Is That a Change in the Wind? The 6th Circuit Rules Against the IRS on the Application of the Substance-Over-Form Doctrine... [ read ]
On February 16th, the Federal Court of Appeals for the Sixth Circuit issued a very entertaining and interesting opinion in Summa Holdings Inc. v. Commissioner, holding that the taxpayers' use of a Domestic International Sales Corporation (DISC) and two Roth IRAs for their congressionally sanctioned purposes - tax avoidance - was permissible. The 6th Circuit opinion reversed a Tax Court decision that upheld an IRS determination that the substance-over-form doctrine allowed the transactions to be re-characterized as dividends to the taxpayers followed by excess Roth IRA contributions. The IRS had argued that the transactions should be re-characterized although it agreed that the taxpayers had complied with the relevant Tax Code provisions and that the purpose of the provisions was to lower taxes.
The Third Court of Appeals in Agri-Plex Finds that a Business Buyer May Not Be Able to Escape Successor Liability for Hidden Tax Liabilities Assessed After Purchase... [ read ]
On January 19, 2017, the Texas Third Court of Appeals (the "Court") in Agri-Plex Heating and Cooling, LLC v. Hegar found that a business buyer may not be able to escape successor liability for hidden tax liabilities assessed after the purchase occurs. Agri-Plex Heating and Cooling, LLC v. Hegar, No. 03-15-00813-CV (Tex. App.-Austin January 19, 2017, no pet. h.) (mem. op.)). As a result and moving forward, a buyer purchasing a business should be cautious and plan accordingly because it could be liable for taxes incurred by the seller before the purchase but not known or ascertainable by either party at the time of closing.
IRS Launches New Audit Initiatives Targeting 13 Specific Tax Issues... [ read ]
The IRS Large Business and International division – which serves corporations, subchapter S corporations, and partnerships with assets greater than $10 million – has announced a new series of targeted audits, referred to as "campaigns." These campaigns will target 13 specific issues affecting a broad spectrum of taxpayers and industries, and marks a significant step forward in the IRS' move toward issue-based examinations.
An Update on the Uncertain Fate of the Proposed Section 2704 Regulations... [ read ]
Before they were released in August of last year, we all knew the proposed regulations under section 2704 were going to be controversial. What we didn't know back then was that Donald Trump was going to be president. With the new administration, the section 2704 regulations project could be altogether abandoned. And even if finalized, the Republican controlled Congress could severely undermine the impact of the regulations with a major tax overhaul, including a possible repeal of the estate tax. Despite this uncertainty, Treasury has provided some good news, hinting at the addition of a closely-held business exception to the regulations.
IRS Injured Spouse Relief Provisions... [ read ]
Last year the Treasury Inspector General For Tax Administration (TIGTA) issued a report on the IRS track record in injured spouse cases. Although similar to the more well-known innocent spouse relief provisions, the injured spouse relief provisions do not relieve the injured spouse of a joint liability on a valid jointly filed return. Instead, the injured spouse provisions allow the injured spouse to request that the IRS return the portion of a joint refund taken to offset a debt of the non-requesting spouse. The background portion of the TIGTA report explains the intent and procedure for filing for injured spouse relief:
Payroll Taxes, Worker Misclassification and Options for Resolving IRS Audits... [ read ]
Employment taxes and worker misclassification continue to be priorities for the IRS and the Tax Division of the Department of Justice. The IRS has announced information sharing agreements with the Department of Labor and state agencies to find businesses that are misclassifying their workers as independent contractors. The DOJ has made employment taxes and worker misclassification priorities for its civil tax and criminal tax sections. It is very important for any business that uses independent contractors to be aware of its options in an IRS employment tax/worker misclassification audit.
Proposed Regulations under I.R.C. Section 2704 (NOTE: Treasury Withdrew these Regulations in October 2017)... [ read ]
New tax proposed Treasury Regulations may affect the amount of tax on family businesses. Alan Davis discusses the proposed Regulations under I.R.C. Section 2704.
Recently Revised Opinion in American Multi-Cinema, Inc. v. Hegar Narrows Its Previously Broad Scope... [ read ]
On January 6, 2017, the Texas Third Court of Appeals (the "Court") withdrew their opinion and judgment in American Multi-Cinema, Inc. v. Hegar from April 30, 2015 to substitute a revised opinion (No. 03-14-00397-CV (Tex. App.—Austin January 6, 2017, no pet. h.) (mem. op.)). The revised opinion upholds American Multi-Cinema, Inc.'s ("AMC's") cost of goods sold ("COGS") deduction for its film exhibition costs while leaving unresolved whether AMC's products are "perceptible to the senses" and thus qualify as "tangible personal property" under Texas Tax Code Section ("Section") 171.1012(a)(3)(A)(i).
Dealing with Non-filers... [ read ]
On November 18, 2016 at the 2016 New England IRS Representation Conference in Ledyard, Connecticut, I had the honor of being on a panel discussion entitled Dealing with Non-filers. The panel covered a wide range of issues--from the routine to the exceptional--encountered by tax professionals when representing taxpayers before the IRS.
The IRS Increases Taxpayer Entrance Fees for Installment Agreements While Adding Reduced Online Option... [ read ]
On December 2, 2016, the IRS issued final regulations outlining increased installment agreement entrance fees while adding a reduced fee for online payment agreements. The change in installment agreement entrance fees will apply to installment agreements entered into on or after January 1, 2017.
