Author: Kreig Mitchell

Conversations Between Spouses Not Evidence of Tax Crimes

Can the IRS record conversations between a husband and wife and use the recordings as evidence for tax crimes? The court addressed this in United States v. Fomichev, No. 16-50227 (9th Cir. 2018) holding that marital communications are privileged even in the case of a sham marriage. Facts & Procedural History Fomichev was born in Russia… Continue reading Conversations Between Spouses Not Evidence of Tax Crimes

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August 21, 2018
Discharging Unpaid Taxes in Bankruptcy

There are circumstances when unpaid taxes can be discharged in bankruptcy. There are a number of rules involved. They all hinge on whether a tax return was filed. The recent United States v. Mayer, No. 16-626-RGA (D. Del. 2018), case provides an opportunity to consider these bankruptcy-tax rules. Facts & Procedural History The case involved the taxpayer’s… Continue reading Discharging Unpaid Taxes in Bankruptcy

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August 11, 2018
Agreeing to an IRS Real Estate Foreclosure Sale

Can you ask the IRS to take real estate to satisfy your unpaid tax liability? The answer is “yes,” but it is usually not the best option. The recent order in United States v. Leroy, No. 2:18-cv-01777-MCE-DB (E.D. Cali. 2018) provides an example of this. The Facts & Procedural History Ms. Leroy owed $177,653.70 in unpaid… Continue reading Agreeing to an IRS Real Estate Foreclosure Sale

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August 4, 2018
Dormant IRS Levy Precludes Wrongful Levy Suit, IRS Wins

What happens if the IRS issues a levy to someone who does not owe taxes to the IRS, but the IRS does not receive anything from the levy? The levy sits dormant for several years. Everything is good, right? But then the third party pays the IRS. Can the person’s right to challenge the levy… Continue reading Dormant IRS Levy Precludes Wrongful Levy Suit, IRS Wins

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July 24, 2018
Last Filed Rule Overruled? IRS Collections Uncertain

Taxpayers will often file tax returns that do not report all of their allowable deductions and credits, with the intent of going back and filing amended returns once they are able to determine the correct deductions and credits. Can the IRS base its collection analysis on the originally-filed but incorrect tax returns? The court recently… Continue reading Last Filed Rule Overruled? IRS Collections Uncertain

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July 5, 2018
Avoiding IRS Wage Levy by Change of Status

Can you avoid an IRS wage levy by having your employer change your status from that of an employee to a contractor? The court addressed this in Hudiak vs. United States, No. MJG-11-1271 (D. Md. 2018) by ordering the taxpayer to make installment payments to the IRS despite the change in employment status. The Facts &… Continue reading Avoiding IRS Wage Levy by Change of Status

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July 3, 2018
IRS Cannot Collect Taxes Discharged in Bankruptcy

In Internal Revenue Service v. Murphy, No. 17-1601 (1st Cir. 2018), the taxpayer discharged his unpaid taxes in bankruptcy. The IRS continued to try to collect the discharged tax debt. The case is a must read for taxpayers who find themselves in this same situation. The Facts & Procedural History The taxpayer in Murphy filed Chapter… Continue reading IRS Cannot Collect Taxes Discharged in Bankruptcy

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June 11, 2018
Can I Deduct My Clothing Costs?

Can you take a deduction for clothing? What if you purchase the clothing for work and would not otherwise have purchased the clothing? What if the clothing is only worn at work? This is a common dispute that comes up on audit with the IRS. The Farolan v. Commissioner, T.C. Summary Opinion 2018-28, case provides… Continue reading Can I Deduct My Clothing Costs?

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June 7, 2018
The Ins and Outs of the IRS’s Bank Deposit Analysis

The IRS almost always checks for unreported income when it audits an income tax return. The IRS does this by analyzing the deposits made in the taxpayer’s bank accounts. But what if a deposit was not taxable, as in the case of an amount received for a third party and paid out to a third… Continue reading The Ins and Outs of the IRS’s Bank Deposit Analysis

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May 30, 2018