Abstract
The question of who should win in the context of a mistake raises competing notions of fairness and competing notions of equity. Rewarding taxpayers for their mistakes motivates tax practitioners to find more and more mistakes to the benefit of the sophisticated taxpayer. Such a system creates cynicism about the fairness of the nation’s tax laws because it allows some taxpayers who plan for mistakes to receive a preference over similarly situated taxpayers who do not plan for mistakes. However, a counter-equity argument can be made that taxpayers should be able to rely on the plain meaning of the tax laws. Tax laws are, by their very nature, enforced exactions. There is something unfair about collecting an enforced exaction when the tax laws do not specifically authorize the exaction. Due to these competing notions of fairness, any tax mistake will create an inequity to someone, and so the question is who will suffer that inequity? It is in this context that new section 7701(o) has now entered the discussion and has sought to clarify and in many cases re-draw the line for where the taxpayer can benefit from a mistake and where the taxpayer cannot.
Recommended Citation
Wells, Bret
(2011)
"Economic Substance Doctrine: How Codification Changes Decided Cases,"
Florida Tax Review: Vol. 10:
No.
1, Article 9.
Available at:
https://scholarship.law.ufl.edu/ftr/vol10/iss1/9