Here are two cases in the federal appeals courts that we’re keeping an eye on: The first is whether a preparer’s e-filing error can avoid a late filing penalty. When e-filing a couple’s return, a preparer put the wife’s Social Security number on the wrong line. IRS rejected the return. The preparer claimed his software program failed to notify him of the rejection. The couple found out their return wasn’t filed only after getting a letter from the Service. They then quickly filed a paper return, but IRS had assessed a penalty for the late filing. A district court upheld the fine. The taxpayers have appealed the holding to the 5th U.S. Circuit Court of Appeals.
A second involves the income tax exemption for the parsonage allowance, after a federal court said the exclusion is unconstitutional because the exemption for clergy housing allowances is akin to support of religion by the federal government. IRS is asking the 7th U.S. Circuit Court of Appeals to overturn that decision.