Joel N. Crouch

Tax Alliance Conference 2024... [ read ]

Jaynes, Reitmeier, Boyd & Therrell, P.C. Presentation... [ read ]

Armanino LLP Presentation... [ read ]

Seidel Schroeder Presentation... [ read ]

Carr, Riggs & Ingram In-House Presentation... [ read ]

Beaird Harris In-House Presentation... [ read ]

Whitley Penn In-House Presentation... [ read ]

Grant Thornton In-House Presentation... [ read ]

Meadow Collier January 9, 2023 One-Hour Webinar... [ read ]

2023 TXCPA Permian Basin CPE Expo... [ read ]

ACPEN The Essential Guide to Partnership & LLCs Taxation... [ read ]

TXCPA Austin Annual Tax Conference... [ read ]

El Paso Chapter/TXCPA... [ read ]

IRS Appeals and Alternative Dispute Resolution... [ read ]

Dallas Bar Association Solo and Small Firm Section... [ read ]

Midland Odessa Business & Estate Council... [ read ]

2023 Panhandle Chapter/TXCPA Tax Institute... [ read ]

2023 Texas Bank and Trust - Longview, TX... [ read ]

50th Annual North American Petroleum Accounting Conference... [ read ]

2023 Texas Bank and Trust, Tyler, TX... [ read ]

Tax Decisions and Other Developments in the First Quarter of 2023... [ read ]

IRS Examinations and IRS Appeals... [ read ]

2022 Corpus Christi Estate Planning Council... [ read ]

TXCPA Austin Annual Tax Conference... [ read ]

Texas Management Group (TMG) Conference ( Day Two)... [ read ]

October 2022 1-Hour Webinar... [ read ]

37th Annual Panhandle Chapter Tax Institute... [ read ]

July Meadows Collier Monthly Webinar... [ read ]

2022 Tax Alliance Conference... [ read ]

North American Petroleum Accounting Conference (NAPAC) 2022... [ read ]

April 2022 Meadows Collier 1 Hour Monthly Webinar... [ read ]

East Texas Estate Planning Council... [ read ]

Estate Planning Council of Central Texas... [ read ]

Meadows Collier January 2022 One-Hour Free Monthly Webinar... [ read ]

San Antonio Estate Planning Council Meeting... [ read ]

Greater Longview Estate Planning Council... [ read ]

Tips and Techniques for Dealing with the IRS Exam and Collection Divisions... [ read ]

2021 Panhandle Chapter/TXCPA Tax Institute... [ read ]

45th Annual Advanced Estate Planning & Probate Course... [ read ]

Tax Alliance Conference 2021... [ read ]

Clear Law Institute Webinar... [ read ]

North American Petroleum Accounting Conference (NAPAC)... [ read ]

April 2021 Dallas Bar Association Tax Section Meeting... [ read ]

TXCPA Dallas March 2021 CPE Session... [ read ]

Tolling Tax Statutes of Limitations - Strafford Webinar... [ read ]

TXCPA Corpus Christi Chapter... [ read ]

UT Law CLE - 68th Annual Taxation Conference... [ read ]

Austin Chapter/TXCPA Virtual Annual Tax Conference... [ read ]

Fort Worth Chapter/TXCPA 36th Annual Tax Institute... [ read ]

Corpus Christi Chapter/TXCPA February Monthly Meeting... [ read ]

TXCPA Corpus Christi 62nd Annual Tax Conference... [ read ]

Joint Meeting - TXCPA Panhandle Chapter and the Amarillo Area Estate Planning Association... [ read ]

TXCPA Tax Institute - Dallas... [ read ]

TXCPA Tax Institute - San Antonio... [ read ]

2019 TXCPA Austin Annual Tax Conference... [ read ]

21st Annual Meadows Collier Tax Conference... [ read ]

Webinar - Clear Law Institute... [ read ]

35th Annual Tax Institute sponsored by the Panhandle Chapter/TXCPA... [ read ]

TXCPA Advanced Estate Planning Conference... [ read ]

Fort Worth Chapter/TSCPA Tax Institute 2019... [ read ]

AXA Advisors Annual CPE Event... [ read ]

Intermediate Estate Planning and Probate Course by the TexasBarCLE... [ read ]

Taxation and Estate Planning Update for Professionals... [ read ]

Taxation and Estate Planning Update for Professionals... [ read ]

Henry & Peters Seminar... [ read ]

AXA Advisors Lunch Seminar 2018... [ read ]

2018 Austin CPA Chapter Annual Tax Conference... [ read ]

C12 3Ten Coalition Retreat... [ read ]

Metroplex Practice Management Group (MPMG)... [ read ]

2018 Panhandle Chapter/TSCPA Tax Institute... [ read ]

Bloomberg Webinar... [ read ]

Fort Worth Chapter/TSCPA 2018 Tax Institute... [ read ]

Atlas Advisor Group Annual Conference... [ read ]

34th Annual Texas Federal Tax Institute... [ read ]

The DBA Health Care Section... [ read ]

Texas Bank and Trust... [ read ]

Texas Bank and Trust... [ read ]

DBA Corporate Counsel Section - The Tax Cuts and Jobs Act... [ read ]

Federal Tax Workshop Co-Sponored by the SBOT... [ read ]

DBA Friday Clinic -Belo... [ read ]

Clear Law Institute (Webinar)... [ read ]

Corpus Christi Chapter/TSCPA Annual Tax Conference... [ read ]

Merrilly Lynch's The Maynard Group - Tax Cuts and Jobs Act Conference... [ read ]

American Academy of Attorney-CPAs 2018 Southwest Regional Education Conference... [ read ]

TSCPA CPE Expo- Houston... [ read ]

TSCPA CPE Expo- San Antonio... [ read ]

Speaking at TSCPA CPE Expo... [ read ]

Austin Chapter/TSCPA Tax Conference... [ read ]

Hein & Associates National Tax Meeting... [ read ]

Metroplex Practice Management Group (MPMG)... [ read ]

Strafford Webinar - Navigating the IRS Penalty Abatement Procedures for Foreign Information Reporting Noncompliance... [ read ]

Panhandle Chapter/TSCPA Tax Institute - Aug. 23, 2017... [ read ]

Fort Worth Chapter/TSCPA Tax Institute... [ read ]

ACPEN Webcast - Doing Business with the IRS: Overview of the IRS... [ read ]

The Knowledge Group Webinar... [ read ]

Texas Forum on International Tax Biannual Luncheon... [ read ]

CPE by the Sea on June 16, 2017... [ read ]

Texas Federal Tax Institute - June 14, 2017 in San Antonio, TX... [ read ]

Texas Bank and Trust Seminar... [ read ]

NAPAC... [ read ]

Dallas CPA Society Convergence - May 12, 2017... [ read ]

Texas Bank and Trust Seminar... [ read ]

Strafford Webinar on April 18, 2017... [ read ]

AICPA Family Office Group... [ read ]

TSCPA CPE Expo- San Antonio... [ read ]

TSCPA CPE Expo- Arlington... [ read ]

2016 Tax Symposium- Shreveport, LA... [ read ]

TSCPA CPE Expo- Houston... [ read ]

New England IRS Representation Conference... [ read ]

Austin CPA Chapter Annual Tax Conference... [ read ]

Permian Basin Chapter/TSCPA CPE Expo... [ read ]

18th Annual Meadows Collier Tax Conference... [ read ]

TSCPA Young and Emerging Professionals Conference... [ read ]

The Knowledge Group Webinar... [ read ]

Stafford Group... [ read ]

Panhandle Chapter/TSCPA Tax Institute... [ read ]

Forth Worth Chapter Tax Institute... [ read ]

CPE by the Sea... [ read ]

The Knowledge Group Webinar-Dallas... [ read ]

Dallas CPA Society 2016 Convergence Conference... [ read ]

Texas Bank & Trust Seminar- Longview... [ read ]

NAPAC Conference... [ read ]

ACPEN LLCs & Partnershp Update Broadcast... [ read ]

Texas Bank & Trust Seminar- Tyler... [ read ]

Corpus Christi Estate Planning Council Annual Seminar... [ read ]

Texas Association of CPAs... [ read ]

Dallas Area Paralegal Association Meeting... [ read ]

STEP- Fort Worth... [ read ]

TSCPA CPE Expo- Houston... [ read ]

TSCPA CPE Expo- San Antonio... [ read ]

TSCPA CPE Expo- Arlington... [ read ]

Austin Chapter/TSCPA Annual Tax Conference... [ read ]

Central Texas Chapter/TSCPA CPE Expo... [ read ]

"Judicial Update"... [ read ]

Ft. Worth Tax Institute... [ read ]

Texas Bank and Trust Seminar-Longview... [ read ]

Texas Bank and Trust Seminar- Tyler... [ read ]

First State Bank & Trust Seminar... [ read ]

AAA-CPA Speech... [ read ]

"Passive Activity and Hobby Loss Limitations: Withstanding an IRS Attack of Your Client's Outside Business Activities Under IRS Sections 469 and 183"... [ read ]

"Judicial Update"- Austin... [ read ]

"Foreign Asset Reporting Obligations to the IRS"... [ read ]

"What to Expect in 2014 from a Rapidly Changing IRS"... [ read ]

"What to Expect from a Rapidly Changing IRS in 2014"... [ read ]

"Judicial Update"- Fort Worth... [ read ]

"Circular 230"... [ read ]

"Recent Developments in Federal Income Taxation"... [ read ]

"Judicial Update"- Tyler... [ read ]

"Health Care Fraud"... [ read ]

"Health Care Fraud"... [ read ]

"Family Limited Partnerships"... [ read ]

"Self Employment Tax for LLCs and S Corps"... [ read ]

"Self Employment Tax Issues for LLCs and S Corps"... [ read ]

"What to Expect in 2014 From a Rapidly Changing IRS"... [ read ]

"What to Expect in 2014 From a Rapidly Changing IRS"... [ read ]

"Procedural Issues in Partnership Audits and Litigation, Return Preparer Penalties and Hot Litigation Topics"... [ read ]

"What to Expect from a Rapidly Changing IRS"... [ read ]

