here - Fuerst Ittleman David & Joseph, PL

Case: 11-1612 Document: 003110561288 Page: 28 Date Filed: 06/13/2011
and to identify the source of each item shown on such return, nor
[IRC] section 932(c)(4)(C), which required that he pay income tax to
the USVI on his worldwide income. [IRC] section 6501(a) gives the
IRS a period of up to three years from the date of the filing of a return
to assess taxes due by the taxpayer. Since more than three years have
passed since the taxpayer filed the tax return required by [IRC]
section 932(c)(2), the IRS may not assess and collect additional tax
unless other exceptions apply. [IRC] section 6501(a).
FSA 199906031; 1998 FSA LEXIS 18 (December 18, 1998). 11
At the time the IRS focused its attention on the USVI, it was clear that the
statute of limitations had run, or was about to run, on most of the taxpayers the IRS
intended to audit. To avoid this fact, the IRS unilaterally changed the statute of
limitations provisions under IRC § 6501 (this was necessary otherwise the ―Virgin
Islands project‖ would have been for naught).
Specifically, in Notice 2007-19, the IRS, without appropriate legislative
process or delegated executive authority, took the unconstitutional position that the
three year statute of limitations period for tax years ending before December 31,
2006, only applies to those individuals who filed with the BIR and who had less
than $75,000 of gross income for the taxable year. Notice 2007-19.
Subsequently, the IRS issued Notice 2007-31, which amended Notice 2007-
19. Notice 2007-31 states: ―[t]his notice announces that for taxable years ending
on or after December 31, 2006, the U.S. federal statute of limitations for all U.S.
11 This is not an error; the Field Service Advice was dated December 18, 1998, but
not published until 1999, hence the discrepancy in the dates.
FUERST ITTLEMAN, PL
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