Tomato, Toma-toe: IRS’s Imperfect Designation of “Immediate Supervisor” Deemed Insufficient to Overturn Penalties Under Code Section 6751(b)(1)
Section 6751(b)(1) of the Internal Revenue Code provides that “[n]o penalty under this title shall be assessed unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination[.] . . .” 26 U.S.C. § 6751(b)(1). In the Tax Court opinion of Long Branch Land, LLC v. Commissioner, No. 7288-19, T.C. Memo. 2022-2 (U.S. Tax Ct. Jan. 13, 2022) (mem. op.), the court addressed what is meant by “immediate supervisor,” as that term is used in Section 6751(b)(1), as well as the doctrine of “presumption of regularity.”
In the case, Long Branch Land, LLC (“LBL”) claimed a $10,425,000 charitable contribution deduction for a conservation easement it granted to a charitable organization as well as a $3,475,000 charitable contribution deduction for LBL’s donation of a fee simple interest in real property associated with that easement. The IRS selected LBL’s return for examination.
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