Archives: IRS Guidance

Subscribe to IRS Guidance RSS Feed

Sovereign Immunity Principles Bar Taxpayers from Challenging John Doe Summonses

We recently wrote here about “John Doe” summonses and a case where an anonymous “John Doe” was allowed to intervene in a summons enforcement action. To refresh, under Internal Revenue Code (IRC) Section 7602 the Internal Revenue Service (IRS) has broad authority to issue administrative summonses to taxpayers and third parties to gather information to … Continue Reading

Grecian Magnesite Mining v. Commissioner: Foreign Investor Not Subject to US Tax on Sale of Partnership Interest

In a long-awaited decision, the US Tax Court recently held that gain realized by a foreign taxpayer on the sale of a partnership engaged in a US trade or business was a sale of a capital asset not subject to US tax, declining to follow Revenue Ruling 91-32. The government has yet to comment regarding … Continue Reading

The IRS Is Struck Down Again in Privilege Dispute

Courts continue to strike down the Internal Revenue Service (IRS) as it continues to test the bounds of the attorney-client privilege and work product doctrine through the issuance of improper summonses. In the last several years, the IRS has filed numerous summons enforcement proceedings related to the production of documents generally protected by the attorney-client … Continue Reading

TIGTA Pounces on IRS Federal Records Retention Policies; Recommends Changes

The Treasury Inspector General for Tax Administration (TIGTA) recently summarized several critical deficiencies in how the IRS handles electronically stored federal records in a recent report, available here. The lapses identified by TIGTA may affect the availability of those electronic records for future Freedom of Information Act (FOIA) requests, litigation and Congressional review. The report … Continue Reading

A 360-Degree View: July and August 2017

Wrapping up July—and Looking Forward to August Tax Controversy Activities in August: August 7, 2017: Elizabeth Erickson and Kristen Hazel will be representing McDermott Will & Emery at the 2017 US Captive Awards in Burlington, Vermont. McDermott has been shortlisted in the Law Firm category. August 8, 2017: Tom Jones is presenting an update on … Continue Reading

Tax Court Hands Eaton a Complete Victory on the Cancellation of its Advance Pricing Agreements

On July 26, 2017, the United States Tax Court (Tax Court) handed a complete victory to Eaton Corporation (Eaton) relating to the Internal Revenue Service’s (IRS) cancellation of two Advance Pricing Agreements (APA). Eaton Corporation v. Commissioner, TC Memo 2017-147. The Tax Court held that the IRS had abused its discretion in cancelling the two successive … Continue Reading

IRS Rules (Again) That Taxpayers Are Not Entitled to Claimed Refined Coal Credits

In a highly-anticipated Technical Advice Memorandum (TAM) dated March 23, 2017 and released on July 21, 2017, the Internal Revenue Service (IRS) ruled that two taxpayers who had invested in a Limited Liability Company that owned and operated a refined coal facility (the LLC) were not entitled to refined coal production credits they had claimed … Continue Reading

BEWARE: Whistleblowers Can “Out” You to the IRS!

Not only should companies worry about the Internal Revenue Service (IRS) auditing their returns, but they also have to be aware of a potential assault from within. Indeed, current and former employees have an incentive to air all of your tax issues with the hope of being rewarded for the information. Section 7623(b) was added … Continue Reading

John Doe Intervenes in Virtual Currency Summons Enforcement Case

The Internal Revenue Service (IRS) has broad authority under Internal Revenue Code (IRC) Section 7602 to issue administrative summonses to taxpayers and third parties to gather information to ascertain the correctness of any return. If the IRS does not know the identity of the parties whose records are covered by the summons, the IRS may … Continue Reading

Tax Court Rejects IRS Reliance on “Cursory” Analysis in Revenue Ruling

We have previously discussed, in March and October of 2016, the various levels of deference given to Internal Revenue Service (IRS) guidance, whether it is in published or private form. For revenue rulings, courts traditionally apply Skidmore deference, which essentially looks at the persuasiveness of the ruling. Under this standard, and the IRS’s position in … Continue Reading

Courts Rejects Challenge to OVDP Transition Rules

The Internal Revenue Service (IRS) currently offers non-compliant US taxpayers several different relief programs to report foreign assets and/or income to become compliant with US rules related to the disclosure of offshore income. See here for a link to the different options. The two main programs are the Offshore Voluntary Disclosure Program (OVDP) and the … Continue Reading

New IRS CbC Resource

We have reported several times about the new Country-by-Country (CBC) reporting regime. Taxpayers and the tax bar have been desperate for clarity about the requirements for CbC reporting.  In response, today the Internal Revenue Service (IRS) announced the launch of its CbC resource on its www.IRS.gov website. The new information is designed to provide background … Continue Reading

