Federal

The Latest

Last week, an amicus brief was filed with the First Circuit Court of Appeals in support of a taxpayer’s[i] challenge to the U.S. Tax Court’s dismissal of the taxpayer’s petition[ii] for lack of jurisdiction. The Tax Court determined that the taxpayer failed to satisfy the statutory requirement that a petition be filed with the Court within 90 days after the IRS mails a Notice of Deficiency to the taxpayer if the taxpayer wants to challenge the asserted deficiency in the Tax Court.[iii]

Continue Reading Will Congress Extend the Statutory Period For Filing a Petition With the U.S. Tax Court?

Rules

  • Winston: Two rules that cannot be broken, Jonathan. No blood on Continental grounds, and every marker must be honored. Now, while my judgment comes in the form of excommunicado, the High Table demand a more severe outcome if their traditions are refused.
  • John Wick: I have no choice?
  • Winston: You dishonor the marker, you die. You kill the holder of the marker, you die. You run, you die. This is what you agreed to, Jonathan. Do what the man asks. Be free. Then, if you want to go after him, . . .  be my guest. But until then . . .
  • John Wick: Rules.
  • Winston: Exactly. Rules. Without them, we’d live with the animals.[i]

In the fictional world of John Wicks, the High Table enforces a strict code of conduct[ii] without which the lives of its inhabitants would mimic life in a Hobbesian state of nature.[iii]

However, as dangerous and as rule-bound as life “under the Table” appears to be, it pales in comparison, both in terms of numbers and complexity, to the rules that have been promulgated for the administration of the U.S. federal system.

Continue Reading Responding Timely to A “90-Day Letter” – Is It Jurisdictional?

C Corp
Imagine a closely held and growing start-up business (“Corp”) that was recently incorporated under state law and, so, is treated as a regular C corporation for purposes of the federal income tax.[i]

Thus, Corp will pay income tax on its taxable income,[ii] and the losses generated in Corp’s first few years of operation – not uncommon with a start-up – will be trapped within Corp and cannot be passed out to Corp’s shareholders for their own use.[iii]

Continue Reading Gifting Qualified Small Business Stock – Can You “Stack” the Section 1202 Odds In Your Favor?

Not Long Ago

In the months preceding the general election in 2024, the owners of many closely held businesses who had not yet given much thought to the disposition of their future estates, including their businesses,[i] decided they should meet with their attorneys and other advisers[ii] to see what steps they should consider taking to protect their wealth, which in many, if not most, cases resided primarily in their business.

What prompted many of these owners to act was a sense of urgency arising from the realization that the federal transfer tax[iii] benefits and other tax benefits made available to them by the 2017 Tax Cuts and Jobs Act[iv] were going to expire after 2025 (perhaps sooner);[v] these included the enhanced unified estate and gift tax basic exclusion amount,[vi] the increased generation-skipping transfer tax exemption amount,[vii] the reduced top marginal income tax rate for ordinary income,[viii] and others.

Continue Reading The Enactment of OBBBA: It’s Time to Plan, Not Relax – “Winter is Coming”

The “One Big Beautiful Bill Act” (the “Act”)[i] was signed into law last week, on July 4. As promised by the White House, the Act extends – i.e., purports to make “permanent” – many of the otherwise expiring provisions that were introduced by the Tax Cuts and Jobs Act (P.L. 115-97) in 2017.[ii] The legislation also adds some new provisions to the Code, while “updating” others.

Continue Reading Closely Held Businesses and Their Owners Ask: What’s Big and Beautiful in the Recent Tax Law?

An Agency Under Siege

The mission statement of the IRS reminds taxpayers that it is their responsibility to understand and meet their tax obligations, while it is the role of the IRS to “enforce the [tax] law with integrity and fairness to all” to ensure that those obligations are satisfied.

The IRA

In 2023, following the $80 billion of funding authorized for the agency by the Inflation Reduction Act (the “IRA”),[i] the IRS announced it was going to increase its enforcement efforts with regard to wealthy and high-earning taxpayers, and the complex partnerships they employ,[ii] to ensure these taxpayers were held accountable for the full amount of taxes they owed.

Continue Reading The Limited Partner Exclusion From Self-Employment Tax – But Who Is A Limited Partner?

Back to the Office

You are probably aware that many employers are discarding the fully flexible, remote work policies that were forced upon them – as “nonessential” businesses – during the COVID-19 pandemic[i] and which they retained as an accommodation to employees after the pandemic ended. Indeed, there is now a steadily increasing percentage of employers that are requiring their employees to return to the office or place of business.

Some employers are mandating that employees work in the office full-time.[ii] Many other businesses expect employees to be physically present at least three days per week.[iii] Often, employers are “taking attendance” to ensure compliance with their in-office policies.

Continue Reading Employer to Nonresident Employee: “You Cannot Work in New York”; New York to Employee: “We Will Tax You Anyway”

Expiring Provisions

Just a few weeks ago, many individual taxpayers, driven by what they viewed as the relatively imminent expiration of the enhanced federal transfer tax[i] exemptions, sought advice on how to leverage their remaining exemption and thereby optimize the transfer of value to their beneficiaries while limiting the amount of tax incurred.

Even following the results of the November elections, and regardless of the President-Elect’s recent statements about further curbing the federal transfer taxes, many individuals continue to be concerned about the reduction of the “basic exclusion amount”[ii] that is scheduled to occur at the end of this year.[iii]

Continue Reading Expiring Federal Transfer Tax Benefits – Nothing is Certain or Lasts Forever

Legitimate Interest

Few would argue that the federal government does not have a legitimate interest in preventing, detecting, and punishing tax fraud, money laundering, and other financial crimes. Likewise, I imagine few would disagree with the precept that the means by which the federal government chooses to perform these functions must not exceed its constitutionally enumerated powers.[i] Among Congress’s enumerated powers is the power to “regulate Commerce with foreign nations, and among the several States, . . .”[ii]

Continue Reading The Status of the Corporate Transparency Act – It’s Not Clear

Enforcement

Earlier this year the IRS announced that, as part of its larger compliance efforts begun last fall under the Inflation Reduction Act,[i] the agency’s stepped-up enforcement activity with respect to high wealth, high income individuals had generated more than $1 billion in collections of past-due taxes.

One would be hard-pressed to seriously dispute that every taxpayer must pay the correct amount of income tax; no more, no less. That means a taxpayer has the right to pay only the amount of tax that is legally due and the right to have the IRS apply all tax payments properly.[ii]

Continue Reading Challenge to Collection Due Process? Will Supreme Court Affirm IRS’s Offset of Valid Refund With Disputed Tax Liability?