"Offers in Compromise: Is the IRS Really Becoming Kinder and Gentler?"... [ read ]

"Dysfunctional Family Limited Partnerships"... [ read ]

"Conservation and Facade Easements: Are They for Real or a Facade?"... [ read ]

"What We Can Expect from the IRS in 2013"... [ read ]

"What We Can Expect from the IRS in 2013"... [ read ]

"What We Can Expect from the IRS in 2013" "Self-Employment and Employment Tax Issues in LLCs and S Corporatons"... [ read ]

"Self-Employment and Employment Tax Issues in LLCs and S Corporations"... [ read ]

"Using Family Limited Partnerships"... [ read ]

"Panelists - Criminal Tax"... [ read ]

"Using Family Limited Partnerships"... [ read ]

"Conservation and Facade Easements: Are They for Real or a Facade?"... [ read ]

"What Can We Expect From the IRS in 2013?"... [ read ]

"What We Can Expect from the IRS in 2013"... [ read ]

"What We Can Expect from the IRS in 2013"... [ read ]

"Judicial Update"- Austin... [ read ]

"Judicial Update"- Washington, DC... [ read ]

"IRS Exams and Collections"... [ read ]

"IRS Priority #1: Foreign Transactions, Entities and Bank Accounts"... [ read ]

"Worker Classification"... [ read ]

"Worker Classification"... [ read ]

"What Every Attorney Should Know About the IRS"... [ read ]

"Using Family Limited Partnerships and What to Expect from the IRS"... [ read ]

"Compliance Issues for U.S. Partnerships with Foreign Partners and U.S. Partners with Foreign Partnerships"... [ read ]

"Health Care and Independent Contractors: How to Avoid Being A Target"... [ read ]

"Making Ends Meet: Getting Paid Consistently and Ethically"... [ read ]

"Making Ends Meet: Getting Paid Consistently and Ethically"... [ read ]

"Current Trends in IRS Examinations and Appeals"... [ read ]

"How to Make Sure Your Client Does Not Have IRS Employment Tax Problems"... [ read ]

"The Evolving Relationship Amongst the IRS, Taxpayers and Tax Professionals"... [ read ]

"The Evolving Relationship Amongst the IRS, Taxpayers and Tax Professionals"... [ read ]

"The Evolving Relationship Amongst the IRS, Taxpayers and Tax Professionals"... [ read ]

"Practical Suggestions and Traps to Avoid When Working with the IRS"... [ read ]

"Tax Issues in Settlements and Agreements"... [ read ]

"The Changing Relationship between Taxpayers and the IRS Examination Division"... [ read ]

"The CPA's Continuing Role in Family Limited Partnership" "Compliance Issues for U.S. Partnerships with Foreign Partners and U.S. Partners in Foreign Partnerships"... [ read ]

"The IRS and the Tax Professional: Friends or Foes?"... [ read ]

"Responding to Governmental Inquiries"... [ read ]

"Professionals as Return Preparers, Witnesses, Targets and IRS Licensees"... [ read ]

"Don't Give Up on Family Limited Partnerships (FLPs)" "Differences Between Aggressive Tax Planning and Tax Fraud" "The Legislative and Admi... [ read ]

"Don't Give Up on Family Limited Partnerships (FLPs)" "Differences Between Aggressive Tax Planning and Tax Fraud" "The Legislative and Administrat... [ read ]

"Tax issues in Divorce and Separation"... [ read ]

"The Changing Relationship Between Taxpayers and the IRS Examination Division"... [ read ]

"Divorce and Separation: A "Taxing" Experience"... [ read ]

"Judicial Update: What's Happening in the Courts?" "Estate Planning Update and Year-End Planning"... [ read ]

"Judicial Update: What's Happening in the Courts?"... [ read ]

"Judicial Update: What's Happening in the Courts?" "Estate Planning Update and Year-End Planning"... [ read ]

"The Changing Relationship Between Taxpayers and the IRS Examination Division"... [ read ]

"Tax Disputes Before the IRS: Audit, Appeal & Tax Litigation"... [ read ]

"Exploring Criminal/Civil Overlap Issues" "Employment Tax Law" "Federal Estate and Gift Tax Examinations and Case Updates"... [ read ]

"Family Limited Partnership Update"... [ read ]

"IRS Criminal Tax Investigations: Successfully Representing Your Client"... [ read ]

"Current Trends in IRS Examinations and Appeals"... [ read ]

"Differences Between Aggressive Tax Planning and Tax Fraud"... [ read ]

"IRS Attacks on Estate Planning Techniques" and "Litigating FLPs: The Keller Decision"... [ read ]

"Tax Disputes Before the IRS: Audit, Appeal & Tax Litigation"... [ read ]

"What are our 'Friends' at the IRS Doing Today?" "Divorce and Separation: A 'Taxing' Experience"... [ read ]

"What are our 'Friends' at the IRS Doing Today?" "Divorce and Separation: A 'Taxing' Experience"... [ read ]

"What are our 'Friends' at the IRS Doing Today?" "Divorce and Separation: A 'Taxing' Experience"... [ read ]

"Current Trends in IRS Examinations and Appeals"... [ read ]

"Staying out of Trouble: CPAs Communications with Clients and Courts" "IRS Audit" "IRS Examinations/Appeals"... [ read ]

"Partnership and LLCs Update"... [ read ]

"Preserving the Benefits of Family Limited Partnerships: What You Need to Know Now"... [ read ]

"IRS Examinations/Appeals"... [ read ]

"Update on Tax Issues in Divorce and Separation" (Part II)... [ read ]

"Tax and Divorce: What You Need to Know"... [ read ]

"Update on Tax Issues in Divorce and Separation"... [ read ]

"The Nuts & Bolts of IRS Practice: Audit, Appeal & Tax Litigation"... [ read ]

"Preparer Beware: Circular 230 and the New Section 6694 Penalty" and "The IRS is Currently Auditing Taxpayers Again: What Issues Will the IRS Likely Raise During your Next Audit?"... [ read ]

"IRS Examinations of Estate & Gift Tax Returns"... [ read ]

"Experts on 'Legal' Matters"... [ read ]

IRS and the Last Known Address Rule... [ read ]

When the IRS issues a Notice of Deficiency (NOD), I.R.C. Sections 6212(a) and (b)(1) require that the NOD be sent to the taxpayer's "last known address" by certified or registered mail. The taxpayer's last known address is the address that appears on the most recently filed and processed tax return unless the taxpayer has given the IRS clear and concise notification of a different address. If the IRS has properly mailed the NOD to the taxpayer's last known address and the taxpayer fails to file a petition with the Tax Court within 90 days, the IRS will assess the tax and penalties included in the NOD. Thereafter, the IRS contacts the taxpayer and begins collection activities.

Reliance on Professional Advice Defense to IRS Penalties... [ read ]

When the IRS proposes changes to a taxpayer's return that result in an underpayment of tax, it will always consider penalties under Internal Revenue Code Section 6662 - Imposition of Accuracy-Related Penalty on Underpayments. The most common penalties proposed by the IRS are negligence and substantial understatement of income tax, both of which are 20% of the tax due.

IRS Proposes Adding Certain CRATs to the Naughty List... [ read ]

After a period of relative inactivity, over the last 18 months the IRS has increased the number of potential listed transactions including syndicated conservation easements, micro-captives, Malta pension plans and monetized installment plans. Most of these were already on the IRS Dirty Dozen list, but, so far, none of the proposed regulations regarding making these listed transactions have been finalized.

Deadline for ERC Voluntary Disclosure is Around the Corner... [ read ]

Blog readers are well aware of the IRS continuing enforcement efforts regarding the Employer Retention Credit (ERC). One tool in that enforcement effort is the ERC voluntary disclosure program for employers who received questionable ERC refunds. Introduced on December 22, 2024, the deadline for applying, March 22, 2024, is fast approaching. Any employer who has concerns about an ERC refund should consult with a competent tax advisor as soon as possible about whether they should be considering a voluntary disclosure.

The Most Important Elements of a Successful IRS Voluntary Disclosure? Timing and Luck.... [ read ]

As in comedy, the most important element in an IRS voluntary disclosure is generally timing. However, a couple of U.S. Tax Court memorandum opinions in Whistleblower 14376-16W v. Commissioner, T.C. Memo 2017-181 and T.C. Memo 2024-22, point out that timing and luck are the most important elements of a voluntary disclosure

Another Shot Across the ERC Bow by the IRS... [ read ]

One of my ERC friends sent me the IRS letter below that was received by one of his ERC clients about their ERC filing. The letter, Notice CP271, says there has been aggressive advertising involving ERC and the employer should confirm they are entitled to the ERC amount they claimed.

Return Preparer Fraud Results in Harsh Outcome for Innocent Taxpayer... [ read ]

the IRS generally has three years to assess additional tax, pursuant to IRC Section 6501. The three years can be extended by agreement, the taxpayer filing for bankruptcy, the IRS issuing a Notice of Deficiency, or taxpayer involvement in a third party summons enforcement action.

More Top 10 Tax Lists From the Taxpayer Advocate and David Letterman... [ read ]

About this time last year, I compared the National Taxpayer Advocate's 2022 Top 10 list of most serious problems taxpayers encountered with some of my favorite David Letterman Top 10 lists, see What Do The National Taxpayer Advocate and David Letterman Have In Common?

Taxpayer Advocate Says the IRS Processing of ERC Claims has Slowed to a Dribble... [ read ]

Readers will recall that in response to growing concerns of the IRS, tax professionals and others regarding the number of fraudulent ERC claims, on September 14, 2023 the IRS announced a moratorium on processing ERC claims filed after September 14th until at least December 31, 2023. Although the announcement also said the time to process pending claims would increase from 90 days to 180 days, we all assumed the IRS would continue processing claims filed before September 14, 2023. According to the National Taxpayer Advocate's January 10th Annual Report to Congress, that assumption was incorrect.

