the refund claim was time-barred, the IRS Appeals Office should permit equitable recoupment as a defense to collection. The IRS denied Yaakov's equitable recoupment argument on the grounds that equitable recoupment is not a collection alternative and he had previously waived his right to contest the underlying liability. The Tax Court agreed with the IRS, and even though Yaakov asserted he had been unable to exhaust his administrative remedies in a meaningful manner, the court found that equitable recoupment did not apply as there was no inequitable application of inconsistent theories of taxation.

OBSERVATION: The equitable recoupment doctrine allows a taxpayer to avoid the bar of an expired statutory limitation period and prevents an inequitable windfall to a taxpayer or to the government that would otherwise result from the inconsistent tax treatment of a single transaction, item, or event affecting the same taxpayer or a sufficiently related taxpayer.

In Estate of Branson v. Comm'r, 264 F.3d 904 (9th Cir. 2001), the court held that in order for a taxpayer to obtain equitable recoupment, he or she must show (1) the same transaction, item, or taxable event is subject to two taxes; (2) the taxes are inconsistent in that the Tax Code authorizes only a single tax; (3) the tax sought to be recouped is time barred; (4) there is an identity of interest between the parties paying the duplicative tax; and (5) the court in which the recoupment claim is brought must independently have jurisdiction to adjudicate the claim.

The Tax Court held that Yaakov's inability to use net operating losses to reduce tax liabilities was the result of his failure to make his refund claims within the proper time period, rather than the result of inconsistent theories of taxation.

The Ninth Circuit reversed the Tax Court's decision, holding that the lower court's denial of equitable recoupment was erroneous. The court relied on U.S. v. Bowcut, 287 F.2d 654 (9th Cir. 1961), in which the Ninth Circuit held that equitable recoupment should be permitted notwithstanding that the cause for relief sought was created by the taxpayer's untimely refund claim. Thus, the circuit court held that although Yaakov did not file his refund claim within the statutory period, the mistake was not grounds to prohibit him from applying for equitable recoupment. The Ninth Circuit remanded the case back to the Tax Court for further proceedings.

For a discussion of the equitable recoupment doctrine see Parker Tax ¶261,180. (Staff Editor Parker Tax Publishing)

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

Parker Tax Pro Library - An Affordable Professional Tax Research Solution.

Professional tax research

We hope you find our professional tax research articles comprehensive and informative. Parker Tax Pro Library gives you unlimited online access all of our past Biweekly Tax Bulletins, 22 volumes of expert analysis, 250 Client Letters, Bob Jennings Practice Aids, time saving election statements and our comprehensive, fully updated primary source library.

Parker Tax Research

Try Our Easy, Powerful Search Engine

A Professional Tax Research Solution that gives you instant access to 22 volumes of expert analysis and 185,000 authoritative source documents. But having access won’t help if you can’t quickly and easily find the materials that answer your questions. That’s where Parker’s search engine – and it’s uncanny knack for finding the right documents – comes into play

Things that take half a dozen steps in other products take two steps in ours. Search results come up instantly and browsing them is a cinch. So is linking from Parker’s analysis to practice aids and cited primary source documents. Parker’s powerful, user-friendly search engine ensures that you quickly find what you need every time you visit Our Tax Research Library.

Parker Tax Research Library

Dear Tax Professional,

My name is James Levey, and a few years back I founded a company named Kleinrock Publishing. I started Kleinrock out of frustration with the prohibitively high prices and difficult search engines of BNA, CCH, and RIA tax research products ... kind of reminiscent of the situation practitioners face today.

Now that Kleinrock has disappeared into CCH, prices are soaring again and ease-of-use has fallen by the wayside. The needs of smaller firms and sole practitioners are simply not being met.

To address the problem, I’ve partnered with a group of highly talented tax writers to create Parker Tax Publishing ... a company dedicated to the idea that comprehensive, authoritative tax information service can be both easy-to-use and highly affordable.

Our product, the Parker Tax Pro Library, is breathtaking in its scope. Check out the contents listing to the left to get a sense of all the valuable material you'll have access to when you subscribe.

Or better yet, take a minute to sign yourself up for a free trial, so you can experience first-hand just how easy it is to get results with the Pro Library!


James Levey

Parker Tax Pro Library - An Affordable Professional Tax Research Solution.

    ®2012-2018 Parker Tax Publishing. Use of content subject to Website Terms and Conditions.

IRS Codes and Regs
Tax Court Cases IRS guidance