Overview
Sixth Circuit Finds LLCs are not 'Customers' Under Right to Financial Privacy Act: Today, the U.S. Court of Appeals for the Sixth Circuit issued its opinion in Hohman v. Eadie, a case involving the IRS’s use of “John Doe” summonses. The plaintiffs, two LLCs, alleged that the IRS’s use of the John Doe summonses to obtain their financial records violated the Right to Financial Privacy Act. The government argued that sovereign immunity divested the court of subject matter jurisdiction over plaintiffs’ claims. The court held that the United States was immune from plaintiffs’ claims; the Act’s waiver of sovereign immunity only covered claims by a “customer,” and LLCs did not qualify as “customers” under the Act. The court found that an LLC is not within the plain meaning of the words “individual or a partnership of less than five individuals,” and thus the Act’s wavier of sovereign immunity did not apply.
Tax Court Issues Opinion on 'Adequate Disclosures' for Limitations Period Purposes: Today, in Manashi v. Comm’r of Internal Revenue, the U.S. Tax Court considered the question of whether three notices of deficiency issued by the IRS were timely. The court held that reporting some gross receipts and the filings by others of Forms 1099 did not adequately disclose that the taxpayer had omitted income, and thus the longer six-year period of limitations provided in section 6501(e)(1)(A) applied.
EU to Audit VAT and Customs Duties in E-Commerce: Today, the European Court of Auditors announced that it is conducting an audit to study the effectiveness of the EU’s efforts to address the challenges posed by e-commerce with regards to VAT and customs duties. The auditors will examine the European Commission’s regulatory and control framework for e-commerce and cooperation between Member States to ensure that VAT and customs duties on e-commerce transactions are collected in full. The auditors have also issued a background paper that discusses the issues being examined.
EU Releases Briefing on Tax Transparency for Intermediaries: The EU issued an updated Legislation in Process briefing on its proposal to set an obligation to report cross-border arrangements designed by tax intermediaries or taxpayers and to include the information collected in the automatic exchange of information between tax authorities within the European Union. The proposed directive was adopted on May 25, 2018 with an effective date of July 1, 2020.