Prose by Tax Pros

  The IRS has implemented numerous voluntary disclosure programs over the past decade for taxpayers with international tax non-compliance. Opinions vary, of course, but many taxpayers and practitioners considered the penalties imposed under such programs fairly harsh. The IRS has softened its stance considerably with the introduction of its newest program in September 2019, called Relief Procedures for Certain Former Citizens (“RPCFC”). It is designed to benefit taxpayers who were formerly U.S. citizens, have already expatriated, had little to no U.S. income tax liability in the years preceding expatriation, were not filing U.S. tax or information returns with the IRS before expatriating, did not pay the “exit tax” under Code Sec. 877A, and would not have been subject to the exit tax were it not for their non-willful violations. This article explains the general tax and information-reporting duties for U.S. taxpayers with international connections, the application of the exit tax...

  Many people have grown weary of cases focused on penalties for failing to declare foreign accounts on FinCEN Form 114 (“FBAR”), which is understandable given all the attention heaped on this topic since 2008. However, the reality is that the Internal Revenue Service (“IRS”) continues to aggressively impose severe FBAR penalties, while the Department of Justice (“DOJ”) regularly files lawsuits in District Courts to collect them. These governmental actions, coupled with the colorful defenses raised by taxpayers, have created a significant amount of precedent in recent years. Court decisions are inconsistent, the IRS is capricious in following its own published guidance, and the key concept of “willfulness” is constantly evolving. Taxpayers who do not stay abreast of the evolution diminish their chances of success in fending off FBAR penalties. In an effort to keep taxpayers and their advisors updated, this article analyzes three recent FBAR cases, Flume, Boyd, and Cohen, which co...

In September 2020, the IRS instructed its personnel to gather and utilize, for multiple purposes and proceedings, all data possible about SCETs and SSTs. The IRS also indicated that such multi-tasking and data sharing, involving lots of unrelated parties and transactions, would not violate the general prohibition against disclosure of returns and return information found in Section 6103. The IRS, in essence, announced that it will attempt to present as much evidence as possible, relating to partnerships, promoters, appraisers, accommodating parties, and others, in overlapping tax audits, investigations, and litigation. This article: Summarizes conservation easement donations and related tax deductions Identifies the parties that the IRS is now pursuing Explains the non-disclosure rules and applicable exceptions Unpacks three IRS pronouncements attempting to justify potential violations of taxpayer protections and evidentiary rules Reminds partnerships and others affiliated with SCETs a...

The IRS has been attacking for several years what it has labeled syndicated conservation easement transactions (“SCETs”). Among the many weapons employed by the IRS are identifying SCETs as “listed transactions” in Notice 2017-10, 2017-4 IRB 544, launching a “compliance campaign” consisting of dozens of specialized Revenue Agents, featuring SCETs on the IRS’s “dirty dozen” list, and engaging in a widespread practice of claiming that tax deductions related to SCETs should be $0 and imposing severe penalties. Assaults on SCETs are now common knowledge, but what many fail to realize is that the IRS does not limit itself. Indeed, the IRS has also been challenging fee-simple donations of property to charities for years, applying many of the same techniques used more recently against SCETs.  This article examines a relatively obscure case from yesteryear, Terrene Investments, whose importance likely will increase as tax disputes involving SCETs and fee-simple property donations increase....