Tax Court Decides What is Adequate Disclosure for Gift Tax... [ read ]

Anyone who makes a taxable gift (more than $17,000 in 2023, $18,000 in 2024) in a taxable year must file a Form 709, United States Gift Tax Return, reporting the gift to the IRS. Generally, the IRS then has three years to assess any tax due. However, if no Form 709 is filed or the gift is not adequately disclosed on the Form 709, the IRS has an indefinite time to assess any tax due.

Court Finds Civil Fraud Penalty Not Applicable To Easement Donation Where Taxpayer Disclosed Cost Basis... [ read ]

On October 26th, the Tax Court issued an interesting opinion in Mill Road 36 Henry LLC v. Commissioner, T.C. Memo 2023-129, upholding the IRS disallowance of a $8.9 million deduction for an easement donation but also holding that a partnership's filing of an information return disclosing the wide disparity between its cost basis and claimed value of the easement donation meant there was no intent to mislead the IRS, and thus the civil fraud penalty did not apply.

Court Holds that Late-Filing Penalty is Applicable to E-Filed Tax Return... [ read ]

I've previously written blog posts regarding the IRC Section 6651 failure-to-file penalty and its application to electronically filed tax returns. On October 24th, the 11th Circuit Court of Appeals issued a decision in Lee v. United States which is the first appellate-level holding that reliance on an agent, in this case a CPA, is not reasonable cause for failure to file a timely e-filed tax return.

The Squeaky Wheel Gets the Grease? Employers Should Consider Filing Lawsuits to Obtain ERC Refunds... [ read ]

Just last week, the IRS announced that it was no longer processing any new Employee Retention Credit (ERC) claims amid a surge in questionable claims. While there may be questionable claims being filed, there are plenty of legitimate claims that should be processed and refunded to employers.

IRS Halts Processing of ERC Claims... [ read ]

On September 14, the IRS announced that it was immediately stopping processing of any new Employee Retention Credit (ERC) claims amid a surge in questionable claims. The moratorium on processing is effective immediately and will run through at least the end of the year.

IRS Announces Plans to Focus Examinations on High-Income Taxpayers, Partnerships, Corporations and Abusive Promoters With the Help of AI... [ read ]

On September 8th, the IRS, following a "top-to-bottom" review of enforcement efforts, announced that it will be shifting more enforcement efforts to "high-income earners, partnerships, large corporations and promoters abusing the nations' tax laws".

Another New IRS Audit Target: Employee Stock Ownership Plans (ESOPs)... [ read ]

In an August 9th announcement, the IRS said it has identified compliance issues for Employee Stock Ownership Plans (ESOPs). This is on the heels of recent IRS announcements regarding Malta Pension Plans, Puerto Rico Act 20/22/60 participants, Monetized Installment Sales, Cost of Goods Sold, and of course, Employee Retention Credits. According to IRS Commissioner Danny Werfel, "The IRS is focusing on this transaction as part of the effort to ensure our tax laws are applied fairly and high-income filers pay the taxes they owe.

IRS Counsel Releases Legal Memorandum Regarding Suspension of Operations for the Employee Retention Credit... [ read ]

On July 21, IRS Chief Counsel released a Generic Legal Advice Memorandum (GLAM) regarding "Whether an Employer Experienced a Full or Partial Suspension of the Operation of a Trade or Business under Section 2301 of the Coronavirus Aid, Relief, and Economic Security Act or Section 3134 of the Internal Revenue Code due to a Supply Chain Disruption."

IRS Agents Getting Too Big For Their Britches... [ read ]

It appears Republicans on the Senate Finance Committee think that IRS agents are "getting too big for their britches." In a July 18 letter to IRS Commissioner Daniel Werfel the lawmakers asked for information about three separate allegations of IRS agent misconduct.

IRS Criminal Investigation Targeting Puerto Rico Act 20/22/60 Participants... [ read ]

On July 14th, the IRS released a thank you to the Inflation Reduction Act highlighting its improved service, plans for updating its technology and enforcement initiatives. The enforcement initiatives in the announcement focus on high-income filers including millionaires who don't pay their tax or have unfiled tax returns, and millionaires who are attempting to evade paying their taxes.

IRS Criminal Investigation of Malta Pension Plan... [ read ]

Last week the IRS' interest in the Malta Pension Plan (MPP) took a very serious turn as IRS Criminal Investigators started contacting professionals and taxpayers who participated in MPPs. The first indication of IRS interest in MPPs was when MPPs were included on the 2021 IRS Dirty Dozen list.

IRS Badges of Fraud... [ read ]

On June 22nd, the U.S. Tax Court released a memorandum decision in Kamal v. Commissioner, T.C. Memo 2023-80, which is a helpful reminder of what evidence a court will consider when the IRS has proposed a 75% civil fraud penalty. In addition, Kamal is another example of the potential risks of filing a Tax Court petition.

How Long Does the IRS Have to Challenge an ERC Refund?... [ read ]

For employers who have either filed for or have received payment for Employee Retention Credit (ERC) claims, the significant surge in IRS examinations of ERC claims is similar to the shark in the movie Jaws. You know he is out there, but you don't know where he will bite and when.

California Introduces Settlement Proposal for Micro-Captive Insurance Transactions and Syndicated Conservation Easement Transactions. What's the IRS' Plan?... [ read ]

On May 31, 2023, the California Franchise Tax Board (FTB) issued Notice 2023-02 providing a limited time settlement opportunity to taxpayers who participated in potentially abusive Micro-Captive Insurance (MCI) and Syndicated Conservation Easement (SCE) transactions.

Sometimes "The Truth" is Reasonable Cause for IRS Penalties... [ read ]

I was reminded of a Seinfeld episode when I read the summary opinion by the Tax Court in Tracy v. Commissioner, T.C. Summ. Op. 2023-30, where the judge held that the taxpayer had reasonable cause for his failure to file employment tax returns and pay employment taxes because he had a good story to tell.

Sometimes the IRS is Even Steven... [ read ]

Seinfeld fans will recall the episode called "Even Steven", where Jerry was Even Steven. If he lost a gig, another one became available. If he lost money, he would find the same amount somewhere else. In two recent cases, the IRS was Even Steven, like Jerry. In one case, Lakepoint Land II LLC v. Commissioner, Tax Court Docket No. 13925-17, the IRS stands accused of knowingly using a backdated document to win a penalty defense. In the second case, Soleimani v. Commissioner, T.C. Memo 2023-60, the IRS prevailed in disallowing millions of dollars in deductions, after the court determined the taxpayers were relying on forged documents and information from a fictious lawyer.

Delaware Must Turnover Communications with Microcaptive Promoters... [ read ]

On April 21st, a Third Circuit Court of Appeals panel ruled that the Delaware Department of Insurance (DDOI) must comply with a 2020 summons from the IRS for all communications with microcaptive insurance companies and their managers. This is another step in the IRS continuing attack on microcaptive insurance companies.

Tax Court Opinion Reminds Taxpayers to be Careful about Social Media Posts... [ read ]

Most lawyers, especially those who handle some type of litigation, have warned clients about social media posts. Because people like to post pictures of events, extravagant trips and other adventures or discuss what they are doing on social media, it is standard operating procedure for lawyers to search social media of an opposing party for helpful information.

Any Taxpayer Who Paid An International Information Return Penalty Should Consider Requesting a Refund... [ read ]

On April 3rd the Tax Court issued an opinion in Farhy v. Commissioner, holding that the IRS does not have authority to assess certain international information return reporting penalties. As a result, any taxpayer who previously paid an international information return penalty should consider requesting a refund of the penalty.

Part Three: Are Tax Returns Given to an IRS Agent Considered Filed?... [ read ]

Last June, I wrote a blog post on a 9th circuit panel opinion in Seaview Trading LLC v. Commissioner, where the panel, in a 2-1 decision, reversed the Tax Court on the meaning of a "filed" return. The panel held that a tax return sent to an IRS agent was considered filed and started the three-year time period of limitations for the IRS to issue a notice of deficiency. This was important because the IRS did not issue a Notice of Deficiency until more than three years after the tax return was provided to the IRS examiner, and therefore was beyond the statute of limitations.

ERC: Is the IRS Trying to Ski Uphill?... [ read ]

One of my favorite things to do is snow ski. I've been doing it for a long time and try to go on a couple of ski trips every year. In fact, I just returned from a trip with a couple of friends including my colleague Alan Davis, who is not only a great estate planning attorney, he is also an excellent skier. But I digress. Uphill skiing was brought to mind when I saw on March 7th the IRS released its third warning in six months regarding fraud and abuse in the Employee Retention Credit (ERC) program.

The IRS Gets Serious About ERC Abuse... [ read ]

In a prior blog post, I discussed how both the IRS Examination Division and the IRS Criminal Investigation Division were starting to focus on Employee Retention Credits (ERC) and ERC promoters. In a recent interview, an IRS CID official said that there have already been 10 or 11 ERC indictments.

IRS Proposes A New Acronym and a New Tip Reporting Program... [ read ]

The government loves a good acronym for a program, institution or act, like FATCA (Foreign Account Tax Compliance Act), TEFRA (Tax Equality and Fiscal Responsibility Act), NASA or IRS. There must be a branch of the government solely dedicated to creating acronyms and making sure the acronym is not offensive, like Seattle's South Lake Union Trolley which I understand was quickly changed to South Lake Union Streetcar.

What Do The National Taxpayer Advocate and David Letterman Have In Common?... [ read ]

When I was in college, Late Night With David Letterman, which was on NBC immediately after The Tonight Show With Johnny Carson, was must see TV. I know I am dating myself, but almost every weeknight my fraternity brothers and I would watch Late Night to see Dave, Paul Schafer, Larry "Bud" Melman, stupid pet tricks, stupid people tricks, the guy under the seats and other wacky bits. Of course, this was only after we had completed 2-3 hours of quality study time at the fraternity house. I know from recent experience that you can waste a whole weekend watching old Late Night clips on YouTube, including an audience favorite, the nightly Top 10 list. The Top 10 list was usually topical, but could be anything.

