The U.S. tax system reports income through Form 1099s and similar information returns. The payer fills out the form, sends one copy to the IRS, and mails another to the recipient. The recipient has no economic stake in whether that second copy ever arrives. He needs nothing from it. He takes no deduction that depends……
Tag: Tax Procedure
Can the IRS’s Automated System Issue a Valid Notice of Deficiency?
Every year, millions of taxpayers receive letters from the IRS proposing adjustments to their tax returns. Most people assume those letters came from a human being who reviewed the file, weighed the facts, and made a considered decision to send the notice. That assumption is increasingly wrong. The IRS relies heavily on automated systems to……
Can Corporate Suspension Foreclose U.S. Tax Court Review
There are a number of administrative rules that businesses have to comply with. This can create administrative headaches for businesses–particularly small businesses. The requirement for annual maintenace of state corporate status is an example. Businesses, particularly small businesses, often fail to meet annual state filing requirements. The result is that their corporate powers are limited.……
Can the IRS Walk Away from an Installment Agreement?
Taxpayers who owe the IRS back taxes often try to work out terms with the IRS for the balance. This often involves an installment agreement. Once established, the IRS often terminates the agreements and it often does so without any notice or explanation as to why it did so. This can be extremely frustrating for……
An Offer of IRS Appeals Review Can Preclude Judicial Review
The IRS assesses a tax penalty against you or your business. The audit closes and the IRS assesses the penalty. So how do you get a judge to look at it? For most tax disputes, the answer is the U.S. Tax Court. You can go there without first pre-paying the tax. But for certain types……
When the IRS Levies Estate Property, Whose Fight is it?
When a taxpayer dies with unresolved IRS issues—unpaid taxes, disputed levies, or unrefunded overpayments—the family often assumes that whoever inherits the estate can pick up where the decedent left off. That assumption might not be the correct. The tax code gives specific rights to specific parties. When the wrong person shows up in federal court……
The IRS Audit Credit-Card-to-Cash Estimation Method for Cash Businesses
When it comes to income taxes, cash businesses have always been a challenge for the IRS. Cash is hard to track. Businesses, whether large or small, often fail to keep records of cash transactions. In other cases, businesses keep the records lose the records by the time the IRS audits the business years later. And……
When Does a Tax Return Mistake Become a Crime?
The IRS has limited resources. This is true of its human capital and its technology resources. Even with significantly more resources, the IRS would still not be able to verify every entry on every return. There are just too many taxpayers, too many types of returns, and too many calculations and entries on the tax……
Estate Planning Attorney Personally Liable for Client’s Unpaid Taxes?
Estate planning and business attorneys often serve dual roles for their clients. Beyond providing legal advice, they might accept positions as registered agent, corporate secretary, or director of a client’s holding company. The arrangements can streamline matters and be a more efficient way to handle transactions. The attorney maintains control over corporate records, handles filings,……