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Legal Studies
Reference:

Taxpayer integrity in US law enforcement practice.

Muratov Ruslan Adamovich

Postgraduate student, the department of Financial Law, O. E. Kutafin Moscow State Law University

123001, Russia, g. Moscow, ul. Sadovaya-Kudrinskaya, 9

muratovrus@inbox.ru
Other publications by this author
 

 

DOI:

10.25136/2409-7136.2022.4.37629

Received:

02-03-2022


Published:

13-04-2022


Abstract: The subject of the study is the concept of taxpayer integrity in the US law enforcement practice, in particular, the approach of the US tax authorities and the US Tax Court in applying this concept when considering tax disputes. When considering this issue, it was revealed that the signs of the taxpayer's integrity are fixed in the US Internal Revenue Code in Article 1.6664-4. In accordance with the provisions of this article, no fine may be imposed in accordance with section 6662 in respect of any part of the underpayment if the taxpayer proves that there was a reasonable reason for such part and that the taxpayer acted in good faith.     The main conclusion of the study is that the existence of a legal norm defining the signs of a taxpayer's good faith in the US tax legislation allows taxpayers to avoid a fine in case of incomplete fulfillment of tax obligations by providing a reasonable reasonable reason. In addition, we can conclude that when determining the legality of accepting expenses for the purpose of reducing the income tax base, the US Tax Court takes into account the nature of the appearance of these expenses (case Neonatology Assocs., P.A. v. Commissioner - 115 T.C. 43, 99 (2000), aff'd, 299 F 3d 221 (3d Cir. 2002))


Keywords:

the principle of good faith, tax law, taxpayers, tax authorities, execution of the tax obligation, integrity of taxpayers, US Tax Law, US Tax Court, Tax disputes, tax legislation

This article is automatically translated.

According to the US Internal Revenue Service, the most significant factor in determining whether a taxpayer had a reasonable reason and acted in good faith is the taxpayer's attempt to fulfill a tax obligation in an appropriate form.

As an example, the US Internal Revenue Service (hereinafter referred to as the Service) cites a situation when a taxpayer submits an incorrect tax return, but does not know that the amounts are incorrect, a reasonable reason may apply. In addition, a separate error of the taxpayer in calculations or data transfer may indicate a reasonable cause and good faith of actions.

The extent of the taxpayer's efforts to properly fulfill the tax obligation is the most important factor in determining a reasonable cause[1]. The rules do not offer vivid tests to measure taxpayers' efforts. When assessing the taxpayer's efforts, inspectors should take into account all relevant facts.

In addition, the US Internal Revenue Code provides examples that allow us to understand the main criteria for assessing the integrity of taxpayers, which can reveal circumstances that will be important when considering a particular case by the Internal Revenue Service or a court.

According to the case "Neonatology Assocs., P.A. v. Commissioner"[2] medical companies reduced the income tax base and these contributions so exceeded the cost of annual life insurance that they could not be plausibly qualified as ordinary and necessary business expenses in accordance with section 162 of the US Internal Revenue Code. In fact, Neonatology applied a specially created form of doing business in order to circumvent the provisions of the US Tax Code by paying inflated life insurance premiums by the company to account for deductions on insurance policies in an excessive amount for the purpose of reducing income tax. As the Tax Court correctly recognized, these contributions represented hidden dividends subject to taxation, and not deductible expenses. Moreover, individual taxpayers who were paid insurance premiums could not use the insurance policy in good faith. The tax Court duly held them liable for negligence related to the accuracy of the data specified in the tax return. The reasons for making this decision, indicated in the case file, we will consider in more detail.[2]

The US Internal Revenue Service conducted an audit of Neonatology's tax returns for calendar years 1992 and 1993 and the tax returns of doctors who received insurance policies that were the subject of a court case. As a result of the inspections , the tax authority made the following conclusions:

(1) The excess contributions were not normal and necessary business expenses under section 162 (a) of the U.S. Internal Revenue Code. Even if the amounts represented ordinary and necessary business expenses, they were nevertheless not deductible in accordance with articles §§ 404 (a) and 419 (a) of the Internal Revenue Code, which limit the deduction of contributions paid to deferred compensation plans and social benefit plans.

