Federal Income Tax Research Tax Credits Tax

Research Tax Credit Records Must Be Kept for 40+ Years

A frequent question is how long one has to keep records for tax purposes. The United States v. Quebe, No. 3:15-cv-294 (S.D. Ohio 2019) case provides the answer for research tax credits. The answer is that you have to keep records that pre-date the formation of your business by twenty years and then you have […]

Bankruptcy Tax IRS Audits Tax Procedure

The IRS Isn’t Charged With Knowledge of Other Federal Agencies

The IRS only has to mail a notice of deficiency to a taxpayer’s last known address in order to assess or record a tax liability for the taxpayer.  This “last known address” rule is often the subject of disputes.  The Sadek v. Commissioner, T.C. Memo. 2018-174, case provides an example where information available to the […]

IRS Debts Tax Procedure

Perception Can Be As Important as Substance in Tax Disputes

Taxpayers voluntarily submit information to the IRS.  The IRS not only evaluates the substance of this information, but also the taxpayer’s candor in preparing and providing the information.  The perception of candor is just as important as the substance in many cases.  The Guess v. Commissioner, T.C. Memo. 2018-97, provides an example of how things can […]

Federal Income Tax Tax Tax Deductions

Deducting Fringe Benefits for Family Members

Small business owners often look for ways to reduce their taxes.  With family businesses, these plans often involve employing the owner’s children.  This raises the question of whether a small business owner employ their children as independent contractors and deduct seemingly personal expenses for the children as fringe benefits if the children did in fact […]

Tax Procedure Tax Returns

Is the IRS Bound by It’s Letters and Notices?

If the IRS sends a taxpayer a letter saying that it will process their refund claim but then it fails to do so, is the IRS bound by its letter? The court recently addressed this in Hawver v. Commissioner, T.C. Memo. 2017-244. The Facts & Procedural History The taxpayer filed his 2005 tax return in […]

IRS Audits Tax Procedure

U.S. Treasury Says IRS Not Using Information from Foreign Governments

It wasn’t long ago that the IRS was completely in the dark as to what information taxpayers and others were reporting to foreign governments. The IRS would never show up on U.S. audit with information obtained from foreign governments. We do see this on audits occasionally, but it is still a rare occurrence. A recent […]

Tax Litigation Tax Procedure

How to Challenge an Invalid IRS Notice of Deficiency

The IRS is required to send taxpayers a notice of deficiency before it can assess additional tax. The notice itself has to put the taxpayer on notice that the IRS made a determination that there was a tax deficiency (i.e., an amount owed), the tax year, and the amount. A notice that does not include […]