Thursday, October 22, 2009

Taxpayer Cannot Rely on Google to Prove Reasonable Cause

Good-faith reliance on advice from an independent, competent professional as to the tax treatment of an item may meet the reasonable cause requirement for abatement of penalties. The Tax Court in Woodard v. Commissioner did not accept Mr. Woodard's argument that his research on the Internet using the Google search engine provided him with reasonable cause for the position he took when filing his 2004 tax return.

Tax Court Rules Cancellation of Debt Not Income

In the recent case of McCormick v Commissioner, the Tax Court held for the IRS to determine the amount of cancellation of indebtedness income properly attributed to the taxpayers, the Tax Court must determine the amount of the CitiFinancial and Chase debt that was definite and liquidated.

In this case, the Tax Court found that the IRS could not rely on the Forms 1099-C submitted by CitiFinancial and Chase as evidence of the amount of debt that was definite and liquidated. Section 6201(d) provides that in any court proceeding, if a taxpayer asserts a reasonable dispute with respect to any item of income reported on an information return and has fully cooperated, the IRS shall have the burden of producing reasonable and probative information concerning the deficiency in addition to the information return. In this case the taxpyaers asserted reasonable disputes with respect to the amounts reported by CitiFinancial and Chase. The IRSfailed to produce reasonable and probative information independent of the third-party information returns. Thus, the Tax Court held for the taxpayers.

Wednesday, October 21, 2009

Who Is Being Convicted of Tax Crimes

For those of you who may have an interest in who is being prosecuted for tax crimes here is a link from TIGTA with some interesting information.

Commissioner's Advice to Corporate Directors

IRS Commissioner Doug Shulman addressed the National Associaton of Corporate Directors Governance Conference and gave them certain advice. You can see the Commissioner's remarks here.

Monday, October 19, 2009

Annual Report to Congress on the Whistleblower Statute

The Department of the Treasury has published its annual report on the Whistleblower statute. The report can be found here.

Whistleblower Guidance from the IRS

The IRS has published guidance to provide procedures for processing and examining referrals received from the Whistleblower’s Office (WBO) regarding IRC 7623(b). Due to a change to IRC 7623, there are now two types of Whistleblower informant claim cases:

IRC 7623(a) discretionary award cases, “A” cases, and
IRC 7623(b) mandatory award cases, “B” cases.

The guidance can be found here.