Donna E. McBride Admitted to American College of Trial Lawyers


Miller, Miller & Canby’s Donna McBride has become a Fellow of the American College of Trial Lawyers, one of the premier legal associations in North America.

The induction ceremony at which Ms. McBride became a Fellow took place on March 2nd before an audience of 570 during the recent Induction Ceremony at the 2019 Spring Meeting of the College in La Quinta, California. The meeting had a total attendance of 750.

Founded in 1950, the College is composed of the best of the trial bar from the United States and Canada. Fellowship in the College is extended by invitation only and only after careful investigation, to those experienced trial lawyers of diverse backgrounds, who have mastered the art of advocacy and whose professional careers have been marked by the highest standards of ethical conduct, professionalism, civility and collegiality. Lawyers must have a minimum of fifteen years trial experience before they can be considered for Fellowship.

Membership in the College cannot exceed one percent of the total lawyer population of any state or province. There are currently approximately 5,800 members in the United States and Canada, including active Fellows, Emeritus Fellows, Judicial Fellows (those who ascended to the bench after their induction) and Honorary Fellows. The College maintains and seeks to improve the standards of trial practice, professionalism, ethics, and the administration of justice through education and public statements on independence of the judiciary, trial by jury, respect for the rule of law, access to justice, and fair and just representation of all parties to legal proceedings. The College is thus able to speak with a balanced voice on important issues affecting the legal profession and the administration of justice.

Donna McBride
is a partner in Miller, Miller & Canby’s Litigation group, with a trial practice that is diverse and extensive. In her more than two decades of practice, she has tried hundreds of lawsuits throughout the state of Maryland and in the District of Columbia.

In addition to her background as a trial lawyer, Ms. McBride is a member of the Court of Appeals Standing Committee of Rules of Practice and Procedure, where she was appointed to serve a second 5-year term beginning in 2018. She is also a member of the Trial Court's Judicial Nominating Commission, the Montgomery County Inn of Court, a former co-chair and current member of the Maryland State Bar Association's Judicial Selections Committee and has volunteered as a mediator for the District Court since 2008. In 2018, she was elected to serve as Treasurer for the Montgomery County Bar Association, to serve the 2018-2019 term.

The newly inducted Fellow is an alumna of the American University Washington College of Law.

For more information about Donna McBride and Miller, Miller & Canby’s Litigation practice click here. View the firm press release by clicking the Download button below.
 





Democratic Congressional Leaders Accuse FCC of Collusion in Small Cell Ruling


In a letter to FCC Chairman Ajit Pai dated January 24, 2019, the heads of the House Energy and Commerce Committee and the Subcommittee on Communications and Technology accused the agency of colluding with telecom companies to win court approval for a ruling that limits fees and approval processes for small cell deployments. Click here to view the letter.

When the FCC approved the rule change in September 2018, it was positioned as a necessary step to meet the needs of 5G and speed up the deployment of small cells and other telecom equipment. Regulators limited the fees that cities and states can charge for small cell installations and set reduced timelines for the approval process.

Cities must now act on applications within 60-90 days and can only charge a $100 application fee and an annual $270 fee per small cell. The move drew criticism from local officials who believe the FCC overstepped its authority, and many continue to call for an appeal or outright reversal of the ruling.

As discussed in previous MM&C articles on this topic, many local governments have combined forces to appeal the FCC Order. The U.S. Court of Appeals for the 10th Circuit denied the cities’ request for a stay, the FCC’s Declaratory Ruling and Third Report and Order on small cell deployment went into effect on January 15, 2019. The cities’ appeal has moved to the 9th Circuit.

According to MM&C Telecommunications Attorney, Sean Hughes, “I suspect that this debate and accompanying legal and legislative maneuvering is going to continue. Between the Fed’s  actions to streamline 5G infrastructure development for the  consumer, which is nearly everyone (considering there are over 400 million wireless devices active in the United States), versus local government efforts to prevent or roll back Federal preemptions that are limiting local government review authority and citizen involvement over wireless development requests.“

The telecommunications land use attorneys at Miller, Miller & Canby are experienced in Maryland, D.C. and Virginia’s 5G Wireless and Small Cells Zoning. Our telecommunications, zoning attorneys and real estate attorneys are closely monitoring the impacts of the FCC order and the efforts of local legislatures to craft small cell legislation in order to be able to advise telecommunications carriers and potential landlords.