Tax Court Starts Off The Year Allowing the Deduction of Significant Losses from a Cattle Ranch... [ read ]

The U.S. Tax Court started off the year with a very nice win for taxpayers. In Wondries v. Commissioner, the court rejected the IRS's disallowance of loss deductions under IRC Section 183 and held that the taxpayers engaged in their cattle ranching activity for profit rather than as a hobby.

The Hidden Dangers of Filing a Tax Court Petition, Part III... [ read ]

I've previously written two blog posts regarding the "hidden" dangers of filing a Tax Court petition. In both blog posts, I discussed taxpayers who received Notices of Deficiency, filed Tax Court petitions and were surprised by the IRS answer, wherein the IRS increased the stakes by proposing a 75% fraud penalty for the first time.

IRS Exam Training Materials on Employee Retention Credit... [ read ]

In a prior blog post, I discussed the IRS warnings about Employee Retention Credit (ERC) abuse and the IRS training more than 300 auditors and criminal investigators to examine claims involving the ERC. According to IRS officials, the auditors and criminal investigators have now all completed a 56-hour training course on ERCs.

Want the Employee Retention Credit? The IRS Says Be Careful.... [ read ]

These days you can't throw a rock without hitting someone offering to assist an employer with the Employee Retention Credit(ERC). I have heard multiple reports of "tax specialists" making dubious claims about their ability to assist with ERC, some even claiming that they have received "special IRS training" for the ERC. Of course, they charge a substantial fee for this "specialized" help they will provide.

The IRS Makes it Easier and Cheaper to Fix Foot Faults on S-Corp Elections... [ read ]

On October 7th, the IRS released Revenue Procedure 2022-19 which provides simplified measures for correcting six procedural missteps that the IRS says are resolvable without requesting a letter ruling. The IRS believes the relief provided in Rev. Proc. 2022-19 will reduce burdens on taxpayers and the government, facilitate increased taxpayer compliance with the rules for electing S corporation status, and reduce costs and delays in completing transactions involving S corporations and qualified subchapter S subsidiaries.

When is an Amended Return NOT A Qualified Amended Return?... [ read ]

In a prior blog post I discuss options for correcting mistakes and omissions on tax returns and other IRS filings, including filing a qualified amended tax return ("QAR"). A recent Tax Court opinion, Lamprecht v. Commissioner, T.C. Memo. 2022-91, discusses a taxpayer's attempt to avoid the accuracy-related penalty by filing what the taxpayers hoped were QARs.

The IRS Wants to Interview Me. What Are My Rights?... [ read ]

It can be intimidating for any taxpayer to be contacted by the IRS, much less be interviewed by the IRS. Although I have never asked how they came to the conclusion, some of my clients have said the IRS is more intimidating than the police or FBI. Any taxpayer who is contacted by the IRS for an interview has a right to representation and although the IRS has done a poor job in letting taxpayers know this right, a recent report from the Treasury Inspector General for Tax Administration (TIGTA) says that the IRS is getting better.

Cash Nana and Papa's Checks Before They Die So the Gift is Completed... [ read ]

Fans of "Seinfeld" will recall that Jerry's grandmother, who everyone referred to as Nana, gave Jerry a $10 check every year for his birthday, which he never cashed. Years later Jerry's "financial advisor", Kramer, convinces Jerry to cash Nana's checks, however because Nana had closed the bank account, the checks bounce. Nana gets lost while trying to make the checks good.

AICPA Makes Recommendations to the IRS About Transparency, Communications and Backlog... [ read ]

On July 11th, the American Institute of Certified Public Accountants (AICPA) wrote a letter to the IRS commissioner and Assistant Secretary for Tax Policy, making recommendations and requests for how the IRS could do a better job while it is recovering. The AICPA makes some very good suggestions to which the IRS may or may not agree. It is a quick read for anyone who is interested.

Want a Charitable Contribution Deduction? Make Sure You Dot the I's and Cross the T's... [ read ]

A recent Tax Court decision, Albrecht v. Commissioner, was a reminder that the IRS requirements for substantiating a charitable contribution are strictly enforced by both the IRS and the Tax Court. In Albrecht, a widow lost a $464,000 deduction for failing to comply with the IRS requirements, although many of us would consider it nitpicking by the IRS and the Tax Court.

Part Two: Are Tax Returns Given to an IRS Agent Considered Filed?... [ read ]

In 2015, I wrote a blog post with this same title (here) concluding that based on case law, a tax return that is given to a representative of the IRS is not considered filed and, therefore, the statute of limitations does not start. I followed that up with a blog post (here) last year discussing a case which confirmed that tax returns are not considered filed if merely given to an IRS representative. Furthermore, in 2015 the 9th Circuit reversed a CPA's convictions for tax evasion because "filing" is an element of tax evasion and the CPA handed his fraudulent tax returns to the IRS agent instead of filing them. United States v. Boitano

Some CRATs are CR*P, So Sayeth the IRS and Department of Justice... [ read ]

In a February blog post, IRS Sends a Shot Across the Bow to Taxpayers With Grantor-Retained Annuity Trusts, I discussed the IRS blowing up a taxpayer's GRAT planning and sending a message to taxpayers and tax professionals. Soon after, another message was sent when the Justice Department filed a civil complaint in a Missouri District Court accusing five individuals and two LLCs of promoting an abusive tax scheme involving charitable remainder annuity trusts (CRATs) to eliminate capital gains taxes.

Tax Court Determines That Officer-Shareholder Compensation is Not Reasonable... [ read ]

In a recent memorandum decision, Clary Hood Inc. v. Commissioner, T.C. Memo. 2022-15, the Tax Court considered the issue of reasonable compensation to an owner/executive of a construction company. Unfortunately, the Tax Court held that the company failed to establish how the amount it deducted as compensation for its CEO and shareholder was both reasonable and paid solely as compensation for his services. To add insult to injury, the Tax Court held the company liable for an accuracy-related penalty for one of the years under consideration.

IRS Sends a Shot Across the Bow to Taxpayers With Grantor-Retained Annuity Trusts... [ read ]

An IRS legal memorandum involving a grantor-retained annuity trust (GRAT) released on December 30, 2021, should be a wake-up call to taxpayers and tax professionals. The memorandum blows up the taxpayer's GRAT by determining that the business asset held in the taxpayer's GRAT was egregiously undervalued allowing the IRS to disregard the GRAT and treat the entire transfer of assets to the trust as an outright gift. Not surprisingly, there are some unique and difficult facts regarding the GRAT and asset at issue, but it is a reminder of the importance of a good valuation and dotting all the I's and crossing all the T's when doing complex tax planning.

Taxpayer Loses Round One on Substantial Compliance But Still Has a "Reasonable" Chance to Save Its Easement Charitable Deduction... [ read ]

In a February 8th order in Hickory Equestrian LLC v. Commissioner, USTC No. 347-21, the U.S. Tax Court partially granted the IRS motion for summary judgment regarding the taxpayer's $6.4 million easement deduction. The court agreed with the IRS that the partnership's omission of cost basis on Form 8283, "Noncash Charitable Contributions", constituted a failure to satisfy the substantiation requirements of Reg. Section 1.170A-13(c). However, the court left open the possibility that the taxpayer could still save its charitable contribution deduction based on reasonable cause.

Taxpayer Does Some Creative Do-It-Yourself Estate and Gift Tax Planning and Then Tells the World About It... [ read ]

On January 20th, a U.S. Magistrate Judge in Illinois issued a memorandum opinion and order in R. David Yost v. Morgan Carroll, No. 20-C-5393 (N.D. Illinois), which involved a promissory note enforcement dispute between a soon-to-be former father-in-law (Yost) and his soon-to-be former son-in-law (Carroll). The lawsuit was filed after Carroll and Yost's daughter, Annie, started divorce proceedings. The promissory note case does not involve the IRS or any tax issues, but based on the court's order, the IRS, and possibly the Department of Justice, could be making inquiries of the parties soon.

Taxpayer Advocate Report to Congress-Parts 2 & 3 (Sort of)... [ read ]

Have you ever committed to do something only to later discover that someone has already done it and done it very well? Well, I had one of those moments this week. Last week I wrote a blog post regarding the Taxpayer Advocate's 2021 report entitled The National Taxpayer Advocate's 2021 Report to Congress (Part 1). Because there is a tremendous amount of interesting material in the report (interesting to tax nerds like me), my intent was to write at least one or two other blog posts regarding the Advocate's report to Congress.

The National Taxpayer Advocate's 2021 Report to Congress (Part 1)... [ read ]

On January 12th, the IRS National Taxpayer Advocate delivered her annual report regarding the IRS to Congress. The report contains statistical information and recommendations for how the IRS could improve its service and how Congress could assist the IRS in making the suggested improvements. For those of us who assist clients with IRS matters, we were not surprised that the Advocate's report stated that 2021 was the most challenging year ever for taxpayers and the IRS. "

IRS Introduces New Pilot Program to Allow Some Taxpayers to Skip the Line for Letter Rulings... [ read ]

In an early 2019 blog post, we discussed the what and how of requesting an IRS Letter Ruling. The process for obtaining a Letter Ruling can be slow and time consuming and that has been further slowed by the pandemic. In response to "numerous informal comments from taxpayers and practitioners regarding the time required to process letter ruling requests" on January 14th, the IRS issued Revenue Procedure 2022-10 , which immediately implements an 18-month pilot program that allows taxpayers to request fast-track processing (12 weeks) for letter ruling requests.

The Tacit Consent Rule and An Unsigned Tax Return... [ read ]

In a recent memorandum opinion, Om P. Soni v. Commissioner, T.C. Memo 2021-137, the U.S. Tax Court discussed a rule rarely seen in tax cases, the "tacit consent rule". The court held that although the taxpayer's wife had not signed the tax return at issue and other related documents, her actions invoked the tacit consent rule and she was liable for the tax deficiency.

Two Recent Tax Court Decisions Regarding Breeding Animals and Hobby Losses: The Miniature Donkey Breeder Had a "Little" Better Facts... [ read ]

The U.S. Tax Court recently issued two memorandum opinions regarding animal breeding activities and whether the taxpayers at issue could deduct expenses in excess of income from the activity. In Skolnick v. Commissioner, the Tax Court found that a pair of horse breeders were not engaged in the activity for profit, and thus the deductions were limited by IRC Section 183(b). In Huff v. Commissioner, the Tax Court found that a miniature-donkey-breeder venture was engaged in for profit, and therefore expenses in excess of income were allowable deductions under Section 162(a).

