The IRS is authorized to abate penalties for reasonable cause. There is no set of standard facts or factors that show reasonable cause. Taxpayers have made various arguments, with the IRS and courts rejecting most of them. How bad does life have to be for there to be reasonable cause? The court addresses this in…
Category: Tax Procedure
Tax Procedure
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IRS Collections for U.S. Military Personnel
Military Tax Rights under the SCRA Judicial and administrative proceedings are temporarily suspended for those serving in the United States military. This includes a temporary hold on IRS collection actions. These laws are not provided in the Tax Code. Rather, they are set out in the Service members Civil Relief Act or SCRA. Military Tax…
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…
TIGTA Review of the IRS’s Practices in Levying on Social Security Payments
The IRS has the power to levy on or take a taxpayer’s property. This includes nearly all property, including Social Security payments. The Treasury Inspector General for Tax Administration (TIGTA), the agency that audits the IRS, recently released a report that examined the IRS’s practices in levying on Social Security payments. Social Security Payments TIGTA’s…
The IRS’s Streamlined Procedures for Foreign Accounts
Given its limited resources and ability to detect foreign assets, accounts and income, the IRS has offered various voluntary programs to entice taxpayers to come clean and report this information. The IRS’s OVDP program and the more recent streamlined procedures are two examples. The Maze v. Internal Revenue Service, Nos. 15-1806 (D.D.C. 2016), highlights several…
Online Account Trigger FBAR Filing, Not Poker Websites
In Hom v. United States, No. 14-16214 (9th Cir. 2016), the court addressed whether an online payment account and poker websites triggered FBAR filing requirements. The stakes are high with FBAR penalties, so those with foreign accounts should take heed. FBAR Filing Requirements Taxpayers with an interest in or authority over certain foreign accounts are…
Five IRS Audits in Ten Years is Not Harassment
There are times when the IRS does not act reasonably. It happens. There are also instances where a few IRS employees take it upon themselves to thoroughly examine all aspects of the taxpayer’s finances. Taxpayers do have rights, but these rights only go so far. This brings us to the Appenrodt v. United States, No.…
IRS Whistleblower Claimants May Be Entitled to Larger Awards
The IRS is often gets more from whistleblowers than one may think. Specifically, the IRS may be able to recoup taxes, penalties and interest for other years or related but different issues. There is a question as to whether the whistleblowers who shine the light on these other years or issues should be compensated for…
Taxpayer Not Entitled to Attorneys Fees Despite Prevailing In Lawsuit
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…
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…