Sean P. Hughes
is an attorney in Miller, Miller & Canby’s Land Use practice group. His career spans more than two decades of focus in legal and wireless telecommunications and he has represented clients in land use and zoning matters throughout the Mid-Atlantic.  To learn more about the firm’s Land Use and Zoning practice, click here.

Cathy Borten
is an associate in Miller, Miller & Canby’s real estate practice group. She focuses in commercial real estate transactions and leasing, real estate litigation, land use and zoning and commercial financings and settlements. Cathy has over 10 years' experience in leasing, land use and zoning in the wireless telecommunications industry. Cathy also participated in the drafting of the Montgomery County and City of Gaithersburg original small cell ordinances. To learn more about the firm’s Real Estate practice, click here.
 





FCC Order on 5G and Small Cells Goes into Effect; Cities’ Appeal Goes to 9th Circuit Court


After the U.S. Court of Appeals for the 10th Circuit denied the cities’ request for a stay, the FCC’s Declaratory Ruling and Third Report and Order on small cell deployment went into effect on January 15, 2019.

Known as the September Small Cell Order, the item states that fees charged by a municipality for applications or rent must be limited to costs or they may be deemed as “effective prohibitions of service.” Aesthetic and undergrounding requirements may also be deemed to be a prohibition of service of small cell deployment. Additionally, it established new small cell shot clocks and codified previous ones, as well.
However, the courtroom drama is not over. In a second order, the 10th Circuit remanded the cities’ motion to review their petitions against the September Order back to the U.S. Court of Appeals for the 9th Circuit.

The 9th Circuit was already considering a lawsuit against the FCC’s Order banning municipal moratoria, which is basically part of the same rulemaking as the Small Cell Order. So with the transfer, both the moratoria and the Small Cell Order will be examined by the same court.
Which circuit rules on an appeal can have a big impact on the final outcome of the case. The 9th Circuit could turn out to be more supportive of the cities’ point of view as numerous 9th Circuits’ precedents were overruled by the FCC’s Small Cell Order.

Section 253 of the Telecommunications Act states that local regulations may not prohibit telecommunications services. The FCC Small Cell Order attempted to expand upon the definition of what would be deemed as a prohibition.

Another wrinkle in this case, the FCC currently does not have a lawyer working on this with the partial government shutdown. If it is not reopened in time, the Dept. of Justice will argue the case.

Congressional Involvement
The cities have also taken their fight against the FCC to Capitol Hill. Congresswoman Ana Eshoo introduced the “Accelerating Broadband Development by Empowering Local Communities Act of 2019,’’ on Jan. 14th to preserve the rights of state and local governments, essentially nullifying the September small cell order by the FCC: ‘‘Accelerating Wireless and Wireline Broadband Deployment by Removing Barriers to Infrastructure Investment.

Sean Hughes of Miller, Miller & Canby weighed in, “All interested parties are anxiously watching the Courts and legislative actions that will steer 5G infrastructure development.  Nearly all agree that the 5G state of the art technology is desired, the debate really exists about where the 5G equipment can be located, what it can look like and what local governments can charge as the related fees.”  

The telecommunications land use attorneys at Miller, Miller & Canby are experienced and entrenched in Maryland, D.C. and Virginia’s 5G Wireless and Small Cells Zoning. Our telecommunications, zoning attorneys and real estate attorneys are closely monitoring the impacts of the FCC order and the efforts of local legislatures to craft small cell legislation in order to be able to advise telecommunications carriers and potential landlords.

Sean P. Hughes
is an attorney in Miller, Miller & Canby’s Land Use practice group. His career spans more than two decades of focus in legal and wireless telecommunications and he has represented clients in land use and zoning matters throughout the Mid-Atlantic.  To learn more about the firm’s Land Use and Zoning practice, click here.

Cathy Borten
is an associate in Miller, Miller & Canby’s real estate practice group. She focuses in commercial real estate transactions and leasing, real estate litigation, land use and zoning and commercial financings and settlements. Cathy has over 10 years' experience in leasing, land use and zoning in the wireless telecommunications industry. Cathy also participated in the drafting of the Montgomery County and City of Gaithersburg original small cell ordinances. To learn more about the firm’s Real Estate practice, click here.
 