The Impact of Delinquent International Informational Returns on the IRS Statute of Limitations... [ read ]

Early this year the U.S. Tax Court released a decision in Kelly v. Commissioner, which, among other things, discusses how a delinquent international return impacts the IRS statute of limitations for assessment. It is a welcomed partial win for a taxpayer and contains a good discussion of reliance on a tax professional as the basis for reasonable cause.

The Hidden Danger of Filing a Tax Court Petition, Part II... [ read ]

In an earlier blog post, I discussed the hidden danger of filing a Tax Court petition, i.e., that the IRS can raise new issues, including new penalties. In the case referenced in the prior blog post, Wegbreit v. Commissioner, T.C. Memo. 2019-82, the Notice of Deficiency included a 20% negligence penalty, the taxpayer filed a Tax Court petition and after the IRS filed its answer and conducted some discovery, the IRS amended its answer to include 75% civil fraud penalty.

Court Agrees with Taxpayer and Quashes Summonses to Third-Party Record Keeper... [ read ]

In a rare win for a taxpayer, a federal district court in Idaho turned down an IRS request to enforce third-party summonses for information and granted the taxpayers' motion to quash the summonses. The court said the IRS failed to properly notify the taxpayers of its intent to contact a third party during the course of the examination and therefore, the summonses was not enforceable.

TIGTA Says the IRS Should Be Pursuing Taxes From S Corporation Owners... [ read ]

The tax treatment of compensation to S-Corp owners has reared its head again in an August 11th report issued by the Treasury Inspector General for Tax Administration (TIGTA). As long as I have practiced tax law, tax treatment of distributions to S corporation shareholders has been an issue with no clear answer. Not surprisingly, the TIGTA report says the IRS should be doing more to examine distributions to S corporation owners.

IRS-The 10 Deadly Sins... [ read ]

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... [ read ]

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... [ read ]

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... [ read ]

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.

Taxpayer's Penalty Defense Gets Boyled (Boiled?)... [ read ]

In previous blog posts I have discussed the late filing penalty and the reliance on a tax professional defense to the penalty. We discussed the reliance defense with respect to a late estate tax return and with respect to late e-filed returns .

Are You Feeling Lucky? IRS Taxes on Wagers and Bookmakers... [ read ]

These days it seems like the government taxes everything it can. While it is debatable whether or not that is true, there are a number of "hidden" taxes of which many taxpayers are unaware. Taxes on wagers and occupational taxes on bookmakers are a couple of those "hidden" taxes. Although the casinos in Las Vegas know about and pay these taxes, illegal bookmakers may not be and could be facing significant tax liabilities as a result.

Missteps in Filing a Tax Return Come Back to Haunt the Taxpayer and Her Representative... [ read ]

In prior blog posts, I discussed the mailbox rule and filing tax returns with the IRS. A recent case in Michigan reiterates the lesson discussed in that blog post about always using certified or registered mail if a tax return is mailed to the IRS. In addition, the Michigan case confirms that a taxpayer should always file a tax return in the manner described by the Internal Revenue Code and regulations, and not file it with an IRS representative not authorized to receive a return.

Another Tax Court case involving the Danielson Rule and this Time the Taxpayer Wins... [ read ]

In a prior blog post, I discussed a Tax Court memorandum opinion in Watts v. Comm'r, 2020-144, in which the Tax Court cited to the Danielson rule in holding for the IRS. The last line of that blog post reads, "The lesson from Watts and Danielson is that a taxpayer who attempts to disavow the tax consequences of an arm's length agreement will face a significant uphill battle." Well, only a few months later, the taxpayer in another Tax Court memorandum opinion, Complex Media Inc. v. Commissioner, T.C. Memo 2021-14, prevailed in that uphill battle and convinced the Tax Court that the taxpayer could disavow and recharacterize the form of a transaction.

Timely Filed IRS Documents and the Mailbox Rule... [ read ]

In a prior blog post, I discussed when the statute of limitation for the IRS assessing tax starts. The simple answer is, the statute of limitations starts when the tax return is filed. I recently read a case, Taha v. United States, which is being appealed by the taxpayer to the Federal Circuit Court of Appeals and involves a refund claim, the statute of limitations and the common law "mailbox rule".

When Does the Statute of Limitations for Assessing Tax Start?... [ read ]

I thought I would blog about a couple of December 2020 tax cases, decided within five days of each other, that involved taxpayers arguing that the IRS was time barred from assessing tax because the statute of limitations had run. In both cases, the IRS argued an assessment of tax was not time barred because the taxpayer had failed to file the required tax returns. In one case, Quezada v. IRS , the Fifth Circuit held in favor of the taxpayer, and in the other, Coffey v. Commissioner, the Eighth Circuit held in favor of the IRS.

IRC Section 6901 and Transferee Liability... [ read ]

In a previous blog post, I discussed a case involving the liability of an executor for unpaid federal estate taxes. In this blog post, I will discuss the basics of transferee liability for a transferor's taxes.

Section 469 and Material Participation... [ read ]

One of the tools in the IRS toolkit for limiting a taxpayer's business and investment loss deductions is IRC Section 469 and material participation. In Gurpreet S. Padda and Pamela B. Kane v. Commissioner, the U.S. Tax Court held that a practicing medical doctor met the IRC Section 469 material participation requirements for five restaurants and a brewery, and could deduct the losses generated by those business in full.

Can An Executor of An Estate That Owes Taxes Be Personally Liable?... [ read ]

In an unpublished decision, a U.S. District Court in New Jersey granted the government summary judgment against the executors of two related estates for fiduciary liability claims for failure to pay federal estate tax. United States v. Estate of Lorraine Kelley, et. al has a detailed discussion of how an estate executor can become personally liable for the estate tax and is a good example of what an executor should not do.

"Houston, We Have a Problem"- Options for Correcting Mistakes and Omissions on Tax Returns and Other IRS Filings... [ read ]

The federal tax system is a voluntary system that relies on taxpayers to file complete and accurate tax returns and other information with the IRS. However, sometimes after a tax return or other information in filed with the IRS, a taxpayer discovers it was incomplete or inaccurate. In order to avoid potential civil or criminal penalties, a taxpayer may want to act. This blog post discusses some of the options taxpayers have for addressing incomplete or inaccurate tax filings.

What is the Danielson Rule?... [ read ]

In the recent case of Watts v. Comm'r, T.C. Memo. 2020-143, the Tax Court cited to the Danielson rule in holding for the IRS. So, what is the Danielson rule?

Amended Tax Return or Superseding Tax Return?... [ read ]

I recently had one of those "aha" moments and thought it was blog-post worthy. A tax return preparer called me after a tax return he tried to electronically file was rejected by the IRS because a return had already been filed for the taxpayer for same tax period. The first thought is: this is a case of stolen identity and a fraudulent return, right? In most cases, yes; but in this case, wrong. Upon further investigation, the preparer found that his office had inadvertently filed an incomplete return for the taxpayer, ten days before. In fact, the return that was filed was completely blank.

IRS Has Requested Comments on Ending Revenue Procedure 94-69 Disclosures As a Defense to Penalties... [ read ]

On August 19, 2020 the IRS requested comments on whether it should eliminate disclosures made under Revenue Procedure 94-69, which allows taxpayers to avoid accuracy-related penalties with respect to self-reported adjustments at the beginning of an IRS audit

Using the Substantial Compliance Doctrine to Defeat the IRS... [ read ]

On August 17th, the Tax Court held in favor of the taxpayers regarding a $4 million charitable contribution deduction for donating land to a town in Emanouil v. Commissioner, T.C. Memo 2020-10. The IRS had challenged the taxpayer's deduction for a number of reasons including the taxpayers' appraisals did not include all the required information and therefore failed to comply with the qualified appraisal requirements. In holding for the taxpayers, the Tax Court cited the taxpayer-friendly substantial compliance doctrine.

The IRS Publishes a Roadmap for Bipartisan Budget Act (BBA) Partnership Audits... [ read ]

On July 6th, the IRS published a BBA Roadmap for Taxpayers to assist partnerships subject to the centralized partnership audit regime. The centralized partnership audit regime was created in the Bipartisan Budget Act of 2015 and applies to partnership tax years beginning after December 31, 2017. Although the IRS has already started some BBA audits, the release of the roadmap is likely an indication that more partnership audits will be starting soon.

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.

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.

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.

IRS Called Out for Not Pursuing High Income Taxpayers... [ read ]

On May 29, 2020, the Treasury Inspector General for Tax Administration (TIGTA) issued a report entitled, "High-Income Nonfilers Owing Billions of Dollars Are Not Being Worked by the Internal Revenue Service". The report found that 879,415 high-income tastaxpayers failed to file tax returns from 2014-2016 resulting in approximately $45.7 billion in unpaid taxes. On June 4, 2020, the Senate Finance Committee Chairman, Chuck Grassley, sent a letter to IRS Commissioner, Charles Rettig, requesting information on how many tax dollars went uncollected and why there was so little effort to address the issue.

A District Court Pushes Back on Government's Willful FBAR Penalty... [ read ]

After a string of government victories in willful FBAR penalty cases, there may be some light at the end of the tunnel for taxpayers challenging an assertion of a willful FBAR penalty. In United States v. Sandra J. de Forrest , the U.S. District Court for the District of Nevada denied the government's motion for partial summary judgment regarding a willful FBAR penalty, finding there were genuine disputed material facts regarding the taxpayer's knowledge of the obligation to file an FBAR.

U.S. Tax Court Announces Trial Sessions will be Conducted Remotely... [ read ]

On May 29th, the U.S. Tax Court announced it will be conducting remote trial sessions until further notice, joining many other courts around the country.

