Correcting Tax Overpayments After the Refund Period

There are times when tax deadlines are strict. They cannot be changed. The time period for filing a refund claim is an example. Taxpayers generally have the later of three years from the filing of a return or two years from the payment of the tax to file a refund claim. But what if the…Continue readingCorrecting Tax Overpayments After the Refund Period

Rejected e-File Return is a Valid Tax Return

The IRS’s Identity Protection Personal Identification Number (“IP PIN”) is intended to protect those who are victims of identity theft. It does so by making it harder for third parties to file fraudulent tax returns. The IP PIN can also cause problems for taxpayers. This is particularly true for tax returns that are filed close…Continue readingRejected e-File Return is a Valid Tax Return

The Mailbox Rule Extends Time to Recoup Tax Refund

Taxpayers often miss tax filing deadlines. This is even true when the IRS owes the taxpayer money back. Taxpayers have a limited time to request a refund of overpayments. The recent Harrison v. Commissioner, No. 3:19-cv-00194 (2nd Cir. 2020) case provides an opportunity to consider these rules–particularly the mailbox rule. Facts & Procedural History This…Continue readingThe Mailbox Rule Extends Time to Recoup Tax Refund

Is Reliance on a CPA Sufficient for a Late Filed Tax Form?

The IRS often turns a deaf ear to taxpayers who miss a filing deadline due to some action or inaction by their CPA or tax preparer. This is the case for late filing tax penalties. But what about a late filed accounting method change? Is reliance on a CPA or tax preparer sufficient for a…Continue readingIs Reliance on a CPA Sufficient for a Late Filed Tax Form?

Is an IRS Audit Report an Informal Claim for Refund?

Amended returns generally have to be filed to recoup overpayments of tax. What counts as a refund claim is open to interpretation, as the courts have allowed a myriad of written documents to qualify. But what about the IRS report itself? If it includes a taxpayer favorable adjustment, is the report itself an informal refund…Continue readingIs an IRS Audit Report an Informal Claim for Refund?

The IRS’s Math Error Powers

With our tax system, taxpayers are generally required to file returns to tell the IRS how much tax is due. This is no easy task as the tax reporting process can be confusing. Errors happen. Congress has authorized the IRS to correct mathematical and clerical errors made on tax returns. The IRS’s CCA 129453-17 memorandum…Continue readingThe IRS’s Math Error Powers

The Dilemma: File A Timely or An Accurate Tax Return?

If you have an ongoing dispute with the IRS for one or more years and the outcome of that dispute will impact the current year, can you take a wait and see approach to filing the current year tax return?   The Namakain v. Commissioner, T.C. Memo. 2018-200, case provides an opportunity to consider this question. Facts…Continue readingThe Dilemma: File A Timely or An Accurate Tax Return?

When Forged Signatures Suffice: The Tacit Consent Exception

A tax return has to be signed to be valid.  But what if the return is signed by someone else?  Is a tax return with a forged signature a valid tax return?  The court addressed this in Coggin v. United States, No. 1:16-CV-106 (M.D.N.C. 2018). Facts & Procedural History The taxpayer relied on her attorney to…Continue readingWhen Forged Signatures Suffice: The Tacit Consent Exception

Shareholder Cannot Make S Corp. Separately Stated Item Election

S corporation’s account for separately stated items that flow through to the shareholder’s tax returns. They are computed on page 3 of the Form 1120S and then listed separately on the Schedule K-1. The idea for breaking these items out separately is that they can impact the shareholder’s individual returns differently. That makes sense, but…Continue readingShareholder Cannot Make S Corp. Separately Stated Item Election

Applying Tax Overpayments to Later Years is Usually a Bad Idea

Instead of requesting a refund, taxpayers can ask the IRS to hold the overpayment and apply it to the taxpayer’s tax liability for the following year. These tax payment credits can result in significant headaches. The recent Schuster v. Commissioner, No. 17-11647 (11th Cir. 2018) case provides an example of why taxpayers should request refunds…Continue readingApplying Tax Overpayments to Later Years is Usually a Bad Idea

Some Filing Deadlines are Strict, Others are Not

When it comes to fixing tax problems, procedural footfaults can make solving the problem even more difficult. Filing deadlines are an example. The Duggan v. Commissioner, No. 15-73819 (9th Cir. 2018), case provides an example. Facts & Procedural History In Duggan, the taxpayer was contesting the IRS’s decision to proceed with collections. He requested a…Continue readingSome Filing Deadlines are Strict, Others are Not

Is the IRS Bound by It’s Letters and Notices?

If the IRS sends a taxpayer a letter saying that it will process their refund claim but then it fails to do so, is the IRS bound by its letter? The court recently addressed this in Hawver v. Commissioner, T.C. Memo. 2017-244. The Facts & Procedural History The taxpayer filed his 2005 tax return in…Continue readingIs the IRS Bound by It’s Letters and Notices?

