Tax Court in Brief | Couturier v. Commissioner | Taxation of Excess Contributions from IRA

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The Tax Court in Brief – July 4th – July 8th, 2022

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Tax Litigation:  The Week of July 4th, 2022, through July 8th, 2022

Couturier v. Commissioner, No. 19714-16, T.C. Memo 2022-69 | July 6, 2022 | Lauber | Dkt. 19714-16


Short Summary:  This case involves a determination by the IRS that petitioner in 2004 made an excess contribution of $25,132,892 to his individual retirement account (“IRA”). Section 4973(a) imposes an excise tax “in an amount equal to 6 percent of the amount of the excess contributions” that a taxpayer makes to an IRA in any given year. This excise tax continues to apply to future tax years, until such time as the original excess contribution is distributed to the taxpayer and included in income. See § 4973(b)(2).  Petitioner contended that the IRS is precluded as a matter of law from asserting excise tax liability under section 4973 because it did not issue him a notice of deficiency challenging his income tax treatment of the transactions that generated the excess contributions. Finding no merit in this argument, the Tax Court denied the Motion.

Key Issues:

Facts and Primary Holdings

Key Points of Law:

InsightUnfortunately for taxpayers, the assessment of income taxes is an entirely separate matter from the assessment of excise taxes.  Even though they may overlap, the failure to assess one does not prevent or prohibit the assessment of the other.