Tax Blog/Blawg

For taxpayers who entered the IRS’s second Offshore Voluntary Disclosure Initiative (“OVDI”) prior to August 31, 2011, November 29th marked the end of the extended deadline that some taxpayers requested for submitting all of the materials included in the disclosure (e.g., amended returns, FBARs).  Coincidentally with the timing of this deadline, many individuals who only recently learned of their reporting obligations (or, in some cases, of the existence of their accounts in the first place) are asking themselves what they can do now, having missed the opportunity to ...

When the IRS audits a tax return involving a business, its agents invariably get involved in questions of recordkeeping and how transactions are conducted and recorded.  All too often, an IRS Examiner will suggest that a taxpayer's records are not "adequate," or that in some fashion the taxpayer is not operating in "a businesslike manner."  This most often occurs in situations where the taxpayer is attempting to operate a ranch and has incurred losses, or claims that shareholder advances to the company should be recognized as bona fide loans rather than an investment of capital.

This ...

On September 19, 2011, Commissioner Shulman and Secretary of Labor Solis signed a memorandum of understanding that will allow for the sharing of information intended to combat employee misclassification.  The sharing of information and collaboration between the two agencies is intended to help reduce the incidence of misclassification, reduce the tax gap, and improve compliance with federal tax and labor laws.  The increased collaboration will also strengthen the relationship between the IRS and DOL, enable both agencies to leverage existing resources and send a consistent ...

On May 5, 2011, the Treasury Inspector General for Tax Administration (TIGTA) issued a report that is not going to please anybody.  It concluded that IRS employees are provided with ample information about their tax responsibilities to enable them to comply, but some do not, and the agency needs to do more to address the problem.

This is not the first report on the subject, following up on an Employee Tax Compliance program (ETC) initiated in calendar year 1995 “to insure that employees are held to a high standard of compliance.”  In a December 2009 IRS Report, more than 97,000 Federal ...

In IRS examinations, many practitioners encounter situations where the Internal Revenue Service seems to conjure up a set of facts that is divorced from reality.  On the collection side, strange as it may sound, the IRS sometimes does this too, by treating the taxpayer as if he has assets he really doesn't.

When a taxpayer is unable to pay his tax in full, he is entitled to request a “collection alternative” from the IRS, usually an Installment Agreement but sometimes an Offer in Compromise.  This process involves submitting a variety of financial statements to the IRS – most often ...

Five days ago, this would have seemed like just another April Fools'  Day joke, but it is apparently quite real.  Via the Washington Times, an excerpt:

There's at least one government function some taxpayers might not miss in a government shutdown: IRS tax audits.

A senior administration official, briefing reporters on potential effects of a shutdown, said "the performance of tax audits will be shut down or suspended for this period."

Overall, the official said he expects about 800,000 government employees to be furloughed if Congress and the president aren't able to agree on spending ...

For most citizens of the United States, the thought of an IRS audit is probably scarier than a root canal or a colonoscopy without anesthesia.  As a result, people will be pleased to learn that the Internal Revenue Service is in fact "audited" itself, and sometimes doesn't like the results of those audits.

The notion of auditing the IRS is probably surprising.  Most taxpayers know that from time to time their local media doubtless has someone who will find a horror story about a widow who really didn't owe any taxes but is being harassed because of a mistake made by the IRS computer, and from time to time Congress occasionally exercises its oversight over IRS operations above and beyond asking the Commissioner what he's doing about closing the "tax gap."  But these contacts are sporadic, and there's a question about their effectiveness.

In Tuesday’s confirmation hearings for Supreme Court nominee Elena Kagan, one topic on which there appeared to be agreement between the nominee and the panel was concern about the dwindling number of cases heard by the High Court. In response to questioning from Senator Arlen Specter, Kagan had no explanation for the precipitous decline in the Court’s docket over the last 20 years, but agreed that it has led to an increase in unresolved conflicts among the circuit courts on “vital national issues.”

Quite naturally, those of us in the tax field like to think of our livelihoods as ...

Just when the Department of Justice must have thought that it could do no wrong in pursuing the workpapers of taxpayers and their auditors, it ran smack into the formidable blockade that is the Court of Appeals for the District of Columbia Circuit.  In United States v. Deloitte LLP et al., No. 09-5171 (D.C. Cir. Jun. 29, 2010), the D.C. Circuit seems to have fired a shot across the bow of both the Department of Justice and the IRS’s brand-new Schedule UTP.