Blog

TIGTA initiated an audit of the IRS because TIGTA is required to annually report on the IRS’s compliance with provisions of the law that restricts the IRS from directly contacting taxpayers who are represented.

What TIGTA Found 

The IRS has policies and procedures to help ensure that taxpayers are afforded the right to designate an authorized representative to act on their behalf in a variety of tax matters. In addition, the IRS has a process to handle the review and disposition of taxpayer allegations of direct contact violations. However, the IRS has not developed a system to identify IRS employee violations of the direct contact provisions. 

TIGTA found that revenue officers potentially violated taxpayers’ rights concerning directly contacting taxpayers who are represented before the IRS. TIGTA reviewed a stratified statistically valid sample of 132 taxpayers from a population of 1,613 taxpayers who had collection actions documented in case history narratives by revenue officers between October 1, 2021, and June 30, 2022. 

TIGTA Found Eight Taxpayers (8) (6%) For Whom
Revenue Officers Did Not Comply With The I.R.C. Sections Pertaining To Direct Contact Provisions And
The Right To Fair Collection Practices.

TIGTA also reviewed Fiscal Year 2022 Embedded Quality Review System (EQRS) data pertaining to Field Collection. There were 129 cases in which the quality element ‘right to representation not observed,’ was reported as a potential exception and the reviewer included a narrative explaining the specific nature of the violation. 

TIGTA found that for the 129 potential violations, there were 48 taxpayers for whom the IRS did not comply with the law regarding the right to representation. While IRS procedures require the reporting of potential Fair Tax Collection Practices violations to a Labor Relations Specialist for investigation, the 48 potential violations TIGTA identified were not reported. TIGTA concluded that the IRS has significant gaps in both its reporting of potential employee misconduct and in disciplining employees for potential taxpayer violations. TIGTA also determined that training for new revenue officers does not have case scenarios to show the variety of ways taxpayers may ask to consult with a representative. 

What TIGTA Recommended 

TIGTA recommended that the IRS: 

1. Ensure that group managers discuss the potential violations identified during the review of Integrated Collection System case narratives with responsible employees and report potential violations to Labor Relations; 
2. Report the potential Fair Tax Collection Practices violations identified in EQRS reviews to Labor Relations for investigation; 
3. Establish controls to ensure that all potential violations of Fair Tax Collection Practices identified in case reviews are reported for investigation; 
4. Establish procedures that require EQRS reviewers to include a narrative detailing a potential violation relating to the ‘right to representation not observed’ quality element; and 
5. Improve new revenue officer training by adding direct contact scenarios pertaining to taxpayers’ statements concerning their right to representation. 

The IRS agreed with all five recommendations.

Have An IRS Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

 

Read more at: Tax Times blog

The IRS released its report on efforts it's made, pursuant to its increased funding provided a year ago in the inflation reduction act.

Included in this report was an account of their successes in ensuring high-income taxpayers pay taxes owed.

The IRS is working to ensure high-income filers pay the taxes they owe. Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented IRS from keeping pace with the increasingly complicated set of tools that the wealthiest taxpayers use to hide their income and evade paying their share. The IRS is now taking swift and aggressive action to close this gap.

• Pursuing tax-evading millionaires. In recent months, IRS Criminal Investigation has closed a lengthy list of cases in which wealthy taxpayers have been sentenced for tax evasion, money laundering and filing false tax returns. Instead of paying taxes owed, these evaders spent money owed to the government on gambling, vacations and luxury goods.

• 

  Making delinquent millionaires pay up. In recent months, IRS closed about 175 delinquent tax cases for millionaires, generating $38 million in recoveries. IRS will continue to pursue millionaires who do not pay their taxes as the agency ramps up enforcement capabilities through the Inflation Reduction Act. Examples of schemes IRS is now pursuing include:

• High-dollar scheme exploiting Puerto Rico. IRS recently identified about 100 high-income individuals claiming benefits in Puerto Rico without meeting the residence and source rules involving U.S. possessions. These wealthy individuals are attempting to avoid U.S. taxation on U.S. source income, and IRS expects many of these cases to proceed to criminal investigation.
• Pension arrangements in Malta. As part of IRS' effort to pursue unlawful offshore tactics, the Department of Treasury and IRS in June issued proposed rules that define Maltese personal retirement schemes used to avoid U.S. taxes as listed transactions. IRS is working to identify taxpayers who are improperly using Malta-U.S. Treaty rules to improperly claim exemptions. Inflation Reduction Act resources will enable IRS to detect those who leverage these offshore schemes.
• Cracking down on millionaire non-filers. The IRS continues to intensify work around wealthy individuals who do not file tax returns. These are particularly egregious cases where instead of filing their taxes and paying taxes owed, these individuals used the money to make lavish purchases. In one recently closed case, an individual used funds owed to the government to purchase a Maserati and Bentley. IRS is continuing to work with law enforcement partners to hold these individuals accountable.

