IRS Releases Practice Unit on Reasonable Cause and Good Faith Defenses to Penalties... [ read ]
On July 2, 2020, the IRS released a practice unit addressing a taxpayer's reasonable cause and good faith defenses to civil penalties. IRS practice units are developed through internal collaboration and serve as both job aids and training materials on tax issues. Practice units provide a general discussion of a concept, process or transaction and are a means for collaborating and sharing knowledge among IRS employees. A list of the IRS practice units can be found here. Although practice units are not official pronouncements of law or directives and cannot be used, cited or relied upon, they provide insight to taxpayers and tax advisors.
Working With the New IRS Independent Office of Appeals... [ read ]
On July 1, 2019, the Taxpayer First Act was signed into law and among other things, it established the "Internal Revenue Service Independent Office of Appeals". The IRS Office of Appeals has been around for almost 100 years and has generally been independent. However, the Taxpayer First Act codified the Office of Appeals and its long-standing purpose and duties, i.e., " to resolve tax controversies, without litigation, on a basis which is fair and impartial to both the Government and [the taxpayer] in a manner that will enhance voluntary compliance and [public confidence} in the integrity and efficiency of the Service".
The IRS Offers a Settlement Opportunity to Abusive Easement Cases... [ read ]
In an unexpected development on June 25th, the IRS announced a time-limited settlement offer to certain taxpayers with pending docketed Tax Court cases involving syndicated conservation easement transactions. The settlement offer is surprising because on June 18th, IRS SB/SE Division Commissioner, Eric Hylton, stated that the IRS was not considering a resolution program for syndicated conservation easements similar to the microcaptive insurance settlement offer.
Debt Relief: Breaking Down the Tax Aspects of Covid-19's Economic Impact – Part IV, Modifications of Indebtedness... [ read ]
Modifying the terms of indebtedness, as opposed to cancelling or discharging the indebtedness, leaves the indebtedness outstanding but revises the terms governing the obligation. For example, the lender and borrower of a debt instrument may adjust the interest rate, change the collateral underlying the obligation, or defer or otherwise adjust the schedule of payments made on the debt instrument. Whether such a change in terms results in tax consequences is dependent on the terms of the original, unmodified indebtedness instrument, as well as the nature and extent of the changes made.
IRS Finds New Target in Microcaptive Enforcement: The State of Delaware... [ read ]
Just when you thought the IRS hit full speed in its enforcement campaign against microcaptives, the IRS found another gear. After pursuing captive management companies, tax advisors, and taxpayers alike, the IRS has set its sights on a new foe: the Delaware Department of Insurance.
Tax Court Hands a Taxpayer a Rare Win in a Worker Classification Case... [ read ]
On June 17th, U.S. Tax Court Judge Tamara Ashford issued an opinion in Leticia C. Santos v. Commissioner holding for a taxpayer on a worker classification case. We have previously discussed how the IRS usually tries bad-fact cases, so a taxpayer win regarding worker classification is something to write about.
Stress Testing the Estate Plan... [ read ]
In a previous blog post we discussed the Tax Court's recent decision in The Estate of Howard V. Moore v. Commissioner. An important take away from Moore for tax professionals and their clients is the importance of stress testing the estate planning to avoid being "low hanging fruit" for the IRS.
Things that Make You Go Hmmm: Tax Court Orders Partnership to Explain Over 480% Increase in Value in 3 Days to Avoid 40% Penalty in Conservation Easement Dispute... [ read ]
If Tax Court Judge Lauber's June 15, 2020 order is any indication, the Tax Court has grown tired of syndicated conservation easement cases.
A Tough Lesson About Estate Planning-The Estate of Howard V. Moore v. Commissioner... [ read ]
Earlier this year, the U.S. Tax Court in The Estate of Howard V. Moore v. Commissioner reminded every taxpayer that while estate planning is important, to achieve the intended estate tax benefits, traps must be avoided.
Debt Relief: Breaking Down the Tax Aspects of Covid-19's Economic Impact – Part III, Defining Indebtedness... [ read ]
Indebtedness has been a central focus of Parts I and II of this series, and it will continue to be a key concept in future posts as we explore in further detail the COD Income exceptions and discuss potential tax consequences resulting from modifications of indebtedness. In order to fully grasp the concepts discussed throughout this series, a baseline understanding of what the term "indebtedness" means is necessary. This Part III seeks to provide a brief introduction to the history of indebtedness in the tax law and serve as a guide to understanding what constitutes indebtedness.