(2) The amounts of insurance premiums were deposited for the purposes of obtaining economic benefits by individual taxpayers and as such represented hidden dividends in accordance with §§ 61 (a)(7) and 301 of the US Tax Code. Assuming that the life insurance Plans of Neonatology and the individual doctors for whom these insurance policies were issued constitute deferred compensation plans, the excess contributions, in any case, should have been included in accordance with section 402 (b).

Finally, the tax authority determined that due to underpayment of taxes, individual taxpayers are subject to fines in accordance with Article 6662 (a) of the US Internal Revenue Code.

According to the Tax Court, the Neonatology life insurance plan is primarily a method that was developed and intended for the hidden distribution of surplus funds (in the form of excess contributions) from corporations for the end use and benefit of employees and (or) owners.

In the case of "MacMurray vs. Commissioner"[3] The Tax Court ruled that the taxpayer's exclusion of income received as a result of the transaction represents a significant understatement of income for the purposes of calculating income tax. Thus, the taxpayer is obliged to pay a fine related to the accuracy of the data provided in the tax return, in accordance with Section 6662 of the US Internal Revenue Code.

The US Tax Court found that the taxpayer failed to fulfill the conditions specified in accordance with article 6664(c)(1), which we mentioned in the previous paragraph, in order to obtain an exemption from compliance with section 6662(a). In particular, the court concluded that the taxpayer could not avoid the fine because he did not provide reasonable grounds for deduction in the amount that he indicated in the tax return, and, moreover, he acted in bad faith.

In this case, it is alleged that the Tax Court, determining whether a taxpayer was entitled to exemption from a fine related to the reliability of data in the tax return, established the incorrect application of the provisions provided for by law and judicial practice.

The taxpayer tried to exercise the right to exemption from the fine after the regulatory authorities detected a tax offense when deducting amounts that the taxpayer did not have the right to apply to reduce the tax base.

Thus, in accordance with the US tax legislation, taxpayers have the right to deduct amounts transferred as charity when filling out a tax return[4]. Also, if a taxpayer makes a charitable contribution in non-monetary form, then he can deduct the fair market value. Fair market value refers to "the price at which a property could be bought by a willing buyer or sold by a willing seller, neither of whom is forced to buy or sell, and both have an understanding of the actual state of the property."

However, during the inspection, the supervisory authority found out that the valuation of the property was overstated. It was also established that all experts assessed McMurray's property below the one that was in the act to which he referred when proving his innocence.

In this regard, the Tax Court considered McMurray's evidence inadequate, since the expert who provided the conclusion to McMurray did not take into account restrictions on peat extraction in the territory transferred to them for charitable purposes or the costs associated with such an operation. Also, the expert did not adequately assess other characteristics of the property transferred to charity, which led to an overestimation of the price of the property compared to a reasonable price, which further led to an unjustified underestimation of the tax base for calculating income tax. Thus, the court concluded that McMurray did not provide sufficient evidence to indicate a large amount as a deduction reducing the tax base.[5]

According to Elena Vasilyevna Kilinkarova, the basis for the formation of judicial doctrines in the United States on the limits of tax optimization was the case "Gregory v. Helvering»[6]. In accordance with this case, Evelyn Gregory was the owner of all shares of the United Mortgage Company (hereinafter referred to as "United"), which, in turn, owned 1,000 shares of Monitor Securities Corporation (hereinafter referred to as "Monitor"). Ms. Gregory wanted to become the rightholder of Monitor shares for subsequent sale in order to make a profit, but using the most obvious method of transferring rights to shares — transferring them from United as dividends — Ms. Gregory would have to pay a significant amount of tax.

