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Penalties

Tax Court – no clear link from financial problems to not paying tax, so penalties, liens, levies applied

Tax Court – no clear link from financial problems to not paying tax, so penalties, liens, levies applied

Nutrition Formulators Inc., TC Memo 2016-60 The Tax Court has held that an employer did not have reasonable cause that would excuse penalties for failure to deposit employment taxes, failure to pay employment taxes shown on its return and failure to timely file a return, and that IRS settlement officers acted properly in sustaining lien […]

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Withholding agent not penalized for using invalid TIN provided by foreign payee

Withholding agent not penalized for using invalid TIN provided by foreign payee

Chief Counsel Advice 201615012 In Chief Counsel Advice, IRS has concluded that it should not impose penalties on withholding agents in every instance where an IRS audit determines that there were any invalid taxpayer identification numbers (TINs) reported on Forms 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. Rather, IRS said, such penalties should […]

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Tax Court – fraud penalties upheld against auto dealer who failed to report misappropriated funds

Tax Court – fraud penalties upheld against auto dealer who failed to report misappropriated funds

O’Neal, TC Memo 2016-49 The Tax Court has determined that a former auto dealer and his wife failed to report funds that were misappropriated from various businesses that he was involved with, weren’t entitled to claim pass-through losses in respect to entities in which he had no basis, and were liable for fraud penalties for […]

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IRS: Cash reimbursements to reflect retroactive transit benefit increase may be taxable

IRS: Cash reimbursements to reflect retroactive transit benefit increase may be taxable

Program Manager Technical Advice 2016-001 In Program Manager Technical Advice (PMTA), IRS has concluded that: a) where transit passes are readily available, cash payments from employers to employees, to reflect retroactive legislation that increased the amount of the exemption for qualified transportation fringe benefits, are taxable compensation; and b) an employee’s maximum excludible qualified transportation […]

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Temporary and proposed reliance regs on inherited property consistent basis rules

Temporary and proposed reliance regs on inherited property consistent basis rules

T.D. 9757, 03/02/2016; Reg. § 1.6035-2T; Preamble to Prop Reg 03/02/2016; Prop Reg § 1.1014-10 , Prop Reg § 1.6035-1, Prop Reg § 1.6035-2, Prop Reg § 1.6662-8 , Prop Reg § 301.6721-1, Prop Reg § 301.6721-2 IRS has issued temporary regs that confirm the recently-delayed due date for providing statements to IRS and to […]

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Tax Court – failure to report court-ordered IRA liquidation results in accuracy-related penalty

Tax Court – failure to report court-ordered IRA liquidation results in accuracy-related penalty

Navaid, TC Memo 2016-37 The Tax Court has ruled that a taxpayer who failed to report the court-ordered liquidation of his bank-held IRA for restitution payments was liable for the accuracy-related penalty for substantial understatements of income tax. Although the taxpayer was never notified of the court’s action and never received a Form 1099-R, the […]

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IRS clarifies relief available to recipients of late or incorrect 2014 ACA Marketplace statement

IRS clarifies relief available to recipients of late or incorrect 2014 ACA Marketplace statement

IRS Small Business and Self Employed (SB/SE) Division SBSE-20-0216-0385: Notice 2015-30 Penalty Relief (Feb. 24, 2016). In an internal memo, IRS has clarified the application of Notice 2015-30, which provided penalty relief to taxpayers who received a 2014 Form 1095-A, Health Insurance Marketplace Statement, that was either delayed or that the taxpayer believed to be […]

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President signs into law trade enforcement bill with increased penalty for failure to file return

President signs into law trade enforcement bill with increased penalty for failure to file return

On February 24, President Obama signed into law H.R. 644, the “Trade Facilitation and Trade Enforcement Act of 2015.” In addition to authorizing U.S. Customs and Border Protection (i.e., the agency within the Department of Homeland Security charged with border protection and managing imports) and making permanent the Internet Tax Freedom Act banning taxes on […]

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Tax Court – previous IRS auditor saying taxpayer wasn’t employee didn’t affect tax but eliminated penalty

Tax Court – previous IRS auditor saying taxpayer wasn’t employee didn’t affect tax but eliminated penalty

Alfred S. Co, TC Memo 2016-19 The Tax Court has held that a taxpayer who worked under a series of personal service contracts for the U.S. Department of State was an employee of the U.S. government and thus the income he earned in the position was not foreign earned income under Code Sec. 911(a). The […]

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Partnership fails in attempt to get Tax Court to halt IRS proceeding against partner

Partnership fails in attempt to get Tax Court to halt IRS proceeding against partner

Endeavor Partners Fund, LLC, TC Memo 2016-12 The Tax Court has rejected a partnership’s motion to enjoin IRS from taking any further action in its separate administrative proceeding against an indirect partner of the partnership until the Court ruled on the partnership’s Tax Court petition. It also rejected the partnership’s motion that the Court certify […]

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IRS narrows requirement to file schedule m-3 to avoid penalties

