Photo of Kevin Spencer

Kevin Spencer

Subscribe to Kevin Spencer's Posts

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.

On May 20, 2020, the Internal Revenue Service (IRS) announced that Andy Keyso has been named Chief of the IRS Independent Office of Appeals. He replaces Donna Hansberry, who retired in December 2019.

Mr. Keyso is a long time veteran of the IRS, with more than 25 years of service. During his career, he has held numerous positions within the IRS, including serving as the IRS Chief of Staff, 18 years in various positions in the IRS Office of Chief Counsel, including as Associate Chief Counsel of the Income Tax and Accounting Division. Mr. Keyso also served as Special Counsel to the Chief Counsel and as an attorney in the Procedure and Administration Division. Before coming to Washington, DC, Mr. Keyso worked in the field as a revenue agent in the former Newark, New Jersey District, where he later served as a technical advisor to the Chief, Examination Division. Since July 2017, Mr. Keyso has been the Deputy Chief of Appeals and acting Appeals Chief.

…
Continue Reading Andy Keyso To Head IRS Appeals

In response to a series of questions posed in a November 2019 letter from Senator Menendez (D-NJ), the Treasury Inspector General for Tax Administration (TIGTA) issued a letter on April 15, 2020, analyzing carbon oxide credits under Internal Revenue Code (IRC) section 45Q. For tax years between 2010 and 2019, TIGTA found that up to…

More than three years ago, the Internal Revenue Service (IRS) revised the Internal Revenue Manual 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. The IRS also started a three-year initiative for taxpayers under the Large Business & International (LB&I) Division with cases assigned to Appeals Team Case Leaders (ATCLs). Under the initiative, LB&I personnel from Exam and Counsel were invited to the non-settlement portion of the taxpayer’s Appeals conference to test whether the participation of both parties would assist Appeals in narrowing and resolving complex factual and legal differences.

The IRS announced that the initiative ended on May 1, 2020. The IRS has invited comments from the public about the initiative and its effectiveness. Such comments should be submitted by August 31, 2020.

…
Continue Reading IRS Appeals Large Case Pilot Program Ends

On April 24, 2020, the US Court of Appeals for the Eighth Circuit published its opinion in Wells Fargo & Co. v. United States, No. 17-3578, affirming a district court’s holdings that the taxpayer was not entitled to certain foreign tax credits and was liable for the negligence penalty for claiming the credits. Much has been written about the substantive issue, which we will not discuss here. Instead, we focus on the Eighth Circuit’s divided analysis relating to the reasonable basis defense to the negligence penalty.

In Wells Fargo, the taxpayer relied solely on the reasonable basis defense to the government’s assertion of penalties. Under Internal Revenue Code (IRC) section 6662(b)(1), a taxpayer is liable for penalty of 20% of an underpayment of its taxes attributable to its “negligence.” Various defenses are potentially applicable to the negligence penalty, which we recently discussed in detail here. One such defense is if the taxpayer can show it had a “reasonable basis” for its position. Under Treas. Reg. § 1.6662-3(b), this defense applies if the taxpayer’s return position was “reasonably based on” certain authorities specified in the regulations.

…
Continue Reading Eighth Circuit Applies Subjective Standard to Reasonable Basis Penalty Defense

Rev. Proc. 2020-29 temporarily allows taxpayers to submit certain requests for letter rulings and determinations to the Internal Revenue Service (IRS) electronically. Electronic submissions will be permitted until the revenue procedure is superseded or modified, but taxpayers may still make paper submissions.

Electronic submissions are permitted for requests for letter rulings, closing agreements, determination letters, and information letters from the Associate Chief Counsel Offices and for determination letters from the Large Business and International (LB&I) Division. However, procedures for submissions to the IRS Small Business/Self Employed Division, Wage and Investment Division, or Tax Exempt and Government Entities Division are unchanged.

…
Continue Reading You Can Now Submit Your Letter Rulings and Determinations to the IRS Electronically

In Taylor Lohmeyer Law Firm P.L.L.C. v. United States, No. 19-50506, the United States Court of Appeals for the Fifth Circuit held that a Texas-based estate and tax-planning law firm (Firm) could not invoke the attorney-client privilege against an Internal Revenue Service (IRS) summons seeking the identity of its clients.

According to an IRS revenue agent’s declaration submitted in support of the summons, the Firm became a target for IRS investigation following an audit of one of its clients, an individual who had used the Firm’s services to establish and operate various foreign accounts and entities, through which the individual had funneled millions of dollars of unreported income. The IRS issued a John Doe summons to the Firm seeking, amongst other things, the identities of other clients for whom it had established foreign accounts or entities.

…
Continue Reading Fifth Circuit Rules that Law Firm Clients’ Identities Are Not Privileged

Recently, in Revenue Ruling 2020-8, the Internal Revenue Service (IRS) announced that it was suspending Revenue Ruling 71-533, which had addressed the interaction of two Internal Revenue Code (IRC) provisions regarding limitations periods on refund claims, pending reconsideration of the holding of the earlier Revenue Ruling.

Under IRC section 6511(d)(2)(A), a taxpayer generally must make a refund claim relating to an overpayment attributable to a net operating loss (NOL) carryback no later than three years after the taxable year in which the NOL was generated. Under IRC section 6511(d)(3)(A), a taxpayer generally must make a refund claim relating to an overpayment attributable to a foreign tax credit carryback no later than ten years after the taxable year in which the foreign taxes were paid.

…
Continue Reading New Revenue Ruling 2020-8 Helps Taxpayers Seek COVID-19 Tax Refund Claims

The United States Court of Appeals for the Tenth Circuit’s recent opinion in Standing Akimbo, LLC v. United States, No. 19-1049 (10th Cir. April 7, 2020), reminds us of the Internal Revenue Service’s (IRS) ability to obtain the information it needs to examine taxpayers’ returns using its powerful summons tool.

In May 2017, the IRS began auditing Standing Akimbo, LLC (Standing Akimbo), a Colorado limited liability company operating as a medical-marijuana dispensary. The audit focused on whether Standing Akimbo improperly claimed business deductions that were prohibited under Internal Revenue Code (IRC) section 280E. Generally, IRC section 280E provides that no deduction or credit is allowed for any amount paid or incurred in the carrying of a business if such business trafficks in controlled substances that are prohibited by Federal law. While legal under Colorado law, marijuana is still classified as a controlled substance under Federal law, and specifically the Controlled Substances Act. As a pass-through entity, any adjustments to Standing Akimbo’s returns would affect its owners’ (Taxpayers) individual tax returns.

…
Continue Reading IRS Flexes Its Administrative Summons Power in Recent Tax Case

On April 14, 2020, the Internal Revenue Service (IRS) issued informal guidance in the form of frequently asked questions (the “FAQs”), urging taxpayers to strengthen their transfer pricing documentation required under Internal Revenue Code (IRC) section 6662(e) and Treasury Regulations § 1.6662-6. IRC section 6662 provides several types of accuracy-related penalties on underpayments…

On April 8, 2020, the Internal Revenue Service (IRS) released a statement telling taxpayers that guidance would be forthcoming on refund claims related to the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act. Consistent with that promise, on April 13, 2020, the IRS issued guidance describing temporary procedures permitting the submission via fax of Form 1139, Corporation Application for Tentative Refund, and Form 1045, Application for Tentative Refund. For our prior discussion of CARES Act refund guidance issued by the IRS, see here.
…
Continue Reading More Guidance on CARES Act Refund Claims