In order to reduce the tax burden on the acquisition of shares by the taxpayer , the following method was used:

1. On September 18, 1928, Mrs. Gregory created a new company, Averill Corporation (hereinafter referred to as "Averill"), and three days later, United, on the instructions of Mrs. Gregory, transferred all the shares of Monitor to the newly created Averill Company. Averill did not make any other transactions and had no intention to do so.

2.                 After that, Ms. Gregory took over all the shares of United, which no longer owned shares of Monitor, and all the shares of Averill, which owned only 1,000 shares of Monitor.

3. On September 24, 1928, Mrs. Gregory liquidated the Averill company and, as its founder, received all the property - 1000 shares of the Monitor company.

4.                 On the same day, Ms. Gregory sold the shares received to a third party and, in connection with the sale of the shares, paid less tax than if she had sold the shares received as dividends from United.

The actions as a result of which Ms. Gregory acquired shares of Monitor were qualified by her as a distribution of shares in corporate reorganization, which, according to the legislation in force at that time, was exempt from tax[7].

Assessing the above actions of Ms. Gregory on tax optimization, the US Supreme Court indicated that the taxpayer has the right to reduce the amount of tax payable to the extent that the law allows. However, as the court pointed out, if the transaction does not have a business or corporate purpose implied by law (and the reorganization under consideration was not really aimed at restructuring the business or part of it, but was made solely for the transfer of shares to Ms. Gregory), this set of transactions cannot be recognized as reorganization for tax exemption purposes. In the considered case, the taxpayer was held accountable and obliged to pay taxes, as if the reorganization had not been carried out, but there had been a payment of dividends from United to the taxpayer.

As the court pointed out, the reorganization had no economic content, which the legislator assumed when defining the term "reorganization" (the doctrine of economic substance), and the reorganization was not taken into account for tax purposes, since it did not pursue a real business goal of business restructuring (the doctrine of business purpose). In addition, the court pointed out the need to analyze the essence of the mechanism used to identify the true purpose of its use (the doctrine of the priority of substance over form).[8]

Due to the fact that the principle of good faith lays down the main vector of behavior of both tax authorities and taxpayers in relation to all tax relations, it is proposed to consider the law enforcement practice under the rules of transfer pricing.

In the case of "US vs Whirlpool"[9], the US Internal Revenue Service increased the tax base of "Whirlpool US", since the income attributed to the company "Whirlpool Luxembourg" for the sale of household appliances was considered taxable income from sales of a foreign parent company or income from a controlled foreign company of the parent company in the United States in accordance with the "rule of the production department" according to Section 951(a) of the US Tax Code. The income from the sale of household appliances was transferred to Whirlpool Luxembourg through a production and distribution agreement, according to which it was the nominal manufacturer of household appliances manufactured in Mexico, which were then sold to Whirlpool US and Whirlpool Mexico. According to the aforementioned agreement, income attributed to Luxembourg was not taxed in either Mexico or Luxembourg. Whirlpool challenged the assessment of the Internal Revenue Service and filed a lawsuit in the US Tax Court. In May 2020, the Tax Court ruled in favor of the tax service. According to the court, "if Whirlpool Luxembourg had conducted its manufacturing operations in Mexico through a separate entity, its sales revenue could have been attributed to the sales income of the foreign parent company (FCBSI) in accordance with section 954 (d)(1)." Thus, the income should be treated as "FBCSI" according to the US Tax Code. In such a case, Section 954 (d)(2) of the US Internal Revenue Code applies, which states that "for the purposes of determining income from sales of a foreign parent company in situations where the conduct of activities of a controlled foreign corporation through a branch or similar institution outside the country of registration of a controlled foreign corporation has virtually the same effect, as if such a branch or similar institution were a wholly owned subsidiary corporation receiving such income, in accordance with the provisions established by the Secretary, income related to the performance of such activities of such a branch or similar institution should be treated as income received by a wholly owned subsidiary of a controlled foreign corporation, and amounts to income from sales of a foreign base company to a controlled foreign corporation."