City of Gaithersburg Considers Changes to Small Cell Regulations


While some communities are re-inventing themselves as smart cities, many other small towns are busy deciphering what 5G means to them. Bringing 5G capabilities to an area means either new telecommunications towers or small cell deployment and all the financial implications of each.

The September FCC 5G and Small Cell Order is trying to help wireless companies speed deployment of 5G capabilities. The order states that local government cannot prohibit wireless telecommunication services. Local governments are trying to ensure their regulations do not run afoul of the FCC requirements and their regulations do not have the effect of prohibiting wireless telecommunication services to their residents.

Gaithersburg, Maryland City Council members discussed potential changes to small cell tower ordinances for local right-of-ways at a public hearing on January 7, 2019. New changes in FCC regulations and the telecommunications industry spurred on the proposed revisions that would allow developers to increase the size of cell tower equipment housing. Crown Castle and AT&T have been in communication with local government to discuss the possible changes. According to Deputy City Manager Dennis Enslinger, the current size regulation for cell tower equipment is 2.8 cubic feet, and with the changes it would increase to 12 cubic feet.

Council Member Ryan Spiegel will soon become president of the Maryland Municipal League and the City of Gaithersburg Council, where he has expressed the importance of this issue, and continuing to regulate small cell installation.

The public record on the potential ordinance changes will be open until January 31, and the Council will re-address the issue in mid-February.

The telecommunications land use attorneys at Miller, Miller & Canby are experienced and entrenched in Maryland, D.C. and Virginia’s 5G Wireless and Small Cells Zoning. Our telecommunications, zoning attorneys and real estate attorneys are closely monitoring the impacts of the FCC order and the efforts of local legislatures to craft small cell legislation in order to be able to advise telecommunications carriers and potential landlords. Click here to view all MM&C articles related to this topic.

Sean P. Hughes
is an attorney in Miller, Miller & Canby’s Land Use practice group. His career spans more than two decades of focus in legal and wireless telecommunications and he has represented clients in land use and zoning matters throughout the Mid-Atlantic.  To learn more about the firm’s Land Use and Zoning practice, click here.

Cathy Borten
is an associate in Miller, Miller & Canby’s real estate practice group. She focuses in commercial real estate transactions and leasing, real estate litigation, land use and zoning and commercial financings and settlements. Cathy has over 10 years' experience in leasing, land use and zoning in the wireless telecommunications industry. Cathy also participated in the drafting of the Montgomery County and City of Gaithersburg original small cell ordinances. To learn more about the firm’s Real Estate practice, click here.

 





Property Owners Have Until Early February to Appeal New Maryland Property Tax Assessments


At the end of December, the Maryland Department of Assessments and Taxation (SDAT) issued new Assessment Notices to owners of one-third of all commercial and residential properties in Maryland.  For instance, in Montgomery County, commercial properties in Silver Spring and Wheaton were reassessed.  In Frederick County, commercial properties in Urbana and parts of Ijamsville and Frederick were reassessed.  In Prince George’s County, commercial properties in Greenbelt, College Park, Hyattsville, Oxon Hill, Temple Hills and Riverdale were reassessed.

Property owners have 45 days from the date of the Assessment Notice to challenge these new assessments.  Based on the notices we have seen this cycle, the appeal deadline is February 11, 2019, although this could vary depending upon the notice date.  The “first-level” appeal takes place at the local Assessment Office.  If the assessor refuses to reduce the assessment, the owner may file a further appeal to the county’s Property Tax Assessment Appeals Board (PTAAB).   This Board will consider the evidence and issue a written decision, usually within two weeks.  If the property owner is still dissatisfied, another appeal may be filed to the Maryland Tax Court.

Miller, Miller & Canby has been challenging the assessments of various types of properties in Maryland for more than 30 years and has obtained substantial reductions in real property assessments for our clients.  Our litigation attorneys regularly represent clients before the local Assessment Office, PTAAB and the Maryland Tax Court.  We have successfully appealed the assessments on office buildings, retail stores, senior living centers, warehouses, industrial sites, casinos, apartment buildings and cemeteries.  Let us help you reduce your Maryland property assessments in 2019.

