If you hire a competent tax advisor and end up having a late filed return, you may be able to avoid penalties for the late filing. But this is a defense. It is something that you, the taxpayer, have to prove. So how does a taxpayer prove that they relied on a tax advsior? The…
Tax Articles
Is Reliance on a CPA Sufficient for a Late Filed Tax Form?
The IRS often turns a deaf ear to taxpayers who miss a filing deadline due to some action or inaction by their CPA or tax preparer. This is the case for late filing tax penalties. But what about a late filed accounting method change? Is reliance on a CPA or tax preparer sufficient for a…
Taxpayer Cannot Recoup Attorney Travel Costs
If the IRS wrongfully denies your refund claim and you are successful in litigating the matter in court, you are entitled to recoup some of your court costs. But what about the taxpayer’s tax attorney’s travel costs? And what if the travel costs were necessary as the tax issue was complex and a tax attorney…
Cashing a Tax Refund Check for a False Return is a Crime
Cashing a tax refund check that was triggered by filing a false tax return is a crime. It is theft of government money. Theft of government money is different than tax evasion. The recent United States v. Box, No. 18-13935 (11th Cir. 2019) court case provides an opportunity to consider the crime of theft of…
CPA Penalized for Knowledge of Understatement
Section 6701 imposes a penalty for assisting another person in understating their tax liability. The Section 6701 penalty is not subject to a statute of limitations. The IRS can assess these penalties at any time, even years and decades after the fact. This can result in very large penalty assessments for those who prepare tax…
Can the IRS Get Records from Foreign Corps Doing Business in the U.S.?
In CCA 2019060408545121, the IRS asked its tax attorneys whether a foreign corporation that conducts business with a limited partner in the U.S. had to produce records. Our tax laws provide address this very topic, as noted in the CCA. The CCA serves as a reminder that failing to provide records for transactions with foreign…
Reporting Debt Discharged in a Court Settlement to the IRS
There are some circumstances where information has to be reported to the IRS, even though the information does not trigger a tax. But the potential problem can be that the information reporting triggers an IRS audit or other consequences. The Form 1099-C, Cancellation of Debt, form can have this effect. In PLR 201927005 the IRS…
Voluntary Sale In Advance of Forced Auction an Involuntary Conversion?
A taxpayer can generally avoid paying income tax on gain from the sale of property if the sale is an involuntary conversion. This typically involves a government act that takes or destroys the taxpayer’s property. There are a number of different types of property and takings that can qualify? But what about a local TV…
Recouping Tax on Marital Wages Repaid to Employer After Divorce
If a couple files a joint return and pays tax on the income they earn, but after they divorce it turns out that one of the spouses has to repay monies received in error, can the other spouse recoup their portion of the prior tax paid on the income? The claim of right doctrine may…
Raising a Tax Issue for the First Time in Court
With tax litigation, it is often best to raise every argument possible. But what if the law seems clear on an issue and then, during the course of the tax dispute, another court issues an opinion making the law less clear? If this isn’t discovered or realized soon enough, should the taxpayer be precluded from…