Tax Procedure Archives

Informal Offer in Compromise? Is There Such a Thing?

Informal Offer In Compromise? Is There Such A Thing?

What if you reach an oral agreement with the IRS to settle the tax debt, but then the IRS back tracks on the agreement? If you didn’t submit the offer on a Form 656, do you have any rights? The court addresses this in Bergdale v. Commissioner, T.C. Memo. 2014-152. Facts & Procedural History Mr.…

Wife Can Rely on Husband (to Avoid a Tax Penalty)

Wife Can Rely On Husband (to Avoid A Tax Penalty)

Marriage can be challenging. This is particularly true when it comes to finances. And it is even more so when it comes to taxes. But what if a spouse reports something wrong? Can the other spouse get out of penalties for the wrong doing? The court answers this in Miller v. Commissioner, T.C. Summary Opinion 2014-74,…

IRS Notice of Intent to Levy Sustained Despite IRS Not Following Its Procedures

In Eichler v. Commissioner, 143 T.C. 2, the U.S. Tax Court said that the IRS Notice of Intent to Levy was proper even though the IRS failed to follow its policy to check an installment request into its system which would have stopped IRS collection actions. Facts & Procedural History The IRS assessed Section 6672…

IRS Appeals: New Evidence & Theories

The IRS released a memo describing Phase II of the Appeals Judicial Approach and Culture (AJAC) program. This program is intended to formalize many of the best practices of the IRS Office of Appeals (Appeals). Tax disputes often end up in Appeals. Appeals is able to successfully resolve or settle most cases. The Appeals process…

Truck Driver Expenses Not Subject to Higher Substantiation

The absence of records results in the disallowance of tax deductions and credits on audit. This is particularly true for expenses that are subject to the higher substantiation requirement in Section 280F, such as travel expenses. In Baker v. Commissioner, T.C. Memo. 2014-122, the court considered whether a truck driver’s transportation expenses are subject to the…

Truck Expenses Not Deductible Due to Inadequate Mileage Log

In Houchin v. Commissioner, T.C. Summary Opinion 2014-29, the U.S. Tax Court concluded that truck expenses were not deductible as the mileage log did not note the locations the taxpayer traveled to. Facts & Procedural History Mr. Houchin worked as a truck driver, but was unemployed in 2010. He collected unemployment compensation. Mr. Houchin also…

IRS Announces Significant Changes to Audit Process

The Large Business & International or LB&I division of the IRS recently announced significant changes to the way its IRS auditors gather information from taxpayers. These announcements were made by directives issued by the LB&I Commissioner to all LB&I agents, which makes it mandatory for IRS agents to follow the directives. Reasons for The Changes…

IRS De-Coordinates All Coordinated Issue Papers

The IRS de-coordinated its remaining Coordinated Issue Papers yesterday. This is the final step in the IRS ending its coordinated issue or tiered program. The IRS’s coordinated issue or tiered program was how the IRS was identifying and working challenging tax issues that presented compliance problems. Coordinated Issue Papers were instructions for IRS auditors on…

Car and Truck Expenses Allowed Based on Mileage Not Actual Costs, Absent Records

In Aivatzidis v. Commissioner, T.C. Summary Opinion 2013-105, the U.S. Tax Court concluded that a professional driver could deduct expenses based on mileage, but not for actual expenses. This case provides an example of why drivers should compute car and truck expenses based on mileage if they do not have sufficient records. Facts & Procedural…

How the IRS Evaluates Offer in Compromise

In Zumo v. Commissioner, T.C. Summary Opinion 2013-66, the U.S. Tax Court examined a case involving the Internal Revenue Service’s (“IRS”) rejection of an offer in compromise based on doubt as to collectibility. An offer in compromise is a request by a taxpayer to settle their tax debt for an amount that is less than…