Federal
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August 23, 2024
Chamber Backs Doctor In Tax Court Economic Substance Suit
The U.S. Chamber of Commerce lent its support to an eye doctor and his wife's U.S. Tax Court case disputing accuracy-related penalties that the Internal Revenue Service plans to impose on their microcaptive insurance arrangements for lacking economic substance.
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August 23, 2024
Intended Financial Harm Counts In Sentencing, 4th Circ. Says
A split Fourth Circuit panel on Friday upheld a South Carolina woman's 30-month sentence for filing false tax returns and making false statements on applications for Paycheck Protection Program loans, finding that a sentencing range can be calculated using the total amount of intended financial harm.
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August 23, 2024
IRS Spinoff Guidance Sparks Worries About Short-Term Debt
Companies that intend to give creditors equity tied to a spinoff transaction won't get early tax-free approval if the exchange involves recently acquired debt under IRS guidance that practitioners say draws an arbitrary line without accounting for ordinary business operations.
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August 23, 2024
Alvarez & Marsal Adds Transfer Pricing Expert From EY
A former EY partner joined Alvarez & Marsal LLC to serve as managing director of its transfer pricing line of services in its New York office, the firm announced.
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August 23, 2024
Crypto Exec To Appeal IRS Bank Summons Ruling
A cryptocurrency executive charged in a 2020 bitcoin fraud investigation told a Texas federal court that he will appeal a decision this month that granted the Internal Revenue Service's request to review his and his company's sequestered bank records.
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August 23, 2024
US Trying Illegal Property Grab For Dad's Tax Debt, Son Says
The son of a man serving a 22-year fraud sentence told a Georgia federal court that the federal government is violating his constitutional rights in trying to take his property to satisfy his parents' tax debts, saying he had nothing to do with his father's crimes.
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August 23, 2024
Tax Deadlines In South Dakota Delayed After Storms
Taxpayers in South Dakota will be given until Feb. 3 to file individual and business tax returns and make payments after areas of the state were hit by severe storms, straight-line winds and flooding in June, the Internal Revenue Service said Friday.
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August 23, 2024
Utah Plumbing Supply Co.'s Microcaptive Suit Tossed
A Utah federal judge dismissed Friday a plumbing supply company and its owners' bid to set aside the IRS' 2016 notice that imposed additional reporting requirements for certain microcaptive insurance arrangements under the threat of penalty, saying the court lacks jurisdiction to do so.
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August 23, 2024
Gov't Too Late In $2.3M Estate Tax Suit, Court Rules
The U.S. government waited too long to pursue more than $2.3 million in estate taxes from a Florida man accused of using his late mother's estate's funds to pay mortgage payments instead of taxes, a federal court ruled.
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August 23, 2024
IRS Delays Tax Deadlines In Puerto Rico After Tropical Storm
Taxpayers in Puerto Rico will be given until Feb. 3 to file individual and business tax returns and make payments after the island was hit by Tropical Storm Ernesto, the Internal Revenue Service said Friday.
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August 23, 2024
Business Or Home? The $1M Question, Judge Says
A family-run company that spent $7.3 million on a house overlooking San Francisco Bay may have used it for business and so the family's trust could be entitled to a $1 million tax refund for related operating losses, a Florida federal judge said.
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August 23, 2024
DC Eyes Joining IRS Direct File For 2026, Revenue Rep Says
The District of Columbia is considering joining the Internal Revenue Service's free electronic tax filing program, Direct File, in 2026, a representative of the district's tax agency said Friday.
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August 23, 2024
Weekly Internal Revenue Bulletin
The Internal Revenue Service's weekly bulletin, issued Friday, included proposed regulations that outline when foreign taxes under the Pillar Two international minimum tax agreement could trigger long-standing U.S. rules that aim to prevent companies from what is known as double-dipping the same economic loss.
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August 23, 2024
Taxation With Representation: Latham, Wachtell, Paul Weiss
In this week's Taxation With Representation, Arch Resources merges with Consol Energy in a deal worth $5.2 billion, Advanced Micro Devices agrees to purchase ZT Systems for $4.9 billion, and Japanese tobacco company JT Group inks a deal to buy Vector Group for $2.4 billion.
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August 22, 2024
5th Circ. Says No Tolling For COVID, Trims Atty's Conviction
The Fifth Circuit on Thursday knocked a false statement charge off Houston attorney Richard Plezia's conviction for his involvement in a multimillion-dollar ambulance-chasing kickback scheme but upheld the rest of his conviction, including conspiracy to defraud the U.S. by helping another lawyer evade federal income taxes.
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August 22, 2024
Justices Disfavor External Consistency Test, Mass. Atty Says
The U.S. Supreme Court likely will decline to hear a construction company's argument that South Dakota's refusal to apportion use tax on its equipment was unconstitutional, a Massachusetts tax agency attorney predicted Thursday, saying the justices have no appetite for applying the external consistency test anymore.
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August 22, 2024
NC Hot Rod Shop Owner Admits To Not Paying $2M In Taxes
A North Carolina automotive business owner has pled guilty to failing to pay more than $2 million in employment taxes and not filing employment tax returns, the U.S. Department of Justice announced Thursday.
