Prose by Tax Pros

The IRS is fixated on challenging partnerships that donate conservation easements, claim the corresponding tax deductions, and pass them along to their partners. One of the many tools utilized by the IRS is conducting widespread audits and claiming that the partnerships are entitled to deductions of $0 because, among other things, their easements lack a “significant” conservation purpose. This position is interesting because it is based solely on the regulations, promulgated by the IRS, not by the related law, enacted by Congress. In other words, the IRS is essentially creating its own, expansive rules and then applying them.  This article examines the main issues in conservation easement disputes, the arguments typically raised by the IRS, various Tax Court cases focused on conservation purpose, and a new, non-easement case that might fortify taxpayer defenses. Read the full article here. About Hale E. Sheppard HALE E. SHEPPARD, Esq. (B.S., M.A., J.D., LL.M., LL.M.T.) is a Shareho...

The IRS has a relatively short time to complete an audit and its resources are  limited. Consequently, the IRS often must ask taxpayers to “voluntarily” extend  the assessment-period by granting a Form 872 (Consent to Extend the Time  to Assess Tax) or some variation thereof. Given the significant issues at stake,  the Internal Revenue Code and IRS procedures mandate that IRS personnel  notify taxpayers and their representatives of certain rights, including the right  to reject, limit, or otherwise tailor the Form 872. A recent report by a government  watchdog agency found that the IRS is not fully meeting its notification  duties. Even if it were, many taxpayers and their representatives would remain  completely unaware of key issues affecting the decision of whether or not to  grant the IRS a Form 872. This article explains: Assessment-periods IRS duties related to extension requests The findings of the recent governmental report....

In light of the IRS’s new “compliance campaign,” nonresident aliens and those involved with foreign owners of U.S. real property would be wise to contact experienced tax/legal professionals in order to explore the options for proactively rectifying any issues with the IRS on the most beneficial terms available. The good news is that large numbers of foreign investors are injecting money into the U.S. economy by buying real property. The bad news is that many are not paying the correct amount of U.S. income taxes when they rent or sell such property. The IRS is hyper-aware of this problem and several others, thanks to three reports issued by the Treasury Inspector General for Tax Administration (“TIGTA”) over the past decade. the IRS, following its normal playbook, announced a “compliance campaign” in March 2020 designed to correct the situation. This article begins by explaining the unique U.S. tax rules applicable to nonresident aliens (“NRAs”) renting U.S. real property, as well as t...