TAXLITIGATOR – Tax Controversy (Civil & Criminal) Report

Sec. 1031(a) of the Internal Revenue Code provides that no gain or loss is recognized when property held for productive use in a trade or business or for investment is exchanged for like-kind property to be held either for productive use in a trade or business or for investment. The purpose of section 1031 is to defer the recognition of gain or loss on transactions in which, although in theory the taxpayer may have realized a gain or loss, his economic situation is in substance the same after the transaction as it was before the transaction. H. Rept. No. 704, 73d Cong., 2d Sess. (1934); Jordan Marsh Co. v. Commissioner, 269 F.2d 453, 455-456 (2d Cir. 1959).

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Robert S. Horwitz is a Principal at Hochman Salkin Toscher Perez P.C., former Chair of the Taxation Section, California Lawyers’ Association, a Fellow of the American College of Tax Counsel, a former Assistant United States Attorney and a former Trial Attorney, United States Department of Justice Tax Division. He represents clients throughout the United States and elsewhere involving federal and state administrative civil tax disputes and tax litigation as well as defending clients in criminal tax investigations and prosecutions. In 2022 the Tax Section of the California Lawyers Association awarded him the Joanne M. Garvey Award for lifetime achievement in and contributions to the field of tax law. Additional information is available at http://www.taxlitigator.com

For more information, please contact Robert S. Horwitz at horwitz@taxlitigator.com

Generally, an enrolled member of a federally recognized Indian tribe who resides on his or her tribe’s reservation in California is subject to California personal income tax, except with respect to income derived from sources within the tribe’s reservation. See McClanahan v. Arizona State Tax Commission, 411 U.S. 164 (1974).

In Legal Notice 2015-1, the California Franchise Tax Board set out its position on whether an enrolled member of a federally recognized Indian Tribe is living on or off the reservation for California personal income tax purposes. The FTB articulated four scenarios and stated that the FTB would apply the “closest connections” test articulated in Appeal of Stephen Bragg, 2003-SBE-003 and other Board of Equalization cases to determine whether a tribal member would be treated as residing on a tribal reservation.

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Michel R. Stein is a Principal at Hochman Salkin Toscher Perez, specializing in both civil and criminal tax controversies at every administrative level of the Internal Revenue Service and the California Franchise Tax Board, as well as tax planning for individuals, businesses and corporations. For almost 30 years, he has represented individuals with sensitive issue civil tax examinations where substantial penalty issues may arise and extensively advised individuals on foreign and domestic voluntary disclosures regarding foreign account and asset compliance matters. Mr. Stein is a frequent lecturer at national and regional conferences on a wide range of tax-related topics including tax residency matters, cryptocurrency, sensitive tax compliance issues, international tax issues, and State and Federal worker classification issues. Additional information is available at http://www.taxlitigator.com

For more information, please contact Michel R. Stein at stein@taxlitigator.com

Robert S. Horwitz is a Principal at Hochman Salkin Toscher Perez P.C., former Chair of the Taxation Section, California Lawyers’ Association, a Fellow of the American College of Tax Counsel, a former Assistant United States Attorney and a former Trial Attorney, United States Department of Justice Tax Division.  He represents clients throughout the United States and elsewhere involving federal and state administrative civil tax disputes and tax litigation as well as defending clients in criminal tax investigations and prosecutions. In 2022 the Tax Section of the California Lawyers Association awarded him the Joanne M. Garvey Award for lifetime achievement in and contributions to the field of tax law. Additional information is available at http://www.taxlitigator.com.

For more information, please contact Robert S. Horwitz at horwitz@taxlitigator.com

On my way to Mérida in the Yucatán. Great weather, great food, Mayan ruins and exploration of the intersection of tax fraud and customs fraud with two great panel members, Wazirah Allen, IRS-Criminal Investigations, Director of International Operations and Jeff Neiman, Neiman Mays Floch & Almeida PLLC. Patrick Martin is a great host and thank you University of SanDiego and Chamberlain. 

