IRS Audits for Insolvent Taxpayers

When times are good, we don’t need to worry about the tax loss rules, the net operating loss (“NOL”) rules, or even the bankruptcy tax rules. But these rules are front and center in most tax planning and advice during and after an economic downturn. We saw this with the 2001 dot com bust, the…Continue readingIRS Audits for Insolvent Taxpayers

Taxes & Defunct Texas Corporations

Our Federal tax laws often look to state law. Differences in state law can expand or limit the IRS’s ability to assess and collect Federal taxes. In Patrick’s Payroll Services, Inc. v. Commissioner, T.C. Memo. 2020-47, the court considers whether a defunct Michigan corporation can bring suit against the IRS. This case provides an opportunity…Continue readingTaxes & Defunct Texas Corporations

Property Rights & IRS Levies: Louisiana’s Usufruct

To determine whether the IRS can levy or take property, one has to consider what property the taxpayer owns. State law dictates what property the taxpayer owns. The property laws in most states are similar, which makes applying Federal tax collection law relatively easy. But then there is Louisiana law. Louisiana law differs in many…Continue readingProperty Rights & IRS Levies: Louisiana’s Usufruct

Fix to Duplicate IRS Address Problem

The IRS sends taxpayers letters and notices from quite a few different IRS offices. As a result, taxpayers are often confused as to what IRS office to respond to. This is particularly true if the IRS letter or notice includes more than one IRS address. The IRS has maintained a harsh stance on taxpayers who…Continue readingFix to Duplicate IRS Address Problem

Estate Plan Triggers Liability for Unpaid Taxes

Estate planning often involves transferring business interests from one generation to the next.  But what if the parent owes unpaid taxes? Can the children be held liable for the unpaid taxes? What about the surviving spouse? What if they were not aware of the steps taken to avoid paying taxes? The recent United States v…Continue readingEstate Plan Triggers Liability for Unpaid Taxes

IRS Levy Does Not Attach to Future Payments

The IRS levy is one of the IRS’s primary methods for collecting unpaid taxes. But the levy power is not unlimited. The IRS levy can attach to some amounts held by third parties that are owed to the taxpayer. But it does not attach to future payments. The recent Gold Forever Music Inc. v. United…Continue readingIRS Levy Does Not Attach to Future Payments

The IRS Isn’t Charged With Knowledge of Other Federal Agencies

The IRS only has to mail a notice of deficiency to a taxpayer’s last known address in order to assess or record a tax liability for the taxpayer.  This “last known address” rule is often the subject of disputes.  The Sadek v. Commissioner, T.C. Memo. 2018-174, case provides an example where information available to the…Continue readingThe IRS Isn’t Charged With Knowledge of Other Federal Agencies

Perception Can Be As Important as Substance in Tax Disputes

Taxpayers voluntarily submit information to the IRS.  The IRS not only evaluates the substance of this information, but also the taxpayer’s candor in preparing and providing the information.  The perception of candor is just as important as the substance in many cases.  The Guess v. Commissioner, T.C. Memo. 2018-97, provides an example of how things can…Continue readingPerception Can Be As Important as Substance in Tax Disputes

Transferring Property to a Spouse After IRS Lien

There are a number of difficult questions that come up when one spouse has a debt with the IRS and also owns property jointly with their spouse. The question is often whether the spouses can transfer the property to the non-liable spouse. The answer is, maybe. The court recently addressed this in U.S. v. Gerard,…Continue readingTransferring Property to a Spouse After IRS Lien