Category Archives: criminal tax law

The U.S. Tax Court held in Chavis, 158 TC No. 8, that an IRS appeals officer correctly determined, after a collection due process (CDP) hearing, that the petitioner wasn’t eligible for “innocent spouse” relief because her Trust Fund Recovery Penalty (TFRP) didn’t arise from any liability shown on a joint federal income tax return. 

Angela Chavis and her husband were officers of a corporation that failed to remit withheld payroll taxes to the IRS. The agency issued Angela Chavis a Letter 1153, Notice of Trust Fund Recovery Penalty, informing her that it proposed to assert a TFRP against her.

Letter 1153 includes detailed instructions about the steps to take in order to appeal the proposed assessment and the issues that would be considered during an appeal. The letter also warned: "If we do not hear from you within 60 days from the date of this letter... we will assess the penalty and begin collection action."

When Chavis didn't file an appeal to challenge the proposed assessment, the IRS assessed TFRPs totaling $146,682. The IRS followed up the assessment by issuing Chavis a Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing. Chavis timely requested a CDP hearing.

During the CDP hearing Angela Chavis sought to challenge her liability for the TFRPs. The appeals officer explained that Chavis couldn't challenge her liability for the TFRPs because she received Letter 1153, and didn't file an appeal challenging the liability before the IRS assessed the penalties.

Then, Chavis requested "innocent spouse" relief under Code Sec. 6015. However, the appeals officer determined that such relief isn't available for TFRP liabilities.

Finally, Chavis asked the IRS to place her account in currently not collectible (CNC) status and that the IRS withdraw the lien. The appeals officer considered Chavis' collection alternatives but determined that Chavis didn't qualify for either one.

Chavis submitted a Form 433–A, Collection Information Statement for Wage Earners and Self-Employed Individuals, together with supporting financial information. Based on this information, an IRS collection specialist determined she could pay $1,685 a month toward the TFRP liability and, therefore, didn't qualify for CNC status. 

The appeals officer issued a Notice of Determination (NOD) sustaining the IRS's lien filing and Chavis timely petitioned the Tax Court for review of the NOD.

According to the Tax Court, the appeals officer correctly determined that Chavis couldn't challenge the TFRPs in a CDP hearing because Letter 1153 afforded her a prior opportunity to challenge the penalties, which she failed to do. As a result, she couldn't challenge her liability for the TFRPs at a CDP hearing or in the Tax Court.

In addition, the Tax Court said the appeals officer properly determined that Chavis wasn't eligible for innocent-spouse relief because her TFRP liability didn't arise from any liability shown on a joint federal income tax return.

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

National Taxpayer Advocate Erin M. Collins today released her statutorily mandated mid-year report to Congress. The report expresses concern about continuing delays in the processing of paper-filed tax returns and the consequent impact on taxpayer refunds. At the end of May, the agency had a backlog of 21.3 million unprocessed paper tax returns, an increase of 1.3 million over the same time last year.

“The IRS has said it is aiming to crush the backlogged inventory this year, and I hope it succeeds,” Collins wrote. 

“Unfortunately, At This Point The Backlog Is Still Crushing
The IRS, Its Employees, And Most Importantly, Taxpayers.
As Such, The Agency Is Continuing To Explore
Additional Processing Strategies.” 

More than 90% of individual income taxpayers e-file their returns, yet last year, about 17 million taxpayers filed their returns on paper. Some choose to file on paper. Some have no choice because they encounter e-filing barriers, such as when they are required to file a tax form or schedule the IRS cannot accept electronically. Before the pandemic, the IRS typically delivered refunds to paper-filers within four to six weeks. Over the past year, refund delays on paper-filed returns have generally exceeded six months, with delays of 10 months or more common for many taxpayers.

Forms 1040 are just one component of the paper tax returns processing backlog. Millions of business tax returns and amended tax returns (both individual and business) are also filed on paper. The overall backlog has increased by 7% over the past year as shown in the Figure 1.

Figure 1: Status of Unprocessed Paper Tax Returns Comparing Weeks Ending May 22, 2021, and May 27, 2022

The IRS Has Publicly Committed To Reducing Its
Paper Tax Return Backlog To A “Healthy” Level
By The End Of The Year, But It Has Not Provided
A Definition Of “Healthy.”

“Historically, the IRS has paid refunds resulting from paper-filed returns within four to six weeks,” Collins wrote. “From a taxpayer perspective, returning to a four-to-six-week refund delivery period is a reasonable definition of ‘healthy.’”

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

On April 5, 2022 we posted 3 Groups Urge Supreme Court To Review Non-Willful FBAR Penalty, where we discussed that whether a foreign bank account reporting penalty is assessed Per Unreported Account or Per Unfiled Form should be determined by the U.S. Supreme Court, tax and business groups said, arguing a circuit split on the issue warrants high court intervention.

In amicus briefs filed on April 1, 2022, the U.S. Chamber of Commerce, Center for Taxpayer Rights and American College of Tax Counsel told the Supreme Court it should resolve the divergent findings by two appeals courts on the proper application of the penalty for a person or business' nonwillful failure to disclose foreign accounts.

The U.S. Supreme Court decided on June 21, 2022 to hear a dispute over the maximum penalty for failing to disclose foreign bank accounts to the IRS in a case that could resolve the limits of a $10,000 penalty for undeclared accounts. The case is Alexandru Bittner v. U.S., case number 21-1195, in the U.S. Supreme Court.

The justices will weigh in on the dispute between Alexandru Bittner and the federal government, who disagree over the proper application of the $10,000 penalty for a nonwillful failure to disclose foreign bank accounts, according to an order list. 

While the Ninth Circuit has decided that the penalty for a nonwillful failure to disclose foreign accounts is assessed on a per-form basis, the Fifth Circuit found in Bittner's case that the penalty is imposed for each unreported account.

 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

The IRS collected more than $245 million as a result of whistleblowers' tips, for which it made 179 awards totaling over $36 million in 2021, the agency's Whistleblower Office said in its annual report to Congress.

According to the report, which was released June 13, 2022 the revenue was split between almost $130 million collected under Code Sec. 7623(a) and more than $115 million under Code Sec. 7623(b). Covering the period October 2020 through September 2021, the report found that the work of Whistleblower Office decreased as a result of the COVID-19 pandemic, though most operations have resumed in full.

Since the whistleblower program began in 2007, the number and amounts of awards paid annually can vary significantly, "especially when a small number of high-dollar claims are resolved in a single year," according to the report. 

The year in which an award is paid is generally not the year in which collections occurred because the IRS must wait to make a final determination of proceeds. That determination can occur only after a taxpayer has exhausted all appeals and can no longer file a claim for refund or otherwise seek to recover the proceeds from the government.

Read more at: Tax Times blog