United States Tax Court Decision of the Week-Underpayment Penalties

A recent Tax Court decision was reported dealing with Underpayment Penalties and additional tax.  J. Frank Best, Tax Controversy CPA/U. S. Tax Court Litigator with locations in Raleigh and Wilmington, NC  & North Myrtle Beach and Myrtle Beach, SC works to stay current on all IRS decisions concerning tax litigation to ensure we are fully informed and prepared for our clients.

Couple That Relied Entirely on Tax Prep Software Can’t Avoid Underpayment Penalties: In Ayissi-Etoh v. Comm’r, T.C. Memo. 2018-107, the Tax Court held that a couple was liable for additional taxes for (1) underreporting certain income and not substantiating certain deductions, and (2) underreporting self-employment income from the International Monetary Fund that was subject to self-employment tax. In addition, the court held that the couple was liable for penalties for substantially understating their tax liabilities because the couple did not seek advice from a qualified tax professional but relied entirely on tax preparation software and their tax deficiency amounts exceeded both $5,000 and 10 percent of the amounts required to be shown on their returns.

The issues for decision are whether petitioners: (1) underreported a taxable refund of State income tax; (2) are entitled to deductions claimed on Schedules C, Profit or Loss From Business; (3) are entitled to deductions claimed on Schedules A, Itemized Deductions, for charitable contributions and unreimbursed employee expenses; (4) are liable for self-employment tax on wages received from an international organization; and (5) are liable for accuracy-related penalties. We resolve all issues in respondent’s favor.

United States Tax Court Decision for the Week – You be the Judge

United States Tax Court Upholds Levy Action, Rejection of Installment Agreement, and Finds No IRS Abuse of Discretion

The United States Tax Court held that an IRS settlement officer in the Appeals Office didn’t abuse his discretion by rejecting a couple’s proposed installment agreement and sustaining a levy action against them because they had sufficient equity in their assets to pay the taxes, they failed to offer acceptable collection alternatives, and they had a history of noncompliance.

A recent Tax Court decision was reported that may be of interest to individuals potentially dealing with tax litigation. J. Frank Best, Certified Public Accountant and United States Tax Court Practitioner, works to stay current on all IRS decisions concerning tax litigation to ensure we are fully informed and prepared for our clients.

RANDY TILLERY AND RACHEL BENATOR,
Petitioners
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

T.C. Memo. 2015-170

 

United States Tax Court Decision for the Week – You be the Judge

The United States Tax Court Holds Restaurant Owner Fraudulently Underpaid Taxes

A recent Tax Court decision was reported that may be of interest to individuals potentially dealing with tax litigation. J. Frank Best, Certified Public Accountant and United States Tax Court Practitioner, works to stay current on all IRS decisions concerning tax litigation to ensure we are fully informed and prepared for our clients.

The United States Tax Court held that civil fraud penalties applied to a restaurant owner’s tax underpayments, finding that several badges of fraud were present to support a determination that his underpayments were due to fraud; however, the court allowed some additional business expense deductions for nonemployee compensation.

ALAA I. MUSA,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

T.C. Memo. 2015-58

United States Tax Court Decision for the Week – You be the Judge

A Prior Bankruptcy Decision Bars Challenge to Tax Deficiency and Innocent Spouse Relief

A recent Tax Court decision was reported that may be of interest to individuals potentially dealing with tax litigation. J. Frank Best, Certified Public Accountant and United States Tax Court Practitioner, works to stay current on all IRS decisions concerning tax litigation to ensure we are fully informed and prepared for our clients.

The United States Tax Court, sustaining a collection action, held that the doctrine of res judicata bars a married couple from challenging the timeliness and validity of notices of deficiency, finding that those issues were previously resolved during bankruptcy proceedings, and that res judicata also bars the wife from seeking innocent spouse relief.

RICHARD E. SNYDER AND MARION B. SNYDER,
Petitioners
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

RICHARD E. SNYDER AND MARION SNYDER,
Petitioners
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

T.C. Memo. 2015-26

 

United States Tax Court Decision for the Week – You be the Judge

The United States Tax Court Determines a Disbarred CPA Liable for Penalties for Fraud, Frivolous Arguments

A recent Tax Court decision was reported that may be of interest to individuals potentially dealing with tax litigation. J. Frank Best, Certified Public Accountant and United States Tax Court Practitioner, works to stay current on all IRS decisions concerning tax litigation to ensure we are fully informed and prepared for our clients.

The United States Tax Court, imposing a $25,000 frivolous argument penalty, held that a CPA who was disbarred from practicing before the IRS is liable for additions to tax for fraudulent failure to file returns, finding that he had knowledge of his tax-paying responsibilities and failed to provide a nonfraudulent explanation for his behavior.

