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On April 25, 2012, the Supreme Court announced its decision in United States v. Home Concrete & Supply, LLC, a case involving a dispute over the language of certain tax code provisions and regulations. Generally, if the IRS believes that a taxpayer’s return has understated the amount of tax owed, the IRS has three years to assess additional tax. The tax code, however, extends that three-year period to six years when the taxpayer improperly “omits from gross income” a sum that exceeds 25% of the gross income that the taxpayer stated on the return. The question here was whether an understatement of gross income that occurred when a taxpayer overstated the “basis” in sold property should count as an “omission” from gross income that triggers the extended six-year assessment period.
The Court held by a vote of 5-4 that the understatement of gross income does not trigger the extended six-year assessment period. Justice Breyer delivered the majority opinion of the Court, with the exception of Part IV-C. The Chief Justice and Justices Alito and Thomas joined the opinion in full, while Justice Scalia joined the opinion in all except Part IV-C. Justice Scalia also filed an opinion concurring in part and concurring in the judgment. Justice Kennedy filed a dissenting opinion, which was joined by Justices Ginsburg, Sotomayor and Kagan.
To discuss the case, we have Kristin Hickman, who is a Professor of Law at the University of Minnesota Law School.