The U.S. Court of Appeals for the First Circuit Aug. 19 upheld a Treasury regulation barring the Internal Revenue Service from granting an executor a second extension of time for filing an estate tax return unless he qualifies for one of the good cause exceptions laid out in the regulation (Dickow v. United States, 1st Cir., No. 10-2151, 8/19/11).
“We think the regulations are clear when read as a whole that no second extension was available to be granted on the facts of this case,” wrote Chief Judge Sandra Lea Lynch for the First Circuit. “[The estate's executor] had already received the automatic extension, was not an executor who was abroad, and did not qualify for any of the categories for ‘good cause’ extensions.”
The decision affirms a ruling by the U.S. District Court for the District of Massachusetts, which found Internal Revenue Code Section 6081(a) is ambiguous as to whether IRS may grant more than one six-month extension. The district court said, however, that the implementing regulations, codified in Treasury Regulation Section 20.6081-1, made it clear that IRS lacked the authority to grant Dickow more than one six-month extension.
According to the First Circuit, IRS’s filing deadlines and extension rules are crucial to handling the millions of returns the service must process each year.
“The regulatory scheme as the IRS has promulgated it also provides clarity as to limits,” the court said. “It clearly sets forth rules based on identified categories of taxpayers. Thus, for example, the regulations allow further extensions beyond one six-month extension only to executors abroad who can show good cause.”
Lynch said the regulations are clear, when read as a whole, that no second extension was available to be granted on the facts of the case.
“The regulations rather pointedly do not say that the IRS has the discretion to accept or act upon applications for extensions based on any type of general ‘good cause’ claim other than the three types explicitly set forth in § 20.6081-1(c),” explained Lynch. “Further, the regulations refer repeatedly to Form 4768, which by its terms does not allow for the extensions sought here. Thus, in our view, Chevron deference requires that the IRS position prevail.”
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