When it comes to tax rules and government administrative guidance, one may expect that the provisions are clear and can be easily applied. However, this is often not the case. Even detailed regulations with explanations may fail to provide readily discernible answers. Applying such rules to common situations can still lead to questionable or incorrect……
Category: Tax Law
Transferring Property to a Spouse to Avoid IRS Collections
Imagine you live in a community property state, like Texas, and jointly own a home with your spouse. You owe back taxes to the IRS and want to protect your share of the home if the IRS tries to seize your assets. You divorce your spouse and transfer your interest in your home to your……
When Can Your Tax Preparer’s Fraud Leave You on the Hook?
Say you hire a tax return preparer and get your tax returns filed, and think that everything is fine. Then years later, say more than a decade later, the IRS shows up and asserts that your tax returns were fraudulent. You did not commit fraud and this is news to you, but the IRS asserts……
When is a Tax Return Not a Tax Return?
The tax code commands the IRS to assess the tax reported to the IRS by a taxpayer on a non-fraudulent tax return. The provision is not optional for the IRS. It is mandatory. However, the tax law does not define what is fraudulent or what counts as a tax return. This begs the question as……
The Unanswerable Discovery Request
Have you ever been asked a question that you should probably know the answer to, but you don’t fully know the answer or have access to information to find the actual answer? This is a frequent occurrence when it comes to litigation and, in particular, tax litigation. The litigation discovery process involves exchanging relevant information……
Relying on Filing Deadline in IRS Notice of Deficiency
Those outside of the tax world often assume that the IRS approaches taxpayers fairly and aims to reach equitable outcomes based on a strict reading of the tax code. This often is not the case. The IRS frequently takes an overly adversarial stance leaning in the government’s favor. This can include adopting positions and interpretations……
Using Estimates to Prove Business Expenses
Imagine this common scenario – you own a small business and incur a legitimate expense that you pay and have some record of. Years later the IRS audits and disallows the deduction for lack of receipts or other documentation. The auditor may request bank statements, which you provide, only to be told those are inadequate.……
Blunt Truth: Paying Taxes on Illegal Income
When a taxpayer makes money from something like selling marijuana, they still owe taxes on that income. The law requires the marijuana profits to be reported for income tax purposes. This type of income is usually only reported and tax collected if the IRS catches wind of the illegal activities. This is often limited to……
Court Rejects IRS Claim to Taxpayer’s Property
If a bank loans money to a business to buy equipment when the business owes back taxes, can the bank foreclose on and repossess the equipment? Does the bank or the IRS have a superior interest in the equipment? This gets into questions of state and federal law. Generally, state law defines property rights and……