Somebody at the Internal Revenue Service forgot to look at the calendar - and the goof could cost the government as much as $100 million in taxes.
The IRS confirmed Wednesday that it was one day late in filing a notice of appeal in an important case - an appeal that some legal experts expect the IRS would have won. An agency spokesman disputed the estimate of what the error could cost.On May 26, the U.S. Tax Court entered a decision holding that the IRS was wrong in requiring AT&T to pay tax currently on customer security deposits. The agency had 90 days to appeal, a period that ended Aug. 24. The notice of appeal was filed Aug. 25.
"Underscoring this embarrassment is the fact that the service prevailed in the only appellate decision addressing the issue presented in the AT&T case," reported Tax Notes, an authoritative tax journal. The publication noted a previous appeals court verdict in favor of the IRS in a Florida case involving security deposits paid by gas customers.
Tax Notes estimated the goof could cost $100 million in disputed taxes and interest. Keith contended, however, that because the issue is essentially one of when taxes should be paid, the potential loss would be less.