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
Category: Tax Procedure
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 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
IRS Uses Taxpayer Records to Secure Tax Fraud Conviction
Taxpayers who are being investigated for tax fraud should be very careful about turning over incriminating records to third parties. The recent Yang v. United States case provides an excellent example of how this can be a problem. The Yang brothers and their parents were being investigated by the IRS for tax fraud related to… Continue reading IRS Uses Taxpayer Records to Secure Tax Fraud Conviction
Courts Should Not Rely on Information from the Wikipedia
The Wikipedia is a popular internet encyclopedia that is written and edited online by anonymous individuals. As the popularity of the Wikipedia grows, so too does the perception that the Wikipedia provides accurate and reliable information. For instance, the United States Tax Court cited the Wikipedia today in its Ferguson v. Commissioner opinion. As the… Continue reading Courts Should Not Rely on Information from the Wikipedia
Cash Payments Deposited by Salesman & the Form 8300
Cash-based businesses pose a number of problems for the IRS. They may also be involved in tax fraud. The Form 8300 allows the IRS to track cash payments for this very purpose. Chief Counsel Advice Memorandum 200707001 provides an example involving cash payments deposited by a salesman for a car dealership. Facts & Procedural History… Continue reading Cash Payments Deposited by Salesman & the Form 8300
Years Combined for U.S. Tax Court Small Case Limit
The U.S. Tax Court’s rules allow taxpayers to elect small case status to avoid some of the technical litigation rules that they may not be familiar with. To qualify for small case status, do you combine the amounts from all open tax years in determining whether small case status is available? The court addressed these… Continue reading Years Combined for U.S. Tax Court Small Case Limit