How Acquiesce Works

Acquiesce is a term used by the United States Department of Internal Revenue Services (IRS). The IRS can refuse rulings by a lower federal court or the tax court. The IRS does so by releasing a document titled Actions on Decision (AoD). This document details what actions the IRS has decided to take following a ruling. The IRS may acquiesce to a verdict. In this usage, the term does not indicate disapproval or concern with the contents of the judgment.

However, the IRS may refuse to acquiesce. When the IRS refuses to acquiesce to a ruling by federal or tax court, it indicates the IRS has an issue with all or part of the ruling. When the IRS refuses to approve, they do not need to uphold the court's orders. This practice is legal but controversial. The only court that can mandate the IRS change policy is the United States Supreme Court.

Real-World Example of Acquiesce

In 2017, the IRS was given a ruling in the Estate of Bartell Drug case that they refused to consent due to the AoD release. In the Bartell Drug case, the Bartell Drug company wished to purchase a Lynwood, Washington property to build a new pharmacy. Bartell did not buy the land outright; instead, a company called EPC II LLC held the title. The Bartell Drug company leased this property until later, then the title was transferred to Bartell.

Bartell then began looking for a buyer for the property and a new property found in Everette, Washington. The Bartell Company decided to trade the Lynwood property for the Everette property. The IRS then stated that the EPC II LLC did not have ownership of the Lynwood property at the time of exchange. In addition to signing a clause in the original contract with Bartlett that stated compliance in the sale of the property, EPC II LLC did not claim any benefit or responsibility in the property ownership.

However, the deciding factor in the IRS refusal to acquiesce came in the timeframe of the exchange of properties. The sale of the two properties took seventeen months to complete, exceeding the 180 day time limit the parking regulations stated. Additionally, this transaction took place before the enactment of the safe harbor policy. The purpose of this policy was to protect property owners in situations similar to this. As a result of the IRS Action on Decision declaration, the Bartell Drug company is now at the mercy of the IRS's decision to pursue action or follow the courts ruling in the matter.

Significance of Acquiesce

Acquiesce and refusal to acquiesce are essential concepts in the world of tax. Due to this policy allowing the Department of Revenue Services to refuse a court ruling, it is challenging to hold a government agency accountable. While the United States Supreme Court can order the IRS to change policy or uphold rulings, this process takes time and funding, in addition to leaving citizens in limbo and at the mercy of the IRS.