Tax Blog/Blawg

It should come as no surprise that for a significant segment of the population, social media is rapidly replacing traditional print and television media as the primary source of news and information.  That trend is troubling enough because of questions about accuracy, objectivity and competency.  But perhaps an even more troubling trend is the increasing reliance on social media for advice on matters of import, particularly those that delve into traditional fields of expertise that involve legal issues. Relying on, “advice” on federal income tax matters from so called “tax ...

Background:

Millions of Employee Retention Credit (ERC) claims have been filed with the IRS as a result of the COVID-19 pandemic, with millions of taxpayers already receiving their refunds and others still waiting to receive refund checks. The IRS audits and Appeals work has commenced with a fury at a dizzying pace. While many appropriate ERC claims have been filed, the IRS has seen a number of erroneous claims as well. On December 21st, the IRS launched a new initiative to address the issue of erroneous ERC claims. The Voluntary Disclosure Program, part of a broader IRS effort to ...

For taxpayers challenging IRS notices and regulations designating transactions as “reportable transactions” or “listed transactions,” the Mann Construction case keeps getting better. 

In 2022, the U.S. Court of Appeals for the Sixth Circuit in Mann Construction held that IRS Notice 2007-83, which labeled a certain type of transactions as a “listed transaction,” was invalid due to the IRS’ violation of the Administrative Procedure Act in promulgating the notice. Last week, on remand, the district court amplified the IRS’ loss by vacating the IRS notice not only ...

Back in July 2022, the media reported that two of President Trump’s rivals, former FBI Director James Comey and his deputy, Andrew McCabe, had both been selected for IRS examinations under the National Research Program (NRP).  There were allegations that President Trump had sicced the IRS on his political foes.  That Comey and McCabe were both selected for NRP audits seemed at best a statistical anomaly given the low nationwide audit rate.  At worst, it conjured images of Nixon’s enemies list.  

In a report dated November 28, 2022, the Treasury Inspector General for Tax ...

For decades, tax audit procedures for partnerships had been governed by a framework established in the Tax Equity and Fiscal Responsibility Act of 1982.  This partnership audit regime was commonly referred to as the TEFRA partnership procedures, or simply TEFRA.  In 2015, in response to widespread criticism over the complexities of TEFRA, Congress replaced TEFRA with a new audit regime under the Bipartisan Budget Act of 2015, now the BBA partnership procedures. 

The BBA partnership procedures have been phasing in, with the first wave of partnership audits applying the BBA still ...

On December 29, the Eleventh Circuit in Hewitt v. Commissioner gave taxpayers a nice victory to ring in the New Year.  There, the Court struck down a 1980’s era conservation easement regulation and reminded Treasury and the IRS that the notice-and-comment cornerstone of the Administrative Procedures Act (APA) requires that agencies genuinely consider and address legitimate public comments received on proposed regulations.

In 1995, the Supreme Court in Perez v. Mortg. Bankers Ass'n, had described an essentially four-step procedure for notice-and-comment rulemaking: (1) an ...

On August 11, 2011, TIGTA published a report entitled ‘”Efforts to Address the Compliance Risk of Underreporting of S Corporation Officers' Compensation are Increasing, but More Action Can Be Taken.”  At the outset, TIGTA properly identified part of the problem:  there are S corporations – some owned by one individual and others owned by groups – where the officers perform work and do not pay themselves compensation. 

The S corporation is a “pass through,” so that its income would be passed through and be reported by the Officer.  However, this technique has the effect of ...

The undersigned has been practicing in the United States Tax Court since May 1971, and has seen many changes, such as the evolution of the very simple Tax Court Rules of Practice during 1973 into the Tax Court Rules of Practice and Procedure when the Court added provisions with regard to summary judgment as well as discovery.  The Tax Court, and its predecessor – the Bureau of Tax Appeals, were originally created to give taxpayers the opportunity to challenge determinations of deficiencies in taxes, and occasionally secure overpayments when in fact they were appropriate.  Over time ...

When the IRS reaches (in the words of Tax Court Judge Mark Holmes) the “we're taking your stuff” stage to collect back-taxes, taxpayers generally have the right to a collection due process (CDP) hearing at which a CDP hearings officer is duty-bound to independently and genuinely evaluate whether it’s proper for the IRS to move forward with seizing a taxpayer’s property.  On May 20, 2021, the Tax Court, in Mason v. Commissioner, concluded the IRS had abused its discretion in the CDP process when it gave the green-light to the IRS collection division to take the taxpayer’s stuff ...

London’s Underground (which is a subway to us Yanks) is known for its iconic warnings to “mind the gap.”  That’s the spatial crevice between the train and the station platform.  In D.C., a different gap is garnering attention: the tax gap.  This is the delta between taxes owed to the government and actually paid.

On May 20, 2021, as part of the Administration’s pitch for an $80 billion increase in IRS funding, Treasury released a report that outlines the magnitude and categorical causes of the tax gap, and in broad strokes how it would deploy the $80 billion over a 10-year period to ...