The Court of Appeal upheld the decision of the first instance and found that only according to the text of the law, sales income is income from sales of a foreign parent company, which should be included in the taxpayer's income under subsection F of the US Tax Code.

The question presented is whether the income of "Whirlpool Luxembourg" from the sale of household appliances "Whirlpool-US" and "Whirlpool-Mexico" in 2009 is income from sales of a foreign parent company in accordance with §954(d)(2).

As the Tax Court correctly noted, § 954(d)(2) consists of two conditions and two consequences that follow if these conditions are met.

The first condition is that the controlled foreign company "carried out" activities "through a branch or similar institution" outside the country of its registration.

The second condition is that the branch agreement had "almost the same effect as if such a branch were a wholly owned subsidiary corporation [CFC] receiving such income."

If these conditions are met, then the following two consequences apply to income related to the activities of the branch:

1) income should be treated as income received by a wholly owned subsidiary of a controlled foreign corporation;

2) income related to the activities of the branch should be income from sales of a foreign parent company to a controlled foreign corporation[10].[11]

Despite the absence of the principle of taxpayer integrity in the USA, we see that when considering various cases, the US tax courts consider the issue of the integrity of both taxpayers and tax authorities.

There are several circumstances that influenced the decision of the tax courts in favor of the taxpayer or tax authority, for example:

1)                 The correctness of the application of the provisions of tax legislation in the implementation of tax control measures by the tax authority;

2)                 Application of the provisions of tax legislation in accordance with the purpose of their introduction;

3) Reasonableness in requesting documents for the implementation of tax control procedures (for example, the availability of the opportunity to study the entire volume of required documents or the need to request all documents to verify the taxpayer's activities);

4) The presence of a reasonable reason for the taxpayer when choosing a method of carrying out his activities other than tax evasion.

In fact, when considering law enforcement practice in the United States, it can be seen that when considering each specific US Tax Court considered the question of the reason for the taxpayer's behavior in each case and, very importantly, the justification for such behavior. In cases where the taxpayer provided sufficient evidence of his position and with the correct application of the relevant provisions of tax legislation, the tax courts made decisions in favor of the taxpayer.

References
1. article 1.6664-4 IRC
2. Neonatology Assocs., P.A. v. Commissioner-115 T.C. 43, 99 (2000), aff’d, 299 F 3d 221 (3d Cir. 2002)
3. «Homer F. and Dorothy L. McMurray v. Commissioner». Docket No. 4850-90., 63 T.C.M. 1802 (1992), T.C. Memo. 1992-27, United States Tax Court
4. article 1.170A1(c)(1) IRC
5. Homer F. and Dorothy L. McMurray v. Commissioner [Electronic resource] URL: https://www.timbertax.org/research/caselaw/court_cases/m/McMurry.pdf
6. «Gregory v. Helvering» 293 U.S. 465 (1935).
7. In accordance with the decision in the case, the term "reorganization" under the applicable law meant, among other terms, the transfer by a company of all or part of its assets, provided that, immediately after such transfer, the transferring company and/or its shareholders simultaneously control the company to which the assets were transferred (http://supreme.justia.com/us/293/465/case.html)
8. Permissible tax optimization in the court practice of the USA and the Great Britain: Kilinkarova E.V. [Electronic resource] URL: http://www.arbitr.ru/_upimg/D811A99CE225EF38F1F691E495F15335_z-1_p_166-167.pdf
9. US vs Whirlpool, December 2021, U.S. Court of Appeals, Case No. Nos. 20-1899/1900 [Electronic resource] URL: https://tpcases.com/us-vs-whirlpool-december-2021-u-s-court-of-appeals-case-no-nos-20-1899-1900/
10. § 954(d)(2) IRC
11. US vs Whirlpool, December 2021, U.S. Court of Appeals, Case No. Nos. 20-1899/1900 [Electronic resource] URL: https://tpcases.com/us-vs-whirlpool-december-2021-u-s-court-of-appeals-case-no-nos-20-1899-1900/

First Peer Review

Peer reviewers' evaluations remain confidential and are not disclosed to the public. Only external reviews, authorized for publication by the article's author(s), are made public. Typically, these final reviews are conducted after the manuscript's revision. Adhering to our double-blind review policy, the reviewer's identity is kept confidential.
The list of publisher reviewers can be found here.

