On April 17, 2018, the Taxpayer Advocate, Nina E. Olson, testified before a Congressional Oversight Committee regarding on-going challenges to the administration of an efficient and effective tax system. Ms. Olson runs the Taxpayer Advocate Service (TAS), an independent office within the Internal Revenue Service (IRS). The Taxpayer Advocate is appointed by and reports directly to the Commissioner of Internal Revenue. The office was created under the Taxpayer Bill of Rights, which became law on July 30, 1996. The office replaced the IRS Office of the Ombudsman. Continue Reading National Taxpayer Advocate Reminds Congress of IRS Deficiencies
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.
Our recent post on potential changes to the Tax Court’s procedure rules has been republished in the Corporate Tax Newsletter – USA by The International Law Office. See here for the article.
Tax controversy practitioners are undoubtedly aware of the gradual movement over the years to conform certain Tax Court procedure rules (Tax Court Rules) to those of the Federal Rules of Civil Procedure. In many ways, this makes sense to ensure uniformity of tax cases regardless of whether a taxpayer litigates his tax dispute in a refund forum in the US District Court or the US Court of Federal Claims, or prior to payment of tax in the Tax Court. Below we note a few important areas of divergence between the different rules, and point out situations where the Tax Court Rules do not address a particular matter. These matters were discussed at the recent Tax Court Judicial Conference held in Chicago last week.
As we have discussed before, amicus briefs are not uncommon in other courts. However, the Tax Court does not have specific rules on the topic and, instead, permits each judge to decide a case-by-case basis whether to permit the filing of an amicus brief. Although the Tax Court has discussed standards for filing amicus briefs in unpublished orders, given the nationwide importance of many issues that arise in Tax Court litigation, it may be time for the court to issue specific rules addressing the issue. Continue Reading Are Changes Looming over the Tax Court’s Procedure Rules?
A shrinking Internal Revenue Budget (IRS) budget has meant that fewer agents are available to make sure that the tax laws are being enforced. We have reported previously about how Congress has decreased the IRS’s budget. In 2017, the audit rate fell to its lowest levels in 15 years because of a shrinking IRS budget and workforce. Indeed, your chance of being audited fell to 0.6% in 2017, the lowest rate since 2002. Similarly, tax collection levies fell 32% from the prior year, and the IRS filed 5% fewer liens year-over-year. Detailed information from the IRS can be found here.
Practice Point. The decreased funding of the IRS in the wake of bipartisan disagreements seems to have quelled in recent weeks. We have seen movement to get the IRS more funding in the wake of tax reform but it remains to be seen whether some of those funds will be used to increase the enforcement functions of the IRS. We anticipate, however, an increase in enforcement activity as a result of some of the positions taken by taxpayers in anticipation of tax reform and the myriad of interpretive questions that are expected to result from the new tax laws.
Robin Greenhouse and Kevin Spencer recently authored, “US District Court To French Tax Authorities: Pas De Probleme” for Law360. The article discusses a case involving IRS summons and taxpayers’ rights in context of the US-France Treaty.
Read the full coverage on Law360.
We have previously commented on changes at the Internal Revenue Service (IRS) Appeals Division, including: (1) the allowance of Appeals to invite representatives from the IRS Examination Division (Exam) and IRS Office of Chief Counsel to the Appeals conference, (2) the limitations on in-person conferences, and (3) the use of “virtual” conferences.
- IRS Extends Permanent Invitation to Exam to Attend Appeals Conferences
- Appeals Large Case Pilot Program Draws Criticism
- Virtual IRS Appeals – A New Frontier?
- More Changes to IRS Appeals, in Response to Taxpayer and Practitioner Concerns
IRS Appeals Chief Donna Hansberry discussed these changes at a recent tax law conference held by the Federal Bar Association. According to reports, Ms. Hansberry wants feedback from practitioners on the compliance attendance and virtual conferences. Continue Reading More Changes to IRS Appeals’ Practices?
