Prose by Tax Pros

Taxpayers embroiled in a tax dispute often feel bullied by the IRS. This is particularly true with partnerships that donated conservation easements to charitable organizations, because the IRS has implemented a long list of aggressive enforcement tactics. The good news is that various mechanisms are available to taxpayers to turn the proverbial tide, one of which is submitting a “qualified offer” to the IRS. In simplified terms, if the IRS ignores or rejects a qualified offer, the case goes to trial, and the court rules that the taxpayer’s liability is less than the amount in the earlier qualified offer, then the IRS must reimburse the taxpayer’s reasonable administrative and/or litigation costs.  Only two cases have addressed whether partnerships subject to the special proceedings created by the Tax Equity and Fiscal Responsibility Act (“TEFRA”) are able to make a qualified offer. Just one of these cases yielded a decision with precedential value, and it explained that TEFRA part...

A long list of cases over the past decade have centered on the proper definition of “willfulness” in the context of penalties for an unfiled, incomplete, or inaccurate FinCEN Form 114 (Report of Foreign Bank and Financial Accounts) (“FBAR”). However, those cases did not address some key issues, including (i) whether the Internal Revenue Service, with help from the Department of Justice (“DOJ”),can assess and/or collect penalties after the taxpayer who committed the FBAR violation dies, and (ii) if so, against whom can the IRS and DOJ take action, the deceased individual, a surviving spouse, the executor of the estate, beneficiaries of the estate, transferees, others? This article analyzes a series of recent cases centered on post-death actions by the IRS and DOJ, giving special attention to the question of the survivability of FBAR penalties. Click here to read the full article. About Hale E. Sheppard HALE E. SHEPPARD, Esq. (B.S., M.A., J.D., LL.M., LL.M.T.) is a Shareholder in the T...

The IRS has been riding high recently because of several Tax Court victories on “technical” issues in conservation easement disputes. However, several signs exist that the tide might be turning. One of these is the recent decision by the Eleventh Circuit Court of Appeals in Pine Mountain Preserve, LLLP. This article explains the general rules related to conservation easement donations, critical facts from the case, analysis by the Tax Court, overlooked aspects of the initial decision, recent rulings by the Court of Appeals, issues that the Tax Court must now decide on remand, and the positive aspects of the case thus far for taxpayers making charitable donations. Click here to read the full article. About Hale E. Sheppard HALE E. SHEPPARD, Esq. (B.S., M.A., J.D., LL.M., LL.M.T.) is a Shareholder in the Tax Controversy Section of Chamberlain Hrdlicka and Chair of the International Tax Group.

  The IRS is sending mixed messages when it comes to potential resolution of disputes involving partnerships that engaged in a so-called syndicated conservation easement transaction (SCET). On one hand, the IRS has taken several enforcement actions recently, which make it procedurally  impossible for an individual partner to voluntarily resolve matters with the IRS and remain penalty-free by submitting a qualified amended return (QAR). On the other hand, the IRS commissioner issued two news releases in November and December, warning taxpayers of increased  enforcement activities and “encouraging” them to file QARs. This apparent inconsistency has many in the tax community confused and unable to properly advise partners, partnerships, and others. The good news is that the regulations seem to grant the commissioner authority to modify the QAR rules as necessary. This article reviews SCET issues; explains ongoing enforcement tools; summarizes recent IRS announcements urging ...

The IRS takes the stance that any error or omission in connection with Form 8283, regardless of how minor, merits a deduction of $0. The IRS has recently added new layers to this argument. It now contends that some partnerships are not properly accounting for “syndication expenses,” which  leads to unwarranted deductions and/or inaccurate basis information on Form 8283, which impairs the IRS’s ability to detect non-compliance, which justifies complete disallowance of charitable deductions. This article analyzes issues relevant to this expanded position by the IRS. 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 Shareholder in the Tax Controversy Section of Chamberlain Hrdlicka and Chair of the International Tax Group.

  Attention has been focused recently on conservation easement donations, micro-captive insurance, virtual currency, and other “hot” topics. Although not dominating the news cycle any longer, plenty of taxpayers continue hiding foreign assets, and the Internal Revenue Service (“IRS”), with help from the Department of Justice (“DOJ”), still aggressively pursues them. What is remarkable about these international actions is that they sometimes trigger three interrelated disputes, occurring in three different venues, and generating three potentially large liabilities. 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 Shareholder in the Tax Controversy Section of Chamberlain Hrdlicka and Chair of the International Tax Group.

Uplifted by some recent Tax Court victories on “technical” issues in conservation easement disputes, and cognizant of the enormous amount of additional cases headed its way in the coming years, the IRS announced a settlement initiative in June. The agency first described the terms of the settlement initiative through two means: a public release and private offer letters to eligible partnerships. Not surprisingly, that initial guidance had several holes. The IRS tried to plug them in October 2020 by publishing a chief counsel notice, along with a second release. This article analyzes all the information provided thus far about the settlement initiative, identifying key issues that remain unaddressed by the IRS, whether strategically or inadvertently. 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 Shareholder in the Tax Controversy Section of Chamberlain Hrdlicka and Chair of the International Tax Group.