Tax Blog/Blawg

Members of our Tax Controversy & Litigation practice filed comments last week on the proposed regulations published July 2, 2024, regarding the Employee Retention Credits. They argued that these proposed regulations exceed the IRS and Treasury authority. They also urged these bodies to abandon the current proposed regulations as they relate to the ERC, and to reconsider the appropriateness of the final regulations treating excessive ERC refunds as underpayments of tax, particularly in light of the Supreme Court's recent decision in Loper Bright Enterprises v. Raimondo. 

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2018 Capital Gain Deferral Opportunity through June 29, 2019

An important deadline is approaching on June 29, 2019 for taxpayers looking to defer 2018 capital gains by investing in a Qualified Opportunity Zone (“QOZ”).  Investments of capital gains in a Qualified Opportunity Fund (“QOF”) generally require the investments to be made within 180 days from the date(s) of sale giving rise to capital gain. However, the 180-day period is extended for capital gains earned through a partnership or pass-through entity.  This exception to the 180-day contribution rule for ...

As if the waters for small captive insurance arrangements hadn’t been muddied enough after Avrahami v. Commissioner, on June 18, 2018, the U.S. Tax Court issued the second opinion in a small captive case, Reserve Mechanical Corp. v. Commissioner, this time holding that the taxpayer’s participation in a risk pool failed to satisfy the risk distribution requirement (i.e., the sharing of a sufficient number of independent insurance risks so that no one claim can have too great an adverse financial effect on the insurer) to establish a bona fide insurance arrangement. Until this ...

For my fellow procrastinators whose federal tax returns are on extension, with the October 15th deadline rapidly approaching, perhaps the burning question has crossed your mind, “If I file electronically while the government is shut down, will my return be accepted?”  Yes, I can happily report that a return electronically submitted to the IRS at 3:43 p.m. this day was “accepted for filing” at 4:04 p.m., efficiency approaching a Michael Phelps-like performance. Perhaps the IRS has designed a system that operates better when it is staffed only by computers rather than by ...

The Quality Stores employment tax refund case was argued before the Supreme Court on January 14, 2014.  An explanation about the issue at stake can be found in prior Taxblawg.net postings.  Although the outcome of the case remains in doubt, the possibility of a taxpayer victory means that employers should start thinking about the need to satisfy an important prerequisite to qualify their claims for refund.

Employment (FICA) taxes have both an employer and an employee component. A taxpayer victory in Quality Stores will enable both employers and terminated employees to recover their ...

In a high profile summons enforcement case brought by the Internal Revenue Service against Coinbase, Inc. (United States v. Coinbase Inc., No. 3:17-cv-01431 (N.D. Cal. 2017)), a virtual currency exchange for traders of popular digital cryptocurrencies like Bitcoin, Ethereum and Litecoin, the Internal Revenue Service sought the production by Coinbase of all of its customer records involving Bitcoin transactions from 2013 through 2015.  The number of customers potentially susceptible to such a broad summons request was estimated at just under 500,000.

The U.S ...

All taxpayers, whether individuals or not, may deduct as business expenses the costs relating to tax matters that are ordinary and necessary in the conduct of their trade or business under Section 162 of the Internal Revenue Code.  However, certain non-business expenses are also deductible under Section 212, "Expenses for production of income."  Notwithstanding the somewhat limiting title of Section 212, subsection (3) currently permits a deduction for non-business expenses that can have nothing to do with the production of income, namely expenses paid or incurred "in connection ...

Is the IRS getting closer to ferreting out “quiet disclosures” by taxpayers who chose that route to address the problem of previously unreported offshore accounts rather than by participating in the Service's offshore voluntary disclosure program (OVDP)?  That’s the conclusion of an increasing number of tax professionals and if taxpayers in this predicament weren't already worried, they should be.

A quiet disclosure involves the filing of new or amended tax returns that report offshore income, and FBARs (Report of Foreign Bank and Financial Accounts) that provide other ...

Senator Carl Levin (D-Mich.) may have tried to take a bite out of Apple (AAPL) in congressional hearings last May examining the company’s overseas tax structure, calling it “the holy grail of tax avoidance." However, it appears that more than just Irish eyes are smiling on the company these days, for in the eyes of the SEC, Apple’s efforts to minimize its tax burden are just fine thank you.  See e.g., O'Brian, Chris, "SEC reveals review of Apple's Irish tax disclosures." Los Angeles Times, 3 Oct. 2013, LATimes.com, 9 Oct. 2013.

But is that the happy end of the story for Apple and the ...

The U.S. Supreme Court today accepted the government's petition for certiorari in  United States v. Quality Stores (Civil No. 10-1563, 6th Cir. 2012), a case in which the Sixth Circuit affirmed a lower court’s decision that supplemental unemployment compensation benefit (SUB) payments are not taxable as wages and are consequently exempt from FICA taxes.  In accepting the case for consideration, the Supreme Court is expected to resolve a conflict between the Sixth Circuit and the Federal Circuit, which decided a prior case,  CSX Corp. v. United States, 518 F.3d 1328 ...