IRS Acquiesces to Vainisi Decision
Victory for S corporation financial institutions as the Internal Revenue Service announces it's acquiescence with the Seventh Circuit Court of Appeals in TEFRA case.
Earlier this week, the Internal Revenue Service announced that it was acquiescing to the decision of the Seventh Circuit Court of Appeals regarding the long-fought TEFRA disallowance appeal.
In March of this year, the Seventh Circuit ruled in favor of the Vainisi Appellants- as well was the greater Subchapter S bank community- holding that the 20% TEFRA disallowance only applies to Subchapter S and qualified Subchapter S subsidiary (QSub) financial institutions for the first three taxable years after they elect Subchapter S tax status. The Subchapter S Bank Association was the driving force behind the appeal, raising the necessary funds to continue the fight with a coalition of community banks and industry partners.
While the Court's decision was marked as a victory in the case, and many bank shareholders have already undergone the process of amending previous years' returns to receive a refund from the IRS, there was some trepidation among banks outside of the jurisdiction of the Seventh Circuit who feared that the IRS might still interpret the TEFRA disallowance provisions according to the earlier U.S. Tax Court decision, though it was ultimately reversed by the Seventh Circuit.
With the issuance of the letter of acquiesce, the IRS has opened the door for all shareholders of S corporation financial institutions to receive the 100% deduction for years beyond the initial three years following the institution's S election. Shareholders are advised to consult their tax professionals regarding refunds for previous tax years and in planning for 2010 tax returns.
The IRS's acquiescence on this issue is the icing on the cake of a resounding victory for Sub S bank shareholder that would not have been possible without the financial support of the 70+ bank members of the association who contributed to the appeal. Additionally, S Corporation shareholders owe a debt of gratitude to the Community Banking Associations of Iowa, Illinois and Wisconsin, the Council of Community Banking Associations, the Independent Community Bankers of America, the Independent Bankers Association of Texas and the Wisconsin Bankers Association for assistance in raising the funds necessary to underwrite the appeal of the Vainisi Tax Court decision.
Other News Items
- Press Release
- The Sub S Bank Report
- The Fiscal Cliff: How did Sub S Banks Fare?
- The Future of Sub S Banks 15th Annual Conference
- 2012 Southeast Regional Subchapter S Bank Conference
- IRS Withdraws Proposed TEFRA Rule
- Association Adds Keynote Speaker to Annual Conference
- Registration Now Open for 14th Annual Conference
- Federal Reserve Issues Interim Final Rule Regarding SBLF
- View All News Items