A REVIEW of an article on the topic "Taxpayer integrity in U.S. law enforcement practice". The subject of the study. The article proposed for review is devoted to topical issues of studying the integrity of "... the taxpayer in the law enforcement practice of the United States." The author has chosen a special subject of research: the proposed issues are investigated from the point of view of tax law and analysis of the court decision, while the author notes that "... the most significant factor in determining whether a taxpayer had a reasonable reason and whether he acted in good faith is the taxpayer's attempt to fulfill a tax obligation in an appropriate form." It describes mainly an appeal "... against the decisions of the United States Tax Court adopted on April 9, 2001 in accordance with its opinion filed on July 31, 2000, which confirms the determination of the Commissioner of Internal Revenue" (http://taxpravo.ru/sudebnie_dela/statya-72664-NEONATOLOGY_ASSOCIATES_PA_v_COMMISSIONER_OF_INTERNAL_REVENUE_Tax_Court ) and basically a translation of this decision into Russian is given. No amount of scientific literature on the stated problems is studied or generalized. It is not at all clear why there is no scientific literature of scientists on the issue raised in this article. Probably, according to the author, it either does not exist, or it does not deserve attention. But this is completely untrue. You can refer to the works of scientists, and you can find quite a few of them. At the same time, the author notes that "A single error in calculations usually does not contradict reasonable cause and good faith." However, there are no references to the work of opponents. Research methodology. The purpose of the study is determined by the title and content of the work "... since individual taxpayers could not in good faith use the protection based on professional protection, the US Tax Court duly held them responsible for negligence related to the accuracy of the performance of tax duties." It can be designated as the consideration and resolution of certain problematic aspects related to the above-mentioned issues and the use of certain experience. Based on the set goals and objectives, the author has chosen a certain methodological basis for the study. In particular, the author uses a set of special legal methods of cognition. General legal methods could play the greatest role, but they are absent. In particular, the methods of analysis and synthesis would make it possible to summarize and separate the conclusions of various approaches to the proposed topic, as well as draw some conclusions from the materials of opponents. But the author did not take advantage of this. In particular, the author used a formal legal method, which allowed for the analysis and interpretation of the norms of current legislation: The U.S. Internal Revenue Code, the Tax Reform Act of 1986, and the court decision in the case. At the same time, in the context of the purpose of the study, the formal legal method could be applied in conjunction with the comparative legal method, especially since the author could cite many scientific papers by both foreign and Russian scientists on the topic of "taxpayer integrity in law enforcement practice", which are published in particular in NB journals. It is important to note here that the author declares some aspects of the problem without citing research. Thus, the methodology chosen by the author is not fully adequate to the purpose of the article, and does not allow to study even certain aspects of the topic. The relevance of the stated issues is beyond doubt. This topic is one of the most important in the world and in Russia, from a legal point of view, the work proposed by the author can be considered relevant, namely, he notes that "... a separate error by a taxpayer in calculations or data transfer may indicate a reasonable cause and good faith of actions." Thus, scientific research in the proposed field is only to be welcomed. Scientific novelty. The scientific novelty of the proposed article is questionable. It is not expressed in the specific scientific conclusions of the author. Thus, the materials of the article as presented cannot be of particular interest to the scientific community in terms of contribution to the development of science. Style, structure, content. The subject of the article corresponds to the specialization of the journal "Legal Studies", as it is devoted to topical issues of studying the integrity of "... the taxpayer in the law enforcement practice of the United States." The purpose of focusing on only one court decision is not clear, because the subject of the article is "good faith ...". There is no hint in the article that this question has already been raised! The content of the article practically does not correspond to the title, since the author considered the court decision, but did not achieve the purpose of his research. The quality of the presentation of the study and its results should be recognized as incomplete. The subject matter follows directly from the text of the article, but this does not apply to the tasks, methodology, and results of legal research. The design of the work does not meet the requirements for this kind of work. There are many significant violations of these requirements (the absence of opponents and the analysis of their research, the absence of a practical bibliography, conclusions, etc.). Bibliography. The quality of the literature used should be evaluated poorly (there is none, except for laws and court decisions). The author has not used the literature presented by foreign authors, and there are also no domestic studies on the subject of the article. Thus, the works of the authors not listed do not correspond to the research topic, do not have a sign of sufficiency, do not contribute to the disclosure of certain aspects of the topic, because they are missing. But it is necessary to pay more attention to the analysis of literature and the analysis of the content of legal acts, especially since the article claims to be published in the journal "Legal Research". Appeal to opponents. The author has not conducted a serious analysis of the current state of the problem under study. The author does not describe different points of view on the problem, does not try to argue the correct position in his opinion, does not offer solutions to individual problems. In general, it is necessary to use literature and analyze the content of legal acts, especially since there is a sufficient amount of literature. Conclusions, the interest of the readership. There are practically no conclusions. The article in this form may not be of interest to the readership in terms of the presence in it of the author's systematized positions in relation to the issues stated in the article. Based on the above, summing up all the positive and mostly negative sides of the article, I recommend "reject".

