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Kevin Spencer focuses his practice on tax controversy issues. Kevin represents clients in complicated tax disputes in court and before the Internal Revenue Service (IRS) at the IRS Appeals and Examination divisions. In addition to his tax controversy practice, Kevin has broad experience advising clients on various tax issues, including tax accounting, employment and reasonable compensation, civil and criminal tax penalties, IRS procedures, reportable transactions and tax shelters, renewable energy, state and local tax, and private client matters. After earning his Master of Tax degree, Kevin had the privilege to clerk for the Honorable Robert P. Ruwe on the US Tax Court. Read Kevin Spencer's full bio.

A recent case decided by the US Tax Court reminds us that when you litigate a case in Tax Court, what happened during the Internal Revenue Service (IRS) examination and Appeals bears very little relevance (if any) once you get to court. Generally, Tax Court’s proceedings are de novo, and the court looks solely to the IRS’s position in the Notice of Deficiency (Notice). The Revenue Agent’s Report and other statements made by the IRS before the issuance of the Notice are typically ignored.

In Moya v. Commissioner, 152 TC No. 11 (Apr. 17, 2019), the IRS determined deficiencies related to the disallowance of certain business expense deductions. The taxpayer did not assign error to the disallowance, but instead argued that the Notice was invalid because the IRS had violated her right to be informed and her right to be heard under an IRS news release and an IRS publication outlining various rights of taxpayers. Specifically, the taxpayer asserted that she had requested that her examination proceedings be transferred to California after she had moved from Las Vegas to Santa Cruz, and that the IRS had violated the her rights by providing vague and inconsistent responses to, and by ultimately denying, her request.
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When you do not pay your taxes, the Internal Revenue Service (IRS) has the power to file a “lien” on your property under Internal Revenue Code section 6321. The lien attaches “upon all property and rights to property, whether real or personal, belonging to such person.” Practically, this means that the IRS is giving notice that you owe it money and its debt gets priority to most debts that occur after the lien notice is filed. Historically, the lien law has been interpreted strictly and “foot faults” can invalidate the lien. A recent case, however, provides that if the federal tax lien uses the incorrect name, the lien may still be established and enforceable.

The taxpayer and his wife purchased their home as joint tenants in 1975. The taxpayer became the sole owner of the property after his wife passed away. In July 2007, the taxpayer filed federal income tax returns for tax years 2000 to 2004. Based on those returns, the IRS assessed taxes, penalties and interest, which remained outstanding at the time of his death in July 2009. On August 9, 2010, the government recorded a notice of federal tax lien (the Tax Lien Notice) against the taxpayer with the appropriate recorder of deeds in an amount equal to the previously assessed amounts. The Tax Lien Notice omitted the second “l” in the taxpayer’s first name, and failed to include a legal description or permanent index number for the property. The Tax Lien Notice did identify the correct address.
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Most tax professionals are aware of the common-law “mailbox rule,” which provides that proof of proper mailing creates a rebuttable presumption that the document was physically delivered to the addressee. Internal Revenue Code (Code) section 7502 was enacted to codify the mailbox rule for tax purposes. Thus, for documents received after the applicable deadline, the document will be deemed to have been delivered on the date the document is postmarked. To protect taxpayers against a failure of delivery, Code section 7502 also provides that when a document is sent by registered mail, the registration serves as prima facie evidence that the document was delivered, and the date of registration is treated as the postmark date. In other words, if the Internal Revenue Service (IRS) claims not to have received a document, the presumption arises that such document was delivered so long as the taxpayer produces the registration.

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The Internal Revenue Service (IRS) Large Business and International (LB&I) Division continues to churn out new audit “campaigns.” For our prior coverage, please click here. The most recent set of campaigns were announced on April 16, 2019, bringing the grand total to 53 campaigns since the program’s initial release on January 13, 2017. The IRS explains that the goal of the campaigns is to “improve return selection, identify issues representing a risk of non-compliance, and make the greatest use of limited resources.”

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Borenstein v. Commissioner is an interesting opinion involving the intersection of canons of statutory construction and jurisdiction. Recently, the US Court of Appeals for the Second Circuit reversed the US Tax Court’s holding in Borenstein that the court lacked jurisdiction to order a refund of an undisputed overpayment made by the taxpayer. The case, which we discussed in a prior post, involved interpreting statutory provisions dealing with claims for a refund after a notice of deficiency was issued. The Tax Court’s holding was based on the application of the plain meaning rule to Internal Revenue Code (Code) Section 6512(b)(3), which limit its jurisdiction to order refunds of overpayments.

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Many states and localities give incentives for business to move or transact in their locations. There has always been a question of whether these incentives are taxable income under federal income tax law. Internal Revenue Code (IRC) section 118, as amended by the Tax Cuts and Jobs Act, P.L. 115-97, provides that “[i]n the case of a corporation, gross income does not include any contribution to the capital of the taxpayer….(b) For purposes of subsection (a), the term “contribution to the capital of the taxpayer” does not include—…(2) any contribution by any governmental entity or civic group (other than a contribution made by a shareholder as such).”

In a recent case, the US Tax Court ruled that certain cash grants given by the State of New Jersey fit squarely within IRC section 118, and were not taxable to the corporate taxpayer. Brokertec Holdings, Inc. v. Commissioner, T.C. Memo. 2019-32.


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Each New Year, many of us look back on the previous year’s activities, and determine what we want to accomplish in the coming year – lose weight, start exercising, read more tax articles, etc. The Internal Revenue Service (IRS) Large Business & International (LB&I) Division memorialized its New Year’s resolutions for 2019 in Publication 5319. So, for taxpayers with more than $10 million in assets, you may want listen up and see what the IRS has in store for 2019!

LB&I’s goals come during a time of significant reduction in workforce and increase in responsibilities. LB&I experienced a significant reduction in workforce between October 2017 and October 2018, reducing its workforce by a net of 344 employees (down from 4,868 to 4,524) spread across several positions. This included 18 individuals in leadership, 218 revenue agents and 25 tax examiners. With the exception of tax law specialists, which remained at 24, every other position saw a reduction in personnel. This reduction in personnel comes at critical point for LB&I, as it undoubtedly spent much of its time and resources last year working on guidance necessary to implement the substantial changes made by the Tax Cuts and Jobs Act enacted in late 2017. It will continue to be responsible for training and compliance related to those changes.
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On March 2, 2018, President Trump nominated Michael Desmond to be the Chief Counsel of the Internal Revenue Service (IRS). Unfortunately, the Senate did not get around to confirming him. On January 16, 2019, President Trump renominated Mr. Desmond, and the US Senate Committee on Finance has scheduled a hearing for February 5th to consider

On January 29 and 30, 2019, the Internal Revenue Service’s Large Business and International (LB&I) division released new Practice Units on Permanent Establishments, which can be found here and here. Permanent Establishments create taxing nexus for foreign businesses doing business in the United States and for those who have “effectively connected income.” The Practice