Our federal tax system depends on voluntary compliance by a large segment of taxpayers. Encouraging compliance, while deterring and punishing non-compliance, remains the IRS’s greatest challenge. To meet this challenge, Congress has armed the IRS with a myriad of civil and criminal tax penalties. These penalties are designed to address different types of non-compliance, from……
Tag: Tax Procedure
Signature Not Required on Tax Return for Criminal Liability
One of the requirements for a document to be a tax return is that it is signed by the taxpayer under penalties of perjury. Most tax forms that are intended to be tax returns include a declaration at the bottom that includes the penalty of perjury language. But most tax returns today are filed electronically.……
No Collection Rights for IRS-Assessed FBAR Penalties
The IRS’s historical abuses led Congress to create specific taxpayer rights, including rights stemming from collection due process (“CDP”) hearings. These administrative hearings are intended to pause IRS collection actions while the IRS Office of Appeals considers whether the collection is both lawful and warranted. One might assume these rights extend to any liability assessed……
Tax Disputes When You Have Too Many Records
There are quite a few tax court cases involving taxpayers who did not have sufficient records to substantiate their tax positions. This is probably more than half of the cases that end up in the U.S. Tax Court. But what about the opposite situation where there are too many records? How is one to contend……
Can You File a Zero-Income Tax Return if You Do Not Owe Any Tax?
If you do not owe any tax for a year and you are certain of it, can you just file an income tax return that reports all zeros for income and lists the amount you paid to the IRS that you want refunded? I’ll refer to this as a “zero income-tax return.” This is a……
Taxes and Flow-Through Entities in Divorce
When a marriage involving owners of a flow-through entity is on the rocks, the intertwining of personal and business finances can create significant tax complications. This is especially true when one spouse is more involved in the business operations than the other. There are more than just tax issues to consider in divorce. But taxes……
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……
CDP Hearings and OICs: When Does the 24-Month Clock Stop?
When it comes to tax deadlines, taxpayers are often held to strict standards. Miss a filing deadline by a day, and the taxpayer could lose their rights and/or ultimately be stuck with a higher tax balance. But what happens when it’s the IRS that has a deadline to meet? The short answer is that the……
From Commingled to Contested: The IRS’s Audit of Tax Deductions
The common idea that business expenses are deductible while personal expenses are not is an oversimplification. In reality, the tax rules are more nuanced. Some personal expenses are deductible, and the line between personal and business expenses is often blurry. This complexity is further compounded by the fact that many businesses, particularly small ones, fail……