Prose by Tax Pros

Many taxpayers have strong support for positions they take on their returns, but their limited understanding of complicated tax procedures sinks them. Missing deadlines, using improper forms, sending materials to the wrong place, not getting all required signatures, and other errors can be deadly to taxpayers. The IRS is aware this reality and it often attempts to claim victory and dispense with cases at the early stages based solely on technical and procedural matters, without ever having to fight over the substance. This article explains the penalties and unique mitigation standards applicable to information returns, describes the key aspects of tax refund actions, and analyzes recent cases, including Special Touch Home Care Services, Inc. v. United States, in demonstrating how confusion over tax procedures can trigger lost refunds. 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 Sec...

Battles between taxpayers and IRS about whether certain workers should be treated as employees or independent contractors are constant. The procedures applicable to such disputes change frequently, though. For example, Congress and the IRS have modified the rules related to particular types of employment tax fights in Tax Court several times over the past two decades, with the most recent adjustment coming in 2022. This article explains the main categories of workers, strategies that taxpayers can use during IRS audits or administrative appeals, evolution of the rules under Section 7436 concerning litigation of employment tax issues before the Tax Court, and taxpayer-favorable issues absent from recent IRS guidance. 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.

The IRS has been attacking syndicated conservation easement transactions (“SCETs”) for more than half a decade. These disputes often involve prolonged audits, Appeals Office conferences, Tax Court trials, and appellate litigation. Such procedures can have a huge cost, not only to the partnerships, but also to the IRS and the entire judicial system. For instance, even after diverting lots of personnel to its Compliance Campaign aimed at SCETs, the IRS acknowledged in early 2022 that it was still severely understaffed and needed to spend yet more to hire, train and integrate 200 additional attorneys. At this juncture, reviewing proposed solutions, both by the IRS and state tax authorities, for resolving SCET cases is worthwhile. This article analyzes the conservation easement donation process, role of Qualified Amended Returns, prior Settlement Initiative offered by the IRS, and current approach for partners in California. Read the full article here. About Hale E. Sheppard HALE E. SHEPP...

  The article summarizes the rules affecting conservation easement donations, identifies the “technical” arguments on which the IRS has heavily relied, describes newer attacks by the IRS focused on appraisals, analyzes multiple sources supporting valuation of real property based on its highest and best use, and suggests that the IRS has failed to adequately explain why it, taxpayers, and/or the courts should ignore longstanding authorities. 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.

Business has evolved more quickly than tax law, and this has led the IRS to take conflicting positions about the meaning of “limited partner.” The IRS is characterizing this term broadly or narrowly in different contexts in furtherance of its goal of always maximizing tax revenue. When it comes to the passive activity loss rules in Section 469, the IRS argues that “limited partner” must be loosely defined. However, when a case involves whether certain amounts from partnerships should be subject to self-employment taxes, the IRS argues for a tight definition of “limited partner” under Section 1402. This article, which is the third in a series, compares and contrasts the positions taken by the IRS in two important areas. 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.

Voluntary compliance is a hallmark of the U.S. tax system; taxpayers are expected to proactively file all returns with the IRS and pay all amounts due. Many taxpayers fail to meet that commitment, of course. This is where whistleblowers come into play. If they can provide data to the IRS that leads to the collection of taxes, penalties, and interest from non-compliant taxpayers, they stand to receive a percentage of the take. This financial reality has incentivized whistleblowers to bring to the IRS’s attention taxpayers falling into various categories, including “accidental Americans.” This article explains obligations of U.S. persons with foreign activities, describes the exit tax, identifies a special relief program for former U.S. citizens, summarizes the whistleblower process, and examines a recent Tax Court case that brings these concepts together. 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 disputes with the IRS can last a very long time, even under normal circumstances. The duration of these battles increased because of the Coronavirus. These holdups cause taxpayers ongoing anxiety and uncertainty. They also hurt taxpayers financially, as interest charged by the IRS continues to accumulate while the fighting ensues. Taxpayers aware of this economic reality often seek potential solutions, among them making a “deposit” with the IRS to halt interest. The rules associated with doing so are complex, of course, and they prevent some taxpayers from achieving their goals. This article analyzes key issues related to making “deposits” with the IRS, using a recent Tax Court case, Ahmed v. Commissioner, as a point of reference. 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.