Tax Procedure Archives

Sidestep Tax Court Review by Applying Overpayments

What happens when a taxpayer properly invokes their right to challenge the underlying tax liability through the CDP process, but the IRS then uses subsequent overpayments to zero out the disputed balance? Can the IRS effectively eliminate tax court jurisdiction by manipulating these overpayments mid-process, leaving the taxpayer without any forum to resolve their legitimate…

IRS Collections: Can Taxpayers Rely on IRS Statements?

Taxpayers who enter into payment arrangements with the IRS often believe they are safe from IRS collection actions. Many assume that agreeing to monthly payments will prevent the government from filing tax liens. This assumption seems reasonable given the IRS’s own published guidelines. These guidelines suggest liens won’t be filed in certain circumstances. But can…

When the IRS Agrees You’re Right But the Court Says You’re Wrong

Say the IRS agrees that you are entitled to a sizeable tax deduction. But on audit, the IRS determines that you reported the tax deduction using the wrong form. The form used does not change the amount of the tax deduction or the taxpayer that would ultimately pay the tax. From the IRS’s perspective, the…

Can Limited Partners be Subject to Self-Employment Tax?

Investment funds are often structured as limited partnerships. These partnerships allow professional managers to pool investor funds while maintaining operational flexibility. These structures typically have a general partner (“GP”) who manages day-to-day operations. Limited partners (“LP”) provide the capital and earn passive returns. The active manager and passive investor roles have different tax implications. Self-employment…

What Makes a Tax Debt “Legally Enforceable” for Passport Certification?

The IRS has a number of tools it can use to collect unpaid taxes. This includes liens and levies, offsetting refunds, and, since 2015, requesting that the State Department deny or revoke a taxpayer’s passport. But what happens when a tax debt is old and seemingly beyond the collection statute of limitations? Can the IRS…

How Much Tax to Pay to Sue for a Refund?

Say you run a business. The IRS audits your tax return and determines that you do not owe tax. It comes back a few years later and, even though your business is the same, determines that you owe tax. The IRS hands you a large tax bill. You do not agree with that the tax…

Software Failures Can be Reasonable Cause for IRS Penalties

What one expects as data or information a business would commonly capture and maintain has changed dramatically over time. Readers who are older will appreciate this. The truth is that businesses tracked financial ins and outs and a few other items in the 1980s and leading up to the early 2000s. It was the addition…

Income Tax Due for Business Use of Employee Tax Withholding

Business owners facing cash flow challenges sometimes look to available funds to keep operations running. When those funds include employee tax withholdings that should be remitted to the IRS, the IRS has a number of tools at its disposal to recover the withheld but un-remitted funds. For the most part this includes pursuing the business…

Does the IRS Have Authority to Certify ACA Employer Penalties?

The IRS has been sending notices to businesses about Affordable Care Act (“ACA”) penalties. The penalties are often very large in amount and, in many cases, come as a complete suprise to the business owners. This is particularly true for growing businesses that are right around the cutoff for the headcount requirements. Businesses with 50…

When Is an Informal Tax Refund Claim Timely?

We’ve all experienced those moments when we say something and realize our wording wasn’t perfect. Yet from the other person’s nod or response, we can tell they understood our meaning perfectly well. We don’t feel the need to repeat ourselves with better phrasing. This is simply part of being human. A similar situation occurs with…