Taxation & Wealth Planning

Tax Controversy & Litigation

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Tax Controversy Sentinel

The increasingly complex area of tax law in the U.S. can cause a variety of legal setbacks for any business. The more notable the tax controversy, the more roadblocks that can be created between a company and its success. Our Tax Controversy Sentinel blog addresses the latest developments in all aspects of tax controversy matters.

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Recent Blog Posts

  • IRS Would Receive Slight Funding Boost Under House Appropriations Bill Released Today The House Appropriations Committee today released the FY2019 Financial Services and General Government Appropriations bill, which provides annual funding for the Treasury Department, the Judiciary, the Small Business Administration, the Securities and Exchange Commission, and related agencies. The bill provides $11.6 billion for the Internal Revenue Service, an increase of $186 million above the FY2018 enacted level. Of the funds, $77 million are earmarked to help the IRS with implementing the new tax code adopted in the Tax Cuts and Jobs Act of... More
  • IRS Cautions Taxpayers Regarding Efforts to Bypass New State and Local Tax Deduction Caps Today the Internal Revenue Service notified taxpayers that it will soon be issuing regulations addressing the deductibility of state and local tax payments for federal income tax purposes. The IRS also reminded taxpayers that federal law controls the characterization of payments for federal income tax purposes regardless of the characterization of the payments under state law. These forthcoming regulations are targeted at efforts by some states, including New York and New Jersey, to pass laws providing for mechanisms to work... More
  • Internal Revenue Service’s LB&I Division Announces Six More Compliance Campaigns Yesterday the Internal Revenue Service’s Large Business and International Division announced that it was adding six more compliance campaigns to its previously-announced list of 29 such campaigns. The compliance campaigns signify LB&I’s move toward “issue-based examinations” premised upon pre-selected issues that present the greatest risk of non-compliance. According to LB&I, the stated goal of this effort is to “improve return selection, identify issues representing a risk of non-compliance, and make the greatest use of limited resources.” In January 2017, LB&I unveiled... More
  • IRS Guidance to Field: Deep Clean Equipment Used in Cannabis Businesses Before Selling Attorneys representing cannabis businesses are often faced with questions about what happens when the cannabis business has not paid its taxes and the IRS is proceeding with collection actions.  No one thinks the IRS will seize and sell cannabis to satisfy tax liabilities, because in doing so the IRS would engage in criminal violations of the Controlled Substances Act.  However, recently, IRS Chief Counsel issued advice addressing questions posed by the field about whether an IRS sale of equipment used in a cannabis... More
  • Conservation Easements: Charitable Deduction Disallowed Under “Substantial Benefits” Test In Wendell Falls Development, LLC v. Commissioner, T.C. Memo. 2018-45, the Tax Court denied a charitable contribution deduction for a taxpayer’s contribution of a conservation easement because the taxpayer expected to receive a substantial benefit from the donation. The taxpayer purchased 27 contiguous parcels of unimproved land, comprising 1,280 acres. The taxpayer planned to subdivide the 1,280 acres into a master-planned community with residential areas, commercial spaces, an elementary school, and a park. The taxpayer would then sell the lots to... More
  • Tax Court Addresses Supervisor Approval Requirement in Partnership-Level Proceeding Recently, the written supervisory approval requirement of Section 6751(b) has been one of the primary issues in Tax Court litigation concerning penalties that the IRS has asserted against taxpayers. The focus of this litigation is the effect of Section 6751(b) and its interplay with the Commissioner’s burden of production as to penalties in court proceedings under Section 7491(c). In Dynamo Holdings v. Commissioner, 150 T.C. No. 10 (May 7, 2018), the Tax Court addressed these issues in a partnership-level proceeding. Section... More
  • Philadelphia Chapter of FBA Tax Section to Host Tax Court Judge Mark Holmes on May 30 On May 30, the newly-formed Philadelphia Chapter of the Federal Bar Association’s Section on Taxation will host a meet-and-greet event with the Honorable Mark V. Holmes of the United States Tax Court. The event is free and open to all tax practitioners in the greater Philadelphia area. To RSVP for this event, please email [email protected] Judge Holmes was appointed to the Tax Court by President George W. Bush in 2003, and was recently re-appointed for a second fifteen-year term. Judge Holmes... More
  • Minnesota Joins Widening Crackdown on “Zappers” With Announcement of State’s First Criminal Convictions for Using Sales Suppression Devices The State of Minnesota has joined the growing list of states that are criminally prosecuting business owners for using “zapper” programs to commit tax evasion.  Yesterday the Minnesota Department of Revenue and the St. Louis County Attorney’s Office announced the convictions of a Duluth restaurant and its owners for tax crimes based upon their use of sales suppression software.  This represents the first time that Minnesota has criminally prosecuted anyone for using a zapper. Commonly called “zappers,” sales suppression software programs run on... More
  • District Court Holds Tax Liens Stay with Property after Conveyance United States v. Gerard, a recent case from the Northern District of Indiana, demonstrates how a tax lien, once attached, can stay with property even after the property is conveyed to someone other than the taxpayer.  In 1990, a husband and wife named Robert and Cynthia Gerard bought a residence as tenants by the entirety.  Although the Gerards bought the residence together, Robert paid at least 90% of the purchase price.  Between 2003 and 2008, Cynthia owned a business with... More
  • FinCEN Quietly Extends Real Estate Geographic Targeting Orders for Another Six Months Breaking from its recent practice of making public announcements about Geographic Targeting Orders, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) last month quietly extended its real estate GTOs for another six months. The new expiration date is September 16, 2018. FinCEN’s move to continue the GTOs a fourth time suggests that the orders are generating meaningful intelligence for law enforcement regarding potential money laundering involving luxury real estate in the United States. In January 2016, FinCEN announced with significant fanfare... More