JOSEPH R. BANISTER,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

 

 

United States Tax Court Decision for the Week – You be the Judge

Tax Court Holds Pharmacist Liable for Taxes, and Penalties including the 75% Civil Fraud Penalty

A recent Tax Court decision was reported that may be of interest to individuals potentially dealing with tax litigation. J. Frank Best, Certified Public Accountant and United States Tax Court Practitioner, works to stay current on all IRS decisions concerning tax litigation to ensure we are fully informed and prepared for our clients. This is the latest Civil Fraud Tax Court Memorandum decision to be issued.

The United States Tax Court held that a pharmacist who was involved in the illegal distribution of hydrocodone had unreported income based on a bank deposits analysis and wasn’t entitled to business expense deductions or dependency exemptions; he was also liable for civil fraud penalties based upon clear and convincing evidence and additions to tax for failure to timely file returns and pay taxes.

STEVEN A. SODIPO,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

T.C. Memo. 2015-3

United States Tax Court Decision for the Week – You be the Judge

A recent Tax Court decision was reported that may be of interest to individuals potentially dealing with tax litigation. J. Frank Best, Certified Public Accountant and United States Tax Court Practitioner, works to stay current on all IRS decisions concerning tax litigation to ensure we are fully informed and prepared for our clients.

The United States Tax Court held that a settlement officer didn’t abuse her discretion by making a determination to sustain IRS lien and levy actions against a couple for unpaid tax liabilities, finding that the couple, who didn’t respond to the IRS’s motion for summary judgment, failed to show the existence of any material facts in dispute.

ROBERT TRIOLA AND NANCY V. TRIOLA,
Petitioners
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

T.C. Memo. 2014-166

 

 

United States Tax Court Decision for the Week – You be the Judge

A recent Tax Court decision was reported that may be of interest to individuals potentially dealing with tax litigation. J. Frank Best, Certified Public Accountant and United States Tax Court Practitioner, works to stay current on all IRS decisions concerning tax litigation to ensure we are fully informed and prepared for our clients.

The Tax Court held that an individual couldn’t challenge his underlying tax liability under Internal Revenue Code Section 6330(c)(2)(B)based on his failure to receive a notice of deficiency, finding that he declined to check his mail and retrieve the notice that the IRS attempted to send him by certified mail.

The IRS sent Eric Onyango a notice of deficiency for tax years 2006 and 2007 by certified mail to his legal address. The U.S. Postal Service attempted to deliver the notice and left notifications of its attempted delivery. However, Onyango admittedly failed to check his mail at that address even though he was there 30 to 40 percent of the time. Therefore, he didn’t receive the notice of deficiency, and it was returned to the IRS. The IRS eventually made determinations to proceed with collection actions against Onyango for his unpaid taxes, and he petitioned the Tax Court, claiming that he was entitled to challenge his underlying tax liability for tax year 2006 under section 6330(c)(2)(B) because he didn’t receive a notice of deficiency.

The United States Tax Court, in an opinion by Judge Carolyn P. Chiechi, held that Onyango wasn’t entitled to challenge the liability. The court found that although he was at the address at least some of the time during the period when the post office attempted delivery, he declined to check his mail. The court further found that he failed to do so even though he knew that the IRS was considering adjustments to his taxes and had communicated that it would send him a notice of deficiency. Chiechi concluded, “We hold that petitioner may not decline to retrieve his Postal Service mail, when he was reasonably able and had multiple opportunities to do so, and thereafter successfully contend that he did not receive for purposes of section 6330(c)(2)(B) the 2006-2007 notice of deficiency.”

ERIC ONYANGO, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

142 T.C. No. 24

United States Tax Court Decision for the Week – You be the Judge

A recent Tax Court decision was reported that may be of interest to individuals potentially dealing with tax litigation. J. Frank Best, Certified Public Accountant and United States Tax Court Practitioner, works to stay current on all IRS decisions concerning tax litigation to ensure we are fully informed and prepared for our clients.

The United States Tax Court sustained deficiencies and additions to tax for failure to file returns and pay taxes against an individual, holding him in default for failing to comply with court rules and failing to appear; the court imposed a $25,000 penalty against him for presenting frivolous tax-protester arguments and initiating groundless proceedings.

PETER H. JONES,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent


PETER HENRY JONES,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

T.C. Memo. 2014-101

United States Tax Court Decision for the Week – You be the Judge

A recent Tax Court decision was reported that may be of interest to individuals potentially dealing with tax litigation. J. Frank Best, Certified Public Accountant and United States Tax Court Practitioner, works to stay current on all IRS decisions concerning tax litigation to ensure we are fully informed and prepared for our clients.

The United States Tax Court held that the operator of a bee and wasp removal business maintained insufficient records to substantiate business deductions and the IRS was entitled to use the bank deposits method to reconstruct the income of the business and impose additions to tax under Code Section 6651 and 6654.

GEORGE R. BRISTOL,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

T.C. Memo. 2014-84