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Tax Court Finds that SECA Limited Partner Exception Requires ‘Functional Analysis Test’

A recent U.S. Tax Court decision provides clarity to what the Internal Revenue Service (“IRS”) considers a limited partner for purposes of the ‘limited partner exception’ to the Self-Employment Contributions Act (“SECA”) tax...more

The Taxman, Technology Litigation and Cavalier Settlement Structures

Intellectual property (“IP”) is hugely important to businesses. Given that importance, IP owners must occasionally litigate against the unauthorized use of their technology. The costs of such litigation and appurtenant...more

The Fine Print: IRS Examination of Artwork

Many taxpayers have art collections. However, the art collections of some high-net-worth individuals, family offices, and business taxpayers may draw the unwanted eye of the IRS. With the increased focus on auditing...more

What a Difference a Day Makes, at Least When it Comes to Tax Court Petitions

The Tax Court can be an unusually cruel place when it comes to deadlines.  This is what a recent taxpayer found out in a Tax Court decision that denied their challenge of an over $4.6 Million dollar tax bill asserted by the...more

When is an Accountant Forced to Testify Against Their Client?

Recently, in a criminal case involving a physician who hired an accountant to prepare and submit certain tax forms to the IRS on her behalf, the court denied attorney-client and work-product privilege claims and ordered the...more

Release the Kraken Tax Transaction Information

On June 30, 2023 the District Court in the Northern District of California granted a petition to enforce the cryptocurrency exchange Kraken to release customer information.  Specifically, Kraken was ordered to produce the...more

Is Your Partnership Ready for IRS Audit Initiatives? Because the IRS is Coming!

On September 8, 2023 the IRS announced a sweeping effort to focus enforcement efforts on high-income individuals, partnerships, and corporations. On September 20, 2023 the IRS announced that it will establish a special...more

IRS Sanctioned for Bad Faith on Supervisory Approval of Penalties While Proposed Regulations on the same Issue are Pending

A hearing is scheduled for September 11, 2023 for interested persons and organizations to provide testimony on proposed regulations on the timing and approval process for penalties. Section 6751(b) provides that...more

IRS Chief Counsel Issues GLAMon ERC Supply-Chain Disruption Eligibility

Section 2301 of the CARES Act, as amended, permits employers to claim employee retention credits (“ERCs”) if they meet certain requirements. Under one of those requirements, an employer may claim an ERC if the employer’s...more

IRS Characterizes Monetized Installment Sales as Listed Transaction in Proposed Regulations

Monetized installment sale transactions (“MISTs”) have been on the IRS’s radar for some time.  On May 7, 2021, IRS Chief Counsel issued an advice memorandum, contending such transactions were “problematic” and “flawed”. And...more

IRS Continues to Hunt for Cryptocurrency Investors with John Doe Summonses

The IRS knows it has a problem, in that it knows there are far more cryptocurrency transactions than are being reported on tax returns. The IRS may also get an $80 billion increase in funding for enforcement that will help...more

IRS Penalty Denied Because of Poor Penmanship

Many people, myself included, can sometimes be accused of poor penmanship. As our paperwork becomes more and more electronic, we write less and less down with pen and paper. However, a recent decision from the tax court may...more

Supreme Court Will Hear Non-Willful FBAR Penalty Dispute

On June 21, 2022, the United States Supreme Court agreed to hear a dispute involving split decisions among the circuit courts on non-willful penalties. The Fifth Circuit parted ways with the taxpayer friendly decision of the...more

Taxpayer’s Informal Claim for Refund of Taxes Paid and Offset by the IRS Denied on a Technicality

Properly navigating the IRS labyrinth of rules and regulations is difficult and sometimes taxpayers fail to dot every “i” and cross every “t”. The results can sometimes be devastating for both individuals and small...more

IRS Fails to Follow its Own Procedures and IRS Counsel Claims Supervisory Approval Still Valid

Although the government bears the burden of production for penalties, this often involves nothing more than showing that the penalties were properly assessed. Penalty relief is usually only given when the taxpayer can marshal...more

Taxpayer Wins Tax Refund Despite IRS Claims That The Taxpayer Used The Wrong Form

Dealing with the IRS can be a dangerous labyrinth for the untrained taxpayer or their non-tax advisors. In a recent Federal court case, E. John Rewwer, et al. v. United States, the taxpayers filed the wrong form claiming a...more

Taxpayer’s Testimony on Businesses Losses Defeats IRS Arguments and Penalties

Starting any business has risk, and most businesses take time to become profitable. Unfortunately, the IRS sees multiple years of losses from a business as a red-flag that usually results in further scrutiny. That scrutiny...more

Asking the IRS to Abate Penalties

All kinds of penalties are being assessed by the Internal Revenue Service (IRS) against taxpayers, and more can be expected in the future.  In 1954 there were 13 penalties in the Internal Revenue Code, and now there are more...more

Negotiating with the IRS Collection Division

Once the IRS makes an assessment against a taxpayer, the taxpayer will receive several notices before the IRS takes enforced collection action....more

Recent Tax Court Case Outlines Factors Taxpayers can use to Avoid Negligence Penalties

The IRS is vigorously litigating cases involving conservation easements they believe are abusive.  One such case was Plateau Holdings, LLC v. Comm’r, T.C. Memo 2020-93 (Plateau I). In that case the Tax Court denied the entire...more

Non-Willful FBAR Penalties Will be Much Higher in the Fifth Circuit

On November 30, 2021, the Fifth Circuit parted ways with the taxpayer friendly decision of the Ninth Circuit that non-willful penalties are capped at $10,000 per FBAR filing instead of the $10,000 per unreported bank account...more

The Dangers of Improper Mailing to the IRS

Deadlines are important in legal matters, especially when it relates to tax issues.  There are estimated tax deadlines, tax return filing deadlines, and a host of deadlines if a return is audited and any adjustments are...more

Guidelines for Protecting Privilege in Tax Cases

Lawyers, tax or otherwise, understand that privileged information must be protected to encourage a full and frank dialogue that might not occur without confidentiality.1 Tax information, in particular, contains some of the...more

Understanding IRS Rules on Passive Activity Losses

Several abusive tax shelters in the 1970s and 1980s caused Congress to enact rules to prevent taxpayers from deducting losses when a taxpayer doesn’t materially participate in the activity.  These passive loss rules apply to...more

The Tax Benefits of Research and Development Expenses (IRC Section 41)

Businesses are started with good ideas and a lot of hard work. Companies are sustained by applying that same hard work to the challenges and problems they face along the way.  ...more

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