Farhy v. Commissioner:  The D.C. Circuit Reverses a Win for Taxpayers

May 15, 2024  |  New York Law Journal

Last year, the United States Tax Court handed taxpayers a potentially meaningful victory in Farhy v. Commissioner, holding that the statutory penalty for failure to file certain information returns was not “assessable.” The import of the Tax Court’s decision extended beyond the specific penalty at issue in Farhy, presenting practical barriers to the IRS collecting such penalties. Earlier this month, however, the United States Court of Appeals for the D.C. Circuit reversed the Tax Court and held that the IRS could administratively assess the penalty in question.  The immediate import of the D.C. Circuit’s decision is that the IRS does not have to bring an action in federal district court to collect nearly $500,000 in penalties from the taxpayer in Farhy, but the case has significant implications for taxpayers challenging the administrative application of other penalties as well.  In his latest article for the NYLJ, “Farhy v. Commissioner:  The D.C. Circuit Reverses a Win for Taxpayers,” Morvillo Abramowitz partner Jeremy H. Temkin reviews the two decisions in Farhy and discusses the case’s broader implications. 

Farhy v. Commissioner:  The D.C. Circuit Reverses a Win for Taxpayers (pdf | 130.21 KB)