Income Tax Issues
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Partial Payments of Tax and Deposits with the IRS

Sunday afternoon rolls around, and the last thing on your mind was explaining the pros and cons of making partial payments of tax and deposits with the IRS to a relative who still sees "Charlie" lurking in his backyard from time to time. Nonetheless, of all of your relatives, Cousin Elmer is, surprisingly, the least offensive to you. You may remember that Elmer is currently working with only seven and a half fingers and a score of little scars on remaining fingers, a reminder of an attack by a scurry of squirrels, which beset upon him after he tried, rather unsuccessfully, to eradicate their rather sizeable presence in his attic through the use of what can only be described as a Vietnam-era improvised explosive device. Nonetheless, you know that Elmer has had as many run-ins with the IRS as he has with rodents. When he calls you on a chilly,…

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November 17, 2021
Income Tax Issues
Income Tax Issues / Memorandum Opinions / Tax Opinions

Amburgey v. Commissioner
T.C. Memo. 2021-124

On November 1, 2021, the Tax Court issued a Memorandum Opinion in the case of Amburgey v. Commissioner (T.C. Memo. 2021-124). The primary issue presented in Amburgey v. Commissioner was whether the petitioners were required to repay an advance premium tax credit, or whether requiring them to do so was unconstitutional. Held: Pay up, petitioners. Background to Amburgey v. Commissioner The petitioners, a married couple, reported an adjusted gross income of $181,183 on their joint Federal income tax return for 2018. The petitioners also obtained health insurance for 2018 through the Health Insurance Marketplace, and their health insurance premium was $1,772 per month. They received an “advanced premium tax credit” benefit of $1,279 per month, which was paid directly to the petitioners’ health insurer and applied to the cost of their premiums. The petitioners filed their return ten days late, showing a tax liability of $12,821 for 2018. However, not…

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November 15, 2021
Penalties Under the Code
Memorandum Opinions / Penalties Under the Code / Tax Opinions

Cashaw v. Commissioner
T.C. Memo. 2021-123

On October 26, 2021, the Tax Court issued a Memorandum Opinion in the case of Cashaw v. Commissioner (T.C. Memo. 2021-123). The primary issue presented in Cashaw v. Commissioner was whether the petitioner is liable for trust fund recovery penalties. Held: Yup. Background to Cashaw v. Commissioner The petitioner was presented with difficult choices during her tenure as temporary chief administrator of a hospital. The hospital was under a state order freezing its bank accounts except for the purpose of making specified payments to certain hospital staff, vendors, and creditors following the approval of a third party. The petitioner prioritized payments among the hospital's staff, vendors, and private creditors that she deemed provided “essential patient care services.” This prioritizing included her refusal at times to sign checks on behalf of Riverside where the purported purposes of the payments did not align, in her eyes, with such patient services…including payments to…

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November 12, 2021
Taxing, Briefly
Taxing, Briefly
Taxing, Briefly

Statutes of Limitation on Assessment and Collection

One of the most common questions I am asked by taxpayers is “How long can the IRS try to collect my liability?” It’s a good question, and one that would seem to have a quick, easy answer. Judging purely by the length of this article, however, the answer is never as simple as it might seem. On Statutes of Limitation on Assessment and Collection With the full understanding that “It depends” is the least satisfying answer to any legal question, nonetheless, it is often the most accurate. (For most lawyers “it depends” is about as automatic a response as a thirteen-year-old girl’s intercessory use of the word “like.” Like, all the time.) Though it is true that many factors play into the amount of time that the IRS can collect, nevertheless, there are two rules of thumb when it comes to the statutes of limitation on assessment and collection.  …

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November 12, 2021
Procedural Issues
Memorandum Opinions / Procedural Issues / Tax Opinions

Hill v. Commissioner
T.C. Memo. 2021-121

On October 25, 2021, the Tax Court issued a Memorandum Opinion in the case of Hill v. Commissioner (T.C. Memo. 2021-121). The primary issue presented in Hill v. Commissioner was whether the petitioner’s remittance of $10.3 million to the IRS to be applied toward an anticipated gift tax liability for 2011, which remittance was designated as a “deposit” was a “deposit” or a “payment” for purposes of determining whether interest was due to the petitioner. Held: Look, Albert, I’m going to level with you. If you designate a check as a “deposit,” and you reference your “deposit” in numerous written communications with the IRS, don’t act so heartsick and offended when the IRS agrees with your designation that the check was a “deposit” and not a “payment” as you now argue…seeing as overpayments bear far more interest than deposits. Lesson learned. Go buy an island where you can call your…

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November 10, 2021
Penalties Under the Code
Memorandum Opinions / Penalties Under the Code / Tax Opinions

Morris v. Commissioner
T.C. Memo. 2021-120

On October 25, 2021, the Tax Court issued a Memorandum Opinion in the case of Morris v. Commissioner (T.C. Memo. 2021-120). The primary issue presented in Morris v. Commissioner was whether the petitioner’s or liable for penalties for failure to timely file (IRC § 6651(a)(1)), failure to timely pay (IRC § 6651(a)(2)), and failure to pay estimated tax (IRC § 6654). Held: Yes. Yes, they were. Background to Morris v. Commissioner Mr. Morris was a successful businessman, but his businesses became a bit too big for his britches. In 2013, Mr. Morris expanded his packaging business into the manufacture of converted packaging and formed Morris Converting. Morris Converting expanded very, very rapidly and at the time of trial had about 175 employees. The petitioners’ returns for the years at issue (2015 and 2016) were prepared by their long-time CPA, Dennis. Once Morris Converting had grown too big for Dennis’ skillset…

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November 8, 2021
Income Tax Issues
Income Tax Issues / Tax Articles

The Claim of Right Doctrine and Illegally Obtained Funds

The Claim of Right Doctrine and Cousin Jethro After your Uncle Bill’s unfortunate forklift incident, mentioned here and here, you were surprised to hear that Bill’s idiot boy Jethro got a job at the tannery, especially in light of his somewhat checkered past and run-ins with the law. The more you learn about Jethro’s new job, however, the more it makes sense. Unbeknownst to you, the tanneries of New England are run by a group of families referred to as the “Suede Hand.” You learned about this mafioso-esque group after Jethro showed up to the family reunion in November, which you were somehow swindled into attending, in a brand-new cherry-red Corvette Z06. Despite yourself, you asked Uncle Bill how Jethro’s job at the tannery enabled him to purchase an $85,000 sports car. Bill chuckled, as he is wont to do when there is illegality afoot, and he said simply that…

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November 8, 2021