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…
Category: Tax Procedure
Tax Procedure
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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…
IRS Budget Constraints Continue to Make Resolving Cases Difficult
The IRS’s budget constraints have made it more difficult for taxpayers to resolve IRS tax debt problems. This is especially true for the work that it has shifted to IRS service centers to be worked remotely. The Wang v. Commissioner, T.C. Memo. 2016-123, case provides an example of this. Facts & Procedural History Mr. Wang…
IRS Tax Assessment Overturned Because Notice Not Property Mailed
In Buffano v. United States, T.C. Memo. 2016-122, the U.S. Tax Court concluded that that the taxpayer was not liable for tax because the IRS failed to properly assess the tax because the IRS did not mail notices of the tax deficiencies to the taxpayer’s last known address. This case is a good example of…
Stock Sale Triggers Transferee Liability for Buyer’s Tax Liability
In Marshall v. Commissioner, T.C. Memo. 2016-119, the U.S. Tax Court concluded that business owners who sold their stock was liable for the buyer’s Federal income taxes that arose after the sale. Facts & Procedural History The taxpayers owned Marshall Associated Contractors, Inc. (MAC), which was subject to tax as a Subchapter C corporation. MAC…
Court Affirms that Tax Prepearer Fraud Holds Open Assessment Statute
In Finnegan v. Commissioner, T.C. Memo. 2016-118, the U.S. Tax Court refused to reconsider its previous decision that a tax return preparers fraud keeps the statute of limitations open on the taxpayer’s Federal income tax return. Facts & Procedural History On February 7, 2013, the IRS issued a notice of deficiency for tax years 1994-2001.…
Unperfected Loan Trumped IRS Lien
The IRS has broad collection powers. But its collection powers are not unlimited. The recent U.S. v. Heptner, Case No. 8:15-cv-1125-T-33MAP (Dist. Fla. 2016) case provides an example. Facts & Procedural History Heptner practiced law from 1984-2001. After being disbarred, he was employed as a legal advisor and in-house counsel by Damien Freeman, an entrepreneur,…