A tax attorney might say that you should never go into an iffy transaction naked. This refers to a tax position that covers a real or perceived tax liability from a transaction. This is a corporate tax concept. Larger corporations often have a longer view when it comes to business tax planning. Given their time…
Category: IRS Interest
IRS Interest
Interest charged on unpaid tax debts by the IRS. Give us a call to see how we can help, (713) 909-4906.
Using Contract Law to Avoid IRS Interest
Interest that accrues on taxes can be abated due to IRS errors or delays. The law that implements this general rule often fails to provide a meaningful remedy in most interest abatement cases. But what about contract law? Can contract law provide another means for obtaining a remedy in interest abatement cases? The court addresses…
Is a Taxpayer Liable for Interest if the IRS Delays an Audit?
Can the IRS fail to audit a taxpayer for several years and then, once it actually opens the audit, drag its feet for years and then charge the taxpayer interest retroactively back to the date the tax return was filed? What if that period of time happens to be, say, fourteen years? The court considers…
Revocation of Nonprofit Status Triggers Retroactive Interest
There are some areas of law where principles of equity and good faith play a big role. By and large, tax law does not adopt these principles. The CreditGUARD v. Commissioner, 149 T.C. 17 (2017) case provides an example. The case addresses whether the IRS is entitled to interest on a corporate tax liability when…
Wholly Owned Corp and Parent Not the “Same Corporation” for Interest Netting
In Ford Motor Co. v. United States, No. 14-458T (Ct. Cl. 2017), the court addressed whether a wholly owned corporation and its parent were the “same corporation” when computing the amount of interest the taxpayer owed to the IRS. This “same corporation” issue is one that comes up in most interest-netting cases. The Interest Netting…
Unmarried Taxpayers Can Claim Mortgage Interest Deduction
Mortgage Interest Deductions for Unmarried Couples In Voss v. Commissioner, 796 F.3d 1051 (9th Cir. 2015), the court addressed the rule that limits the deductibility of interest on home mortgages and home equity loans. This rule limits the amount of interest that can be deducted on mortgages in excess of $1 million and home equity…
Transferee Liable for $13 Million in Pre-Judgment Interest
There are times when our tax laws draw distinctions that can seem unfair. The Tricarichi v. Commissioner, T.C. Memo. 2016-132, highlights one of these situations. Tricarichi is a transferee liability case in which the taxpayer was held liable for $13 million in interest on a tax liability owed by a third party even though the…
Business Should Review Interest Netting in Light of Wells Fargo Case
In Wells Fargo & Company v. United States, No. 2015-5059, the United States Court of Appeals for the Federal Circuit considered whether a business that has merged with another business can obtain refunds for interest the prior business entity paid to the IRS. The court’s broad reading of the interest netting statute may allow some…
Getting Interest Abated: Challenges & Solutions
The Internal Revenue Service is notorious for being slow in doing its work, and its delay often results in taxpayers being charged with interest on their tax liabilities. While the IRS has the authority to abate or remove interest on tax liabilities, the process for getting the IRS to exercise this discretion can be challenging.…
IRS Cannot Abate Interest on Employment Taxes
The IRS has a track record of not acting timely. Its failures in this regard are frequent and, sadly, they are expected. The bar has been set so low that we actually expect the IRS to go slow. This can be extremely frustrating for taxpayers and it can even cost taxpayers a considerable amount of…