We will be speaking on Where There is Tariff Evasion, Tax Fraud is not Far Behind, Tuesday, February 17, 2026, 9:00 a.m. – 9:50 a.m. at Centro Internacional de Congresos en Mérida, México.

Tariff fraud often creates ripples beyond customs enforcement — leading directly into income tax fraud cases. This panel will discuss the important role the IRS Criminal Investigations is playing in the joint task force on combating tariff and customs fraud and will discuss real-world patterns where undervaluation, false invoicing, and transshipment schemes in customs filings lead to customs fraud and tax evasion. The panel will explore coordinated enforcement between the Department of Justice and various US and foreign investigative agencies. 

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For more information, please contact Steven Toscher at toscher@taxlitigator.com.

In 2008, California enacted the Property Assessed Clean Energy (“PACE”) Act that allows local governments to provide homeowners with financing for energy efficient home improvements. PACE allows local governments to fund their PACE programs by issuing bonds. The special assessment is assessed and collected “in the same manner and at the same time” as local taxes and secured by a priority tax lien that runs with the land. In exchange for the financing, the homeowner must agree to a voluntary special assessment added to their property taxes and secured by a lien on their real property.

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Robert S. Horwitz is a Principal at Hochman Salkin Toscher Perez P.C., former Chair of the Taxation Section, California Lawyers’ Association, a Fellow of the American College of Tax Counsel, a former Assistant United States Attorney and a former Trial Attorney, United States Department of Justice Tax Division.  He represents clients throughout the United States and elsewhere involving federal and state administrative civil tax disputes and tax litigation as well as defending clients in criminal tax investigations and prosecutions. In 2022 the Tax Section of the California Lawyers Association awarded him the Joanne M. Garvey Award for lifetime achievement in and contributions to the field of tax law. Additional information is available at http://www.taxlitigator.com.

For more information, please contact Robert S. Horwitz at horwitz@taxlitigator.com

We are pleased to announce that Steven Toscher along with Wazirah Allen, IRS-Criminal Investigations, Director of International Operations and Jeffrey Neiman will be speaking at the upcoming University of San Diego School of Law – Chamberlain International Tax Institute on Where There is Tariff Evasion, Tax Fraud is not Far Behind, February 16-17,2026, at Centro Internacional de Congresos en Mérida, México.

Tariff fraud often creates ripples beyond customs enforcement — leading directly into income tax fraud cases. This panel will discuss the important role the IRS Criminal Investigations is playing in the joint task force on combating tariff and customs fraud and will discuss real-world patterns where undervaluation, false invoicing, and transshipment schemes in customs filings lead to customs fraud and tax evasion. The panel will explore coordinated enforcement between the Department of Justice and various US and foreign investigative agencies. 

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For more information, please contact Steven Toscher at toscher@taxlitigator.com.

We’re pleased to announce that Sebastian Voth and Philipp Behrendt will be teaching this online course on Taxation of Digital Assets offered by UCLA Extension from February 10th through March 17th.

This online course prepares legal and tax professionals to plan, analyze, and implement compliant reporting for digital-asset transactions under current IRS rules. We concentrate on statutory and regulatory interpretation (e.g., §§1001, 1012, and §6045 broker reporting), classification of common and advanced transactions (swaps, wrapping/unwrapping, staking/mining, LP, lending), and practical reconciliation of Form 1099-DA with on-chain and exchange data. Participants will examine best practices, common pitfalls, audit-readiness techniques through case studies, and study relevant case law and current IRS guidance.

The aim and focus of the Course is to develop a practitioner-level command of the legal characterization and reporting mechanics of digital-asset activity, enabling participants to identify mismatches between broker reports and taxable events, advise clients effectively, and document defensible tax positions.

