Tax Procedure Trust Fund Penalties

Loaning Money to Business Triggers Trust Fund Penalty

You work hard to build a business, you find success over the years, and then you find out that your long term accountant did not remit payroll taxes and you owe a significant balance.  What do you do?  The recent McClendon v. United States, No. 17-20174 (5th Cir. 2018) case provides some answers. The Facts & Procedural […]

IRS Debts Tax Procedure

IRS Cannot Use Court to Collect from Third Party Located in Another State

The IRS has a number of collection tools at its disposal. This includes the ability to take the taxpayer’s property without court intervention. This power doesn’t extend to all property. For example, the IRS has to go through the courts to get at property held by third parties. As the court reminded the IRS in […]

IRS Debts Tax Procedure

IRS Benefits from the Texas Homestead Exemption

In United States. v. Cobos, No. 3:13-CV-4924-L (N.D. Tex. 2017), the court addressed whether a third party who files a lien notice against a taxpayer before the IRS files its lien notice has a superior claim to the taxpayer’s home. The case highlights how the Texas homestead exemption can benefit the IRS to the detriment […]

IRS Debts Offer in Compromise Tax Procedure

Forgotten Offer in Compromise Extended IRS Collection Time

Sometimes it is best to wait for the IRS’s collection statute to expire. This is a wait-and-see approach where the taxpayer waits to see if the IRS attempts to collect the tax debt. To succeed, it is important for the taxpayer to not extend the IRS’s collection statute. This issue came to a head in […]

Business Tax Federal Income Tax S Corporation Tax Tax Tax Deductions

Deducting Back Taxes in Current Year for Defunct Business

Can an S corporation shareholder for a defunct business pay unpaid taxes in the current year, and have the defunct business deduct the payment in the current year?  The court addresses this in Brown v. Commissioner, T.C. Memo. 2017-18.  Most business owners may miss this deduction given that the business is no longer operating. Facts & […]

IRS Debts Tax Procedure

Transferring Property Owned by Taxpayer With Unpaid Taxes

Buyers have to be careful when purchasing property subject to an IRS lien.  The recent United States v. Urioste, No. 4:15-CV-1787-VEH (N.D. Ala 2017) considered the situation where a business purchased and improved real estate that was encumbered by an IRS tax lien. Facts & Procedural History The case relates to the tax liabilities of Mr. […]

IRS Debts Tax Procedure

Continuation Theory: Collecting Taxes Owed by Prior Business

If a business has or expects to have a significant debt, it may transfer its assets and/or operations to a new business entity to try to avoid the debt. There are a number of non-tax cases where the courts have addressed this. The courts generally apply a “continuation” theory in these cases which asks whether […]