Oral argument: January 17, 2012
Appealed from: United States Court of Appeals for the Fourth Circuit (Feb. 7, 2011)
In 2006, the IRS adjusted Respondent Home Concrete’s 1999 tax return, claiming that Home Concrete overstated its basis in sold assets. The Fourth Circuit found that this adjustment was untimely under the general three year statute of limitations for IRS actions, concluding that overstatements of basis are not omissions that would trigger an extended six year statute of limitations. Petitioner, the United States, argues that the language and purpose behind the statute clarify that overstating a sold asset’s basis triggers the extended period, and that the Fourth Circuit should have deferred to the IRS's statutory interpretation contained within a Treasury Department regulation finalized during the appeal. Home Concrete argues that Supreme Court precedent applies here, eliminating ambiguity in the statutory interpretation. The Supreme Court’s decision will resolve a circuit split over the proper limitations period; the decision will also address the degree of deference due to a Treasury regulation that may be interpreted as conflicting with Supreme Court precedent, and that may be viewed as applying retroactively. The Court’s decision may affect the IRS’s timeframe to detect certain complex tax schemes, and the time period within which taxpayers are subject to audits.