The government makes mistakes. It is not perfect. The United States v. Appelbaum, No. 5:12-CV-186 (W.D.N.C. 2016) , case provides an example. In Appelbaum, the government sued the taxpayer for nearly $4 million that the taxpayer did not owe. The question before the court was whether the taxpayer could recover attorneys fees he incurred in…
Category: Tax Procedure
Tax Procedure
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Failing Business Triggers Trust Fund Penalties
Taxes are often neglected when a business is having financial difficulties. This can have serious repercussions for the business and the individuals who are responsible for having taxes withheld and remitted to the IRS. The IRS has the ability to assess trust fund recovery penalties against these individuals, which essentially makes the business tax liability…
Choosing Not to Comply With an IRS Summons
The law requires taxpayers to keep certain records. The IRS expects taxpayers to produce these records on request. The IRS has the power to issue an administrative summons if the taxpayer does not cooperate. This begs the question of what happens if the taxpayer chooses not to comply with an IRS summons. The United States…
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…
Discharging Taxes in Bankruptcy vs. Settling with the IRS
Bankruptcy can be one of the best methods for resolving tax debts. This is particularly true if the taxpayer’s primary assets only consist of retirement accounts and equity in a personal residence. The recent In re Moore, No. 15-42046 (Bankr. E.D. Tex. Jul. 7, 2016), case presents an opportunity to consider the results if the…
Federal Trade Commission Warnings About Tax Relief Companies
There have been a number of bad actors in the tax resolution industry. One only has to do a cursory search of the internet to find consumer complaints about tax relief companies that do this work. The Federal Trade Commission (FTC) has an article on its website that warns consumers about these bad actors. The…
Mentally Incompetent Owes Frivolous Return Penalty
In Chief Counsel Memo 201623010, the IRS addressed whether Section 6702 frivolous return penalty can be abated due to the taxpayer’s mental incapacity. One would think that a mentally incapacitated person would not be liable for a penalty for filing a frivolous tax return. Mental Incapacity, Generally The law recognizes that mental incapacity as a…
A Look at the IRS Automated Underreporter Program
The IRS uses a computer matching system to make various tax adjustments. The IRS refers to this as its automated underreporter program. This program adjusts millions of taxpayer accounts each year. The program generally goes unnoticed, until there is a problem. The Newman v. Commissioner, T.C. Memo. 2016-125, case provides an example of how this…
Ski Condo in Revocable Trust Not Subject to IRS Lien
Can someone set up a revocable trust to put assets beyond the reach of the IRS? The general answer is no, as federal tax liens typically attach to assets within such trusts. However, that is not always the case. The case of United States v. Kimball, No. 2:14-cv-00521-DBH (D. Me. Sep. 28, 2016), demonstrates, there…