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The Magical Metamorphosis of S Corporations Through an F Reorganization
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Whether to implement a reincorporation of an S corporation, from say California to Texas, or to pave the way for an S corporation asset sale to a buyer taxed as a partnership, an F reorganization can be a tax efficient tool to achieve those objectives, among others.
By on August 18, 2021
I've been practicing tax law for more than 30 years helping businesses and individuals resolve disputes with the IRS and I can't tell you how many times a new client has complained about how they were mistreated by the IRS and that IRS employees can do whatever they want because they have lifetime employment. In 1998, in response to the congressional testimony regarding perceived IRS abuse of taxpayers, Congress enacted the 1998 Revenue Reform Act (RRA 98) which, many of us will recall, was intended to make for a kinder and gentler IRS. Taxpayers became "customers" and tax professionals became "partners". I'll leave for another post my thoughts about RRA 98 and whether the IRS became kinder and gentler. What I am addressing today is Section 1203 of RRA 98, a list of 10 actions by an IRS employee that can result in automatic termination of employment, with appeal only to the IRS Commissioner, i.e., the Ten Deadly Sins.
Musing While Waiting on Hold for Someone at the IRS to Answer My Question
By on August 11. 2021
Trying to work out a client's IRS issues these days can be frustrating for the client and the tax professional. You can't throw a stone without hitting a story about delays and problems the IRS is having. I was recently waiting on hold with the IRS hoping to find someone who could help me find out the status of my client's refund claim. While I listened to the "wonderful" hold music that is on a 30 second loop and hoped I would not a get a "courtesy" hang up, I started doing some web surfing and stumbled onto the Taxpayer Advocate Service webpage. At the very top of the TAS webpage is the following: "Refund delayed? Our ability to help may be limited" and a link to a page detailing why the TAS may not be able to help with a delayed refund. Not a good sign.
Tax Court Petitions and Premature Assessment
By on August 10, 2021
When a taxpayer does not agree with tax adjustments proposed by an IRS examiner, the IRS sends the taxpayer a Notice of Deficiency, which gives a taxpayer 90 days to file a petition with the U.S. Tax Court to dispute the proposed adjustments. If the taxpayer files a timely petition, the IRS cannot assess the proposed tax until the case is resolved by the U.S. Tax Court. If a taxpayer does not file a tax court petition, the IRS assesses the tax and the taxpayer is contacted by the IRS collection division for payment.
IRS Statute of Limitations and Civil Fraud
By on August 4, 2021
On July 26th, U.S. Tax Court Judge Lauber issued an opinion in George S. Harrington v. Commissioner, upholding the IRS' determinations that the taxpayer fraudulently underreported his offshore income and the civil fraud penalty applied. There is nothing particularly unique about the case but it includes a very good discussion of the factors the court will consider when the IRS proposes a civil fraud penalty and the resulting impact on the statute of limitations.