Michael Campbel
l is a partner in the litigation group at Miller, Miller & Canby.  In addition to trial and appellate advocacy, his practice focuses on real estate litigation and property tax assessment appeals.  Please feel free to contact Mr. Campbell at 301.762.5212 or send him an email for property tax guidance or to help reduce your commercial Maryland property tax assessment.  For more information about the firm’s Maryland property tax appeals practice and representative cases, click here.
 





Court Denies Stay Action on FCC Order to Speed Deployment of 5G and Small Cells


Many local governments were caught off guard by the September FCC Order to ease siting of small cells. The National League of Cities (NLC) and a group of local governments and associations brought their case to court and requested a stay for the looming January 14, 2019 implementation date.

Several localities sought judicial review of the order. A judicial panel consolidated the petitions and assigned them to the U.S. Court of Appeals for the Tenth Circuit. In addition to NLC, other parties joining the stay request were: the U.S. Conference of Mayors, National Association of Counties, National Association of Regional Councils, National Association of Towns and Townships and the National Association of Telecommunications Officers & Advisors.

NLC claims the FCC overreached when it voted to impose shot clocks for siting applications and cap application fees for municipalities and other localities concerning wireless infrastructure siting in public rights-of-way.

When evaluating a stay request, the Tenth Circuit Court considers whether the applicant’s arguments are likely to succeed, whether the party would be “irreparably injured” without a stay, and where the public interest lies.

The Tenth Circuit Court concluded the motion failed to satisfy these factors. As for the parties’ arguments that easing small siting rules would hurt property values and create traffic hazards, the court said even the NLC conceded the order, “does not compel any locality to authorize any particular facility,” states the decision signed by Donald Stockdale, Chief of the Wireless Telecommunications Bureau.
The FCC said it followed Congress’ lead by articulating, “specific standards for resolving concrete disputes over whether states’ or localities’ fees” are consistent with its rules. Most of the order is slated to become effective January 14, 2019. The order acknowledged that “some localities will require some time to establish and publish aesthetics standards,” and therefore the aesthetics standards will not take effect until 180 days after Federal Register publication.

According to the FCC Order, for localities that choose to impose aesthetic standards on small cell deployment, they must be:

  1. Reasonable;
  2. no more burdensome than those applied to other types of infrastructure deployments;
  3. objective; and
  4. published in advance.

The telecommunications land use attorneys at Miller, Miller & Canby are experienced and entrenched in Maryland, D.C. and Virginia’s 5G Wireless and Small Cells Zoning. Our telecommunications, zoning attorneys and real estate attorneys are closely monitoring the impacts of the FCC order and the efforts of local legislatures to craft small cell legislation in order to be able to advise telecommunications carriers and potential landlords.

Sean P. Hughes
is an attorney in Miller, Miller & Canby’s Land Use practice group. His career spans more than two decades of focus in legal and wireless telecommunications and he has represented clients in land use and zoning matters throughout the Mid-Atlantic.  To learn more about the firm’s Land Use and Zoning practice, click here.

Cathy Borten
is an associate in Miller, Miller & Canby’s real estate practice group. She focuses in commercial real estate transactions and leasing, real estate litigation, land use and zoning and commercial financings and settlements. Cathy has over 10 years' experience in leasing, land use and zoning in the wireless telecommunications industry. Cathy also participated in the drafting of the Montgomery County and City of Gaithersburg original small cell ordinances. To learn more about the firm’s Real Estate practice, click here.
 





December 2018 Legal News & Notes


The December 2018 issue of Miller, Miller & Canby's Legal News & Notes quarterly email newsletter announces five attorneys as Maryland Super Lawyers, Maryland Property Tax Appeals Approaching Deadline, IRS Gives the Green Light for Gifting, the Importance of a Condemnation Clause in Commercial Leases, Montgomery County Council Defers Action on Small Cell Tower Bill for 5G Infrastructure, Why It's Important to Have an Advanced Medical Directive, Lessons Learned from Actor Wesley Snipes Offer In Compromise Case with the IRS and much more.  Click here to view newsletter.





