On October 24, 2024, Commissioner Daniel Werfel announced that the Internal Revenue Service (IRS) would end its practice of automatically assessing penalties for late-filed forms relating to foreign gifts or bequests, effective immediately. Contrary to popular belief, such penalties were frequently assessed against lower-income taxpayers, immigrants, and small businesses. The change in procedure, which relates [...]
In June of 2024, the Internal Revenue Service (IRS) issued guidance attempting to address the perceived inappropriate use of existing partnership rules related to certain related-party basis-shifting transactions. These basis-shifting transactions are intended to generate tax benefits without any meaningful economic substance. IRS exam teams have reported repeated instances of inappropriate basis-shifting practices by related-party [...]
On February 21, 2024, the Internal Revenue Service (IRS) announced that it plans to begin dozens of audits on business aircraft involving personal use, contributing to the Inflation Reduction Act’s efforts to improve tax compliance for high-income individuals and businesses. These audits will focus on aircraft usage by large corporations, partnerships, and wealthy taxpayers, and [...]
In February of 2020, the United States Tax Court issued a Memo, Railroad Holdings, LLC T.C. Memo. 2020-22 (U.S.T.C. Feb. 5, 2020), and an Order, Rock Creek Holdings, LLC, Tax Court Order, 2/10/2020. Both the Memo and the Order pertain to the conservation easement in dispute in the cases. In the first case, the Court [...]
When it comes to the charitable donation of art, the Internal Revenue Service (IRS) has increasingly adopted a predictable strategy, as outlined in part two of this series. Similar to cases involving conservation easements, the IRS can even take the position that donated art is worth $0. While this is the IRS’s most extreme position [...]
Among the many ways that Congress uses tax laws to influence taxpayers’ spending, encouraging donations to charitable causes is perhaps the least controversial. Section 170 of Title 26 of U.S. Code, for example, has outlined Internal Revenue Service (IRS) policy on charitable contributions and gifts for decades. For many taxpayers, such donations include small payments [...]
The Employee Retention Credit (ERC) is a refundable tax credit for certain eligible business and tax-exempt organizations that had employees and were affected during the COVID-19 pandemic. The ERC Voluntary Disclosure Program is meant to help employers pay back the money they received after incorrectly filing for ERC claims. Businesses who incorrectly claimed the ERC [...]
Since the COVID-19 pandemic, the Internal Revenue Service (IRS) has had a long backlog that, due in part to funding received in the Inflation Reduction Act of 2022, it only began to catch up on in mid-2023. In the meantime, the IRS’s backlogs and delays might have lulled taxpayers into a false sense of security. [...]
Despite the relative rarity of an individual taxpayer’s file being brought to United States Tax Court or even audited, many taxpayers nevertheless fear the Internal Revenue Service (IRS) coming after them. This is not without good reason. Responding to an IRS audit alone can be time consuming and involves obtaining and compiling numerous documents. That [...]
In June 2016, William Canada, Jr. took the Internal Revenue Service (IRS) to bankruptcy court and won. Mr. Canada successfully challenged the IRS’s claim for a $40 million penalty, pursuant to IRC §6707, for failing to report tax shelter transactions under IRC §6111. Per IRC §6707, the IRS imposes a penalty on anyone who fails [...]