Audits Internal Revenue Service

News & Analysis as of

Focus on Tax Controversy and Litigation - United States Tax Court Invalidated Treasury Regulation § 1.482-7(d)(2)

In addition to the discussion of the Tax Court’s decision in Altera, this month’s issue features articles regarding Notice 2015-47 “Basket Options” and Notice 2015-48 “Basket Contracts”, the Federal Circuit Court of Appeals...more

Check Cashing, Tax Evasion, Structuring and Asset Forfeiture; The Making of a Bad Day

The following fact pattern should is representative of a tax evasion and structuring case. A taxpayer receives checks in the ordinary course of business from customers. Some of those checks are deposited into the business...more

What’s So Interesting About Interest Rates?

For those of us who regularly handle state audits, the focus is usually on the legal or factual arguments as to why no additional taxes are due. And it’s great when our clients can walk away with no additional taxes to pay....more

IRS auditor loses flash drive exposing SSNs of almost 12,000 people

Katy Independent School District (ISD) was randomly audited by the IRS on August 5th. In order to conduct the audit, the IRS auditor had a flash drive with the names, addresses, birth dates and Social Security numbers of...more

INTERPOL and the tax man

A reader recently sent in the following questions: Can you tell me would the IRS issue a diffusion notice in a civil tax audit involving offshore banking? Would Interpol even accept a diffusion notice on a non criminal...more

Ninth Circuit Reverses Tax Fraud Conviction Where Returns Were Not “Filed” With Internal Revenue Service

Yesterday the Ninth Circuit addressed the question of whether an individual can be convicted of filing false tax returns pursuant to 26 U.S.C. 7206(1) where the tax returns in question were tendered to an IRS agent during an...more

IRS Updates Guide to Auditing Nonqualified Deferred Compensation Plans

The Internal Revenue Service (IRS) recently updated its “Nonqualified Deferred Compensation Audit Techniques Guide.” The Guide provides a framework for the IRS to audit nonqualified deferred compensation (NQDC) plans. Since...more

Deferred Compensation - Updated IRS Audit Guide

The IRS recently updated the Audit Techniques Guide that is provided to its agents with respect to deferred compensation programs, including - as the Guide specifies - salary reduction arrangements, bonus deferral plans,...more

Tax Policy Update

NUMBER OF THE WEEK: 15. The number of member nations now under increased scrutiny from European Union regulators who are aggressively hunting for violations of the EU’s “state aid” rules. The possible violations arise from...more

DOL Report on Quality of Independent Plan Audits Shows that Plan Sponsors Must Continually Monitor Plan Compliance

The Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor (DOL) recently released “Assessing the Quality of Employee Benefit Plan Audits,” a comprehensive report reviewing the quality of audit work...more

Why, Again, Do You Think that Worker is an Independent Contractor ?

If you're reading this article, then you likely own or administer a medical practice of some sort. That practice may have workers of many stripes. Some of those workers may be treated as employees and some may be independent...more

When you get a call about your Plan, call an ERISA Attorney

It’s unfortunate, but the facts are that most people don’t respond to a complaint until there is a letter from an attorney. Service providers and companies hate correspondence from attorneys because that suggests litigation....more

IRS Scrutinizes Captive Insurance

Every year the IRS issues a list of tax scams pertinent to that filing season. This list is commonly referred to as the (“Dirty Dozen”). The Dirty Dozen warns taxpayers of illegal tax avoidance schemes that can lead to...more

Choosing the “Right” Income Tax Return Preparer

The IRS audits about one taxpayer in ten who reports more than $1 million in income. Many of these taxpayers are at the height of their careers and cannot endure even a whiff of scandal. They need peace of mind so they can...more

Getting to Appeals In an Estate or Gift Tax Audit with Pending Information Requests

Ain’t gonna happen! So says the IRS in guidance released by the IRS, at least in most circumstances. In a memo to IRS estate and gift tax examination employees, the IRS advises...more

Cash Based Business? Have Good Books and Records

What happens when a taxpayer operates a cash based business and lacks adequate books and records according to the IRS? The IRS can use any reasonable method to reconstruct the taxpayers income and expenses. (See, Estate of...more

IRS Error in Extending Statute of Limitations for Wrong Year is Disregarded

When a taxpayer files a federal tax return, the IRS generally has a 3 year statute of limitations period to assess additional tax beyond that reported on the return. If the tax year is audited, the auditor may ask the...more

How to get the IRS to pay your legal fees

What can you do when the IRS is misbehaving and it directly affects you? You will have to fight them, but the law allows you to recover your litigation costs if you win. As many know, the IRS has had a very...more

TEFRA, Sometimes Forgotten But Not Gone

The Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”), as codified in Internal Revenue Code. § 6221, et seq., (“IRC”) is sometimes lost in the maze of more recent tax enactments. But, occasionally, it does rear its...more

MoFo New York Tax Insights - Volume 5, Issue 11 - November 2014

In This Issue: - Court Orders Department of Finance to Release Corporate Tax Return Records to City Comptroller - ALJ Upholds State Tax Department Policy on Personal Liability of LLC Members for Sales...more

The IRS May Require Taxpayers to File Formal Refund Claims During an Audit

The Internal Revenue Service (IRS) has drafted new rules relating to the filing of informal refund claims during an examination. An informal refund claim is a request for a refund by the taxpayer either in a written form,...more

New IRS Appeals Procedures Complicate Tax Dispute Resolution

This article describes and evaluates the new IRS Appeals Office policy for handling IRS audit appeals. This new policy is known as the Appeals Judicial Approach and Culture (“AJAC”) Project. The stated goals of the AJAC...more

The SEC's MCDC Initiative: Where To Go From Here

Issuers, underwriters and advisors in the municipal bond marketplace are facing unprecedented challenges from federal regulators in connection with both the issuance of bonds and ongoing post-issuance compliance. These...more

IRS releases final LIHTC Audit Technique Guide

Yesterday the IRS released a long-anticipated update to its Audit Technique Guide for the low-income housing tax credit (“LIHTC”) program. The guide is intended to assist IRS examiners charged with auditing owners of LIHTC...more

Religious Institutions: August 2014

If the Internal Revenue Service (IRS) had a moratorium on enforcing §501(c)(3) electioneering restrictions against churches and religious organizations, the IRS states that it has been lifted incident to the settlement and...more

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