The IRS has broad collection powers. But its collection powers are not unlimited. The recent U.S. v. Heptner, Case No. 8:15-cv-1125-T-33MAP (Dist. Fla. 2016) case provides an example. Contents1 Facts & Procedural History2 The Purchase Money Mortgage3 The IRS’s Lien Priority4 Which Lien Has Priority? Facts & Procedural History Heptner practiced law from 1984-2001. After…
Tax Articles
New Evidence Not In Record Can Be Considered by Court
Cases before the U.S. Tax Court are often won or lost by whether evidence is or is not admitted in the record. Lunnon v. Commissioner, No. 15-9007 (10th Cir.), provides an example of how this works in a tax collections case. Facts & Procedural History Mr. Lunnon failed to pay employment and unemployment taxes for…
Asset Sale Did Not Trigger Transferee Liability for Buyers Taxes
In Sloan v. Commissioner, T.C. Memo. 2016-115, the U.S. Tax Court refused to apply transferee liability under Section 6901 to make a taxpayer who sold company assets to a third party liable for the third party’s tax liability. The court reached this conclusion even though there was some indication that the taxpayers’ advisers knew that…
Delayed Sale to Former Spouse Not Taxable
You didn’t realize it at the time, but growing up, you didn’t take full advantage of opportunities. With time, you realize that you not only failed to take advantage of opportunities, but the actions you took actually made life even more difficult. It’s more than failure by neglect. It’s also failure by action. That is…
IRS Tax Lien Did Not Attach to Trust Property
If someone sets up a trust for a third party and the third party owes the IRS back taxes, can the IRS reach the trust assets to satisfy the back taxes? This is a common question that we get from those with trusts or those seeking to set up trusts. This is also a question…
NOL Triggers Refund for Earlier Year Adjustments
The tax loss carryback can result in some interesting math. The difficulties come in when one thinks about how to take one number, a loss, from a latter year, and apply that loss back to a former year. This may sound simple enough. It is one number that is being carried back. That part is…
Can the IRS Raise New Issues on the Eve of Trial?
Life isn’t like a Hollywood movie. The good guy doesn’t always win. The underdog does not overcome insurmountable odds to prevail. The events do not culminate in a struggle that results in justice being done. And, worse yet, with time, it isn’t even clear who the good guy is or what justice really means. With…
Payment from Accounting Firm to Settle Claim Excluded From Income
The IRS released Action on Decision 2016-01 to disagree with a court case that held that a payment from an accounting firm to settle a claim against the firm for selling an abusive tax shelter was not taxable to the recipient. Facts & Procedural History The case is Cosentino v. Commissioner, T.C. Memo. 2014-186. In…
IRS Limits Ability to Submit Informal Refund Claims During Audits
The IRS released Publication 5125, Large Business & International Examination Process, which describes the IRS audit process and the new change for taxpayers submitting informal refund claims during the audit. The Publication continues the IRS’s prior policy of cooperation, responsiveness, and transparency in conducting audits. The Publication re-iterates the IRS’s expectations for its examiners and…
Limits on IRS’s Ability to Ask for Records Multiple Times
If the IRS conducts an audit for one year and reviews records, but fails to keep the records and then conducts an audit for a second year, is the taxpayer obligated to provide a second copy of the records the IRS failed to keep from the first year? The court addressed this in United States v.…