When Can the IRS Abate Interest?... [ read ]
Interest on a federal tax liability generally begins accruing from the date the tax should have been paid, even when the additional tax is due to IRS examination changes. IRC Section 6404 allows the IRS to abate interest under some specific circumstances, primarily unreasonable delay by the IRS in determining the taxpayer's tax liability.
A New Court Decision on E-Filed Tax Returns and the Failure to File Penalty... [ read ]
In prior blog posts, I discussed the application of the IRC Section 6651 failure-to-file penalty to an electronically-filed tax return. On August 2nd, a U.S. District Court in Tennessee took on the issue directly and ruled against a taxpayer holding that the U.S. Supreme Court decision in United States v. Boyle is applicable even when the tax return is filed electronically.
The Importance of Hiring the Right Valuation Expert in an Estate Tax Case... [ read ]
Expert testimony in litigation is very important. It is even more important in an estate tax case where the only issue is the value of the decedent's assets and the case will likely turn on valuation expert testimony. The 9th Circuit's recent unpublished affirmation of the Tax Court's decision in Estate of Kollman v. Commissioner highlights the importance of vetting and hiring the right valuation expert.
Texas Comptroller Proposes Revisions to Texas Franchise Tax Rule 3.586, Implementing Wayfair... [ read ]
The Texas Comptroller's office issued a draft set of proposed revisions to Comptroller Rule 3.586 (Margin: Nexus) today in response to the U.S. Supreme Court's decision last year in South Dakota v. Wayfair, Inc., 138 S.Ct. 2080 (2018).
Get Compliant or Else: IRS Embarks on Letter Campaign to Reach 10,000 Virtual Currency Owners... [ read ]
The Internal Revenue Service has begun sending letters to taxpayers with virtual currency transactions that potentially failed to report income and pay the resulting tax from those transactions or did not report them properly. This is yet another step in the IRS' enforcement campaign against virtual currency.
The Hidden Dangers of Filing a Tax Court Petition... [ read ]
When the IRS examines a tax return and proposes adjustments, it will send a Notice of Deficiency to the taxpayer setting forth the adjustments. A taxpayer who disagrees with the Notice of Deficiency may file a petition with the U.S. Tax Court disputing the IRS proposed adjustments without first paying the resulting tax, penalties and interest. Although this seems a like a simple and economical means for disputing IRS examination adjustments, as former football coach and current ESPN commentator Lee Corso says, "Not so fast my friend!!"
Shifting the Burden of Proof to the IRS... [ read ]
In a prior blog post, I discussed the burden of proof in a tax controversy and how in most situations, the taxpayer has the burden of proof. In this post, I will discuss how a taxpayer can shift the burden of proof to the IRS. While the result of most cases does not turn on which party has the burden of proof, it is my experience that the willingness of IRS counsel to discuss a reasonable settlement increases if the IRS has the burden of proof.
Burden of Proof in Tax Cases... [ read ]
A search of the IRS website for "burden of proof" turns up the following statement: "The responsibility to prove entries, deductions, and statements made on your tax returns is known as the burden of proof. You must be able to prove (substantiate) certain elements of expenses to deduct them. Generally, taxpayers meet their burden of proof by having the information and receipts (where needed) for the expenses. You should keep adequate records to prove your expenses or have sufficient evidence that will support your own statement. You generally must have documentary evidence, such as receipts, canceled checks, or bills, to support your expenses. Additional evidence is required for travel, entertainment, gifts, and auto expenses."
Latest on IRS Criminal Investigations... [ read ]
In a prior blog post, we discussed some of the items of interest in the 2018 IRS Criminal Investigation Division's 2018 Annual Report released in November 2018. In recent weeks, there have been a few additional items of interest involving IRS Criminal Investigation (CI).
Have You Checked the Validity of That S Election Recently? (Relief Alternatives Available For No S Election, Invalid Elections or Inadvertent Terminations).... [ read ]
Recurring problems with many S corporations include the untimely discovery of a failure to timely file an S election, filing of an inadvertently invalid election, or inadvertent termination of a previously valid S election. Often times many years will have passed before discovery of an ineffective or inadvertently terminated S election. Absent relief, the termination of an S election can have severe consequences, particularly where the corporation has been making regular distributions. Because this is a pervasive problem under the election requirements of Subchapter S, Congress granted the IRS the power under section 1362(f) to waive invalid or inadvertently terminated S elections provided that certain requirements are satisfied.
