Court Says Employer Entitled to Worker’s IRS Records

Court Says Employer Entitled To Worker’s Irs Records

When the IRS determines that independent contractors are taxed as employees, it is up to the employer to show that the IRS determination is incorrect. One way to do this is to show that the workers paid tax even though the employer did not withhold the tax. In Mescalero Apache Tribe v. Commissioner, 148 T.C.…

How Long Do You Keep Your Tax Records?

How People And The Tax System Impact Individual Cases

Taxpayers often ask how long they have to keep their tax records. Many taxpayers only keep records for three to six years. In Reyonoso v. Commissioner, T.C. Memo. 2016-185, the court considered a case that turned on whether the taxpayer could produce records to support that he had made a mark-to-market election nearly twenty years…

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.…

Truck Driver Expenses Not Subject to Higher Substantiation

The absence of records results in the disallowance of tax deductions and credits on audit.  This is particularly true for expenses that are subject to the higher substantiation requirement in Section 280F, such as travel expenses.  In Baker v. Commissioner, T.C. Memo. 2014-122, the court considered whether a truck driver’s transportation expenses are subject to the…

Truck Expenses Not Deductible Due to Inadequate Mileage Log

In Houchin v. Commissioner, T.C. Summary Opinion 2014-29, the U.S. Tax Court concluded that truck expenses were not deductible as the mileage log did not note the locations the taxpayer traveled to. Facts & Procedural History  Mr. Houchin worked as a truck driver, but was unemployed in 2010. He collected unemployment compensation. Mr. Houchin also…

Car and Truck Expenses Allowed Based on Mileage Not Actual Costs, Absent Records

In Aivatzidis v. Commissioner, T.C. Summary Opinion 2013-105, the U.S. Tax Court concluded that a professional driver could deduct expenses based on mileage, but not for actual expenses. This case provides an example of why drivers should compute car and truck expenses based on mileage if they do not have sufficient records. Facts & Procedural…

Fashion Retailers Business Expenses Disallowed as Routine Substantiation Case

In Heinbockel v. Commissioner, T.C. Memo. 2013-125, the U.S. Tax Court considered a routine substantiation case and disallowed business expense deductions for a fashion clothing retailer. This case presents an opportunity to consider how to present routine substantiation cases to the IRS and to the courts. Facts & Procedural History Mrs. Heinbockel was in the…

Using Third-Party Statistics for Tax Deductions

If you remember the time before the widespread use of personal computers, you will understand this better than others. We live in a society full of data. It’s everywhere. And it’s growing in volume, scope, and utility. The explosion of data has allowed taxpayers to produce documents, documents, and more documents. But why? Documenting business…

Court Determines What Truck Driving Expenses Are Deductible

In Nolder v. Commissioner, T.C. Summary Opinion 2012-50, the U.S. Tax Court examined a number of different expenses incurred by a truck driver to determine which expenses were deductible. This case provides a good overview of the typical expenses truck drivers incur that are and are not deductible. Facts & Procedural History Mr. Nolder was…

Truck Driver Not Entitled to Deduct Meal and Supply Expenses

Truck drivers are an essential part of our economy, transporting goods across the country to keep businesses running smoothly. Trucking expenses can add up quickly. This puts truck driver tax deductions high on the list of concerns for most truckers. Truck driver tax deductions are expenses that can be deducted from taxable income, reducing the…