Second Peer Review

Peer reviewers' evaluations remain confidential and are not disclosed to the public. Only external reviews, authorized for publication by the article's author(s), are made public. Typically, these final reviews are conducted after the manuscript's revision. Adhering to our double-blind review policy, the reviewer's identity is kept confidential.
The list of publisher reviewers can be found here.

A REVIEW of an article on the topic "Taxpayer integrity in U.S. law enforcement practice". The subject of the study. The article proposed for review is devoted to topical issues of regulation of tax relations in the law enforcement practice of the United States, provided that the taxpayer is in good faith. The author examines the issues of how to establish the fact of the taxpayer's good faith due to the practice that has developed in the United States. The subject of the study was the norms of US law, decisions on specific cases, as well as the opinions of scientists. Research methodology. The purpose of the study is not stated directly in the article. At the same time, it can be clearly understood from the title and content of the work. The purpose can be designated as the consideration and resolution of certain problematic aspects of the issue of establishing the fact of a taxpayer's good faith in US law enforcement practice. Based on the set goals and objectives, the author has chosen the methodological basis of the study. In particular, the author uses a set of general scientific methods of cognition: analysis, synthesis, analogy, deduction, induction, and others. In particular, the methods of analysis and synthesis made it possible to summarize and share the conclusions of various scientific approaches to the proposed topic, as well as draw specific conclusions from the materials of judicial practice. The most important role was played by special legal methods. In particular, the author actively applied methods of analysis and generalization of judicial practice in cases that have developed in the United States. For example, the following conclusion of the author: "The question presented is whether the income of Whirlpool Luxembourg from the sale of Whirlpool-US and Whirlpool-Mexico household appliances in 2009 was income from sales of a foreign parent company in accordance with §954(d)(2). As the Tax Authority correctly noted The court, § 954(d)(2) consists of two conditions and two consequences that follow if these conditions are met. The first condition is that the controlled foreign company "carried out" activities "through a branch or similar institution" outside the country of its registration. The second condition is that the branch agreement had "almost the same effect as if such a branch were a wholly owned subsidiary corporation [CFC] receiving such income." Thus, the methodology chosen by the author is fully adequate to the purpose of the study, allows you to study all aspects of the topic in its entirety. Relevance. The relevance of the stated issues is beyond doubt. There are both theoretical and practical aspects of the significance of the proposed topic. From the point of view of theory, the topic of determining and establishing the fact of a taxpayer's good faith is important in a comparative aspect. It is necessary to establish certain practice-oriented criteria for understanding this term not only under US law, but also in general in the theory of tax law. From the point of view of practice, scientifically based recommendations can be created to improve the legislation of various countries. Thus, scientific research in the proposed field should only be welcomed. Scientific novelty. The scientific novelty of the proposed article is beyond doubt. Firstly, it is expressed in the author's specific conclusions. Among them, for example, is the following conclusion: "In fact, when considering law enforcement practice in the United States, it is clear that when considering each specific case, the US Tax Court considered the question of the reason for the taxpayer's behavior in each case and, very importantly, the justification for such behavior. In cases where the taxpayer provided sufficient evidence of his position and with the