Update on IRS Voluntary Disclosures... [ read ]

In a previous blog post, we discussed how and when to make a voluntary disclosure to the IRS using the revised voluntary disclosure guidelines announced by the IRS in November 2018. In April 2020, the IRS quietly updated Form 14457, Voluntary Disclosure Practice Preclearance Request and Application and its instructions. The changes to the form and instructions answer some of the outstanding questions but also raise new questions. For example, while the instructions clearly state that a disclosure will not guarantee immunity from prosecution, they also state multiple times that the practice provides a way to "avoid potential criminal prosecution."

The Who, What, When and Where of IRS Form 8938, Statement of Specified Foreign Financial Assets... [ read ]

IRC Section 6038D requires any taxpayer who has an interest in a "specified foreign financial asset" to disclose that asset to the IRS on a Form 8938 attached to the taxpayer's annual tax return. The penalty for failure to file Form 8938 is $10,000. If failure continues for more than 90 days after notification by the IRS, an additional penalty of $10,000 will apply for each 30-day period during which the failure continues. The maximum penalty for a continuing failure to file a Form 8938 is $50,000.

The Who, What, When and Where of FBAR/FINCEN Form 114... [ read ]

What is an FBAR? Every year taxpayers must report certain foreign financial accounts, such as bank accounts, brokerage accounts and mutual funds, to the Treasury Department and keep certain records of those accounts. Taxpayers report the accounts by filing a Report of Foreign Bank and Financial Accounts (FBAR) on FinCEN Form 114.

Taxpayers With Undisclosed Foreign Accounts and Activities Beware: The IRS and Other Taxing Authorities Are Coordinating Efforts to Tackle International Tax Evasion... [ read ]

On January 23rd the Joint Chiefs of Global Tax Enforcement (J5) released the following statement regarding its "day of action" conducted on January 22nd.

Update on IRS Civil Enforcement Priorities... [ read ]

Last week, I participated in a conference call with IRS officials from Examination and Collection who were discussing the IRS' 2020 enforcement priorities. Here are the take-aways from the call.

Surprise, Surprise, An Estate Has Reasonable Cause For Filing A Tax Return Late... [ read ]

In prior blog posts we have discussed the uphill battle an estate faces when it requests abatement of a late filing penalty when the Form 706, United States Estate Tax Return, is not timely filed. Although there are cases where an estate has prevailed on a reasonable cause/reliance defense, they are few and far between. In the typical case, the court cites United States v. Boyle in holding that a taxpayer can rely on a tax professional for tax advice, but not regarding the "ministerial act" of filing a tax return on time.

IRS Coming After Tax-Delinquent Wealthy People in 2020... [ read ]

At recent tax programs, IRS officials referenced a new program called "Hi-Def" which will be targeting wealthy people who have not filed tax returns. The program is intended to address the perception that the IRS does not pursue delinquent wealthy people.

Fifteen Things You Should Know About Selling Your Business... [ read ]

1. Company Records. When you first begin contemplating a sale, you need to make sure the business's records are in order and up to date. You want your business's records in good shape to produce to a potential buyer at the due diligence stage. Keep a minute book with annual minutes or annual unanimous written consents as well as consents (or minutes of special meetings) approving major transactions, such as loans, etc. Retain copies of all of the business's fully executed contracts (loan documents, customer agreements, vendor agreements). This way, there is no question whether the company is obligated under a contract for which you have only kept a partially executed copy.

IRS Form 8275: To Disclose or Not Disclose -- That Is The Question... [ read ]

At least once in their career most tax return preparers have faced the dilemma of whether and how to make a disclosure with a tax return. A disclosure is an extra explanation beyond the usual income and expenses shown on a tax return. Not surprisingly, most taxpayers do not want to disclose anything more than necessary to the IRS. There may be privacy concerns or they just don't want the IRS to know anything more than necessary about them or their business. They also may be concerned that a disclosure is a red flag and will increase the chances of an IRS audit. All of these are legitimate concerns, but a disclosure can protect the taxpayer -- and maybe more importantly the tax return preparer -- from penalties.

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.

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).

Senate Finance Committee Launches Tax Investigation of Conservation Easements... [ read ]

On March 27th, the Senate Finance Committee launched an investigation into conservation easements by sending letters to 14 people involved in easement transactions. The letters ask for copies of appraisals, promotional materials and internal documents. The senators are also requesting investors' names and addresses, along with information about promoters' fees.

Appeals Court Holds That No Offer Is Too Low To Be A Qualified Offer... [ read ]

In a prior blog post we discussed using a Qualified Offer as a tool for settling a tax case with the government. On February 8th, the U.S. Court of Appeals for the Federal Circuit issued an opinion in BASR Partnership v. United States, holding that a partnership that prevailed in case against the IRS could recover its reasonable litigation costs from the government when it submitted a nominal $1 qualified offer.

Formal Document Request... [ read ]

In prior blog posts, we discussed the IRS using a summons to obtain information and options a taxpayer or third party has for responding to or objecting to a summons. In this blog post we will discuss an additional tool the IRS has to obtain information, a Formal Document Request ("FDR").

Still No Answer on Late Filing Penalty on Electronically Filed Tax Returns... [ read ]

In a blog post last year, we discussed the parties' oral arguments in the 5th Circuit Court of Appeal hearing in Haynes v. United States regarding the application of reasonable cause and a late filing penalty to an electronically filed tax return. On January 29th, the 5th Circuit issued an opinion in Haynes vacating the district court's grant of the government's motion for summary judgment and remanded the case to the district court for additional consideration. However, in vacating the lower court decision, the 5th Circuit declined to address the question of whether the U.S. Supreme Court decision in U.S. v. Boyle is still valid law in the age of electronic filing of tax returns.

New Partnership Audit Rules: Should the Partnership Agreement be Amended?... [ read ]

In November 2015, as part of the Bipartisan Budget Act (BBA) of 2015, Congress enacted a new centralized partnership audit regime (PAR) to replace the TEFRA partnership rules. The PAR applies to all partnerships and, like TEFRA, IRS examinations and adjustments will be made at the partnership level. However, unlike TEFRA, the IRS will assess and collect tax from the partnership.

Opting Out of the New Partnership Audit Rules... [ read ]

In November 2015, as part of the Bipartisan Budget Act (BBA) of 2015, Congress enacted a new centralized partnership audit regime to replace the TEFRA partnership rules. The new partnership audit regime applies to all partnerships and, like TEFRA, IRS examinations and adjustments will be made at the partnership level. However, unlike TEFRA, the IRS will assess and collect tax from the partnership.

Thoughts and Consideration Regarding the Designation of a Partnership Representative... [ read ]

In November 2015, as part of the Bipartisan Budget Act (BBA) of 2015, Congress enacted a new centralized partnership audit regime to replace the TEFRA partnership rules. The new centralized partnership audit regime is generally effective for partnership tax years beginning after December 31, 2017. As a result, the 2018 tax returns for most partnerships will be the first tax return filed under the new regime. One of the first questions partnerships, partners and tax professionals will face is determining who will be the Partnership Representative (PR). Although this would seem to be a simple question to answer, as explained below, it is much more involved than selecting a Tax Matters Partner (TMP) under the old TEFRA regime. This is especially true because any tax liability resulting from an IRS audit under the new centralized partnership audit regime is to be paid by the partnership in the current year, unless the PR takes affirmative steps otherwise. Failure by the PR to take action on a timely basis could result in a mismatch of tax burdens and tax benefits between current and former partners in a partnership.

IRS Updates Guidance on Disclosures and Accuracy Related Penalties... [ read ]

On December 20th, the IRS released Revenue Procedure 2019-9 providing guidance on whether disclosure of an item or position taken on a tax return is adequate for purposes of reducing or eliminating the Substantial Understatement of Income Tax Penalty (IRC Section 6662(d)) and the Return Preparer Penalty (IRC Section 6694(a)). Rev. Proc. 2019-9 updates Rev. Proc. 2018-11 and makes editorial but "no additional substantive changes". Rev. Proc. 2019-9 applies to any income tax return filed on 2018 tax forms for a tax year beginning in 2018, and to any income tax return filed in 2019 on 2018 tax forms for short tax years beginning in 2019.

IRS Revises Voluntary Disclosure Practice... [ read ]

On November 20th, the IRS issued Memorandum LB&I-09-1118-014 updating the process for both domestic and foreign voluntary disclosures. The IRS voluntary disclosure program is found in section 9.5.11.9 of the Internal Revenue Manual and is a long standing practice of the IRS to provide taxpayers who have potential criminal exposure a means to come into compliance with the law and potentially avoid criminal prosecution. In a prior blog post , we discussed the basics of the IRS voluntary disclosure program.

Reacting and Responding to the Commencement of an IRS Criminal Investigation... [ read ]

How a taxpayer or tax professional reacts and responds to a visit by IRS criminal investigators may mean the difference between a criminal indictment and the IRS declining to pursue a criminal case.

Update from the IRS Regarding Like-Kind Exchanges... [ read ]

On November 19th, the IRS issued IR-2018-227, reminding taxpayers that Like-Kind exchange tax treatment is now generally limited to exchanges in real property that is held for use in a trade or business or for investment. Real property includes land and generally anything built on or attached to it. An exchange of real property held primarily for sale still does not qualify as a Like-Kind exchange.

IRS Criminal Investigation Releases Its 2018 Annual Report... [ read ]

On November 14, IRS Criminal Investigation released its 2018 Annual Report. The report comes on the heels of IRS-CI Deputy Chief Eric Hylton's statement at the ABA Section of Taxation meeting in early October that CI plans to hire 250 new special agents over the next 18 months.

How to Respond to an IRS Backup Withholding Notice... [ read ]

The Internal Revenue Code provides that if a business files an information return that has a missing or incorrect Taxpayer Identification Number (TIN), the business will be notified by the IRS and may be required to withhold a specified percentage (24% for payments made after 12/31/17) of certain reportable payments made to the payee with the missing or incorrect TIN. Businesses that ignore the IRS notices and fail to comply may be responsible for uncollected taxes and face penalties for filing incorrect information returns.