Form 2848 Must Specifically List Information Tax Returns

The IRS can generally disclose a taxpayer’s tax information with a representative that is designated by the taxpayer on a Form 2848, Power of Attorney and Designation of Representative.  This covers all forms included with the taxpayer’s tax return as long as the type of tax return is listed on the Form 2848.  This raises…Continue readingForm 2848 Must Specifically List Information Tax Returns

Amending Tax Returns for FTC and NOL Carrybacks

The time limits for filing amended tax returns can present a number of difficult questions.  This is particularly true when tax attributes, such as foreign tax credits and net operating loss deductions, are carried back to prior years.  The carryback to one prior year can result in carrybacks to one or more years prior to…Continue readingAmending Tax Returns for FTC and NOL Carrybacks

The Form 1045 Dispute & Possible Solution: Include a Detailed Cover Letter

The Form 1045, Application for Tentative Refund, is used to carryback losses, credits, etc. from the current year to prior years. In many cases it is used when a taxpayer was previously profitable and then incurrs a loss. The now unprofitable business can go back and recoup taxes paid in prior years and get a…Continue readingThe Form 1045 Dispute & Possible Solution: Include a Detailed Cover Letter

Do You Have to Use the IRS’s Official Forms?

Do taxpayers have to use the official forms published by the IRS?  In May v. United States, No. 15-16599 (9th Cir. 2017), the court considered whether a taxpayer is subject to the listed transaction penalty if he fails to file the IRS’s reportable transaction form, but the IRS is otherwise furnished with all of the information…Continue readingDo You Have to Use the IRS’s Official Forms?

Duty of Consistency Applies to Different Types of Tax Returns

Taxpayers have to report tax positions consistently from year to year.  They cannot get a tax benefit from taking inconsistent positions.  The duty of consistency doctrine provides for this.  But does this doctrine require items to be reported consistently on different types of tax returns?  The court addressed this in Musa v. Commissioner, No. 16-1841 (7th…Continue readingDuty of Consistency Applies to Different Types of Tax Returns

Partnership Return Corrected by Amended Return

In U.S. v. Stewart, No. 15-20596, the Fifth Circuit Court of Appeals concluded that the taxpayer was not entitled to a tax refund that was based on a corrected Schedule K-1 received from a partnership the taxpayer owned. The question on appeal was whether a partnership tax return can be corrected by filing an amended…Continue readingPartnership Return Corrected by Amended Return

Proving that You Mailed a Tax Return to the IRS

How do you prove that you mailed a tax return to the IRS?  This may sound like a simple question to answer.  It isn’t.  The have been and continue to be disputes involving this very issue.  The recent In Re McGrew, No. 13-00149 (Bank. N.D. IA 2016) provides an example. Facts & Procedural History McGrew filed…Continue readingProving that You Mailed a Tax Return to the IRS

Substantial Compliance vs Strict Compliance

There are a number of cases where taxpayers have had to pay more tax than they should due to technical foot faults. These cases often come up when the IRS employees believe that their job is to look for strict compliance (100%) rather than substantial compliance (something more akin to 80%). This brings us to…Continue readingSubstantial Compliance vs Strict Compliance

How to Prove Refund Claim Timely Filed

The Tax Code imposes several artificial deadlines and consequences for not meeting those deadlines. Many tax deadlines are strict. The result in tax cases often come down to whether a taxpayer can prove that he met these deadlines. In Chan v. United States, No. 2:15-cv-739-DN-BCW (D. Utah 2016), the court considered whether an Adobe PDF…Continue readingHow to Prove Refund Claim Timely Filed

Refund Claims Involving Loss Carrybacks Include Computational Adjustments in Earlier Years

In Stein, LLC, v. United States, No. 2:13-03224, the United States District Court for the Western District of Louisiana addressed the question of whether refund claims stemming from loss carrybacks include computational adjustments in the carryback years. This type of issue often comes up when closing out IRS audits, which is evidenced by this case…Continue readingRefund Claims Involving Loss Carrybacks Include Computational Adjustments in Earlier Years

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…Continue readingWho Can Sign a Form 2848 Power of Attorney for an LLC

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…Continue readingJoint Committee Review Limit Increased to $5 Million

Reporting Requirements for ISOs and ESPPs

The IRS has released proposed Regulations to implement the recent changes in Code Sec. 6039. These Regulations require corporations to report the transfer of stock upon the exercise of incentive stock options (ISOs) and by employee stock purchase plans (ESPPs). Pursuant to the changes in Code Sec. 6039, corporations must provide this information to the…Continue readingReporting Requirements for ISOs and ESPPs

U.S. International Tax Withholding and Reporting Requirements

Payments made by U.S. citizens and resident aliens (“U.S. persons”) to non-U.S. persons are typically subject to U.S. tax withholding and result in U.S. tax reporting requirements. These requirements can be difficult to understand and a misstep can prove to be very costly. U.S. Tax Withholding Whether a U.S. person is required to withhold tax…Continue readingU.S. International Tax Withholding and Reporting Requirements

Cash Payments Deposited by Salesman & the Form 8300

Cash-based businesses pose a number of problems for the IRS. They may also be involved in tax fraud. The Form 8300 allows the IRS to track cash payments for this very purpose. Chief Counsel Advice Memorandum 200707001 provides an example involving cash payments deposited by a salesman for a car dealership. Facts & Procedural History…Continue readingCash Payments Deposited by Salesman & the Form 8300

Prisoners Filing False Tax Returns

There are serious consequences for filing false tax returns.  This can include civil and criminal penalties.  These penalties may not be all that effective of a deterrent for someone who is currently incarcerated, which is evidenced by cases like United States v. Wardell, 05-1492 (10th Cir. 2007). Facts & Procedural History Wardell is a prisoner incarcerated…Continue readingPrisoners Filing False Tax Returns