Today’s Opinions
Today’s ruling in Warner-Lambert v. Kent (06-1498), upholding the Second Circuit’s decision by an equally divided vote, is now available here.
Today’s unanimous opinion by Justice Souter in Boulware v. United States (06-1509), vacating the decision of the Ninth Circuit below, is now available here.
For tax nerds, the most interesting part of the Boulware opinion may be the Court’s resurrection of the so-called “right” to avoid taxes. See Boulware, n.7 “We have also recognized that ‘[t]he legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether avoid them, by means which the law permits, cannot be doubted.’” (citing Gregory v. Helvering, 293 U. S. 465).
Justices Thomas and Scalia sometimes repeat taxpayer-favorable quotes in dissents/concurrences, but seeing the “legal right” quote in 9-0 opinion is somewhat surprising.
The statement from Gregory — which until today was last quoted by the Court 48 years ago in Knetsch v. United States, 364 U.S. 361 (1960) — has been slammed by many elite tax scholars over the years, and the court’s recitation of that famous (infamous?) quote from Gregory is sure to ruffle some feathers.
Also, although I’m not inclined to read too much into a judicial footnote, the Gregory quote and the various other statements in Boulware n.7 will surely offer encouragement for taxpayers embroiled in tax controversies with the IRS. It also tends to confirm the Solicitor General’s fears regarding letting a high-profile tax issues get to the supreme court, notwithstanding the severe circuit splits — the SG will probably lose badly. (See, e.g., petition in opposition to Coltec v. U.S., Docket 06-659, cert denied 2/20/07).
Comment by Andy Grewal — March 3, 2008 @ 2:35 pm
In a normal civil tax controversy case, the taxpayer has the opportunity to present prior case law which supports the positions taken on a return. However, in criminal tax cases, under the guise of limiting the jury to deciding only the facts, not the law, the defense is often precluded from presenting evidence that other courts have ruled in favor the taxpayer with similar facts. For example, in a case recently, the judge prohibited the CPA/expert from testifying that a 6th circuit case ruled in favor of the taxpayer under nearly identical fact pattern since that the expert would be testifying as to the law. This case brings the right of a defense back to a reasonable balance.
Comment by Joe Kosanda — March 11, 2008 @ 4:08 pm