Time: Fri Dec 05 02:14:00 1997 To: From: Paul Andrew Mitchell [address in tool bar] Subject: SLS: Dishonor, Your Honor! (fwd) Cc: Bcc: sls References: <snip> > >Thanks to John McAlister for the site containing this article. One >wants to cheer until reading the details of WHO the court sides with >here. The stench should be unbearable to those who have had property >seized by the IRS -- especially those who have argured lack of proper >notice. Wheewww! > >ICE > >http://www.ljx.com/topstories/1203new1.html > > Court Awards Judge's Estate Fees From IRS > > The New York Law Journal > December 3, 1997 > > BY DEBORAH PINES > > THE INTERNAL Revenue Service has been ordered to pay $34,172 in attorney's fees and costs to a > prominent Manhattan estate for a 4-1/2-year tax fight the estate won in the face of IRS conduct termed "abusive" by > a federal judge. > > Southern District Judge Jed S. Rakoff ordered the money paid to cover costs incurred by the Estate of Paul P. > Rao, a former Chief Judge and 40-year member of the former Customs Court who died in 1988. The court was > renamed in 1980 the U.S. Court of International Trade. > > Judge Rakoff also ordered the payment to teach the IRS a lesson. "Given the abusive quality of the IRS's > conduct in this case, the government should feel fortunate the fees were so modest," he wrote in Estate of Paul P. > Rao v. United States, 97 Civ. 3455, filed Nov. 25. > > Judge Rakoff's ruling noted the tax fight began in earnest on May 21, 1993 when the IRS notified the estate it > owed $273,465 in gift taxes. The estate offered repeated denials, by phone and in writing, that it owed that amount. > It also denied receiving an earlier timely notice of the alleged deficiency which the IRS claimed it had sent in > December 1992. > > "The IRS's only response was to file a notice of intent to levy on Sept. 19, 1994, and a notice of a federal tax > lien on May 18, 1995," Judge Rakoff wrote. > > The estate then "attempted with vigor and persistence to bring the relevant facts to the IRS's attention, both > orally and in writing, only to be met, as the government now concedes, with a wall of silence," the judge added. > > Finally, the estate filed suit in May in federal court claiming that the tax lien was void. In less than two > months, "the IRS conceded that it made an error in assessing the deficiency, and agreed to lift its lien, thus mooting > the action," Judge Rakoff wrote. > > Prevailing Party > > After recounting the facts, Judge Rakoff found the estate entitled to $34,172.19 in fees and costs because it > satisfied all of the necessary prerequisites for such an award. > > Preliminarily, Judge Rakoff found the court had jurisdiction over the tax dispute largely because it was a > procedural claim about the IRS's failure to properly notify the estate of the alleged tax deficiency. > > Then he found the estate a suitable "prevailing party" entitled to fees because, among other things, its net > worth did not exceed a $2 million statutory cutoff and the estate prevailed on its claim. > > Judge Rakoff rejected in strong terms government arguments that the estate did not win its primary battle, > which was over the issue of notice, and that the estate deserves no fees because the government position was > "substantially justified." > > "Here the fact that the IRS, having ignored plaintiff's repeated communications for more than four years, > completely accepted plaintiff's position across-the-board within a few months of the filing of this action, makes it > abundantly clear that no prior diligent investigation of this matter was conducted by the defendant," he wrote. > > Noting that the IRS promises taxpayers its goal is "to protect your rights so that you will have the highest > confidence in the integrity, efficiency and fairness of our tax system," Judge Rakoff wrote, "Our goal at the federal > courts is (among other things) to help the IRS keep its word." > > He added, "A modest award of costs and attorneys' fees to the prevailing plaintiff in this case may encourage > such confidence." > > The estate was represented by Paul P. Rao Jr., Judge Rao's son. Aaron M. Katz, a Southern District Assistant > U.S. Attorney, represented the government. > > > >Home|Contents|Marketplace|News|Employment|Practice Areas|Resources|Law Tech.|Law Firms > > >Copyright 1997, The New York Law Publishing Company. All Rights Reserved. >Access to Law Journal EXTRA! is governed by its Rules of Use. Send comments to feedback@ljextra.com > >
Return to Table of Contents for
Supreme Law School: E-mail