Tax Returns Archives

Substantial Variance Doctrine for Informal Tax Refund Claims

Taxpayers often submit refund claims when they discover that they overpaid their taxes. Taxpayers usually do this by submitting a formal refund claim using the IRS’s prescribed forms. But this is not always required. In many cases, taxpayers will submit so-called “informal refund claims” to the IRS during the course of an IRS audit. The…

Can the IRS Collect When the IRS Owes the Taxpayer?

The federal tax system provides various procedural safeguards to protect taxpayers while ensuring efficient tax collection. These protections become particularly important when taxpayers face immediate collection actions while simultaneously pursuing tax credits or refunds that could eliminate their tax debt. Many businesses have recently found themselves in this situation after filing amended returns to claim…

Tax Refunds Lost to Timing Rules: Lesson, File Early, Pay Late

You should always pay your taxes on time, right? After all, early payment avoids tax penalties and interest, and shows good faith compliance with tax obligations. This is not always the best approach. Why? Taxpayers who pay early or even on time may be precluded from getting money back from the IRS if they overpaid…

Signature Not Required on Tax Return for Criminal Liability

One of the requirements for a document to be a tax return is that it is signed by the taxpayer under penalties of perjury. Most tax forms that are intended to be tax returns include a declaration at the bottom that includes the penalty of perjury language. But most tax returns today are filed electronically.…

Can You File a Zero-Income Tax Return if You Do Not Owe Any Tax?

If you do not owe any tax for a year and you are certain of it, can you just file an income tax return that reports all zeros for income and lists the amount you paid to the IRS that you want refunded? I’ll refer to this as a “zero income-tax return.” This is a…

When the IRS Fails to Timely Respond: Who Pays?

The IRS, like many organizations, faced significant challenges during the COVID-19 pandemic. It had to adapt to new working conditions, which led to delays in processing paperwork, including tax returns, and difficulties in responding to taxpayer inquiries. During this time, when a taxpayer could reach someone at the IRS, they were often told that due…

When Can Your Tax Preparer’s Fraud Leave You on the Hook?

Say you hire a tax return preparer and get your tax returns filed, and think that everything is fine. Then years later, say more than a decade later, the IRS shows up and asserts that your tax returns were fraudulent. You did not commit fraud and this is news to you, but the IRS asserts…

When is a Tax Return Not a Tax Return?

The tax code commands the IRS to assess the tax reported to the IRS by a taxpayer on a non-fraudulent tax return. The provision is not optional for the IRS. It is mandatory. However, the tax law does not define what is fraudulent or what counts as a tax return. This begs the question as…

The Tax System as “a Game of Monopoly”

If you are a small business owner or an individual who works or even claimed a deduction for a child on your tax return, the IRS may go to great lengths to scrutinize your tax filings. This is particularly true if you are successful and earn any income. The more successful you are, the more…

Recovering Taxes Paid for Another Party

If you pay tax for another party, can you recover the payment if the tax is not owed? The answer is generally “no,” as you cannot sue the Federal government unless it consents and it only consents in limited circumstances. One such consent is the ability to sue for a refund. The rules that allow…