Free Joint Status Report - District Court of Federal Claims - federal

Case 1:05-cv-01028-MBH

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

ESTATE OF RANKIN M. SMITH, Sr. SUNTRUST BANK, TAYLOR W. SMITH, and RANKIN M. SMITH, JR., Co-Executors, Plaintiff, v. UNITED STATES OF AMERICA, Defendant.

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Case No. 05-1028 T (Judge Marion Blank Horn)

JOINT STATUS REPORT PURSUANT to the Court's Order dated March 16, 2006, the following is a joint status report of counsel with respect to certain preliminary matters in the above-captioned estate tax refund case brought on behalf of the Estate of Rankin M. Smith, Sr. (the "Estate"). 1. A status conference was held with the Court in this case on March 16, 2006,

during which the parties addressed efforts by defendant and defendant's trial attorney to locate missing files and records for this matter. Since the conference, the Internal Revenue Service has located and forwarded to defendant's trial attorney additional records which were missing from the initial administrative file provided in connection with this litigation. In addition, counsel for plaintiff has provided defendant's trial attorney with certain documents that were missing from administrative files that had been located. 2. At the conference, defendant's trial attorney informed the Court and counsel for

plaintiff of a potential jurisdictional issue because the transcript of account for the Estate 1
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indicated a balance due. It was determined that further investigation and discussion between counsel would be necessary in order to address this issue. 3. Following the conference, defendant's trial attorney provided counsel for plaintiff

with a copy of the transcript of account dated October 13, 2005. Defendant's trial attorney contacted the IRS Service Center responsible for the account to obtain information regarding the treatment of certain payments and adjustments under the account. On March 16, 2006, defendants' trial attorney requested review of the matter by Internal Revenue Service counsel, including counsel involved in the estate tax examination. 4. Counsel for plaintiff also investigated the matter and determined that

representatives of the Estate believed, and had been told by IRS personnel, that all taxes necessary to bring the refund suit had been paid. Further, it appeared to plaintiff that the October 13, 2005 transcript of account did not take into account adjustments that plaintiff believes should have been made for (i) deductions resulting from interest payments made by the Estate under IRC § 6166 in 1998, 1999 and 2000, and (ii) credit for state death taxes previously paid and substantiated. 5. As a result, and because of other possible irregularities in the transcript of

account, counsel for plaintiff retained Laura H. Peebles, CPA, PFS, Tax Director, Washington National Office of Deloitte Tax LLP, to review the transcript of account and to analyze and prepare a report on the estate tax liability of the Estate, taking into account assessments, payments, and adjustments. On April 20, 2006, counsel for plaintiff received Ms. Peebles' analysis and report, and that day forwarded a copy to defendant's trial attorney. Ms. Peebles recomputed the Federal Estate Tax for the Estate taking into account the deduction for the

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payments of section 6166 interest, the IRS audit assessment of additional tax due, and the Georgia state death tax credit shown on the official Georgia certificate. Ms. Peebles also performed a reconciliation of the entries on the transcript of account with the estate tax calculation. Defendant's trial attorney forwarded Ms. Peebles' recomputations to the Internal Revenue Service for consideration during their review. 6. By letter dated April 20, 2006, counsel for plaintiff also provided defendant's trial

attorney with information relating to the payment of state death taxes, including (i) correspondence from the Estate to the Georgia Department of Revenue, dated March 1, 2002, forwarding the Notice of Deficiency, dated January 25, 2002, and paying an additional $4,392,387 in state death taxes and interest based on the Service's position in its Notice of Deficiency, (ii) the State of Georgia Estate Tax Certificate of Payment, issued March 29, 2002, showing a total state death tax credit of $6,093,363, and (iii) April 23, 2002 correspondence from the Georgia Department of Revenue adjusting the total credit amount to $5,964,186 as a result of a small refund from Georgia to the Estate. 7. On April 26, 2006, defendant's trial attorney received a response to her request

for review in the form of a supplemental defense recommendation from the Internal Revenue Service regarding future proceedings in this action. Defendant's trial attorney is currently reviewing those recommendations. Defendant's trial attorney also plans to forward plaintiff's recomputations to a Department of Justice recomputation specialist for review. Defendant's trial attorney is hopeful that review of plaintiff's recomputations by a Department of Justice recomputation specialist will be beneficial in that it may serve to narrow the scope of any computational disputes.

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8.

Based upon the foregoing, the parties believe that additional discussion is

necessary before recommendations can be made with respect to future proceedings. Therefore, counsel for the parties propose that they be allowed an additional 21 days within which to meet and confer before making final recommendations as to future proceedings. WHEREFORE, the parties request: That this joint status report be accepted by the Court; and That the parties be given an additional three weeks to attempt to resolve these preliminary issues, at the conclusion of which a further joint status report setting forth the parties' recommendations will be submitted to the Court.

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Respectfully submitted, April 27, 2006 Date s/ Judith A. Mather__________ JUDITH A. MATHER DOW, LOHNES & ALBERTSON, PLLC 1200 New Hampshire Avenue, N.W. Suite 800 Washington, D.C. 20036 (202) 776-2714, (202) 776-4714 (facsimile) Attorney for Plaintiff

April 27, 2006 Date

s/Jennifer Dover Spriggs__________ JENNIFER DOVER SPRIGGS Attorney of Record U.S. Department of Justice Tax Division Court of Federal Claims Section Post Office Box 26 Ben Franklin Post Office Washington, D.C. 20044 (202) 307-0840, (202) 514-9440 (facsimile)

EILEEN J. O'CONNOR Assistant Attorney General DAVID GUSTAFSON Acting Chief, Court of Federal Claims Section STEVEN I. FRAHM Assistant Chief April 27, 2006 Date __s/Steven I. Frahm_________________________ Of Counsel Attorneys for Defendant

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CERTIFICATE OF SERVICE I certify that service of the foregoing Joint Status Report has, this 27th day of April, been made on plaintiff's counsel by electronic filing and by mailing a copy thereof, in a postage prepaid envelope, to the following address:

JUDITH A. MATHER, ESQUIRE DOW, LOHNES & ALBERTSON, PLLC 1200 New Hampshire Avenue, N.W. Suite 800 Washington, D.C. 20036

s/Jennifer Dover Spriggs U.S. Department of Justice Tax Division Court of Federal Claims Section Post Office Box 26 Ben Franklin Post Office Washington, D.C. 20044 (202) 307-6440

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