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Sebastian Voth is a Principal at Hochman Salkin Toscher Perez P.C., specializing in tax investigations, litigation and appeals, and complex tax matters. Prior to entering private practice, Mr. Voth served for 15 years at the Internal Revenue Service including most recently as a Special Trial Attorney with the IRS Office of Chief Counsel’s Strategic Litigation Division leading trial teams in all phases of litigation before the Tax Court. During his tenure with the IRS, Mr. Voth served on the leadership team of the nationwide IRS Counsel mentoring program and mentored numerous IRS attorneys. He is the recipient of two Lucite Awards for significant Tax Court opinions and received a 2024 Special Act Award (Strategic Litigation), the 2023 Nationwide Innovator of the Year (LB&I), the 2022 Nationwide Special Trial Attorney of the Year (SB/SE), the 2017 U.S. Department of the Treasury Outstanding Litigator and the 2017 Nationwide Attorney of the Year (SB/SE). Serving as a Special Trial Attorney, Mr. Voth handled some of the IRS’s most significant and complex litigation matters.

For more information, please contact Sebastian Voth at voth@taxlitigator.com

Philipp Behrendt is an Associate at Hochman Salkin Toscher Perez P.C., licensed in California as well as in Germany and assists in advising clients in civil and criminal tax controversies as well as international money laundering investigations stemming from tax avoidance structures. He also focuses on the technical aspects involved in advising voluntary disclosures in connection with DeFis, NFTs, and other crypto assets. Philipp is a Liaison to the Young Lawyer Committee for the ABA Tax Section’s Civil and Criminal Tax Penalties Committee and served on the Beverly Hills Bar Association’s Barristers Board of Governors from 2022 to 2023. Philipp is the Chair of the Beverly Hills Bar Association’s Tax Section and the Blockchain and Web3 Law Section.

For more information, please contact Philipp Behrendt at behrendt@taxlitigator.com.

Social security and Medicare tax is based on wages paid employees under Internal Revenue Code (IRC) § 3101 and “net earnings from self-employment” under IRC § 1401.  “Net earnings from self-employment” is defined in IRC § 1402 and includes an individual partner’s “distributive share … of income or loss” of the partnership.  Section 1402 contains enumerated exclusions.  In 1976, Congress added subsection (a)(13) to § 1402, which reads:

(13) there shall be excluded the distributive share of any item of income or loss of a limited partner, as such, other than guaranteed payments described in section 707(c) to that partner for services actually rendered to or on behalf of the partnership to the extent that those payments are established to be in the nature of remuneration for those services.

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Robert S. Horwitz is a Principal at Hochman Salkin Toscher Perez P.C., former Chair of the Taxation Section, California Lawyers’ Association, a Fellow of the American College of Tax Counsel, a former Assistant United States Attorney and a former Trial Attorney, United States Department of Justice Tax Division.  He represents clients throughout the United States and elsewhere involving federal and state administrative civil tax disputes and tax litigation as well as defending clients in criminal tax investigations and prosecutions. In 2022 the Tax Section of the California Lawyers Association awarded him the Joanne M. Garvey Award for lifetime achievement in and contributions to the field of tax law. Additional information is available at http://www.taxlitigator.com.

For more information, please contact Robert S. Horwitz at horwitz@taxlitigator.com

On January 8, 2026, in response to alleged benefits fraud in Minnesota, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced the issuance of a Geographic Targeting Order (GTO) requiring all banks and money transmitters located in Hennepin County and Ramsey County, Minnesota, (Covered Businesses) to file reports with FinCEN of certain international fund transfers of $3,000 or more.

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Sandra R. Brown is a Principal of Hochman Salkin Toscher Perez P.C., where her practice focuses on criminal tax investigations, grand jury matters, litigation, and sentencing matters as well as representing and advising taxpayers involved in complex and sophisticated civil tax controversies, including sensitive-issue audits and administrative appeals and litigation. Ms. Brown’s extensive experience and successes have included many notable cases including two U.S. Supreme Court decisions, numerous 9^th Circuit rulings and numerous favorable administrative resolutions for taxpayers involved in IRS investigations and audits.

Prior to joining the firm in 2018, Ms. Brown served as the Acting United States Attorney, First Assistant United States Attorney, and Chief of the Tax Division in the Office of the U.S. Attorney, Central District of California; where, with 27 years as a trial lawyer, she personally litigated over 2,000 tax cases on behalf of the United States.

