[Charlotte, NC] — In a landmark legal victory, Mann Construction, represented by Restricted Property Trust, LLC, has prevailed in a complex tax dispute against the Internal Revenue Service (IRS), marking a significant win for companies using Restricted Property Trust (RPT) structures. The U.S. District Court for the Eastern District of Michigan awarded Mann Construction full attorney fees, a judgment that reinforces the legitimacy of the Restricted Property Trust as a tax strategy for retirement and benefit planning. This ruling, achieved on November 1, 2024, sets a critical precedent for businesses, reaffirming that they can confidently employ Restricted Property Trusts without the threat of baseless IRS penalties.

This case began when the IRS imposed penalties on Mann Construction, alleging that the Restricted Property Trust structure constituted an “abusive tax shelter” as outlined in IRS Notice 2007-83. The IRS classified the Restricted Property Trust as a “listed transaction,” claiming it was used for tax avoidance and penalizing Mann Construction for implementing the structure. However, the Sixth Circuit Court of Appeals overturned this classification, stating that Notice 2007-83 lacked the procedural foundation necessary to be legally enforceable. This initial victory signaled a milestone for Restricted Property Trust users and challenged the IRS’s approach to imposing penalties without clear legal grounds.

After this initial win, Mann Construction sought to recover attorney fees incurred in the lengthy litigation process. The DOJ contested this request, arguing that since Restricted Property Trust, LLC had covered the legal fees for Mann Construction, they were not “incurred” under the IRS code. The court rejected the DOJ’s argument, ruling that fees paid by a third party on behalf of a client qualify as “incurred,” especially when invoices are billed directly to the client. Judge Thomas L. Ludington awarded Mann Construction $220,482.50 in attorney fees and $1,355.90 in court costs, highlighting the court’s stance on fair tax practice.

Implications for Businesses Using Restricted Property Trusts

The court’s decision has far-reaching implications for other companies and high-net-worth individuals who rely on Restricted Property Trusts for retirement planning, tax-efficient benefit structures, and business continuity. By affirming the legitimacy of Restricted Property Trusts, this ruling sets a precedent that third-party payment of legal fees in tax disputes qualifies as “incurred” expenses, protecting clients from bearing unwarranted costs when defending their right to use innovative tax structures. This ruling emphasizes the importance of procedural compliance, ensuring that penalties are not imposed arbitrarily.

Mann Construction’s success demonstrates the value of dedicated legal representation in tax cases and underscores the importance of taxpayer rights. The decision reflects the court’s commitment to ensuring due process in tax matters and establishing that IRS actions must be grounded in legally sound procedures.

About Restricted Property Trust, LLC and Its Role in the Case

Restricted Property Trust, LLC specializes in advising clients on Restricted Property Trusts, providing a legally compliant structure for retirement and tax-efficient planning. Restricted Property Trusts leverage cash-value life insurance and restrictive distribution provisions to offer both immediate and long-term benefits for business owners and highly compensated employees. Restricted Property Trust, LLC’s expertise played a critical role in guiding Mann Construction through the complexities of the IRS dispute, ultimately achieving both penalty reversal and attorney fee recovery.

For businesses that prioritize tax-efficient planning, this ruling affirms the value of the Restricted Property Trust structure and Restricted Property Trust, LLC’s commitment to safeguarding client interests. Restricted Property Trust, LLC has become a trusted advisor, helping clients navigate the intricacies of tax compliance while ensuring they remain protected from unjustified penalties.

A Step Toward Fairness in Tax Compliance

This ruling sends a clear message to all taxpayers and entities employing advanced tax planning strategies: defending against unfounded penalties is both possible and crucial. Mann Construction’s victory, achieved with the support of Restricted Property Trust, LLC, underscores the power of knowledge and preparation in tax law. The decision to pursue both the reversal of penalties and attorney fee recovery illustrates a commitment to justice and fair tax practices, reminding taxpayers that they have the right to challenge arbitrary IRS actions.

For companies that employ Restricted Property Trusts or similar strategies, this victory offers reassurance. It signals that legitimate tax structures can withstand IRS scrutiny and that comprehensive legal support can make a critical difference. Restricted Property Trust, LLC’s work in this case serves as an example of the importance of experienced legal advocacy, paving the way for businesses to continue using the Restricted Property Trust structure confidently and effectively.

About Restricted Property Trust, LLC

Restricted Property Trust, LLC specializes in helping companies and high-net-worth individuals implement Restricted Property Trusts and other advanced tax planning tools. Their expertise in defending clients in complex IRS disputes has made them a trusted resource for businesses seeking compliant, tax-efficient planning solutions. Restricted Property Trust, LLC remains dedicated to protecting taxpayer rights, ensuring that innovative tax structures remain accessible and defensible under the law.