Truly the Season of Giving: IRS Gives the Green Light for Gifting


As explained in a prior article, the sweeping tax reform bill, commonly known as the Tax Cuts and Jobs Act of 2017 (TCJA), temporarily doubles the combined gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption from $5 million to $10 million (adjusted for inflation after 2011). For 2018, the exemption is $11.18 million per person.  The exemption will increase to $11.4 million in 2019. This doubled exemption will adjust for inflation each year and will remain in effect until December 31, 2025. If Congress doesn’t act before 2026, the law will sunset and the exemptions will revert back to the $5 million level (adjusted for inflation).

Shortly after passage of the TCJA, questions arose regarding taxpayers who utilize the doubled exclusion during their lifetime and then die in 2026 or later, when the exclusion reverts to the former $5 million (adjusted for inflation). This could lead to inconsistent tax treatment arising as a result of the temporary nature of the increased exemption amount. Therefore, the statutory sunset of the higher exemption amount and reversion to the lower amount could retroactively deny taxpayers who die after 2025 the full benefit of the higher exclusion amount applied to previous gifts. This scenario has been dubbed a “clawback” of the exemption.

“Clawback” Example
Jim is about to retire and has an estate worth $15.18 million. In 2018, Jim decides to gift $11.18 million to Dynasty trusts for his 3 grandchildren. Jim will rely on the remaining $4 million, social security payments, and his pension to get him through his retirement years. Jim would owe no gift tax in 2018 because his combined gift and estate tax exemption is $11.18 million.

Jim then dies in 2026, when the combined gift and estate tax exemption has reverted back to $5 million (adjusted for inflation). We can assume that the inflation adjusted exemption amount will be about $6 million in 2026. If Jim still has $4 million in assets at death, his gross estate would be $15.18 million after adding in the $11.18 million taxable gift that Jim made in 2018. Would Jim’s estate owe tax on $9.18 million, the difference between his taxable estate ($15.18 million) and the 2026 exemption amount ($6 million)?  If yes, then Jim’s estate would be hit with an estate tax bill of approximately $3.67 million! On November 23, 2018, the IRS published proposed regulations to address the “clawback” problem.  The Regulations indicate that the IRS will not seek to “clawback” into the estate the taxable gifts that the decedent made when the exemption covered those gifts.  These proposed regulations apply to gifts made after 2017 and the estates of persons dying after 2017.

So, in Jim’s example, his estate would not owe estate tax on the amount he gifted in 2018.  Of course, in 2026, he would not have any remaining exemption to use for his $4 million in assets, so his estate would owe tax on the entire $4 million remaining at death – a tax bill of about $1.6 million. It is easy to see that these new Regulations are quite favorable to the taxpayer!

Estate Planning Opportunities: What Clients Need to Know
With the uncertainty of “clawback” soon to be removed, we recommend that clients with taxable estates consider making large gifts to reduce the size of their estates and take advantage of the increased federal exemption amounts. This is especially important for clients in Maryland and the District of Columbia. These jurisdictions have stand-alone state estate taxes with exemption amounts lower than the federal exemption, and do not impose a gift tax; which makes these gifts of even greater importance.

However, prior to making any gift, it is vital to conduct an analysis of the income tax consequences of the gift. This is crucial because a recipient of gifted assets takes the donor’s basis for federal income tax purposes (a “carry-over basis”). Whereas, the basis of assets which are subject to the federal estate tax, and received as a result of a person’s death, is equal to fair market value at the date of the decedent’s death (a “stepped-up basis”).

Finally, clients should know that time is of the essence and should consider taking advantage of the increased exemption amount sooner rather than later because Congress could change the law again prior to the sunset date and those who have not used the larger exemption amount will have lost the opportunity to do so. Keep in mind also that large gifts often take some time due to planning, appraisals, and preparation of trusts and other documents.

David A. Lucas
is an Attorney in Miller, Miller & Canby’s Estates & Trusts and Business and Tax Practice Groups. David is committed to providing his clients with a well-crafted estate plan so they may avoid probate, protect their assets and legacies, and provide for the security of their loved ones. He takes a special interest in ensuring that the dreams parents have for their children and grandchildren are not lost to taxes, poor planning, or procrastination. He speaks frequently on a variety of estate planning topics to both the general public and private groups.

David has focused his practice on helping families preserve their financial wealth and legacies for future generations through the use of Trusts, Wills, Powers of Attorney, Advance Medical Directives, Living Wills, and other estate planning strategies.

