Most people are somewhat confused about Employee Retention Credit (“ERC”) issues. This is logical given the massive amount of information, much of it inaccurate, released by various sources over the past four years. Among the aspects that escape most people are the enforcement actions taken by the IRS. Understanding these is critical because taxpayers and other parties that might end up in the IRS’s crosshairs cannot effectively defend themselves if they do not know what their adversary is doing. This article, another in a long series, explores the major enforcement tactics used by the IRS thus far in challenging what it considers improper ERC claims.

Employers generally are required to withhold, deposit, and remit taxes on wages paid to their employees. They are obligated to file various returns with the IRS documenting their actions, too. Many employers hire a third-party payer (“TPP”) to handle these duties. Things often go smoothly, but issues can arise when situations get complicated. One example is when an employer files an Employee Retention Credit (“ERC”) claim through its TPP, the IRS allows it, and then it starts looking for persons to audit. This article, the latest in a long series, explains the various ERC laws and analyzes the four main sources of IRS guidance thus far about liability for tax underpayments and penalties resulting from improper ERC claims.

The IRS has focused on several different transactions in recent years, but its indignation now centers on certain positions taken by taxpayers in connection with Charitable Remainder Annuity Trusts (“CRATs”). This article describes a growing list of IRS efforts to stop what it deems abusive transactions involving CRATs.  These include a legal memo, an injunction lawsuit, two Tax Court battles, a Dirty Dozen listing, and, most recently, regulations proposing to categorize items as “listed transactions.”

In its effort to win conservation easement cases, the IRS has trotted out lots of different arguments over the years. Some were rejected by the Tax Court upon arrival, others gradually disappeared as taxpayers improved pre-donation documentation to avoid “technical” flaws, and a few still exist. One of the lingering challenges centers on the character of the property on which an easement is placed. This argument has been dubbed the “inventory issue,” and the IRS is now raising it frequently. These efforts have resulted in three recent Tax Court victories for the IRS. This article examines concepts in easement disputes, key participants, legal support for the “inventory issue,” and three pivotal cases thus far.

At some point during most audits, taxpayers will ponder whether, or to what extent, they should “cooperate” with the IRS. They also might ask what, exactly, cooperation means in a particular situation. These are critical questions to which many taxpayers lack clear answers, and this type of unawareness can lead to bad decisions. This article describes duties associated with foreign accounts, standards for reducing penalties, a new case in which taxpayers were stuck with higher sanctions because they failed to fully cooperate during a voluntary disclosure program, and other contexts in which cooperation has a significant effect on IRS disputes.

Fighting over when owners of limited partnerships must pay self-employment taxes has lasted nearly five decades. This struggle is attributable to several things, including the absence of applicable regulations, rapid evolution of business entities, and more. Uncertainty has caused taxpayers to claim disparate tax positions and triggered several big-dollar cases. This article, just one in a series, explores the relevant rules, a long list of arguments advanced by taxpayers and the IRS in two pending cases, and the recent Tax Court ruling that it must apply a “functional test” to determine whether a partner in a limited partnership meets the relevant exemption.

The IRS has a limited period to enforce the rules, and taxpayers hope to go unnoticed until that opportunity has passed. Timing issues do not disappear, though, simply because taxpayers get selected for audit or approach the IRS pro-actively. Indeed, they might become more important than ever, because many interactions with the IRS involve extensions of assessment-periods, some voluntary, others compulsory. This article analyzes the divergent and surprising rules applicable to taxes, on one hand, and FBAR penalties, on the other.

The IRS recently launched its second major effort to dispense with cases involving what it calls syndicated conservation easement transactions. In order for partnerships and their partners to make intelligent decisions, they first need to understand the context. This includes the types of challenges the IRS raises in easement disputes, the terms of the initial settlement introduced back in 2020, the terms of the current settlement launched in 2024, and the types of partnerships to which the current settlement might appeal. This article covers those topics and more.

International tax disputes often create important guidance, some obvious, some not. Aroeste v. United States is a great example. That case involves the mundane issue of FBAR penalties, but it presents exciting and novel issues, too. It makes noteworthy rulings about whether dual residents can seek FBAR protection from tax treaties, whether late filing of certain information returns prevents taxpayers from claiming beneficial tax positions, and whether taxpayers must follow rules issued by way of a Notice instead of a regulation. This article, the second in a series, explores these important issues and others generated by the case.

Everyone knows that IRS is struggling to timely process and audit Employee Retention Credit (“ERC”) claims. What many people do not realize, though, is that the Tax Court issued a decision in January 2024 that might affect timing issues. This article, another in a series, discusses ERC guidance, the three-year and five-year assessment periods under current law, key Tax Court cases addressing the impact of fraud by return preparers on assessment periods of taxpayers, the broad definition of preparers, and potential effects on well-intentioned taxpayers filing improper ERC claims