The IRS has called out improper Employee Retention Credit claims filed by taxpayers and their advisors. It has also failed to pay many valid claims, even to this very day. The IRS has taken a position that ERC claims based on partial shutdown due to government orders require a 10 percent reduction in gross receipts……
Tag: Tax Litigation
Sidestep Tax Court Review by Applying Overpayments
What happens when a taxpayer properly invokes their right to challenge the underlying tax liability through the CDP process, but the IRS then uses subsequent overpayments to zero out the disputed balance? Can the IRS effectively eliminate tax court jurisdiction by manipulating these overpayments mid-process, leaving the taxpayer without any forum to resolve their legitimate……
When the IRS Agrees You’re Right But the Court Says You’re Wrong
Say the IRS agrees that you are entitled to a sizeable tax deduction. But on audit, the IRS determines that you reported the tax deduction using the wrong form. The form used does not change the amount of the tax deduction or the taxpayer that would ultimately pay the tax. From the IRS’s perspective, the……
How Much Tax to Pay to Sue for a Refund?
Say you run a business. The IRS audits your tax return and determines that you do not owe tax. It comes back a few years later and, even though your business is the same, determines that you owe tax. The IRS hands you a large tax bill. You do not agree with that the tax……
Substantial Variance Doctrine for Informal Tax Refund Claims
Taxpayers often submit refund claims when they discover that they overpaid their taxes. Taxpayers usually do this by submitting a formal refund claim using the IRS’s prescribed forms. But this is not always required. In many cases, taxpayers will submit so-called “informal refund claims” to the IRS during the course of an IRS audit. The……
Tax Refunds Lost to Timing Rules: Lesson, File Early, Pay Late
You should always pay your taxes on time, right? After all, early payment avoids tax penalties and interest, and shows good faith compliance with tax obligations. This is not always the best approach. Why? Taxpayers who pay early or even on time may be precluded from getting money back from the IRS if they overpaid……
Attorney Fees in Tax Litigation: Jury Says Yes, Judge Says No
In most litigation, each party pays their own attorney fees regardless of who wins the case. This “American Rule” applies even when one party is clearly right and the other clearly wrong. But litigation against the government, such as tax litigation, presents a unique inequity. When taxpayers are forced to defend against an incorrect IRS……
Can Small Businesses Challenge Unfair Tax Regulations in Court?
Small business owners often struggle to keep up with the ever-changing labyrinth of IRS regulations. Deciphering these complex rules can be time-consuming and costly, diverting resources from core business operations. This leads to the question of what happens when the IRS fails to properly consider the unique burdens its rules place on small entities? The……
A Government Step Transaction Doctrine
When taxpayers weave together various tax rules to produce a favorable outcome, the IRS will often cite various judicial doctrines to avoid the result or to unwind the transaction. This can include economic substance, the step transaction doctrine, etc. These doctrines allow the IRS to effectively reverse the tax treatment of transactions when multiple tax……