Tax Court Split on Firm's Payment of Controlling Shareholders' Liability

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The U.S. Tax Court's presidentially appointed members ruled Sept. 3 in an 11-3 split decision that controlling shareholders should have received a credit against their income tax liabilities for designated payments by their corporation to the Internal Revenue Service (Dixon v. Commissioner, T.C., No. 9962-05L, 141 T.C. No. 3, 9/3/13).
Judge Albert G. Lauber, writing for the majority, said that the IRS was obligated “to respect the taxpayer's designation of a voluntary payment,” and that ensuring this duty “is essential to vindicate the policy against double collection of the same tax.”
The taxpayers, James and Sharon Dixon, pleaded guilty to failure to file individual income tax returns for 1992 through 1995. As part of their plea agreement, the Dixons agreed to pay $61,021 to the IRS.
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