Tag Archives: Internal Revenue Service

Former Tax Court Judge Diane L. Kroupa Sentenced in Connection with Tax Evasion Matter

We have previously blogged on the criminal tax proceedings related to former US Tax Court Judge Kroupa (see here and here). In October 2016, Judge Kroupa pleaded guilty to multiple tax criminal charges related to her tax returns and interactions with the Internal Revenue Service. Based on sentencing guidelines, the recommended sentence was between 30‒37 months. Judge Kroupa … 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 “Issue of First Impression” Defense to Penalties

The Internal Revenue Code (Code) contains various provisions regarding the imposition of penalties and additions to tax. The accuracy-related penalty under section 6662(a), which imposes a penalty equal to 20 percent of the amount of any understatement of tax, is commonly asserted on the grounds that the taxpayer was negligent, disregarded rules or regulations, or … 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

Dealing with Allocations of Tax Liabilities in Non-IRS Agreements

Taxpayers often enter into tax sharing agreements to agree on how the parties may allocate current or future tax liabilities or potential refund. Sometimes these agreements are heavily negotiated (e.g., a corporation acquiring a subsidiary of an unrelated party); sometime they are not (e.g., marital settlement agreements among individuals with little assets). A recent US … Continue Reading

To Agree or Not to Agree, That Is the Question

The last few years have seen significant changes in audit procedures employed by the Internal Revenue Service (IRS). These changes range from the new Information Document Request (IDR) procedures to substantial changes at the IRS Appeals level. This post focuses on the IRS’s attempt to develop an agreed set of facts before a case is … 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

Santander Holdings USA Asks the Supreme Court to Address Economic Substance Doctrine

From 2003 to 2007, Sovereign Bancorp, Inc. (Sovereign) – now known as Santander Holdings USA, Inc. (Santander) – engaged in a so-called STARS transaction with Barclays Bank. According to Santander, “[b]y engaging in the STARS transaction, Sovereign transferred some of its income tax liability from the United States to the United Kingdom,” it “secured a … Continue Reading

Acting IRS Chief Counsel appoints new Deputy Chief Counsel (Operations)

The Acting Chief Counsel announced that effective April 1, 2017, Drita Tonuzi will serve as the Deputy Chief Counsel (Operations), in Washington DC.  In this position, Ms. Tonuzi will provide legal guidance and litigation support to the Internal Revenue Service (IRS) and the Departments of Treasury and Justice in all matters pertaining to the administration … Continue Reading

Taxpayer Rights Around the World (Part 2)

We previously posted on Day One of the 2nd International Conference on Taxpayer Rights in Vienna, Austria. Below, we summarize the panels and issues discussed on Day Two. Four panels were held on March 14: (1) Penalties and General Anti-Avoidance Rules; (2) The Role of Intergovernmental Actors in Furthering and Protecting Taxpayer Rights: A Conversation; … Continue Reading

Taxpayer Rights Around the World (Part 1)

On March 13 and 14, the 2nd International Conference on Taxpayer Rights was held in Vienna, Austria. More than 150 individuals from more than 40 countries attended the conference, which connects government official, scholars and practitioners from around the world to explore how taxpayer rights globally serve as the foundation for effective tax administration. This … Continue Reading

Fast Track Settlement Now For SB/SE Taxpayers

Today, the Internal Revenue Service (IRS) released Revenue Procedure 2017-25 extending the Fast Track Settlement (FTS) program to Small Business / Self Employed (SB/SE) taxpayers.  The IRS’s SB/SE group serves individuals filing Form 1040 (US Individual Income Tax Return), Schedules C, E, F or Form 2106 (Employee Business Expenses), and businesses with assets under $10 … Continue Reading

IRS Opposes Granting of Certiorari in Cases Addressing Definition of Return

Two petitions for certiorari pending before the Supreme Court of the United States ask the Court to resolve the question of whether a tax return filed after an assessment by the Internal Revenue Service (IRS) is a “return” for purposes of the Bankruptcy Code (BC). The answer to this question will determine whether a bankrupt … Continue Reading

IRS Campaign Focuses on Definition of “Qualified Film” Under Section 199

On January 31, the Internal Revenue Service (IRS) announced 13 Large Business & International (LB&I) “campaigns.”  One campaign targets deductions claimed by multi-channel video programming distributors (MVPDs) and TV broadcasters under section 199 of the Internal Revenue Code (IRC).  According to the IRS’s campaign announcement, these taxpayers make several erroneous claims, including that (1) groups … Continue Reading

Understanding LB&I “Campaigns”

On March 3, 2017, KPMG and the Internal Revenue Service (IRS) held a joint webcast presentation regarding the Large Business & International’s (LB&I) new “Campaign” examination process.  The IRS speakers for the presentation were Tina Meaux (Assistant Deputy Commissioner Compliance Integration) and Kathy Robbins, Director (Enterprise Activities Practice Area). On February 1, 2017, we blogged … Continue Reading

IRS Releases IPU Summarizing Foreign and Domestic Loss Impacts on FTCs

On March 1, 2017, the Internal Revenue Service (IRS) released a new International Practice Unit (IPU) summarizing foreign and domestic loss impacts on foreign tax credits (FTC).  The IPU provides a summary of the law regarding worldwide taxation and FTC limitations, followed by explanations and analysis for IRS agents examining FTC issues.  As we have … Continue Reading

IRS Criminal Investigation Division Continues to Face Core Mission Challenges Due to Budget Cuts

This week, the Internal Revenue Service (IRS) Criminal Investigation Division (CID) released its annual report for 2016, continuing a message sent for several years now: that IRS CID’s staffing declines are affecting its core mission tax work. Core mission tax work is distinguished from other types of IRS CID investigations—such as terrorism or health care … Continue Reading
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