[Charlotte, NC] — In a critical legal battle, Mann Construction, supported by tax consulting firm Restricted Property Trust, LLC, has secured a significant win against the IRS, setting a powerful precedent for businesses employing Restricted Property Trust (RPT) structures in tax planning. The U.S. District Court for the Eastern District of Michigan awarded Mann Construction full attorney fees, further validating the Restricted Property Trust as a compliant, tax-efficient strategy for benefit planning. This ruling not only bolsters the confidence of Restricted Property Trust users but also strengthens protections for companies and individuals facing similar IRS penalties.
The dispute began when the IRS issued penalties against Mann Construction, classifying the Restricted Property Truststructure as an “abusive tax shelter” under Notice 2007-83. The IRS cited the Restricted Property Trust as a “listed transaction” used for tax avoidance purposes. However, the Sixth Circuit Court of Appeals ruled that Notice 2007-83 lacked the necessary procedural underpinnings, ultimately “setting aside” the notice under the Administrative Procedure Act (APA). This initial ruling was a major victory for Restricted Property Trust users, illustrating that IRS notices must meet legal standards before they can serve as a basis for penalties.
Following this successful appeal, Mann Construction sought to recover attorney fees incurred during the prolonged litigation. The DOJ argued that because Restricted Property Trust, LLC had paid the legal fees, they did not qualify as “incurred” expenses under the IRS code. The court disagreed, ruling that third-party fee payments billed directly to the client are indeed “incurred” and therefore recoverable. Judge Thomas L. Ludington awarded $220,482.50 in attorney fees and $1,355.90 in court costs, reinforcing taxpayer rights and promoting fairness in tax enforcement.
Legal Impact for Restricted Property Trust Users and Other Taxpayers
The court’s decision has far-reaching implications for businesses and individuals who rely on Restricted Property Trusts for retirement planning, tax-efficient benefits, and business continuity. By affirming that third-party paid fees qualify as “incurred” expenses, this case reassures Restricted Property Trust users that their legal expenses can be recovered in IRS disputes, offering financial protection against unjustified penalties. It underscores that companies employing Restricted Property Trusts can defend their right to use these structures without fear of incurring prohibitive legal costs.
This case exemplifies the importance of effective legal representation in tax matters. The ruling confirms that businesses employing innovative tax strategies, such as the Restricted Property Trust, can rely on experienced counsel to challenge arbitrary IRS actions. This decision to award attorney fees reinforces that the IRS must respect taxpayer rights and follow due process when issuing penalties.
Understanding Restricted Property Trusts and Restricted Property Trust, LLC’s Role in the Case
Restricted Property Trusts are specialized financial structures designed to provide business owners and highly compensated employees with a compliant, tax-efficient means of saving for retirement, succession planning, and business continuity. By using cash-value life insurance and restrictive distribution provisions, Restricted Property Trusts offer both immediate and long-term financial benefits. Restricted Property Trust, LLC has extensive experience in advising and defending clients in Restricted Property Trust cases, guiding Mann Construction through an arduous litigation process that led to both penalty reversal and attorney fee recovery.
For businesses focusing on strategic tax planning, this ruling strengthens the position of the Restricted Property Trust structure as a legitimate tool for benefit planning. Restricted Property Trust, LLC’s role in achieving this outcome reinforces their reputation as a leading advocate for clients in tax compliance matters, particularly those involving complex benefit structures.
A Key Milestone in Promoting Fair Tax Practices
This case serves as a reminder to all taxpayers and businesses employing advanced tax planning techniques that IRS penalties can be challenged successfully. Mann Construction’s decision to seek justice not only for penalty reversal but also for attorney fees illuminates a commitment to fair tax practices and taxpayer rights. The court’s decision sends a strong message to companies and individuals using Restricted Property Trusts that these structures are legally sound and worth defending against arbitrary IRS actions.
For business owners who prioritize effective tax planning, this ruling confirms the legal viability of Restricted Property Trusts, offering reassurance that comprehensive legal support can yield substantial victories. Restricted Property Trust, LLC’s work in this case exemplifies the critical role of skilled representation, allowing businesses to proceed with confidence in using Restricted Property Trusts and other advanced strategies.
About Restricted Property Trust, LLC
Restricted Property Trust, LLC provides strategic tax advice to businesses and high-net-worth individuals, with a focus on Restricted Property Trusts and other tax-efficient structures. Their experience in defending clients against IRS scrutiny underscores their dedication to protecting taxpayer rights and promoting fair practices within the tax compliance landscape. This case reaffirms their commitment to ensuring that legitimate tax strategies remain accessible and defensible under the law.
