| Window of Opportunity Closes on IRS in TEFRA Appeal |
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6/17/2010 |
The window of opportunity has closed for the Internal Revenue Service to appeal the Seventh Circuit Court of Appeals' decision in the TEFRA disallowance case Vainisi v. Commissioner of Internal Revenue. The deadline for the IRS to file an appeal with the United States Supreme Court was Tuesday, June 15. Recall that back in March of this year the Seventh Circuit ruled in favor of the Vainisi Appellants and the Subchapter S bank community, concluding that the 20% TEFRA disallowance applies to Sub S banks only for the first three taxable years after they make the Subchapter S election.
There is still the possibility that the Treasury Department may attempt to make an end-run around the Seventh Circuit's ruling by finalizing the regulation it proposed back in late 2006 or issuing a new regulation requiring S corporations to apply the TEFRA disallowance in the same manner as C corporations. It is also possible that Congress could pass legislation that would have the same effect.
As of right now, however, we have not heard any rumblings about either the Treasury Department or Congress taking any further action on this issue.
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