ELR Citation: 52 ELR 20123
No(s). 17379-19, 17380-19, 17381-19, and 17382-19 (T.C. Nov 9, 2022)

The U.S. Tax Court granted in part four North Carolina partnerships' cross-motion for summary judgment in a challenge to penalties the Internal Revenue Service (IRS) sought to impose on them for charitable deductions in tax years 2014 and 2015 related to syndicated conservation easement transactions pursuant to Notice 2017-10. The notice, issued in 2016, identified all syndicated conservation easement transactions beginning January 1, 2010, as "listed transactions" subject to I.R.C. §6662A penalties if not disclosed. The partnerships argued that §6662A penalties could not be asserted here because any assessment of them would be made retroactively after the notice was issued, and that the IRS failed to comply with APA notice-and-comment requirements when it issued the notice. The court found that the notice was a legislative rule because it created new substantive reporting obligations for taxpayers and material advisors, including the partnerships, the violation of which prompted exposure to financial penalties, and that it was improperly issued without notice and comment as required by the APA. It set aside the notice, refrained from deciding whether §6662A penalties could be applied retroactively, and granted in part the partnership's cross-motion.