Andreozzi Bluestein Litigators Achieve Precedential Tax Court Victory for United States Virgin Islands Taxpayers

In a court-reviewed opinion published on January 29, 2018, the U.S. Tax Court in Coffey, et. al. v. Commissioner, 150 T.C. No. 4, found in favor of the taxpayers and dismissed the Internal Revenue Service’s Statutory Notices of Deficiency against them as time barred. Andreozzi Bluestein LLP represented the Petitioners in this case before the Tax Court.

The Petitioners claimed bona fide residency in the U.S. Virgin Islands for the tax years at issue, and the IRS disputed that claim.  The Internal Revenue Service claimed that the Petitioners were not bona fide residents of the U.S. Virgin Islands and, therefore, their filing as bona fide residents of the U.S. Virgin Islands did not provide them with a statute of limitations barring any further assessment by the Internal Revenue Service. The Tax Court determined, upon the facts in this case, that the Petitioners’ return claiming residency in the U.S. Virgin Islands constituted a return filed with the Internal Revenue Service for purposes of the statute of limitations.  Accordingly, the Court, finding in favor of Petitioners, held that the Internal Revenue Service’s proposed tax deficiencies, which were in excess of $2 million, were time-barred by the statute of limitations.

Coffey has significant precedential value as it will provide guidance for many similarly-situated taxpayers whose cases are currently pending either before the IRS or in the Tax Court.  The case will also serve as guidance for taxpayers currently filing their income tax returns with the Virgin Islands Bureau of Internal Revenue.

We wish to recognize and thank the government of the United States Virgin Islands, which intervened in the case and provided the Tax Court with its insights and arguments on the issue.  The contributions of the USVI government were valuable to the Tax Court’s careful and thoughtful consideration of this complex and important issue, and those contributions reflect that government’s commitment to the protection of its taxpayers.

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