Ms. Brown obtained her LL.M. in Taxation from the University of Denver, is a fellow of the American College of Tax Counsel, Vice-Chair of the ABA’s Section of Taxation’s Criminal and Civil Tax Penalties Committee, Co-Chair of the UCLA Tax Controversy Institute, Co-Chair of the ABA Criminal Tax Fraud and Tax Controversy Conference, an ABA Loretta Collins Argrett Fellowship Mentor, and is a frequent lecturer and author on tax controversy topics, including international compliance and criminal tax matters. Ms. Brown has been recognized as one of California’s top 100 leading women lawyers, the recipient of USD School of Law’s Richard Carpenter Excellence in Tax Award, Chambers High Net Worth in Tax and Tax Fraud, and an honoree of the inaugural Lawdragon 500 Leading Global Tax Lawyers.

For more information, please contact Sandra R. Brown at brown@taxlitigator.com

We are pleased to announce that Jonathan Kalinski and Melissa Briggs have been elected Fellowsof the American College of Tax Counsel. Jonathan and Melissa join eight other members of our firm who are Fellows of the most prestigious group of tax lawyers in the United States.

The President of ACTC welcomed the new Fellows, noting that “we have had a vibrant and impactful year at the College, and we welcome our newest Fellows into our continuing mission of advancing sound tax policy and effective tax administration.”

Link to the Press Release

Jonathan Kalinski is a Principal of the law firm of Hochman Salkin Toscher Perez P.C. and specializes in both civil and criminal tax controversies as well as sensitive tax matters including disclosures of previously undeclared interests in foreign financial accounts and assets and provides tax advice to taxpayers and their advisors throughout the world. He handles both Federal and state tax matters involving individuals, corporations, partnerships, limited liability companies, and trusts and estates. Mr. Kalinski is a California Lawyers Association Taxation Section Executive Committee Member and an ABA Loretta Collins Argrett Fellowship Mentor.

For more information, please contact Jonathan Kalinski at kalinski@taxlitigator.com

Melissa Briggs is a Principal of the law firm of Hochman Salkin Perez P.C. where she represents clients in civil and criminal tax litigation as well as tax investigations. She has over twenty years of litigation experience, including over 16 years combined experience as an Assistant United States Attorney for the Central District of California, Tax Division, and an Appellate Attorney in the United States Department of Justice, Tax Division, Appellate Section.  

For more information, please contact Melissa Briggs at briggs@taxlitigator.com.

We are proud to announce that Evan Davis, a former white-collar federal prosecutor and current Principal of our firm, has been named to the inaugural list of Legal 500 City Elite’s top white-collar lawyers in Los Angeles. “US Elite emphasizes lawyers who are handling work at the top of the legal market in their respective cities.”

Legal 500 selects its elite lawyers after interviewing top practitioners, receiving peer feedback, and gathering evidence of key matters worked on by the ranked attorneys during the past year. 

Legal 500 is a London-based ratings company that focuses on how clients perceive their lawyers, including by measuring client satisfaction.  

Link to the Rankings

Evan Davis has been a Principal at Hochman Salkin Toscher Perez P.C. since November 2016. Mr. Davis handles federal and state criminal and civil tax investigations/exams, white-collar defense, cryptocurrency clients, and civil and criminal appellate matters including having litigated the In re Grand Jury attorney-client privilege matter before the US Supreme Court in 2023. 

Before joining the firm in 2016, Evan spent nearly 20 years with the US Department of Justice. He was first a civil trial attorney with DOJ’s Tax Division, then an Assistant U.S. Attorney in the C.D. Cal’s Tax Division handling civil and criminal tax cases and, finally, a criminal AUSA in the USAO’s Major Frauds Section handling white-collar, tax, and other fraud cases through jury trial and appeal. He served as the Bankruptcy Fraud coordinator, Financial Institution Fraud Coordinator, and Securities Fraud coordinator. His awards include the U.S. Attorney General’s Distinguished Service Award for Evan’s work on the $16 Billion RMBS settlement with Bank of America. He is also a Fellow of the American College of Trial Counsel.

For more information, please contact Evan Davis at davis@taxlitigator.com