Seventh Circuit: Absent Fraud, Tax Court Cannot Vacate Decisions

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The U.S. Court of Appeals for the Seventh Circuit ruled July 24 that absent proof of fraud, the U.S. Tax Court does not have authority to vacate decisions that have become final (Seven W. Enterprises Inc. v. Commissioner, 7th Cir., No. 12-02099, 7/24/13).
Judge Kenneth F. Ripple reversed the decision of the Tax Court to vacate final decisions because they contained clerical errors; he ordered the Tax Court to instead issue separate orders amending the original decisions to correct the errors.
The underlying case involved two closely held companies—Seven W. Enterprises Inc. (Seven) and Highland Supply Corp. (Highland)—that challenged tax deficiencies issued by the Internal Revenue Service. The Tax Court ruled on the deficiencies, finding both companies liable for deficiencies related to certain tax years.