Have Unreported Income?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

 

Read more at: Tax Times blog

According to Law360, a New York federal judge approved an $80,000 settlement in a $330,000 dispute between a woman and the federal government over improperly reported overseas accounts. The case is U.S. v. Bouskila, case number 2:21-cv-04243, in the U.S. District Court for the Eastern District of New York.

Cecile Bouskila will pay the $80,000 settlement as well as 1% annually accruing interest from the date of the amount-due notice, a 6% annually accruing late-payment penalty from 90 days after that notice and other post-judgment interest, according to the order. 

The Internal Revenue Service Had Previously Assessed
$330,000 In Penalties For Bouskila's Failure To Timely
File Reports Of Foreign Bank And Financial Accounts,
Or FBARs, From 2004 Through 2011.

In March, the U.S. Supreme Court ruled in a separate case that the $10,000 maximum penalty dictated by the Bank Secrecy Act is applicable per annual form, rather than per account. Bouskila had previously argued that sentiment, claiming that she was liable for a maximum penalty of $80,000.

Have an FBAR Penalty Problem?  

 

Never Stop Arguing
Legal Basis for Abatement!

 Contact the Tax Lawyers at 

Marini& Associates, P.A. 

 

 

for a FREE Tax Consultation at: 

www.TaxAid.com or www.OVDPLaw.com 
or Toll Free at 888-8TaxAid (888) 882-9243

Read more at: Tax Times blog

In Sanders, (6/20/2023) 160 TC 16, the Tax Court dismissed a pro se taxpayer's petition because it was e-filed late. The taxpayer encountered technical difficulties with the court’s electronic filing platform DAWSON. However, DAWSON was accessible to the public on the taxpayer's last day to file and since he filed his petition 11 seconds late, his petition was untimely.

The court rejected the taxpayer's argument that DAWSON was inaccessible him on the last day for filing. 

Under Tax Court rules, when a "filing location" is inaccessible to the public, a taxpayer may have additional time to file a petition. Under Code Sec. 7451, a filing location is the Tax Court Clerk's office, or "any online portal made available by the Tax Court" for e-filing petitions.

Inaccessibility isn't defined in Code Sec. 7451. However, the Tax Court found that while inaccessibility includes an outage of an electronic filing system, inaccessibility does not include user error or technical difficulties on the user's side. According to the court, the record showed that DAWSON was operational at all relevant times and the taxpayer logged in multiple times on the last day for filing his petition. Although the taxpayer's login attempt at 11:59:15 failed, another petitioner was able to file before midnight. This successful login showed that DAWSON was working properly.

The court also specifically rejected an amicus argument that the timely mailing rule should apply to electronically filed petitions. The timely mailing rule is an exception to the general rule that a document is filed when received. Under that rule, a document that is properly mailed before its due date, but received after that date, is considered filed on the date it was postmarked. The court previously held that the timely mailing rule doesn't apply to an e-filed petition in Nutt, (5/2/2023) 160 TC No. 10.

In Nutt, the Commissioner mailed a notice of deficiency to the Nutts on April 14, 2022, determining an income tax deficiency and an accuracy-related penalty for 2019. Notwithstanding the actual mailing date, the notice was dated April 18, 2022, and the notice stated that the last day to file a petition with this Court was July 18, 2022. That date was a Monday and was not a legal holiday in the District of Columbia.

The notice stated that the Nutts could “get a petition form and the rules for filing from the Tax Court’s website at www.ustaxcourt.gov, or by contacting the Office of the Clerk at . . . 400 Second Street, NW, Washington, DC 20217.”

The Commissioner also sent a letter dated June 7, 2022, to the Nutts in which he reduced the amount of the deficiency and reminded the Nutts of the July 18, 2022, deadline to file a petition in the Tax Court.

While residing in Alabama, the Nutts electronically filed their Petition. At the time of filing, the Court’s electronic case management system (DAWSON) automatically applied a cover sheet to their Petition. The cover sheet shows that the Court electronically received the Petition at 12:05 a.m. eastern time on

July 19, 2022, and filed it the same day. When the Court received the Petition, it was 11:05 p.m. central time on July 18, 2022, in Alabama.

The IRS filed a motion to dismiss the petition for lack of jurisdiction, arguing that, unlike the rule governing tax return filings, the date a petition is treated as filed before the court is determined by the court’s time zone, rather than the taxpayer’s.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

Read more at: Tax Times blog