Pat Smith Quoted in Tax Notes on D.C. Circuit Decision in Good Fortune Shipping

Ivins attorney Pat Smith was quoted in a Tax Notes article on the D.C. Circuit decision in Good Fortune Shipping, which reversed the Tax Court and invalidated a regulation under section 883(c) providing that stock issued in bearer form doesn’t count for purposes of determining stock ownership of a foreign corporation. D.C. Circuit Strikes Down Bearer Share Regs as Unreasonable.

Patrick J. Smith of Ivins, Phillips & Barker Chtd. said the decision will have broader implications for reg challenges.

“Anytime a taxpayer wants to challenge a regulation and they’re unhappy with the explanation that was provided in the preamble, I think they’re going to cite this decision,” Smith said.

Smith said the opinion also makes it clear that the requirement to provide a satisfactory explanation in the preamble is across the board.

“The court focused particularly on the fact that in this case the regulations that were being challenged represented a change in position by the IRS,” Smith said.

In other situations in which somebody is unhappy about a tax regulation and can identify that it was an unexplained change in the IRS's position, “I think this case is going to be particularly helpful,” Smith said.