New IRS Ruling Reveals that Not All Captives are Bad... [ read ]
On August 21, 2017, the Tax Court handed the IRS a critical victory in the first ever case deciding an IRS challenge to an IRC section 831(b) microcaptive insurance arrangement. This decision follows an over three year enforcement push by the IRS against the small captive insurance industry, an initiative that ensnarled captive managers and taxpayers alike as well as landed microcaptives on the IRS' dirty dozen lists. But a ruling issued just days before that decision reveals that the IRS is not seeking to disavow all captive insurance arrangements – perhaps just cull out some of the bad apples.
In the First Case Ever Decided Involving IRC Section 831(b) Microcaptive Insurance Planning, the Tax Court Delivers the IRS a Critical First Win... [ read ]
On August 21, 2017, the Tax Court handed the IRS a critical victory in the first ever case deciding an IRS challenge to an IRC section 831(b) microcaptive insurance arrangement. This decision follows an over three year enforcement push by the IRS against the small captive insurance industry, an initiative that ensnarled captive managers and taxpayers alike as well as landed microcaptives on the IRS' dirty dozen lists. But a ruling issued just days before that decision reveals that the IRS is not seeking to disavow all captive insurance arrangements – perhaps just cull out some of the bad apples.
When "Mostly" is Not Enough Part One: IRS Issues New Warning to Taxpayers of When Compliance is not "Substantial"... [ read ]
In recent months, the IRS has fired two separate shots across the proverbial bow, highlighting the dangers of "incomplete" or "inadequate" reporting as it relates to imposition of penalties and the elongation of the statute of limitations. This blog post explores an International Practice Unit issued by IRS Exam detailing when compliance is not "substantial" and therefore international information return penalties apply.
When "Mostly" is Not Enough Part Two: IRS Issues New Warning to Taxpayers of When Disclosure is Not "Adequate"... [ read ]
In recent months, the IRS has fired two separate shots across the proverbial bow, highlighting the dangers of "incomplete" or "inadequate" reporting as it relates to imposition of penalties and the elongation of the statute of limitations. This blog post explores a Legal Advice memorandum wherein the IRS ruled that a gift tax return did not adequately disclose a gift and therefore the return did not start limitations period.
Section 2704 Proposed Regulations Identified for Burden Reduction in IRS Report... [ read ]
I last provided an update on the proposed regulations under I.R.C. Section 2704 (the 2704 Proposed Regulations) on January 31, 2017, in which I covered President Trump's then recent Executive Orders and their potential to halt to the controversial 2704 Proposed Regulations. Since then, President Trump has called on the Treasury to identify burdensome tax regulations, and the fate of the 2704 Proposed Regulations (at least under the Trump administration) may be known as soon as September.
MLR Blog Post- U.S. Tax Court Decision Deals Blow to IRS on Taxation of U.S. Partnership Interests Held by Foreign Persons... [ read ]
At last year's Annual Meadows Collier Tax Conference, my colleague, Stephen Beck, and I discussed some of the more recent hot topics in international tax law. During our discussions, we spoke of the current ambiguity in U.S. tax law as it relates to the sale of a U.S. partnership interest by a foreign person. For decades, the IRS has argued that the sale of such partnership interests should be subject to U.S. tax if the partnership was engaged in a U.S. trade or business. See Rev. Rul. 91-32, 1991-1 C.B. 107.
The RESPECT Act: Will Congress Pass Legislation to Limit IRS Civil Forfeiture in "Structuring" Cases?... [ read ]
The RESPECT Act (H.R. 1843), also known as the Restraining Excessive Seizure of Property through the Exploitation of Civil Asset Forfeiture Tools Act, was originally introduced in the House of Representatives in March 2017. The House Ways and Means Committee recently unanimously approved the RESPECT Act, which prohibits the IRS from carrying out seizures relating to a currency structuring transaction unless the property to be seized is from an illegal source or the funds were structured for the purpose of concealing the violation of another criminal law. It also requires notice and a post-seizure hearing for such currency structuring seizures.
The Treasury Targeting the Recent Section 385 Debt-Equity Regulations (and Others) for Potential Repeal... [ read ]
On Friday, July 7th, the U.S. Department of the Treasury (the "Treasury") announced in Notice 2017-38 that it is targeting eight tax regulations for potential repeal. Included in the eight targeted are the final section 385 regulations issued in October of 2016. In a previous article from December of 2016, I discussed the onerous documentation requirements under the final section 385 regulations for related-party debt and touched on what effect these requirements may have on closely-held corporations. The Treasury's announcement could prove as a relief to those corporations dreading the potential financial burden resulting from the new documentation requirements.
Practical Suggestions for Effectively Representing a Taxpayer Before IRS Appeals... [ read ]
In a previous blog posted on June 27, 2017, we discussed some suggestions for representing taxpayers in a IRS examination. In this blog, we discuss the next step, i.e., when the exam cannot be resolved and you must make a request for review by an IRS Appeals Officer. Most of the suggestions in the previous exam blog are applicable to working with IRS Appeals and will not be repeated here. If you are representing a taxpayer in an appeals conference, you should review the previous blog and the suggestions below.
Practical Suggestions for Effectively Representing a Taxpayer in an IRS Examination... [ read ]
Through the years we have developed, or adopted from other practitioners, suggestions about dealing with the IRS in exams. The suggestions below are generalizations, to which there are substantial exceptions. Practitioners that deal with the IRS are bound not only by their individual professional ethics but also by Circular 230. It is important to recognize the significance and import of those rules and to apply not only their letter but also their spirit. The goal of any representative is to get a client out of an IRS examination as quickly as possible.
