The IRS released Publication 5125, Large Business & International Examination Process, which describes the IRS audit process and the new change for taxpayers submitting informal refund claims during the audit. The Publication continues the IRS’s prior policy of cooperation, responsiveness, and transparency in conducting audits. The Publication re-iterates the IRS’s expectations for its examiners and…
Category: Tax Procedure
Tax Procedure
From IRS audits and appeals to tax litigation and penalties, our tax attorneys can help you navigate the tax procedure landscape with confidence. Give us a call to see how we can help, (713) 909-4906.
Limits on IRS’s Ability to Ask for Records Multiple Times
If the IRS conducts an audit for one year and reviews records, but fails to keep the records and then conducts an audit for a second year, is the taxpayer obligated to provide a second copy of the records the IRS failed to keep from the first year? The court addressed this in United States v.…
Who Can Sign a Form 2848 Power of Attorney for an LLC
We are often asked who can sign a POA or Form 2848, Power of Attorney and Declaration of Representative, for a limited liability company or LLC? The IRS addressed this in AM 2015-004. About Form 2848 – Power of Attorney The Form 2848 allows the IRS to disclose taxpayer information to persons who represent the…
You Cannot Dodge Notice for the Trust Fund Recovery Penalty
It is almost always advisable to keep on the lookout for open correspondence from the IRS. The Haben v. Commissioner, T.C. Summary Opinion 2015-55, case provides an example. In Haben, the U.S. Tax Court concluded that a taxpayer could not contest a trust fund recovery penalty during a collection due process hearing because he had…
IRS Collections When Taxpayer’s Income Varies
In Charnas v. Commissioner, T.C. Memo. 2015-153, the U.S. Tax Court addressed whether a lawyer who had variable income from year to year was able to pay his outstanding tax debt. The court concluded that the IRS erred in not considering the variable nature of the taxpayer’s income in determining whether he could pay his…
Tax Attorney’s Brain Cancer Insufficient to Avoid Penalties
If a tax return is filed late or taxes are paid late, penalties may be imposed by the IRS. However, there are exceptions to these penalties if the taxpayer can prove that the failure was due to reasonable cause and not due to willful neglect. One might think that brain cancel might fit the bill…
Reasonable Cause Defense for Penalty Waives Privilege
In Eaton Corporation & Subsidiaries v. Commissioner, the U.S. Tax Court concluded that raising the reasonable cause/good faith defense to tax penalties waived the work product, attorney-client, and federal tax practitioner privileges. This is a serious issue that has to be considered when submitting penalty abatement requests based on a reasonable cause defense. APA (Advance…
Joint Committee Review Limit Increased to $5 Million
The Joint Committee on Taxation or JCT is a part of the U.S. Congress. It is tasked with investigating the U.S. tax system and reporting on proposed measures and methods for the simplification of taxes. To carry out this function, the IRS is obligated to provide a report to the JCT for any refund in…
Court Says Tax Lien Does Not Have to Be Filed Prior to Entering Into an Installment Agreement
In Budish v. Commissioner, T.C. Memo. 2014-239, the U.S. Tax Court held that the IRS erred in insisting on a tax lien being filed before it would accept an installment agreement. This case serves as a reminder that a tax lien does not have to be filed if it creates a hardship that would make…
Do IRS Penalties Assessed by Computers Need Manager Approval?
The courts have been abating penalties if the IRS fails to obtain manager approval for the penalties. But what about penalties assessed by the IRS computer? Do they need to be approved by a manager? The court addresses this in Grace Foundation v. Commissioner, T.C. Memo. 2014-229. Facts & Procedural History R.S. Ohendalski created and…