Tax Blog/Blawg

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 ...

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 ...

Section 1031 “like-kind” exchanges have long been a useful tool for family and closely held business planning. For example, business enterprises have been able to exchange commercial or industrial buildings for larger facilities without incurring current tax liability. Similarly, individuals who have owned and operated rental property but no longer are able or wish to manage such property have utilized Section 1031 to exchange their property for “net leased” replacement property, thereby obtaining a dependable stream of rental income and deferring taxation of ...

Fox Business invited me to appear yesterday on “After The Bell” with Liz Claman and David Asman to discuss (i) the IRS reopening the disclosure initiative for offshore bank accounts and (ii) the ongoing debate about whether Congress should implement a corporate repatriation holiday.  A link to the video is below the fold.

See the video at Fox Business.

The reopening of the 2011 OVDI is good news for taxpayers.  While the initiative presently has no deadline by which taxpayers must come forward, the IRS can change the terms of the initiative at any time.  If the government experiences ...

The New York Times and Forbes Magazine are reporting on a study by the Transactional Records Access Clearinghouse, a research group affiliated with Syracuse University, which claims to show that the number of audits of corporations reporting assets of $250 million or more has dropped between 2005 and 2009, while audits of smaller companies have increased during that same time.

Believing that the IRS has misallocated its resources, TRAC blames this development on a "perverse quota system" within the IRS.  The IRS, however, disputes the study's findings.  From the NY Times article ...

President Obama's health-care legislation is becoming more of a tax issue on a daily basis.  In addition to the codification of economic substance (discussed here; see also yesterday's TNT story featuring our own Phil Karter) contained in the reconciliation bill, the consequences of the legislation seem to be increasingly a matter of tax, rather than health-care, policy.

Of particular relevance here is the brewing confrontation between Reps. Waxman and Stupak and the companies who have announced substantial hits to their financial statements as a result of provisions in the health-care legislation. In response to these announcements, Reps. Waxman and Stupak have requested that companies provide documentation verifying their assessment of the impact of the legislation and have indicated an intention to hold a hearing to examine the impact of the new law on these companies.  (Presumably, the documentation provided by the companies will be a central basis for whatever questions are directed at the executives who appear at these hearings.)

Without taking a position about the politics of the matter, the dynamics of the request (and any responses to it) may implicate sensitive areas of tax policy and procedure. At this point, Reps. Waxman and Stupak have merely requested that the corporate taxpayers provide information about the impact of the health-care legislation. Suppose, though, that one or more companies decline to produce the requested information.  The perceived costs and benefits of the health-care legislation are likely to be key issues in the upcoming Congressional races this fall.  If the request is declined, and Congressional Democrats fear that their signature achievement is being negatively perceived, would subpoenas to the taxpayers, demanding that they produce the information, come next?

Assuming that scenario, would taxpayers then be obligated to provide the information being sought?  Perhaps more importantly, would Congress be authorized to use that information in a public hearing?