Bad Address, Good Penalties: Tax Court Says Deficiency Abatement Doesn't Erase Partnership-Level Penalties
165 T.C. No. 2
In Moxon Corporation v. Commissioner, Judge Goeke upheld the IRS's assessment of I.R.C. § 6662(h) penalties against Moxon Corporation, a partner in AD Global FX Fund, even though the underlying deficiencies were abated due to the IRS mailing Notices of Deficiency to an incorrect address. The court, ruling on cross-motions for partial summary judgment, found that penalties determined at the partnership level are not subject to deficiency procedures under I.R.C. § 6230(a)(2)(A)(i).
The court emphasized that the "tax imposed" under I.R.C. § 6664(a) refers to the tax liability determined by Congress, not the amount the IRS can collect, citing United States v. Galletti, 541 U.S. 114 (2004) and Polselli v. IRS, 143 S. Ct. 1231 (2023). The court rejected Moxon's arguments based on strained readings of statutes and precedent, reaffirming its prior holdings in Thompson v. Commissioner, 137 T.C. 220 (2011) and Domulewicz v. Commissioner, 129 T.C. 11 (2007).
Citations:
Internal Revenue Code (I.R.C.):
§ 6211
§ 6216
§ 6221
§ 6223
§ 6225
§ 6226
§ 6229
§ 6230
§ 6231
§ 6232
§ 6234
§ 6662
§ 6664
§ 6501
§ 7482
§ 7806(b)
Treasury Regulations (Treas. Reg.):
§ 301.6231-1(b)(2)
§ 301.6231(a)(3)-1
§ 301.6231(a)(7)-1
§ 301.6231(a)(7)-2
§ 301.6226(f)-1(a)
§ 1.6664-2
Court Cases:
Sundstrand Corp. v. Commissioner, 98 T.C. 518 (1992), aff’d, 17 F.3d 965 (7th Cir. 1994)
AD Global FX Fund, LLC v. United States, No. 05-CV-223 (S.D.N.Y. June 25, 2014)
Sego v. Commissioner, 114 T.C. 604 (2000)
Goza v. Commissioner, 114 T.C. 176 (2000)
Murphy v. Commissioner, 125 T.C. 301 (2005), aff’d, 469 F.3d 27 (1st Cir. 2006)
Alessio Azzari, Inc. v. Commissioner, 136 T.C. 178 (2011)
Lunsford v. Commissioner, 117 T.C. 183 (2001)
Thompson v. Commissioner, 137 T.C. 220 (2011), rev’d and remanded on other grounds, 729 F.3d 869 (8th Cir. 2013)
Domulewicz v. Commissioner, 129 T.C. 11 (2007), aff’d in relevant part, remanded in part sub nom. Desmet v. Commissioner, 581 F.3d 297 (6th Cir. 2009)
Gunther v. Commissioner, T.C. Memo. 2019-6, aff’d, 789 F. App’x 836 (11th Cir. 2020)
United States v. Woods, 571 U.S. 31 (2013)
Highpoint Tower Tech. Inc. v. Commissioner, 931 F.3d 1050 (11th Cir. 2019)
Chai v. Commissioner, 851 F.3d 190 (2d Cir. 2017)
Gosnell v. United States, 525 F. App’x 598 (9th Cir. 2013)
Rowen v. Commissioner, 156 T.C. 101 (2021)
United States v. Reorganized CF & I Fabricators of Utah, Inc., 518 U.S. 213 (1996)
N.Y. & Presbyterian Hosp. v. United States, 881 F.3d 877 (Fed. Cir. 2018)
Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 222 (2012)
Loper Bright Enters. v. Raimondo, 144 S. Ct. 2244 (2024)
Feller v. Commissioner, 135 T.C. 497 (2010)
United States v. Galletti, 541 U.S. 114 (2004)
Polselli v. IRS, 143 S. Ct. 1231 (2023)
Moore v. United States, 144 S. Ct. 1680 (2024)
Snow v. Commissioner, 141 T.C. 238 (2013)
Wasie v. Commissioner, 86 T.C. 962 (1986)
Baur v. Commissioner, 2 T.C. 1016 (1943)
Adams v. Commissioner, 72 T.C. 81 (1979)
Occidental Petroleum Corp. v. United States, 231 Ct. Cl. 334 (1982)
Warner Enterprises, Inc. v. Commissioner, T.C. Memo. 2022-85
McNeill v. Commissioner, 148 T.C. 481 (2017)
Hamel v. Commissioner, T.C. Memo. 2025-19
Fla. Peach Corp. v. Commissioner, 90 T.C. 678 (1988)
Boyd v. Commissioner, 101 T.C. 365 (1993)
Maxwell v. Commissioner, 87 T.C. 783 (1986)
United States v. Woods, 571 U.S. 31 (2013)
Highpoint Tower Tech. Inc. v. Commissioner, 931 F.3d 1050 (11th Cir. 2019)
Chai v. Commissioner, 851 F.3d 190 (2d Cir. 2017)
Gosnell v. United States, 525 F. App’x 598 (9th Cir. 2013)
Counsel:
For Petitioner (Moxon Corporation): Harriet A. Wessel and Jasper G. Taylor III
For Respondent (Commissioner): Sharmeen Ladhani, Brooke N. Stan, Sheila R. Pattison, Christina D. Sullivan, and Siang L. Sang
Scores:
Readability (Flesch-Kincaid Grade Level): 14
Sentiment: 70 (moderately negative, reflecting the unfavorable outcome for the taxpayer)
Case Significance: 78