Smith v. Commissioner, a pending research credit case in the United States Tax Court, presents an issue of first impression: Is a partner’s self-employment income in a partnership allowable as a qualified research expense...more
The United States Tax Court skillfully dodged answering the headline question with a holding on standing. The court decided, however, that IRS appeals officers and IRS appeals team managers are not officers of the United...more
2/20/2025
/ Appointments Clause ,
Article II ,
Constitutional Challenges ,
Government Agencies ,
Internal Revenue Code (IRC) ,
IRS ,
Separation of Powers ,
Standing ,
Tax Appeals ,
Tax Court ,
Tax Liability
Taxpayers whose tax returns the IRS examines may experience long administrative delays in working with the IRS to resolve unagreed issues. About twenty years ago, the IRS developed a procedure – fast track settlement – to...more
Taxpayers had mixed success in two recent research credit cases in the United States Tax Court.
In Smith v. Commissioner, the taxpayer was an architectural firm....more
A potential refund opportunity under the Michigan corporate income tax may justify taking action before year end. The issue concerns the Michigan Department of Treasury’s position that the Internal Revenue Code (“IRC”) 163(j)...more
Altria Group, Inc. v. United States, a federal income tax case pending in federal district court in Virginia, shows the importance of laying groundwork for litigation long before a complaint is filed. At issue is a difficult...more
A tax case pending in the United States Supreme Court, Moore v. United States, may cause a cataclysmic change in the federal income tax. The 16th Amendment to the United States Constitution empowers Congress to impose “taxes...more
8/18/2023
/ Apportionment ,
Certiorari ,
Constitutional Challenges ,
Controlled Foreign Corporations ,
Federal Taxes ,
Income Taxes ,
Internal Revenue Code (IRC) ,
IRS ,
SCOTUS ,
Sixteenth Amendment ,
Tax Cuts and Jobs Act
A federal district court ruled in a high-profile case that the Justice Department may rely on common law rather than the statutory notice of tax deficiency procedure in the Internal Revenue Code to assert a federal income tax...more
Three courts - the Supreme Court, the Sixth Circuit, and the Tax Court - recently rejected administrative guidance in tax cases because the guidance was either wrong as applied, unnecessary, or inapplicable.
The...more
In two recent cases, the IRS has tried to defeat research credit refund claims on procedural grounds, rather than simply litigating whether the substantive nature of the asserted research meets the requirements of section 41...more
8/6/2021
/ Audits ,
Failure To State A Claim ,
Internal Revenue Code (IRC) ,
IRS ,
Pending Legislation ,
Research and Development ,
SBA ,
Scientific Research ,
Small Business ,
Tax Credits ,
Tax Deductions ,
Tax Refunds
For practitioners advancing research credit claims, a recent Tax Court case is of concern because it said more than was necessary to reject the taxpayer's claim. The Commissioner may seize upon dicta in the opinion to...more
A recent United States Tax Court decision raises a high bar for taxpayers claiming federal income tax credits for research expenses. The case turned on whether the taxpayer proved that "substantially all" of its research...more
The IRS Large Business and International Division ("LB&I") announced a campaign on February 27, 2020, to examine taxpayers' returns claiming income tax credits and deductions for research expenditures under IRC Sections 41...more