If you hire a competent tax advisor and end up having a late filed return, you may be able to avoid penalties for the late filing. But this is a defense. It is something that you, the taxpayer, have to prove. So how does a taxpayer prove that they relied on a tax advsior? The… Continue reading Reasonable Cause: Proving Reliance on a Tax Advisor
Category: Tax Procedure
Is Reliance on a CPA Sufficient for a Late Filed Tax Form?
The IRS often turns a deaf ear to taxpayers who miss a filing deadline due to some action or inaction by their CPA or tax preparer. This is the case for late filing tax penalties. But what about a late filed accounting method change? Is reliance on a CPA or tax preparer sufficient for a… Continue reading Is Reliance on a CPA Sufficient for a Late Filed Tax Form?
Cashing a Tax Refund Check for a False Return is a Crime
Cashing a tax refund check that was triggered by filing a false tax return is a crime. It is theft of government money. Theft of government money is different than tax evasion. The recent United States v. Box, No. 18-13935 (11th Cir. 2019) court case provides an opportunity to consider the crime of theft of… Continue reading Cashing a Tax Refund Check for a False Return is a Crime
CPA Penalized for Knowledge of Understatement
Section 6701 imposes a penalty for assisting another person in understating their tax liability. The Section 6701 penalty is not subject to a statute of limitations. The IRS can assess these penalties at any time, even years and decades after the fact. This can result in very large penalty assessments for those who prepare tax… Continue reading CPA Penalized for Knowledge of Understatement
Raising a Tax Issue for the First Time in Court
With tax litigation, it is often best to raise every argument possible. But what if the law seems clear on an issue and then, during the course of the tax dispute, another court issues an opinion making the law less clear? If this isn’t discovered or realized soon enough, should the taxpayer be precluded from… Continue reading Raising a Tax Issue for the First Time in Court
Is an IRS Audit Report an Informal Claim for Refund?
Amended returns generally have to be filed to recoup overpayments of tax. What counts as a refund claim is open to interpretation, as the courts have allowed a myriad of written documents to qualify. But what about the IRS report itself? If it includes a taxpayer-favorable adjustment, is the report itself an informal refund claim?… Continue reading Is an IRS Audit Report an Informal Claim for Refund?
What if the IRS Violates the Law?
What happens if the IRS violates the law? Specifically, what if the IRS assesses a penalty and attempts to collect it without first issuing the proper notice to the taxpayer? The court addresses this in Romano-Murphy v. Commissioner, 152 T.C. 62, in the context of a trust fund recovery penalty. Facts & Procedural History The… Continue reading What if the IRS Violates the Law?
IRS Summons and the Attorney-Client Privilege
The attorney-client privilege protects communications with a tax attorney from disclosure to third parties, such as the IRS. If the IRS discovers that a tax attorney advised a client on a transaction that wasn’t structured properly, should the IRS be able to use its power to issue an administrative summons to require the attorney produce… Continue reading IRS Summons and the Attorney-Client Privilege
Tax Litigation When the Administrative Process Failed
There are cases where the administrative process does not reach the right conclusion. There are also cases where the administrative process isn’t available or fully completed. This can happen with tax disputes handled by the IRS. When it does, does this mean that the taxpayer cannot litigate the tax dispute? The record rule comes into… Continue reading Tax Litigation When the Administrative Process Failed
What if the IRS Loses Your Mail?
The IRS manages to lose a lot of mail. To be fair, some of the mail is likely lost before it even gets to the IRS. When this happens, can the taxpayer lose out on their rights? The court revisits this issue in Baldwin v. United States, 17-55115 (9th Cir. 2019). Facts & Procedural History… Continue reading What if the IRS Loses Your Mail?