The White House announced on March 2 that the president intends to nominate Michael J. Desmond, a prominent tax lawyer, to be the Chief Counsel for the Internal Revenue Service (IRS) and Assistant General Counsel in the Department of Treasury. Subject to approval by the Senate, Mr. Desmond’s new roles will entail providing legal guidance and interpretive advice to taxpayers, the IRS, and the Department of Treasury.
Mr. Desmond clerked for Judge Ronald S.W. Lew of the United States District Court from 1994 until 1995. Mr. Desmond went on to serve as a trial attorney for the Department of Justice Tax Division and as tax legislative counsel for the Department of Treasury’s Office of Tax Policy. After leaving the public sector, Mr. Desmond became a partner with Bingham McCutchen LLP in the Washington, DC office until he opened the Law Offices of Michael J. Desmond in 2012. While operating his own practice, Mr. Desmond has represented clients at every stage of the tax controversy process. He has been a frequent author and speaker on tax topics. More information about Mr. Desmond can be found at his firm’s website.
Mr. Desmond is a very well-known and respected tax practitioner. He is a fixture in the tax community. We congratulate him on his nomination.
If you have traded Bitcoin or other crypto-currencies, you probably know that their taxation may be as uncertain as your potential for reward or loss. Since 2014, the Internal Revenue Service (IRS) has publicized how it believes these investments should be treated for US federal income tax purposes. If you have failed to report your virtual currency transaction, the result in Coinbase, a recent IRS “John Doe” summons enforcement case, should convince you that it is time to ensure you are compliant with tax laws. The IRS may be coming for your Bitcoins!
IRS Guidance – Bitcoins Are Property
In IRS Notice 2014-21, 2014-16 IRB 938, the IRS explained that so-called “virtual currencies” that can be exchanged for traditional currency are “property” for federal income tax purposes. As such, a taxpayer must report gain or loss on its sale or exchange, measured against the taxpayer’s cost to purchase the virtual currency. In the notice, the IRS also made clear that “virtual currencies” are not currency for Internal Revenue Code (IRC) section 988 purposes. Continue Reading The IRS May Be Coming for Your Bitcoins
On February 26, 2018, the US Tax Court announced that Judge Maurice B. Foley has been elected Chief Judge to serve a two-year term beginning June 1, 2018. Judge Foley will replace Chief Judge Paige Marvel.
Judge Foley was appointed to the US Tax Court by President Clinton on April 9, 1995. He was reappointed by President Obama on November 25, 2011, for a second term ending November 24, 2026. He received a bachelor of arts degree from Swarthmore College, a JD from Boalt Hall School of Law at the University of California, Berkeley, and a master of laws in taxation from Georgetown University Law Center. Continue Reading New Chief Judge of US Tax Court
On February 7, 2018, the Department of the Treasury (Treasury) released its second quarter update to the 2017-2018 Priority Guidance Plan to identify tax issues it believes should be addressed through regulations, revenue rulings, revenue procedures, notices and other published administrative guidance. The Priority Guidance Plan contains projects the Treasury hopes to complete during the 12-month period from July 2, 2017 through June 30, 2018. We previously posted on the first quarter 2017-2018 Priority Guidance plan here.
Most of the projects do not involve the issuance of new regulations, instead focus on guidance to taxpayers on a variety of tax issues important to individuals and businesses in the form of: (1) revocations of final, temporary, or proposed regulations (for our prior coverage, see here); (2) notices, revenue rulings and revenue procedures; (3) simplifying and burden reducing amendments to existing regulations; (4) proposed regulations; or (5) final regulations adopting proposed regulations. The initial 2017-2108 Priority Guidance Plan consisted of 198 guidance projects, 30 of which have already been completed. The second quarter update reflects 29 additional projects, including priority items as a result of the Tax Cuts and Jobs Act (TCJA) legislation enacted on December 22, 2017, and guidance published or released from October 13, 2017 through December 31, 2017.