One of the many decisions a business owner must make during the first year of operating is what accounting method is most appropriate for the company. While the Internal Revenue Service (IRS) requires that some taxpayers use the accrual method, for example, retail companies, some business taxpayers can elect to use either the cash or [...]
Sometimes a situation arises when a taxpayer overpays his or her taxes for a particular year. When a taxpayer overpays his or her taxes, he or she can file a Claim for Refund to recover the amount of the overpayment. One common example of a Claim for Refund is when a taxpayer files his or [...]
The United States Tax Court (hereinafter, “Tax Court”) recently issued three seminal opinions1 regarding innocent spouse relief pursuant to Section 6015 of the Internal Revenue Code (hereinafter, “Code”). Each decision helped clarify relief under Code Section 6015(f), commonly referred to as “equitable relief.” Background When married taxpayers file a joint Form 1040 income tax return, [...]
While most taxpayers can resolve their situation with the Internal Revenue Service (IRS) without asking for the assistance of the courts, filing a petition with United States Tax Court (Tax Court) can be the taxpayer’s best option. Some reasons a taxpayer may decide to file a petition with the Tax Court include: the law is [...]
Appealing an IRS audit determination gives the taxpayer a second chance to demonstrate his or her position, although this time, to an Appeals Officer (Officer). The IRS’s goal in appeals is to reach a disposition of the case which reflects the probable result of litigation. The Officer will work with both the evidence provided to [...]
The audit examination process is one of the procedural safeguards the IRS uses to ensure taxpayers are complying with our voluntary tax system. Being selected for an Internal Revenue Service (IRS) audit examination does not, however, necessarily mean that the taxpayer did not comply, filed his or her return incorrectly, or abused the system. In [...]
Many taxpayers are fortunate enough to turn a hobby or an activity they are passionate about into a business. The IRS, however, too often determines that the taxpayer’s business is not a “real business” when the business loses too much money. While sometimes the IRS determination is right, many times the IRS will incorrectly re-characterize [...]
When married taxpayers elect to file a “Married Filing Joint” tax return, both taxpayers are responsible for the accuracy of the income and other items reported on the tax return. So, what happens if a taxpayer who filed a joint return is later in a situation where there is tax owing, but the tax is [...]