Information Reporting Penalty and the Reasonable Cause Defense... [ read ]

Forms W-2 are subject to information reporting penalties under Sections 6721 and 6722 of the Internal Revenue Code. Section 6721 imposes a penalty for any failure to file an information return timely, for any failure to include all required information, or for the inclusion of incorrect information. Section 6722 imposes a penalty in the case of any failure to furnish a payee statement on or before the required date, any failure to include the required information, or the inclusion of incorrect information.

IRS Collection and Retirement Accounts... [ read ]

Pursuant to IRC Section 72(t)(1), if a taxpayer receives a distribution from a qualified retirement account, the taxpayer not only faces potential taxes on the distribution amount itself, but also an additional tax equal to 10% of the amount of the distribution that is includible in gross income. There are a number of exceptions to the 10% rule, most notably distributions made after the taxpayer has reached the age of 59 ½.

Does Failure to Oversee A Trusted Employee Equal Willful Conduct for the Trust Fund Recovery Penalty?... [ read ]

In prior blog posts, we discussed the McClendon case where a doctor made a loan to his business to make payroll, and in doing so, inadvertently exposed himself to liability for the trust fund recovery penalty. The 5th Circuit recently returned the case to the U.S. District Court for further consideration, including the Government's argument that the doctor's failure to oversee the trusted employee to whom he delegated the duty of filing payroll tax returns and paying the employment taxes satisfies the willfulness element of IRC Section 6672.

The Continuing Saga of Dr. McClendon and The Trust Fund Recovery Penalty... [ read ]

In a prior blog post, we discussed the case of Dr. Robert McClendon and the IRS' assessment of the Trust Fund Recovery Penalty against him due to his attempt to do the right thing. In 2016, a U.S. District Court granted the IRS' motion for summary judgement regarding the trust fund recovery penalty, because Dr. McClendon, after learning that his medical practice owed the IRS payroll taxes, loaned the business $100,000 to make its payroll to employees.

Are E-Filed Tax Returns Subject to the Same Late Filing Rules as Paper Tax Returns?... [ read ]

On July 11th, the 5th Circuit Court of Appeals heard arguments in Haynes v. United States regarding the application of a late filing penalty to an electronically filed tax return that was filed late due to a computer software malfunction. The question before the 5th Circuit is whether the U.S. Supreme Court decision in U.S. v. Boyle is still valid law in the age of electronic filing of tax returns.

Can a Taxpayer Avoid a Civil Fraud Penalty by Filing an Amended Tax Return?... [ read ]

In a prior blog post, we discussed amending a tax return to avoid the accuracy-related penalties. This blog post will discuss whether the same strategy can be used to avoid the civil fraud penalty under IRC Section 6663.

Obtaining Information from the IRS: Part II... [ read ]

In a prior blog post, we discussed using a Freedom of Information Act request to obtain information from the IRS. In this blog post we will discuss some other sources of information from the IRS.

Obtaining Information from the IRS: The Freedom of Information Act Request... [ read ]

When the IRS is attempting to enforce the tax laws, it will ask for documents and information from a taxpayer. Just as it is important for the IRS to obtain information from the taxpayer, it is equally important for the taxpayer to obtain information from the IRS. This blog post will discuss one alternative for accessing IRS documents and information, the Freedom of Information Act, 5 U.S.C. 552. A Freedom of Information Act request should be considered in any situation where a taxpayer is interacting with the IRS, including an audit of tax returns, collection of delinquent taxes, assessment of penalties, determination of a responsible person for payroll taxes, request for delinquent tax returns or a criminal tax investigation.

Update on IRS Denial or Revocation of Passports... [ read ]

In a prior blog post we discussed IRC Section 7345 which allows the IRS to take actions to either revoke or deny a passport to a taxpayer with a seriously delinquent tax debt. On April 5, IRS Chief Counsel issued Notice CC-2018-005 which provides guidance for Chief Counsel attorneys regarding how to handle a lawsuit brought by a taxpayer in U.S. Tax Court pursuant to Section 7345(e). This notice was issued on the heels of IRS Deputy Chief Counsel Drita Tunuzi stating at a recent ABA Tax Section meeting that the IRS would probably start issuing the notices of passport revocation or denial by the end of February.

Methods of Proof in a Criminal Tax Investigation... [ read ]

In a criminal tax investigation, the IRS generally must prove a taxpayer either underreported his income or overstated his deductions. To do so the IRS uses a number of methods of proof that fall under one of two categories: Direct (Specific Items) Method of Proof or Indirect Methods of Proof.

What Is A Kovel Accountant?... [ read ]

An attorney who represents a client in a criminal tax investigation will typically retain a forensic accountant to review and analyze the client's financial records and tax returns mirroring the work of the IRS criminal investigators. The accountant is generally referred to as a "Kovel Accountant" and is hired by the attorney, not the client, so that the accountant's work is protected by the attorney-client privilege.

Update On The IRS Attack on Conservation Easements... [ read ]

In prior blog posts, we discussed IRS efforts to combat what it considers to be abusive conservation easements deductions. In Notice 2017-10, the IRS warned that certain conservation easement deductions could be designed to avoid tax and had to be disclosed to the IRS. The notice said that some promoters "are syndicating conservation easement transactions that purport to give investors the opportunity to claim charitable contribution deductions in amounts that significantly exceed the amount invested."

IRS Is Contacting Taxpayers Who Were Denied Access To or Withdrew From the Offshore Voluntary Disclosure Program... [ read ]

Since the beginning of the year taxpayers who either were denied access to or withdrew from the IRS Offshore Voluntary Disclosure Program (OVDP) have been receiving Letter 5935 from the IRS notifying them that they need to come into compliance with U.S. reporting requirements relating to foreign income, foreign entities, and/or foreign financial accounts. The letter is part of the IRS Large Business & International (LB&I) campaign announced late last year called "OVDP Declines-Withdrawals Campaign".

Coinbase Turning Over Information To the IRS Regarding Customers' Investments in Bitcoins... [ read ]

In previous blog posts, we have discussed the IRS and Department of Justice focus on virtual currencies and the IRS John Doe Summons that was served on Coinbase, the largest Bitcoin exchange in the United States. Late last year, Coinbase was ordered to comply with the IRS John Doe Summons for customer information. The summons to Coinbase was based in part on information obtained by the IRS in an audit of one or more taxpayers who admitted they had been using Bitcoin to underreport their taxable income.

The IRS' New Authentication Procedure for Tax Practitioners... [ read ]

Any tax practitioner who has contacted the IRS after January 3, 2018 to obtain client information has received an unpleasant surprise. The IRS is asking the practitioner to provide his or her social security number and date of birth for authentication purposes. There is no doubt this is an attempt to address security concerns, including concerns about compromised CAF numbers, but the change has caught many in the tax community off guard and led to unpleasant exchanges with IRS personnel.

A Couple of Interesting Rulings in Undisclosed Foreign Account Penalty Cases... [ read ]

Read about two cases involving interesting rulings in Undisclosed Foreign Account Penalty Cases: United States v. Forbes and Jarnagin v. United States.

Bitcoin Is Drawing the Interest of Investors and the IRS... [ read ]

In a prior blog post (here) my colleague Chris Weeg discussed using Bitcoin as part of year end charitable giving. Bitcoin has been in the news lately as the value of a single Bitcoin has risen dramatically in the last month. Some financial experts view Bitcoin as the next great investment, while other financial investors believe that Bitcoin is a scam. Currently Bitcoin has limited usage beyond investment, but one of the Big 4 accounting firms says it has begun accepting Bitcoin as payment (here). In addition, futures trading on Bitcoin is expected to start next week.

IRS Announces 11 New Enforcement Campaigns: Swiss Account Holders Beware... [ read ]

On November 3rd, the IRS announced the rollout of 11 Large Business and International (LB&I) enforcement campaigns. The 11 new campaigns are in addition to the 13 LB&I enforcement campaigns introduced by the IRS in January 2017

Options for Taxpayers With Unfiled Tax Returns... [ read ]

Whether due to oversight or intentional conduct, there are number of individuals and businesses with unfiled federal tax returns. Under the Internal Revenue Code (IRC) the failure to file a tax return is a misdemeanor (IRC Section 7203) punishable by imprisonment of not more than one year and a fine of up to $25,000.

TIGTA Report on IRS Estate and Gift Tax Examinations... [ read ]

On September 28th, the Treasury Inspector General of Tax Administration (TIGTA) issued a report recommending changes to fix the procedures the IRS uses to select estate and gift tax returns for examination.

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.

Payroll and Human Resources Departments Beware: An Update on an Identity Theft Scam... [ read ]

On March 1, 2016 the IRS issued IR-2016-34, alerting "payroll and human resources professionals to beware of an emerging phishing email scheme that purports to be from company executives and requests personal information on employees." Recent information indicates that cybercriminals have increased the use of this phishing email in 2017. Identity theft and phishing are both on the 2017 IRS Dirty Dozen List.

An Issue for Real Estate Developers and Their Tax Advisors to Keep An Eye On... [ read ]

On April 10, 2017, the IRS Chief Counsel's Office issued an Action on Decision (AOD 2017-3) refusing to acquiesce to the Tax Court's and 9th Circuit's decisions in Shea Homes Inc. v. Commissioner, 834 F.3d 1061 (9th Cir. 2016), aff'g 142 T.C. 60 (2014). Because of the potential tax benefits associated with the Shea Homes decision, real estate developers and their tax advisors should keep an eye on any future developments.

TIGTA Report: The IRS Putting Innocent Small Business Owners at Risk in Currency Structuring Seizures and Forfeitures... [ read ]

On March 30th, the Treasury Inspector General for Tax Administration (TIGTA) released a report titled "Criminal Investigation Enforced Structuring Laws Primarily Against Legal Source Funds and Compromised the Rights of Some Individuals and Businesses." The TIGTA report (the Report) analyzed and made recommendations regarding how IRS Criminal Investigation (CI) administered cases involving possible currency structuring violations of Title 31 U.S.C. Section 5324(a).

Second Circuit Decision in Chai v. Commissioner Says No Penalties When the IRS Failed to Obtain Written Approval... [ read ]

On March 20th the U.S. Court of Appeals for the Second Circuit issued an opinion in Chai v. Commissioner that could impact every taxpayer who is disputing IRS penalties. Taxpayers with penalty cases pending in Tax Court should review the Chai decision as soon as possible and determine its application to their case.

