When it comes to tax law, there are quite a few known-unknowns. These are tax questions that have been raised tangentially in court cases and rulings, but have not been fully answered. These situations confuse taxpayers. Tax practitioners are often asked to provide answers. The answers from tax practitioners often differ, as practitioners have different…
Tax Articles
Tax Court Clarifies Employee Tool Plans
Prior to the Tax Cuts and Jobs Act (“TCJA”) of 2018, it was common for employers to simply pay employees more and leave it to the employees to deduct their employee business expenses on their personal income tax returns. The TCJA limited the employee’s ability to deduct employee business expenses. Many employers responded by adopting…
Fixing Trust Fund Recovery Penalties
The public may not be fully cognizant of this, but, the IRS is in the business of processing information and making decisions. It accomplishes this by siloing work on tax returns and accounts. The siloed work is intended to allow the IRS to process and make consistent decisions based on a very large volume of…
Electing Out of the Partnership Audit Regime
When it comes to income taxes and IRS audits, there are a lot of procedural rules that are counter-intuitive. Even if one thinks they are half-baked, the rules are the rules. They can have serious consequences. The centralized partnership audit regime is an example. Tax advisors often instruct their clients to elect out of the…
IRS Audits for Insolvent Taxpayers
When times are good, we don’t need to worry about the tax loss rules, the net operating loss (“NOL”) rules, or even the bankruptcy tax rules. But these rules are front and center in most tax planning and advice during and after an economic downturn. We saw this with the 2001 dot com bust, the…
Taxes & Defunct Texas Corporations
Our Federal tax laws often look to state law. Differences in state law can expand or limit the IRS’s ability to assess and collect Federal taxes. In Patrick’s Payroll Services, Inc. v. Commissioner, T.C. Memo. 2020-47, the court considers whether a defunct Michigan corporation can bring suit against the IRS. This case provides an opportunity…
Texas Franchise Tax: What are COGS?
With advance tax planning, it is often possible to avoid the Texas franchise tax. If the tax does apply, it can often be minimized by a close reading and application of the rules. The recent Sunstate Equipment Co., LLC vs. Comptroller of Public Accounts, No. 17-0444 (Tex. 2020) case provides an opportunity to consider when…
Whistleblower Claim Limited by Sequestration
We help claimants submit whistleblower claims. But when we receive calls asking for help with whistleblower claims, we do everything we can to dissuade the callers from submitting claims. The IRS’s whistleblower program has been plagued by mismanagement. Cases have long been mishandled by the IRS. Legitimate awards denied. Claimants have to be prepared to…
Using Contract Law to Avoid IRS Interest
Interest that accrues on taxes can be abated due to IRS errors or delays. The law that implements this general rule often fails to provide a meaningful remedy in most interest abatement cases. But what about contract law? Can contract law provide another means for obtaining a remedy in interest abatement cases? The court addresses…
IRS Contacts With Government Agencies
The IRS considers information from third parties during audits and in collecting unpaid taxes. The IRS’s efforts to gather this information can significantly harm the taxpayer, as third parties may not want to do business with the taxpayer given the IRS inquiry. Recognizing this, Congress has imposed rules that limit the IRS’s ability to make…