CCA 201216039: Advice addresses an alter ego theory for federal tax liens

Plain-English summary

Chief Counsel advice discusses whether a federal tax lien dispute involving an alter ego theory presents fraud or injustice concerns. The message points to the two-factor federal common-law test described in NLRB v. Greater Kansas City Roofing and notes that the case also cites the Board of Trustees of the Mill Cabinet Pension Trust Fund. It also discusses Politte v. United States, a tax refund case that treated California's alter ego doctrine and federal common law as virtually identical and did not require proof of fraud. The message is research guidance rather than a formal ruling on a taxpayer's liability.

Ruling snapshot

• Question: What authorities should be considered when analyzing an alter ego theory in a federal tax lien matter?
• Outcome: Advice
• Key authorities: IRC §§ 6321 and 7426; NLRB v. Greater Kansas City Roofing, 2 F.3d 1047 (10th Cir. 1993); Politte v. United States, 2012 WL 965996 (S.D. Cal. 2012); CC Notice 2012-002.

Full text (IRS public release)

ID: CCA_2012040310240226 Number: 201216039
Release Date: 4/20/2012
Office: --------------
UILC: 6321.00-00

From: -----------------
Sent: Tuesday, April 03, 2012 10:24:03 AM
To: ----------------------
Cc:
Subject: RE: 9th Cir. Alter Ego Rule

Thanks ---------- I’d like to see what you come up with. It does seem to be either fraud or injustice. NLRB th v. Greater Kansas City Roofing, 2 F.3d 1047 (10 Cir. 1993 ) explains Seymour and how it has played out and cites Bd. of Trs. of Mill Cabinet Pension Trust Fund too. (In general, we reference the two factor test in NLRB v. Greater Kansas City Roofing where the factors to be used under the federal common law test are unclear in a circuit per CC Notice 2012-002.) A recent tax refund case addressed the alter ego doctrine to see if the action was brought properly under IRC 7426 and noted that the California alter ego doctrine and the federal common law are virtually identical and therefore looked to the more developed California law as instructive and found it’s not necessary to prove fraud. Politte v. U.S., Slip Copy, 2012 WL 965996 (S.D.Cal., 2012).