IRS narrows requirement to file schedule m-3 to avoid penalties

Rev Proc 2016-13, 2016-4 IRB 290 IRS has issued a Revenue Procedure that contains IRS’s annual update of procedures that taxpayers must follow in order to meet the requirements for adequate disclosure that reduce the substantial understatement accuracy-related penalty and eliminate the preparer understatement penalty for unreasonable positions. The new Revenue Procedure eliminates the need […]

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IRS admits rules are needed on penalty for intentional failure to file electronically

IRS admits rules are needed on penalty for intentional failure to file electronically

Chief Counsel Advice 201603031 IRS has issued a Chief Counsel Advice (CCA) which notes that it hasn’t issued rules for calculating the penalty for intentionally failing to file information returns electronically. The CCA suggests internal IRS procedures for arriving at future IRS policy in this matter and sets out suggestions of how that calculation might […]

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IRS tells its attorneys to pursue penalties for erroneous refundable credits

IRS tells its attorneys to pursue penalties for erroneous refundable credits

Chief Counsel Notice 2016-002 In a Chief Counsel Notice, IRS’s Chief Counsel’s office has instructed its attorneys that, as a result of a provision in the recently enacted Protecting Americans from Tax Hikes Act (PATH Act), they should not concede accuracy-related or fraud penalties based on disallowed refund claims for erroneous refundable credits when a […]

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IRS provides 2015 inflation adjustments for civil penalties & corrects earlier issued 2016 figure

IRS provides 2015 inflation adjustments for civil penalties & corrects earlier issued 2016 figure

Rev Proc 2016-11, 2016-2 IRB In a Revenue Procedure, IRS has provided inflation-adjusted items for civil penalties under Code Sec. 6651, Code Sec. 6652(c), Code Sec. 6695, Code Sec. 6698, Code Sec. 6699, Code Sec. 6721, and Code Sec. 6722 for returns and statements required to be filed after Dec. 31, 2015. IRS also has […]

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IRS TAM describes what is reasonable cause for purposes of abatement of the tax on private foundations

IRS TAM describes what is reasonable cause for purposes of abatement of the tax on private foundations

PLR 201547007 In a Technical Advice Memorandum, IRS has concluded that cases that provide that a taxpayer had reasonable cause for purposes of avoiding the imposition of various penalties are not reliable precedent for determining what is reasonable cause for purposes of abating the taxable expenditure tax on private foundations. Background—tax on private foundations. Excise taxes […]

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Tax Court – Examiner’s alternative position is “initial determination” for penalty assessment purposes

Tax Court – Examiner’s alternative position is “initial determination” for penalty assessment purposes

Legg, (2015) 145 TC No. 13 The Tax Court, siding with IRS, has upheld IRS’s imposition of 40% gross valuation misstatement penalties under Code Sec. 6662(h). The Court rejected the taxpayers’ argument that IRS didn’t make an “initial determination” regarding the penalties within the meaning of Code Sec. 6751(b), finding that the examination report issued […]

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Tax Court – Joint return not signed by wife was not a valid return despite intent to file jointly

Tax Court – Joint return not signed by wife was not a valid return despite intent to file jointly

Reifler, TC Memo 2015-199 The Tax Court has held that a joint return that was not signed by the wife was not a valid return and, as a result, imposed the failure-to-file penalty. In so doing, it rejected the taxpayer’s arguments that the return was valid either because it substantially complied with the valid return […]

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No intentional disregard where taxpayer sent W-2s to employees but not to SSA

No intentional disregard where taxpayer sent W-2s to employees but not to SSA

John C. Hom & Associates, Inc., TC Summary Opinion 2015-49 In a summary opinion, the Tax Court has held that where an owner-president of a small corporation failed to file the corporation’s Forms W-2 with the Social Security Administration (SSA), but sent Forms W-2 to his employees and believed he sent them to SSA, the […]

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Educational institutions get penalty waiver for missing or incorrect TINs

Educational institutions get penalty waiver for missing or incorrect TINs

IRS has announced that for 2012 through 2014, educational institutions won’t face information return penalties for filing Form 1098-T (Tuition Statement) with missing or incorrect taxpayer information numbers (TINs). Legislation enacted earlier this year had provided prospective penalty relief only. Click here for IRS’s release titled “For Colleges and Universities: IRS Waives Penalties for Missing […]

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Proposed regs explain amount of penalty for failure to report reportable transactions

Proposed regs explain amount of penalty for failure to report reportable transactions

Preamble to Prop Reg 08/27/2015, Prop Reg § 301.6707A-1 IRS has issued proposed regs that would provide guidance on the amount of the penalty under Code Sec. 6707A for failure to include on any return or statement any information required to be disclosed under Code Sec. 6011 with respect to a reportable transaction. The proposed […]

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Meet Paul Raymond

Meet Paul Raymond

Mr. Raymond is a sought after speaker in tax controversy law by many attorney, accountant, and business groups and at the request of the Internal Revenue Service, has presented programs at the IRS Nationwide Tax Forum, attended by tax professionals throughout the United States.

Additionally, he continues to be an active member in the Section of Taxation, American Bar Association, where he was the Past Chair of the Employment Taxes Committee.

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Member CA Bar Member Orange County Bar US Tax Court Attorney