• Surprising FBAR Cases: A Mixed Bag for Taxpayers Facing Foreign Account Penalties
    Dec 18 2024

    The tax press has focused recently on captive insurance, conservation easements, Employee Retention Credits, and other “hot” topics. However, international tax enforcement in general, and big penalties for unfiled FBARs in particular, are still key issues. Several cases, largely unnoticed, have held that the IRS can extend the period for assessing FBAR penalties, even though the initial deadline expired. Another case ruled that FBAR penalties are “fines” for constitutional purposes, such that courts can reduce them if they are “excessive.” This article examines disparate rules about extensions of assessment-periods, relevant IRS guidance, and new cases centered on these critical topics.

    Show More Show Less
    20 mins
  • Five New Events Affecting Employee Retention Credit Disputes
    Nov 19 2024

    Battles over Employee Retention Credit (“ERC”) claims are turning more serious now, with many audits, administrative appeals, and cases getting underway. Taxpayers hoping to prevail against the IRS or Department of Justice need to have a deep understanding of legislative, substantive, procedural, and strategic ERC issues. Understandably, loads of taxpayers are having trouble keeping up with evolving matters in the ERC world. This article, the latest in a long series, discusses five new items that might have escaped the attention of taxpayers.

    Show More Show Less
    30 mins
  • Exploring Recent Cases and IRS Guidance on Unique International Disclosure Duties for Dual Residents
    Nov 13 2024

    Complying with international information-reporting duties is difficult; the rules are complex, dense, and obscure. Things get even more complicated when it comes to people who are residents, for tax purposes, of both the United States and another country. These so-called “dual residents” have special disclosure rules, the violation of which can trigger taxes, penalties, extended assessment periods, and more. This article explores information-reporting obligations, traditional IRS enforcement actions, and recent cases and IRS guidance featuring contradictory rulings involving dual residents.

    Show More Show Less
    34 mins
  • Improper ERC Claims: IRS vs. Taxpayers vs. Payroll Companies
    Nov 6 2024

    When people think about tax enforcement, they rarely consider the IRS attacking payroll companies based on benefits they claimed for their clients, but this is happening with the Employee Retention Credit (“ERC”). What makes this more interesting is that the IRS is attacking both payroll companies and their clients thanks to their joint liability in certain situations. This reality sets the stage for primary battles against the IRS, accompanied by secondary clashes between payroll companies and their clients. The finger pointing has already started, and it will no doubt intensify as ERC enforcement escalates. This article analyzes four recent sources of IRS guidance about which parties will be on the hook when ERC claims get disallowed.

    Show More Show Less
    24 mins
  • A Look at the Second ERC Voluntary Disclosure Program
    Oct 30 2024

    Congress introduced the Employee Retention Credit (“ERC”) more than four years ago, but serious enforcement actions are just now getting underway. The IRS, as one part of its comprehensive strategy, has been implementing a multi-step plan designed to convince taxpayers to willingly return ERC payments that they did not deserve in the first place. This article, the latest in a series, analyzes the evolution of ERC benefits by Congress, the no-win situation facing the IRS initially, and some of the steps taken that the IRS has taken thus far to reduce the number of taxpayers it must pursue, including the introduction of its second voluntary disclosure program.

    Show More Show Less
    33 mins
  • Altered, Backdated and Inconsistent Documents Aren’t Enough for Fraud
    Oct 23 2024

    Taxpayers who engage in tax fraud face serious consequences, including steep penalties, endless assessment-periods, prolonged trials, reputational damage, and more. Mere allegations of fraud by the IRS can trigger these types of damaging outcomes. Cynics often argue that this is precisely the reason the IRS sometimes claims that fraud occurred in the first place. Fortunately for taxpayers, while alleging fraud is relatively easy, proving it can be hard for the IRS. Two recent Tax Court cases, analyzed in this article, demonstrate this reality.

    Show More Show Less
    31 mins
  • The Latest on Foreign Trusts: Enforcement Actions, Relief Measures, New Cases, Proposed Regulations, and More
    Oct 10 2024

    Things constantly evolve when it comes to U.S. tax and information-reporting duties for foreign trusts. A major challenge for taxpayers is keeping up with all the changes because they derive from different sources, in different contexts, at different times. In an effort to clarify and update matters, this article offers a summary of foreign trust rules, followed by a chronological review of the latest enforcement actions, relief measures, cases, regulations, and more.

    Show More Show Less
    30 mins
  • Private Placement Life Insurance: Potential Tax Changes and Reasons Why
    Sep 11 2024

    Are taxpayers who acquire Private Placement Life Insurance (“PPLI”) doing something wrong? Certain politicians and academics think so. They argue that taxpayers who have the financial ability to purchase PPLI are somehow “abusing” the system. This article explains the general tax rules favoring life insurance policyholders and their beneficiaries, recent reports and cases putting PPLI in a bad light, and three recent proposals urging legislative changes by Congress and/or increased enforcement by the Internal Revenue Service.

    Show More Show Less
    33 mins