“We the People Foundation” recently lost yet another tax-related court case, but, perhaps wining in court is not really what the group is after. According to the court record, We the People have: engaged since 1999 in “a nationwide effort to get the government to answer specific questions” regarding what plaintiffs view as the Government’s… Continue reading “We the People Foundation” Loses Court Battle, Wins Publicity
Tax Articles
Prepaying Taxes Before Bankruptcy Filing
Can you overpay your taxes and then file bankruptcy, with the aim of having the overpayment applied to other tax liabilities post bankruptcy? The court addressed this in Nichols v. United States, No.?05-15554 (9th Cir. 2007). Facts & Procedural History The taxpayers in the Nichols case overpaid their 2001 state and federal tax liability. The court opinion… Continue reading Prepaying Taxes Before Bankruptcy Filing
Bankruptcy Filing Does Not Prevent Innocent Spouse Relief
Can one spouse prevent the other spouse from obtaining innocent spouse relief by filing bankruptcy? The court addressed this question in Kovitch v. Commissioner, 128 T.C. 9 (2007). The Facts & Procedural History The Kovitch’s were divorced. The IRS then issued a notice of deficiency to both spouses for their joint tax liability. Only the wife… Continue reading Bankruptcy Filing Does Not Prevent Innocent Spouse Relief
Two Taxpayers Commit Tax Fraud: Should They Get Separate Trials?
While a taxpayer who commits tax fraud is entitled to a hearing, in United States v. Robbins the question is whether the taxpayer is entitled to a separate hearing. Lee Robbins founded Robbins & Associates, which was a bookkeeping and tax return preparation business located in Georgia and Oklahoma. Robbins recruited, hired, and trained Gabriel… Continue reading Two Taxpayers Commit Tax Fraud: Should They Get Separate Trials?
IRS Says When a Grape is No Longer a Grape
We all know that (most) wines come from grapes, but many of us might not know exactly when grapes turn into wine for federal income tax purposes. According to the IRS (in Chief Counsel Advice Memorandum 200713023), grapes turn into wine when a taxpayer begins crushing the grapes. This IRS Memorandum highlights a few of… Continue reading IRS Says When a Grape is No Longer a Grape
Yet Another Lottery-Related Tax Question
Here is yet another lottery-related tax question: Does a state lottery have to withhold tax from lotto winnings if a single taxpayer wins more than one lottery prize from the same lotto ticket where the total winnings exceed $5,000, but the individual winnings do not exceed $5,000? In PLR 132947-06-2007, the IRS recently held that… Continue reading Yet Another Lottery-Related Tax Question
Sale of Lottery Payments, Capital or Ordinary?
While lottery winnings may be subject to tax at ordinary tax rates, what about the sale of the right to receive annual lottery payouts? The court addressed this in Prebola v. Commissioner, T.C. Memo 2006-240. Facts & Procedural History The taxpayer won $17.5 million from the lottery. She selected the annual installment option, which would pay out… Continue reading Sale of Lottery Payments, Capital or Ordinary?
IRS Obtains Promissory Note: Can it Collect on the Note?
In United States v. Spangler, the Eleventh Circuit Court of Appeals upheld a lower court order requiring a taxpayer to transfer a promissory note to the government so that the note payments would be credited towards the amount of the taxpayer’s court ordered tax restitution. Given that the IRS has a poor track record in… Continue reading IRS Obtains Promissory Note: Can it Collect on the Note?
“Rule of Thumb:” IRS Employees Not Subject to Ethical or Moral Standards
Unlike tax attorneys, IRS employees are not subject to any ethical or moral standards. Take the case of Wormley v. Department of the Treasury. The Wormley case presents the unusual question as to whether an IRS employee should be fired if she is arrested and convicted of assault for “biting off a portion of her… Continue reading “Rule of Thumb:” IRS Employees Not Subject to Ethical or Moral Standards
IRS Incentive to Delay Processing Cases: Extra Tax Penalties & Interest
I think that most citizens would agree that the IRS should not benefit from failing to do its job in a timely manner. The recent United States v. Ryals case provides an example of how the IRS can benefit from denying taxpayer claims and delaying the collection of taxes. Ryals Case Ryals owed taxes for… Continue reading IRS Incentive to Delay Processing Cases: Extra Tax Penalties & Interest