correct application of the relevant provisions of tax legislation, the tax courts made decisions in favor of the taxpayer." These and other theoretical conclusions can be used in further scientific research. Secondly, the author suggests ideas for generalizing the signs of a bona fide taxpayer in the practice of the United States. In particular, "It is possible to identify several circumstances that influenced the decision of the tax courts in favor of the taxpayer or the tax authority, for example: 1) The correctness of the application of the provisions of tax legislation in the implementation of tax control measures by the tax authority; 2) The application of the provisions of tax legislation in accordance with the purpose of their introduction; 3) Reasonableness in requesting documents for tax control procedures (for example, the ability to examine the entire volume of required documents or the need to request all documents to verify activities 4) The presence of a reasonable reason for the taxpayer to choose a method of carrying out his activities other than tax evasion." The above conclusion may be relevant and useful for law-making activities, including in Russia for comparing domestic law with the law of foreign states. Thus, the materials of the article may be of particular interest to the scientific community in terms of contributing to the development of science. Style, structure, content. The subject of the article corresponds to the specialization of the journal "Legal Studies", as it is devoted to legal problems related to the study of tax law and the practice of its application in various states. The content of the article fully corresponds to the title, as the author considered the stated problems and achieved the research goal. The quality of the presentation of the study and its results should be recognized as fully positive. The subject, objectives, methodology and main results of the study follow directly from the text of the article. The design of the work generally meets the requirements for this kind of work. No significant violations of these requirements were found. Bibliography. The quality of the literature used should be evaluated poorly. The author has not actually used the literature on the research topic. The author makes references to cases from the practice of the United States, which is clearly not enough to solve the purpose of the study. It is necessary to refer to the scientific literature, including in the USA, and make references to it. Paradoxically, at one point the author makes an indication of the scientist's opinion, but does not further provide a link to her work. So, "According to Elena Vasilyevna Kilinkarova, the case became the basis for the formation of judicial doctrines in the United States on the limits of tax optimization ...". However, there is no reference to the work of E.V. Kilinkarova, which seems necessary in the context of the text of the work. In fact, given its purpose (consideration of the law enforcement aspects of the topic), the work does not assume a large number of references to scientific literature. However, their complete absence is not possible. The author should expand the scientific base of the research. Thus, the works of the above authors correspond to the research topic, but do not have a sign of sufficiency, do not contribute to the disclosure of various aspects of the topic. Appeal to opponents. The author has not conducted a serious analysis of the current state of the problem under study. Conclusions, the interest of the readership. The conclusions are fully logical, as they are obtained using a generally accepted methodology. The article may be of interest to the readership in terms of the systematic positions of the author in relation to the generalization of US practice in tax disputes, however, the scientific and theoretical component of the article should be expanded so that the interest of the readership is more obvious. Thus, the article can be recommended for publication after expanding the bibliography and the number of references to the cited literature. Based on the above, summarizing all the positive and negative sides of the article, "I recommend sending it for revision"