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…
Category: Tax Procedure
Tax Procedure
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Texas Homestead Exemption Helps the IRS Collect Tax Debts
Unlike the exemption available in most other states, the Texas homestead exemption has no dollar limit. Texans can feel secure in their homes even if they have unpaid debts owed to third parties. There is a common misconception that this law prevents the IRS from seizing homes in Texas. The IRS’s ability to collect is…
Amending Tax Returns for FTC and NOL Carrybacks
The time limits for filing amended tax returns can present a number of difficult questions. This is particularly true when tax attributes, such as foreign tax credits and net operating loss deductions, are carried back to prior years. The carryback to one prior year can result in carrybacks to one or more years prior to…
Court Denies IRS Injunction in Employment Tax Dispute
It is common for the IRS to make various demands on businesses that are undergoing employment tax audits or businesess that are trying to deal with employment tax collection issues. One common demand is that the taxpayer immediately start complying with the employment tax laws. But what if the taxpayer cannot comply, perhaps due to…
U.S. Treasury Says IRS Not Using Information from Foreign Governments
It wasn’t long ago that the IRS was completely in the dark as to what information taxpayers and others were reporting to foreign governments. The IRS would never show up on U.S. audit with information obtained from foreign governments. We do see this on audits occasionally, but it is still a rare occurrence. A recent…
IRS Penalties for Late-Filed Forms 5471
The Dewees v. United States, 16-cv-01579 (D.D.C. 2017) case is a good reminder that late-filed Forms 5471 should include reasonable cause statements. These statements can be submitted under the IRS’s Delinquent International Information Return Submission Procedures to avoid penalties being assessed. The Facts and Circumstances in Dewees Dewees is a U.S. citizen who lived in…
The Form 1045 Dispute & Possible Solution: Include a Detailed Cover Letter
The Form 1045, Application for Tentative Refund, is used to carryback losses, credits, etc. from the current year to prior years. In many cases it is used when a taxpayer was previously profitable and then incurrs a loss. The now unprofitable business can go back and recoup taxes paid in prior years and get a…
Serial IRS Whistleblower Cannot Remain Anonymous
You would think that an IRS whistleblower could always remain anonymous. That is a fundamental feature of the whistleblower program. In Whistleblower 14377-16W v. Commissioner, 148 T.C. 25, the U.S. Tax Court concluded that a whistleblower claimant could not remain anonymous when litigating his claim in court. This case is one all whistleblowers should read…
Issue for the New Partnership Audit Procedures Raised in TEFRA Case
The Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) procedures were intended to make it easier for the IRS to audit partnership tax returns. TEFRA failed to deliver. The rules are nuanced and hard to apply. The new partnership audit procedures are intended to remedy this. With the new partnership IRS audit procedures coming…
Penalty Abatement for Reliance on Tax Advisor Who Made Obvious Errors
The IRS often willing to abate or remove tax penalties. To do so, taxpayers usually have to show that they acted with reasonable cause and in good faith. Relying on a competent tax professional can be one way taxpayers can make this showing. But what exactly is a competent tax professional? The court addressed this…