TIGTA Recommends That The IRS Pursue More Criminal Employment Tax Cases... [ read ]

On March 21, 2017, the Treasury Inspector General for Tax Administration (TIGTA) issued a report entitled "A More Focused Strategy is Needed to Effectively Address Egregious Employment Tax Crimes". The report presents the results of TIGTA's evaluation of the IRS civil and criminal enforcement actions regarding payroll tax noncompliance. The report calls employment tax noncompliance a "serious crime" and recommends that the IRS, including Criminal Investigation (CI), "consider a focused strategy to enhance the effectiveness of the IRS's efforts to address egregious employment tax cases". "Egregious employment tax cases" are defined as employers who have 20 or more quarters of delinquent employment taxes. The number of employers with egregious employment tax noncompliance has more than tripled in recent years. As of December 2015, 1.4 million employers owed approximately $45.6 billion in unpaid employment taxes, interest and penalties.

Address IRS Tax Debts Now, Before a Passport is Revoked... [ read ]

Section 7345 entitled "Revocation or denial of passport in case of certain tax delinquencies" was added to the Internal Revenue Code in late 2015. The IRS has announced that it will begin sending tax debt certifications to the State Department in early 2017 for revocation or denial of passports. Denying or revoking a person's freedom to travel can have devastating effects including disrupting business, impeding or eliminating an individual's ability to generate income and potentially separating families. Therefore, it is imperative that any person with an IRS tax debt who regularly travels internationally or plans to do so, understand when they may become subject to Section 7345, what type of debts can be excluded from Section 7345 and their options if they receive notice of a tax debt certification.

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.

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.

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 Adds Conservation Easements to the List of Tax Avoidance Transactions... [ read ]

On December 23rd the IRS issued Notice 2017-10 , which adds syndicated conservation easements to the category of transactions that require formal disclosure by investors and advisors to the IRS. Any taxpayer or advisor who is required to make a disclosure but fails to do so could face penalties of up to $50,000.

IRS Alternative Dispute Resolution Options... [ read ]

In a prior post, I talked about the latest IRS Alternative Dispute Resolution (ADR) program, Fast Track Mediation Collection, which replaced the prior Fast Track Mediation program. In this blog post, I want to talk about some of the other ADR programs that are available to taxpayers as an option for resolving tax disputes on an expedited basis.

IRS Introduces New Alternative Dispute Resolution for Taxpayers in Collection... [ read ]

On November 18, the IRS issued Rev. Proc. 2016-57 which provides guidance for the new Small Business/Self Employed (SBSE) Fast Track Mediation Collection (FTMC). The FTMC replaces the SB/SE Fast Track Mediation which was infrequently used and is now obsolete.

The IRS is Considering Adding Conservation Easements to the List of Tax Avoidance Transactions... [ read ]

Conservation easements are legitimate and very good tax planning transactions for taxpayers who wish to preserve valuable land and wildlife habitats. If the conservation easement is done properly, a taxpayer may be able to claim a substantial charitable contribution deduction pursuant to Section 170. However, due to inflated appraisals, poorly drafted documentation, improper deductions and unscrupulous promoters, the IRS is considering adding syndicated conservation easements to its catalog of "listed transactions".

The IRS is Increasing Their Focus on Bitcoin and Other Virtual Currencies... [ read ]

On November, 17, 2016, the Department of Justice filed a petition in a United States District Court in Northern California asking the court to issue a John Doe Summons to Coinbase, the largest bitcoin exchange in the U.S., asking for the records of all customers who bought virtual currency from Coinbase for the years 2013, 2014 and 2015.

Going..Going..Gone. Face-To-Face IRS Appeals Conferences are Disappearing... [ read ]

Effective October 1, 2016, the IRS has revised the Internal Revenue Manual (IRM) instructing Appeals Officers that most Appeals conferences will be held by telephone instead of in person. The changes to the IRS are in response to the dwindling IRS budget and lack of manpower.

Statute of Limitations: The Taxpayer's Ultimate Defense in a Criminal Tax Case... [ read ]

In a previous post, I discussed the civil statute of limitations (SOL) the IRS has for assessing additional tax, penalties and interest against a taxpayer. In this post, I will briefly discuss the SOL for criminal tax cases and a recent case where the defendant effectively used the SOL as a defense.

The Statute of Limitations for Assessment: The Taxpayer's Ultimate Defense to the IRS' Assessment of Additional Tax... [ read ]

One of the questions taxpayers regularly ask is: How long does the IRS have to propose and assess additional tax? Or as some taxpayers put it, " How long before I can be sure I am safe from the IRS"? In this blog post, I will discuss the general rules relating to the statute of limitations (SOL) on assessment and the exceptions to the general rule.

IRS Administrative Summons to a Third Party: The Recipient's and Taxpayer's Duties and Rights... [ read ]

In a previous blog post, I discussed the duties and rights of a taxpayer who receives an IRS administrative summons for records or testimony. In this blog post, I will discuss the duties and rights of a third party who receives an IRS summons for records or testimony and the taxpayer's right and duties with regard to a third party summons.

IRS Administrative Summons to a Taxpayer: The Taxpayer's Duties and Rights... [ read ]

In most IRS examinations, the taxpayer and the IRS prefer an informal information-gathering process with the IRS issuing Information Document Requests (IDRs) and the taxpayer providing responses. However, there are circumstances where the issuance of an IRS administrative summons to the taxpayer for documents and/or testimony becomes necessary. When the IRS issues an administrative summons, it is very important that the taxpayer and the taxpayers' representative understand the taxpayer's duties and rights in responding.

Captive Insurance and the 5th Amendment... [ read ]

An IRS summons enforcement recommendation was issued by a federal magistrate judge in Massachusetts on April 19th, where the summonsed witness appeared as required, but asserted his 5th Amendment privilege against self-incrimination in response to questions by the IRS. The case has a couple of interesting issues.

The Latest IRS Scam--The Scammers are Getting a Little Smarter... [ read ]

I had a good friend send me a letter that one of his clients received from the "IRS". The letter is a hoax and another attempt by scammers to take money from people.

IRS Says File 2015 Tax Returns As Soon As Possible or Criminals Will Do It For You... [ read ]

The IRS head criminal investigator, Richard Weber, had a message for all taxpayers while speaking at a conference on January 25th. "File early before the criminals file for you," Weber said. Weber explained that "current intelligence" indicates that criminal groups have amassed stolen taxpayer identification information to be used to file fraudulent refund claims during the 2016 filing season.

Using a Qualified Amended Return to Avoid the Accuracy-Related Penalty... [ read ]

When a taxpayer or tax professional discovers an error on a previously filed tax return, the taxpayer usually asks whether and how the error should be corrected. While there is nothing in the Internal Revenue Code or Regulations requiring a taxpayer to amend a tax return, CPAs and other tax professionals have a duty under Circular 230 and ethical rules to advise a taxpayer that an amended tax return should be filed and that failure to do so could result in imposition of penalties. If a taxpayer chooses not to file an amended return, he or she could be subject to an accuracy-related penalty pursuant to IRC Section 6662.

Are Tax Returns Given to an IRS Agent Considered Filed?... [ read ]

In the typical IRS delinquent tax return examination, the IRS agent will ask that the original delinquent returns be delivered to him or her for filing. Because providing tax returns and other information, such as refund claims, is not considered filing, I will usually file the returns with the IRS Service Center, and provide a copy to the agent with proof of filing. By doing so, I know that a tax return or refund claim has been properly and promptly.

Tax Sale of Real Property: The Rights and Interests of the Taxpayer and the Purchaser... [ read ]

If you listen to the radio or watch late night TV, you know that the IRS has considerable powers when it comes to collecting unpaid taxes, penalties and interest. Included in these powers is the right to seize and sell real property in which a delinquent taxpayer has an interest, although there are some limits on what real property can be seized and sold by the IRS.

Section 9100 Relief: A Second Bite at the Apple... [ read ]

In my career, I have received calls from panicked tax professionals who have discovered that they have inadvertently missed a tax election and don't know what to do. When I receive such a call, I tell the caller two things. First, I tell the tax professional to contact his or her malpractice carrier. Second, I tell the caller that there may be a solution, Reg. Sections 301.9100-1 thru 3, which contain rules for allowing for extensions of time for late tax elections. Depending on the circumstances, Section 9100 relief may be automatic or non-automatic.

Is Time Running Out on Discounts on Transfers of Family Entity Interests? Now May Be The Time to Act.... [ read ]

The IRS may be close to issuing new regulations on valuation that could significantly increase transfer tax costs. As a result, it is prudent for families who are contemplating gifts of family entity and limited partnership interests to make the gifts now, while the valuation discounts are still available.

The IRS Voluntary Disclosure Program... [ read ]

The federal tax system is a voluntary system that relies on taxpayers to file complete and accurate tax returns. However, the IRS released a study reporting that individuals and businesses underpay their taxes by an estimated 17% each year, resulting in almost $450 billion of lost tax revenues each year.

IRS and DOJ representatives made presentations at the NYU's Tax Controversy Forum in New York... [ read ]

On June 5th, a number of IRS and DOJ representatives made presentations at the NYU's Tax Controversy Forum in New York. The following were of interest.

A Discussion of Recent Tax Decisions...

Joel Crouch was a speaker at a tax conference sponsored by Texas Bank and Trust in Tyler (May 6th) and Longview (May 19th). Mr. Crouch's topic was "A Discussion of Recent Tax Decisions." A copy of the outline from the presentation is at the following link Texas Bank and Trust Speech Judicial Update.

The Art of IRS Penalty Defens...

Joel Crouch was a speaker at a tax conference in Lufkin sponsored by First State Bank and Trust. Mr. Crouch's topic was "The Art of IRS Penalty Defense". Mr. Crouch made the same presentation to the Dallas chapter of the American Association of Attorney-CPAs. A copy of the outline from the presentations is at the following link The Art of IRS Penalty Defense.