The IRS is Targeting Partnership Basis Computations... [ read ]
In every recent IRS examination of a partnership and/or its partners in which I have been involved, the IRS has asked for information to support the computation of the partners' basis in the partnership. It is critical that a partnership maintain very good records to support the basis computations, especially if the partners are deducting partnership losses. In a recent Tax Court case, Langlois v. Commissioner, T.C. Memo. 2025-12, the taxpayer learned a hard lesson when the Tax Court ruled that the taxpayer had failed to establish his basis in his partnerships and not only denied the partnership losses but also imposed a 20% accuracy-related penalty.
The Importance of Preparing a Well-Written Targeted Protest to Avoid Liability for a Trust Fund Recovery Penalty... [ read ]
The Trust Fund Recovery Penalty (TFRP) is a significant tool used by the Internal Revenue Service (IRS) to collect unpaid trust fund taxes. These taxes include amounts withheld from employees' wages, such as income tax, Social Security, and Medicare taxes, which are held in trust by the employer until they are paid to the government
New Treasury Secretary Scott Bessent and SECA Taxes... [ read ]
Earlier this week the Senate confirmed Scott Bessent to serve as the next Treasury secretary by a vote of 68 to 29. Mr. Bessent is highly qualified to be the Treasury secretary and although he was easily confirmed, there was one area of inquiry which caused some concern, i.e. Mr. Bessent's use of the limited partnership exception under IRC Section 1402(a)(13) to avoid the Self-Employment Contributions Act (SECA) taxes related to his limited partnership interest in his hedge fund.
Taxpayer Refuses to Accept Incorrect IRS Determinations and Wins in Tax Court... [ read ]
Sometimes IRS auditors make mistakes. Sometimes those mistakes need to be challenged administratively with the IRS Independent Office of Appeals ("Appeals"). And when the mistakes remain unresolved after Appeals proceedings, litigating in court sometimes is necessary. That is a lot of "sometimes." But another one is warranted to point out that sometimes taxpayers who keep advancing legitimate arguments can be vindicated. This is one of those times—and an IRS conclusion that a taxpayer underreported its income by more than $500,000 was rejected by the United States Tax Court.
Appealing a Denial of an ERC Claim? Keep An Eye on the Statute of Limitations... [ read ]
If the IRS denies a taxpayer's claim for refund, the taxpayer can request that the IRS Office of Appeals ("Appeals") review the denial of the refund claim. If Appeals upholds the denial of the refund, pursuant to IRC Section 6532(a)(1), the taxpayer can file a refund suit in either United States District Court or the Court of Federal Claims challenging the denial of the refund claim. The suit must be filed no later than two years after the date on which the IRS mailed the initial notice disallowing the refund claim. A taxpayer who does not file a refund suit within two years of the refund being denied waives the refund claim.
Navigating the Employee Retention Credit: Key Issues from the Taxpayer Advocate's Report... [ read ]
The Taxpayer Advocate is an independent branch of the IRS that is statutorily required to identify areas where taxpayers have problems in their dealings with the IRS. One of the significant problems identified by the Taxpayer Advocate relates to ERC. Specifically, the Taxpayer Advocate's report highlights several key issues relating to ERC that have presented significant challenges for taxpayers. This blog drills down on the ERC issues highlighted by the Taxpayer Advocate.
National Taxpayer Advocate's Annual Report to Congress Highlights Most Serious Problems Encountered by Taxpayers... [ read ]
It is becoming an annual event for me to write about the National Taxpayer Advocate's Annual Report to Congress and its top 10 list of the most serious problems encountered by taxpayers, see, " What Do the National Taxpayer Advocate and David Letterman Have In Common?" and "More Top 10 Tax Lists From the Taxpayer Advocate and David Letterman."
The IRS Starts 2025 With a Bang by Requesting Two Different John Doe Summonses... [ read ]
With a new administration, one party controlling the House and Senate, potentially a new IRS Commissioner, and likely a reduction in IRS enforcement funding, there has been a great deal of chatter regarding the impact on IRS enforcement in 2025 and beyond. However, someone forgot to tell the IRS because in the last few weeks, two courts have authorized the IRS to issue John Doe summonses to third parties, requesting taxpayer information.
IRS Commissioner Announces ERC Claim Processing Around the Corner: What Else Did We Learn?... [ read ]
Each year, I enjoy participating in the ABA Tax Section's Criminal Tax Fraud and Tax Controversy Conference in Las Vegas. This year, I had the privilege of hearing what sounded like it could be a monumental announcement by the IRS Commissioner, Danny Werfel. As mentioned by Anthony Daddino here, Werfel announced that the IRS had plans to process around 500,000 ERC claims by the end of 2024. The total value of those claims, per Werfel, is around $10 billion. In addition, Werfel announced that another 500,000 – 600,000 claims were "teed up" for approval next year.
Holiday Cash in the Form of ERC... [ read ]
Just in time for the holidays, the IRS just announced plans to approve 500,000 ERC claims in the coming weeks with more to come in 2025.