Contact David
to discuss your estate plan to take advantage of the laws available today and ensure flexibility for future changes. For more information on Miller, Miller & Canby’s Estates & Trusts Practice, click here.





MM&C’s Joe Suntum and James Roth Set to Speak at ALI’s Eminent Domain and Land Valuation Litigation


Two of Miller, Miller & Canby’s eminent domain attorneys will join the national Eminent Domain and Land Valuation Litigation 2019 Conference as presenters. The annual conference is the country’s preeminent gathering of eminent domain professionals. The conference brings together “national experts on the cutting edge of eminent domain and related topics under one roof," said planning co-chair, Robert H. Thomas.

Mr. Suntum will speak to “Tips and Traps for the New Eminent Domain Lawyer”. Mr. Suntum is a principal at Miller, Miller & Canby with decades of trial experience, and he is the firm’s eminent domain practice group leader. He is the Owners’ Counsel of America member attorney for the state of Maryland.  The Owners’ Counsel is a national network of seasoned eminent domain attorneys; membership is selective and restricted to only one member attorney per state.  Mr. Suntum is a nationally-recognized speaker on topics related to eminent domain and condemnation and lectures extensively throughout the country for a variety of legal and educational organizations.

Mr. Roth will address “Fence and Wall Condemnations.” Prior to becoming an attorney and joining Miller, Miller & Canby, Mr. Roth spent over a decade consulting U.S. Customs and Border Protection (CBP) to manage land acquisition required for numerous facilities and border infrastructure construction projects, including some 600 miles of fence construction initiated under the Bush administration.  In that role, he supported attorneys from the U.S. Department of Justice, U.S. Army Corps of Engineers and CBP in the litigation of over 300 eminent domain cases across the U.S./Mexico Border.

In addition to private practitioners, faculty will include law professors, government officials and members of the judiciary.  

Other conference highlights will include:
• Navigating displacement of immigrant and refugee
communities
• A look at the Supreme Court's revisit of ripeness
• Flood, wildfire, and other inverse cases
• Proving just compensation for loss of access and damages
• Correcting misconceptions about eminent domain in the media and social platforms
• Pipelines, challenging the take, and compensation pitfalls

The 2019 conference will be held in Palm Springs, California, January 24-26.  For more information click here.

For more information about Miller, Miller & Canby’s eminent domain practice, click here, or contact Joe Suntum or James Roth at 301-762-5212.





Actor Wesley Snipes Shows Us How Not To Settle an IRS Debt: The Importance of a Tax Attorney


Wesley Snipes Tax Case
Normally, U.S. Tax Court memorandum decisions do not garner media attention.  Typically, they involve issues of substantive or procedural tax disputes – not exactly drop-what-you’re-doing subject matter or material. However, last month, the Court was hit with a dose of celebrity, and in turn, some publicity. Indeed, movie fans of the late-1990s/early-2000s vampire hunter trilogy, Blade, likely found themselves confounded when the actor behind the title character and protagonist re-emerged into the headlines, but not for cinematic achievement or accomplishment. Instead, Wesley Snipes made news for losing his Tax Court petition.

Specifically, Mr. Snipes had racked up quite a tax debt with the IRS – to the tune of $23.5 million. Unable to pay the full amount, he submitted an offer in compromise (OIC) to the IRS, which was rejected and led him to Tax Court. For reference, an offer in compromise is a request submitted to the IRS where a taxpayer desires to settle a tax liability for a lesser amount than is owed. Mr. Snipes submitted his OIC as a doubt as to collectability submission.  In other words, he did not challenge the validity of his tax liability, but contended that the IRS would never fully collect the full amount, making it in their best interest to settle for a lesser amount. Indeed, his contention was clearly reflected on his OIC submission wherein he sought to settle his tax debt for $842,061, or less than 4% of his underlying tax liability.  

Given the staggering discrepancy between Mr. Snipes’ attempted OIC and his tax debt, it would seem as though the IRS’ rejection was a mere formality and that he should stop watching late night tax relief infomercials. However, the IRS’ rejection was not based on such a discrepancy.  Instead, the IRS bases its OIC decisions on the taxpayer’s quantifiable financial disposition, or what a taxpayer can afford to pay.   

