Lamprecht v. Cmsnr. IRS, No. 22-1308 (D.C. Cir. 2024)
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Johannes and Linda Lamprecht, Swiss citizens who lived in the United States in 2006 and 2007, underreported their taxable income by falsely claiming they had no foreign bank accounts. In reality, they had millions in a Swiss bank, UBS. The couple amended their tax returns for 2006 and 2007 in 2010, after the United States served a John Doe Summons on UBS in 2008, seeking information about unknown taxpayers who might have failed to report taxable income in UBS accounts. The amended returns reported taxable income in the previously undisclosed UBS accounts, increasing their tax liability by approximately $2.5 million. The couple paid these back taxes, but in 2014, the IRS informed them they would be penalized for their original inaccuracies, and in 2015, issued a formal “notice of deficiency” assessing about $500,000 in penalties.
The Lamprechts challenged these penalties in the United States Tax Court, arguing that the IRS didn’t follow the tax code’s procedures when it first decided to penalize them, that they deserved protections for voluntarily fixing their own mistake before the IRS acted, and that the statute of limitations for assessing accuracy penalties had run on the two tax years. The tax court granted summary judgment to the IRS.
The United States Court of Appeals for the District of Columbia Circuit affirmed the tax court's decision. The court found that the IRS had complied with the statutory requirement for a supervisor's written approval for the penalty assessment. The court also ruled that the Lamprechts' corrected returns did not protect them from penalties because they were filed after a John Doe Summons was issued. Lastly, the court held that the statute of limitations did not bar the assessment of penalties because the John Doe Summons extended the statute-of-limitations period.
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