TAXLITIGATOR – Tax Controversy (Civil & Criminal) Report

The Employee Retention Credit (ERC) has been a lifeline for businesses struggling during the COVID-19 pandemic. Designed to provide financial assistance to eligible employers who kept their workforce employed during times of economic hardship, the ERC has proven to be a vital source of support for many. However, with its increasing popularity, aggressive marketing tactics, and potential for misuse, the IRS has found itself facing a growing challenge in ensuring the program’s integrity.

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Jonathan Kalinski quoted in Tax Notes article on newly filed Tax Court cases challenging the IRS’ position in applying IRC Section 280E to Offers in Compromise for marijuana businesses. Offers in Compromise are challenging for marijuana businesses because the IRS uses 280E disallowed expenses in determining collection potential, creating a phantom cash problem. 

“The fiction of ignoring taxpayer expenses for considering an OIC makes no one’s life easier as the IRS struggles to collect phantom cash and the taxpayer struggles to pay it.”  

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We are pleased to announce that Steven Toscher, Michel Stein, and Sandra Brown will be speaking at the upcoming CPA Academy webinar “Tax Controversy Hot Topics,” Tuesday, July 25, 2023, 8:00 a.m. – 9:00 a.m. (PST).

This webinar will cover critical practice and procedural issues facing practitioners, including IRS priorities, the new emphasis on fraud investigations, and referrals to the criminal investigation division.

Practitioners at all levels need to have the most up-to-date information to best advise their clients, and this webinar will cover a broad range of topics that any practitioner will benefit from knowing. The presenter will cover updates on IRS Enforcement and what the IRS plans to do with its additional funding, issues around high-wealth examinations and high-income non-filers, John Doe summons, Digital Assets/Cryptocurrency enforcement, and options for taxpayers with undisclosed foreign assets as well as the latest on the Maltese pension plans and on Employee Retention Credits.

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Please join us July 28, 2023 for the USD School of Law – RJS Law Tax Controversy Institute at the San Diego Knauss Center for Business Education, Nexus Theater University of San Diego.

We have an excellent line up of programs –

A Guide to IRS Criminal Tax Investigations and Prosecutions

Featuring Sandra Brown

IRS Cares about CARES Act Relief Abuses: PPP, EIDL and other Government Covid Relief Audits and Criminal Investigations

Featuring Dennis Perez

The Institute is the premier tax controversy event in San Diego. The region’s top tax attorneys, CPAs, and law/business school professors will discuss topics including government loan relief and abuses, challenges in cross-border transactions, and practical and realistic solutions in Trust, Estate Planning, and Tax matters. 

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For more than 85 years the Tax Court, its predecessor, the Board of Tax Appeals, and those courts of appeal that addressed the issue, held that the statute of limitations for filing a petition for redetermination was jurisdictional. When a prerequisite for a lawsuit is jurisdictional, it means that if the prerequisite has not been met, the court has no power to hear the case. It was required to dismiss the case for lack of jurisdiction. 

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Puerto Rico has been offering tax incentives to wealthy individuals, hedge fund managers, and cryptocurrency traders since 2012. These tax incentives have allowed them to legally avoid paying federal income tax and certain other taxes. However, recent developments have brought these tax breaks under scrutiny, with US prosecutors and IRS agents launching criminal and civil investigations into their potential abuse. In this blog post, we will explore the controversies surrounding Puerto Rico’s tax incentives and the increasing scrutiny faced by those who have taken advantage of them.

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Steven Toscher was quoted in recent Tax Notes article discussing the IRS increased enforcement efforts concerning Maltese Pension Plans. One of his primary concerns was due process considerations when the IRS pursues a criminal investigation in an area of tax law which is not very clear. 

“A criminal case based on a substantively debatable return position could be legally stillborn, he said . . . The IRS and Justice Department shouldn’t be prosecuting cases turning on unclear law, Toscher said . . . This Supreme Court would likely be amenable to conviction challenges if the agencies managed to convict someone for taking a position on which the law is uncertain, he said . . . The need for the competent authority agreement clarification will likely bolster that defense, according to Toscher.”

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We are pleased to announce that Michel Stein, Edward Robbins, Jr. and Sandra Brown will be speaking at the upcoming CalCPA webinar “Form 8300 Reporting/Cash Intensive Business Audits,” Tuesday, July 18, 2023, 9:00 a.m. – 10:00 a.m. (PST).

The law requires that trades and businesses report cash payments of more than $10,000 to the federal government by filing Form 8300. This course will explain the Form 8300 filing of obligations of those accepting cash payments in their businesses, best practices surrounding the filing of the Forms 8300, the current civil and criminal enforcement environment surrounding Form 8300 non-compliance, and the voluntary disclosure and mitigation practices surrounding the non-compliant. Do not be caught unprepared!

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We are very pleased to announce that Sandra R. Brown has been appointed vice chair of the Section’s Civil and Criminal Tax Penalties Committee for the 2023-2024 term. Sandra’s selection as a committee vice chair and as a Section leader represents recognition by her peers of her abilities and contributions to the work of the Section. 

Sandra has over 30 years of experience as a tax attorney specializing in the representation of clients in civil and criminal tax cases, including civil audits and appeals, tax collection matters, criminal investigations, and in civil and criminal trials and appeals in federal courts. Prior to joining Hochman Salkin Toscher Perez, P.C., in 2018 as a principal, Sandra was the Acting United States Attorney, the First Assistant United States Attorney, and the Chief of the Tax Division for the United States Attorney’s Office, Central District of California. 

We are also pleased to announce that Jonathan Kalinski has been selected as co-chair of the Legislative & Administrative Developments Sub-Committee of the Civil and Criminal Penalties Committee for the 2023-2024 term. 

Jonathan 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. Jonathan has considerable experience handling complex civil tax examinations, administrative appeals, and tax collection matters. Prior to joining the firm, he served as a trial attorney with the IRS Office of Chief Counsel litigating Tax Court cases and advising Revenue Agents and Revenue Officers on a variety of complex tax matters. Jonathan Kalinski also previously served as an Attorney-Adviser to the Honorable Juan F. Vasquez of the United States Tax Court.

The Internal Revenue Service has long had the power to issue and enforce administrative summonses for the purpose of “ascertaining the correctness of any return … determining the liability of any person for any internal revenue tax … or to collect any such liability.” See Reisman v. Caplin, 375 U.S. 440 (1964). While the courts and the IRS recognized that a taxpayer or an interested party had a right to intervene in an action brought by the IRS to enforce a summons, prior to the 1976 enactment of Internal Revenue Code §7609, there was no legal requirement that notice of a summons be given to a person identified in the summons (other than the summoned person).   

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