Tracking Tax Guidance and Court Cases

Oftentimes, taxpayers rely on various authorities in planning transactions and reporting them for tax purposes, as well as defending them during an Internal Revenue Service (IRS) audit, appeals or in litigation. These sources include authorities like the Internal Revenue Code, legislative history and other legislative materials, Treasury regulations and other IRS published guidance (e.g., revenue … Continue Reading

LB&I’s Final Campaigns Webinar: Section 48C Energy Credits and Completed Contract Method for Land Developers

On June 20, 2017, the Internal Revenue Service (IRS) Large Business and International Division (LB&I) hosted its final webinar regarding LB&I Campaigns. Our previous coverage of LB&I Campaigns can be found here. The webinar focused on two campaigns:  (1) Section 48C Energy Credits and (2) Land Developers – Completed Contract Method.… Continue Reading

Appeals Large Case Pilot Program Draws Criticism

In October 2016, the Internal Revenue Service (IRS) revised the Internal Revenue Manual (Manual) 8.6.1.4.4 to provide IRS Appeals Division (Appeals) with discretion to invite representatives from the IRS Examination Division (Exam) and IRS Office of Chief Counsel (Counsel) to the Appeals conference. Many tax practitioners opposed this change, believing that it undermines the independence … Continue Reading

The View from Here: LB&I’s Cross-Border Activities Campaigns Webinar

On Tuesday, May 23, 2017, the Internal Revenue Service (IRS) Large Business and International Division (LB&I) hosted its sixth in a series of eight webinars regarding LB&I Campaigns. Our previous coverage of LB&I Campaigns can be found here. The webinar focused on two cross-border activities campaigns: (1) the Repatriation Campaign and (2) the Form 1120-F … Continue Reading

Taxpayer Rights Around the World (Follow-Up)

We previously wrote two blog posts about the 2nd International Conference on Taxpayer Rights held in Vienna, Austria in March 2017 here and here. Videos of each panel discussion are now available for viewing here. Planning is currently underway for the 3rd International Conference on Taxpayer Rights, which will be held in The Netherlands on … Continue Reading

IRS Provides New Guidance on Ordinary Versus Capital Issue

A frequently disputed tax issue is the proper treatment of costs incurred by taxpayers and whether they are currently deductible or must be capitalized. Internal Revenue Code (Code) Section 162 generally provides a deduction for ordinary and necessary business expenses paid or incurred during the taxable year in carrying on any trade or business. However, … Continue Reading

The IRS’s Assault on Section 199 (Computer Software) Doesn’t Compute

Internal Revenue Code Section 199 permits taxpayers to claim a 9 percent deduction related to the costs to develop software within the U.S. The relevant regulations and their interpretation, however, place substantial restrictions on claiming the benefit. Moreover, the regulations and the government’s position haven’t kept up with the technological advances in computer software. Before claiming … Continue Reading

Overview of Tax Litigation Forums

Taxpayers can choose whether to litigate tax disputes with the Internal Revenue Service (IRS) in the US Tax Court (Tax Court), federal district court or the Court of Federal Claims. Claims brought in federal district court and the Court of Federal Claims are tax refund litigation: the taxpayer must first pay the tax, file a … Continue Reading

APA Challenge to Notice of Deficiency: QinetiQ Requests Supreme Court Review

On April 4, 2017, QinetiQ U.S. Holdings, Inc. petitioned the US Supreme Court to review the US Court of Appeals for the Fourth Circuit’s decision that the Administrative Procedure Act of 1946 (APA) does not apply to the Internal Revenue Service (IRS) Notices of Deficiency. We previously wrote about the case (QinetiQ U.S. Holdings, Inc. … Continue Reading

Understanding LB&I “Campaigns” – The Second Webinar

On March 28, 2017, EY and the Internal Revenue Service (IRS) held a joint webcast presenting the Large Business & International’s (LB&I) new “Campaign” examination process. This was the IRS’s second in a planned eight-part series about Campaigns. The IRS speakers for the presentation were Tina Meaux (Assistant Deputy Commissioner Compliance Integration) and Kathy Robbins … Continue Reading

IRS is Required to Search Tax Return Information Records to Help Determine Worker Classification

On April 5, 2017, in an unanimous court reviewed opinion, the United States Tax Court determined that disclosure of a worker’s tax return information to absolve the employer from liabilities arising out of the employer’s withholding requirement is not subject to the general prohibition against disclosing taxpayer return information pursuant to Internal Revenue Code (IRC) … Continue Reading
LexBlog