Everything Tax Law Blog


Ninth Circuit Says Taxpayer Must Use IRS Form

Do taxpayers have to use the official forms published by the IRS? There are laws and administrative guidance that allow taxpayers to provide the information requested to the IRS without using the actual IRS form in some circumstances. In May …..
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Court Affirms Broad Scope of the Duty of Consistency

The IRS can use the duty of consistency doctrine to disallow tax deductions, credits, etc. in the current year when the deduction, credit, etc. in the current year is based on facts that differ from facts reported to the IRS in an earlier year.  In Musa v. Commissioner, No. 16-1841 (7th Cir. 2017), the court agreed […]

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IRS Must Refund Penalties Despite Tax Malpractice Recovery

In Ervin v. United States, No. 4:13-CV-00127-JHM (W.D. Ky. 2017), the court considered whether the government can withhold or set off a penalty refund owing to a taxpayer if the taxpayer has already recovered the amount in excess of the penalty from its tax advisor for malpractice. While the case does not create any new […]

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U.S. Foreign Tax Credit Not Impacted by Repayment of Foreign Tax Refund

The tax assessment and collection process in most foreign countries is markedly different than the process in the U.S. These differences can present a number of challenges for U.S. citizens who reside in foreign countries. In Sotiropoulos v. Commissioner, T.C. Memo. 2017-75, the court considered one of these challenges, namely, how does one determine whether […]

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Court Considers Economic Substance in S Corp Transactions

The IRS challenges some tax positions by asserting that the transactions lack economic substance. This can allow the government to unwind or ignore transactions that comply with our tax laws if there is no legitimate business purpose for the transactions other than tax savings. There is a growing body of court cases that helps define […]

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IRS Says Personal Expenses Paid by S Corp. Not Loan Repayments

If a Subchapter S corporation pays its shareholder’s personal expenses, can the payments be for the repayment of loans not subject to employment instead of wages subject to employment taxes? This is a common issue that has to be addressed when preparing S corp. tax returns. The IRS addressed this in AOD 2017-04, which was […]

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Reckless Conduct Sufficient for FBAR Civil Tax Penalty

It is not clear as to what level of conduct justifies the imposition of the $100,000+ foreign bank account reporting (“FBAR”) civil tax penalty. In Bedrosian v. United States, No. 15-5853 (E.D. Pa. 2017), the court considered whether reckless conduct is sufficient given the facts presented in the case. The FBAR Civil Tax Penalty The […]

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Court Says Employer Entitled to Worker’s IRS Records

When the IRS determines that independent contractors are taxed as employees, it is up to the employer to show that the IRS determination is incorrect. One way to do this is to show that the workers paid tax even though the employer did not withhold the tax. In Mescalero Apache Tribe v. Commissioner, 148 T.C. […]

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Computing the Reportable Transaction Penalty

The Section 6707A reportable transaction penalty can be difficult to work with given the more limited avenues for contesting the penalty. The court addressed this in Bitter v. Commissioner, T.C. Memo. 2017-46, in the context of a Section 412(i) plan. Tax advisors have been waiting for an answer to the very question about how to […]

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Court Decides Transfer Pricing Buy-in Payment Case

The transfer pricing disputes often involve transfers of property offshore. Taxpayers make these transfers so that the post-transfer profits earned from the offshored property are not subject to tax in the U.S. or, in many cases, not subject to tax in the foreign countries either. The U.S. Tax Court recently decided Amazon Inc. v. Commissioner, […]

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