IRS Loses $76.5 Million Easement Case Because of Untimely Notice

Partners Hale Sheppard and Cassandra "Sandy" Bradford were quoted in Tax Notes Federal discussing a recent Tax Court decision in Bayou Serpent Property LLC v. Commissioner, where the court ruled that the IRS issued a final partnership adjustment (FPA) too late under the Bipartisan Budget Act’s audit rules. This resulted in the partnership avoiding nearly $39.6 million in taxes and penalties. Sandy emphasized that the case underscores the importance of challenging regulations that conflict with statutory provisions, and Hale highlighted the practical impact, noting that the IRS’s error saved the partners tens of millions of dollars.

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