Why OICs Are Rejected
Indeed, a taxpayer’s ability to pay will focus on their income/assets versus their expenses. While there are a variety of reasons that the IRS rejects OICs, the primary ones are for understating the value of assets/income and overstating expenses. For Mr. Snipes, he was caught attempting to move assets out of his name before and during his initial appeal, and he apparently didn’t do a particularly good job of it. The IRS attributed those assets to him as part of his overall net worth, and therefore concluded he was able to pay substantially more than he offered via his OIC. The IRS scrutinizes both the assets/income and expenses categories – especially if the expenses far exceed the taxpayer’s income or their assets appear to be substantially understated or they are out of line with income and lifestyle (see Wesley Snipes example).

In addition, the IRS will reject an OIC for failure to comply with specific procedures and guidelines or for a lack of cooperation with such procedures and guidelines. While the IRS will generally permit you to re-submit an OIC if it is rejected on procedural grounds, this will only delay and complicate the process, whereas a lack of cooperation can lead to an outright rejection.  When taxpayers are under IRS levy or garnishment, or are saddled or threaten with a federal tax lien, any delay or complication can impose unnecessary hardship and disruption.  

Accordingly, it is essential that the procedures and guidelines are followed precisely. For example, both Form 656 (Offer in Compromise) and Form 433-A or -B (Collection Information for Individuals and Businesses, respectively) must be fully completed and submitted. Taxpayers will oftentimes neglect to submit one of them due to the redundancy of information requested on these forms. In addition, taxpayers must fully complete the forms – especially the Form 433, which amounts to a full and exhaustive financial disclosure form. If incomplete, inaccurate or insufficient, the IRS will either reject the OIC or request further substantiation – which will lead to delays and complications. Taxpayers must also submit both the application fee and the initial offer payment. Taxpayers confuse the application fee as being the same as the initial offer payment, and vice versa. They are separate and they are both required.

How an Experienced Tax Attorney Can Help
An experienced tax attorney guides clients through this process so that an offer has the highest probability of being accepted and the debt resolved. Specifically, the information contained on Form 433 will dominate the IRS’ OIC analysis. Form 433 can be confusing and its rules/instructions can be complicated and deficient. In addition, different taxpayers have different circumstances which can necessitate experienced and professional assistance.

Some questions to consider include:
•    What if the liable taxpayer is married to an innocent spouse?
•    How are joint and separate assets as well as shared expenses reported?
•    How are fluctuating expenses calculated?  
•    Is an anticipated inheritance reportable?
•    Should trust distributions be reported?
•    How should you report the value of stocks?  
•    What about the value of life insurance?  

Taxpayers do not want to get caught misstating the value of assets/income, or the amount of expenses – such figures are subject to substantiation, at the IRS’ request. A misstatement can cause an OIC to be rejected, or (maybe worse) can put a taxpayer in a Wesley Snipes situation where they are deemed more wealthy than they, in fact, are. Accordingly, there are strategies for when and how to complete Form 433 that an experienced tax attorney can provide.

In addition, experienced tax attorneys can provide advice relating to penalty abatement. In limited circumstances, the IRS will agree to abate accrued penalties (and in very limited circumstances, grant interest waivers). This can drastically lower a taxpayer’s total balance due, and potentially make an OIC more palatable for the IRS to accept.

Not every taxpayer is a good candidate for an OIC. An experienced tax attorney will analyze the taxpayer’s situation, discuss alternatives, and determine the best strategy tailored to client needs.  Indeed, for some taxpayers, an installment agreement may make more sense or have a greater likelihood for approval. In addition, currently not collectible status may assist certain taxpayers as it will “pause” IRS collection activity for a limited period of time. However, before making any submissions, it is advisable to seek professional advice. In the event an OIC has already been submitted, and rejected, taxpayers have appeal rights at their disposal (see Wesley Snipes example) where a tax attorney can provide assistance.  

Chris Young
is an associate in the Business & Tax practice at Miller, Miller & Canby. He focuses his practice on tax controversy work and helping clients deal with new tax regulations. He may be reached at 301-762-5212 or at clyoung@mmcanby.com.  View more information about Miller, Miller & Canby's Business & Tax practice by clicking here.





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