Tax Procedure Archives

Conduct During IRS Audit Evidence of Tax Return Fraud

The courts have taken an expansive view as to what counts as fraud for tax matters. Some courts have even said taxpayers can be held accountable for fraud committed by their tax return preparers. When considering fraud, there is a question as to what activities are considered. Take for example the civil tax fraud penalty.…

The IRS’s Challenges With Ghost Tax Preparation

The IRS conducts very few audits. The IRS has recently focused its limited audit resources on higher-income taxpayers who already voluntarily comply with our tax laws. This has made the IRS audit much less effective and even less of a deterrent for most taxpayers. The IRS does have other deterrent measures in its tax enforcement…

IRS Can Revoke Your Offer in Compromise if it Does Not Like You

Imagine working for years to resolve your tax problems and finally reaching an agreement with the IRS to settle your tax debt. You make all the required payments, fulfilling your part of the bargain. You think you are in the clear, but say the IRS employees who worked on your case do not like you.…

Tax Refunds Lost to Timing Rules: Lesson, File Early, Pay Late

You should always pay your taxes on time, right? After all, early payment avoids tax penalties and interest, and shows good faith compliance with tax obligations. This is not always the best approach. Why? Taxpayers who pay early or even on time may be precluded from getting money back from the IRS if they overpaid…

IRS Cannot Assess Foreign Information Return Penalties

Many businesses today have some international transactions. Many U.S. businesses even have operations in foreign countries–which may include ownership of entities, operations, or just sales. Our tax laws include several provisions that require U.S. taxpayers to report most of these foreign business interests and activities. These filings are mostly made by filing various information returns.…

Attorney Fees in Tax Litigation: Jury Says Yes, Judge Says No

In most litigation, each party pays their own attorney fees regardless of who wins the case. This “American Rule” applies even when one party is clearly right and the other clearly wrong. But litigation against the government, such as tax litigation, presents a unique inequity. When taxpayers are forced to defend against an incorrect IRS…

Frivolous Tax Returns Avoid Accuracy-Related Penalties

Our federal tax system depends on voluntary compliance by a large segment of taxpayers. Encouraging compliance, while deterring and punishing non-compliance, remains the IRS’s greatest challenge. To meet this challenge, Congress has armed the IRS with a myriad of civil and criminal tax penalties. These penalties are designed to address different types of non-compliance, from…

Signature Not Required on Tax Return for Criminal Liability

One of the requirements for a document to be a tax return is that it is signed by the taxpayer under penalties of perjury. Most tax forms that are intended to be tax returns include a declaration at the bottom that includes the penalty of perjury language. But most tax returns today are filed electronically.…

No Collection Rights for IRS-Assessed FBAR Penalties

The IRS’s historical abuses led Congress to create specific taxpayer rights, including rights stemming from collection due process (“CDP”) hearings. These administrative hearings are intended to pause IRS collection actions while the IRS Office of Appeals considers whether the collection is both lawful and warranted. One might assume these rights extend to any liability assessed…

Tax Disputes When You Have Too Many Records

There are quite a few tax court cases involving taxpayers who did not have sufficient records to substantiate their tax positions. This is probably more than half of the cases that end up in the U.S. Tax Court. But what about the opposite situation where there are too many records? How is one to contend…