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August 22, 2024
Tax Co. Owner Didn't Fraudulently Fail To File, Tax Court Says
An owner of financial and tax services companies who earned about $1 million annually and failed to file returns for four years doesn't have to pay a roughly $1.2 million fraud penalty assessed by the Internal Revenue Service, the U.S. Tax Court ruled Thursday.
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August 22, 2024
Tax Court OKs IRS Rejection Of Tax Liability Compromise
An Internal Revenue Service settlement officer didn't abuse her discretion when she decided to reject an offer from a Maryland couple to settle their more than $103,000 in outstanding tax debts by paying just over $1,800, the Tax Court said Thursday.
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August 22, 2024
IRS Secretly Targeted Some ESOPs, Court Told
The Internal Revenue Service secretly promulgated rules that treat certain employee stock ownership plans as potentially abusive, an ESOP and its related parties told a Wisconsin federal court in accusing the agency of exceeding its authority and violating the Administrative Procedure Act.
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August 22, 2024
Guardrails Needed To Thwart Abuse Of Tax-Free Tips Law
Without restrictions to prevent it, including limits on incomes of eligible workers, legislation to exempt tips from taxes — something both the Democratic and Republican presidential candidates and some congressional lawmakers are proposing — could be gamed by reclassifying income as tips.
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August 22, 2024
Meet The 'Larger Than Life' Atty Defending Hunter Biden
The renowned attorney representing Hunter Biden at his upcoming criminal tax trial is a "larger than life" figure whose ability to connect with a jury, legal acumen and media savvy have made him a go-to lawyer for celebrities and high-profile cases, according to those who know him.
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August 21, 2024
Hunter Biden Can't Link Trauma, Drug Abuse To Tax Charges
Hunter Biden can't tell jurors in his criminal tax trial that traumatic events like his brother's death caused his addiction, which led to a diminished mental capacity and his failure to pay taxes, a California federal judge said Wednesday, noting the information was irrelevant and not backed by expert opinion.
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August 21, 2024
Ariz. Man Should Pay Full $2.7M FBAR Bill, Gov't Says
An Arizona man who failed to report his foreign bank accounts in Switzerland owes approximately $2.7 million in recalculated penalties and interest to the Internal Revenue Service, the U.S. told an Arizona federal court.
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August 21, 2024
9th Circ. Upholds FBAR Penalty, Imposes Contested Interest
A woman who operates a New Zealand winery must pay $238,000 in penalties and an extra $105,000 in interest and fees for failing to report her New Zealand financial accounts to the U.S. government, the Ninth Circuit ruled Wednesday.
Expert Analysis
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After Jarkesy, IRS Must Course-Correct On Captive Insurance
The U.S. Supreme Court’s recent Securities and Exchange Commission v. Jarkesy decision has profound implications for other agencies, including the IRS, which must stop ignoring due process and curtailing congressional intent in its policing of captive insurance arrangements, says Peter Dawson at the 831(b) Institute.
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Lead Like 'Ted Lasso' By Embracing Cognitive Diversity
The Apple TV+ series “Ted Lasso” aptly illustrates how embracing cognitive diversity can be a winning strategy for teams, providing a useful lesson for law firms, which can benefit significantly from fresh, diverse perspectives and collaborative problem-solving, says Paul Manuele at PR Manuele Consulting.
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Class Actions At The Circuit Courts: July Lessons
In this month's review of class action appeals, Mitchell Engel at Shook Hardy considers cases touching on pre- and post-conviction detainment conditions, communications with class representatives, when the American Pipe tolling doctrine stops applying to modified classes, and more.
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Now More Than Ever, Lawyers Must Exhibit Professionalism
As society becomes increasingly fractured and workplace incivility is on the rise, attorneys must champion professionalism and lead by example, demonstrating how lawyers can respectfully disagree without being disagreeable, says Edward Casmere at Norton Rose.
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Reading Between The Lines Of Justices' Moore Ruling
The U.S. Supreme Court's recent Moore v. U.S. decision, that the Internal Revenue Code Section 965 did not violate the 16th Amendment, was narrowly tailored to minimally disrupt existing tax regimes, but the justices' various opinions leave the door open to future tax challenges and provide clues for what the battles may look like, say Caroline Ngo and Le Chen at McDermott.
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A Midyear Forecast: Tailwinds Expected For Atty Hourly Rates
Hourly rates for partners, associates and support staff continued to rise in the first half of this year, and this growth shows no signs of slowing for the rest of 2024 and into next year, driven in part by the return of mergers and acquisitions and the widespread adoption of artificial intelligence, says Chuck Chandler at Valeo Partners.
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States Should Loosen Law Firm Ownership Restrictions
Despite growing buzz, normalized nonlawyer ownership of law firms is a distant prospect, so the legal community should focus first on liberalizing state restrictions on attorney and firm purchases of practices, which would bolster succession planning and improve access to justice, says Michael Di Gennaro at The Law Practice Exchange.
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After Chevron: Uniform Tax Law Interpretation Not Guaranteed
The loss of Chevron deference will significantly alter the relationship between the IRS, courts and Congress when it comes to tax law, potentially precipitating more transparent rulemaking, but also provoking greater uncertainty due to variability in judicial interpretation, say Michelle Levin and Carneil Wilson at Dentons.
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Texas Ethics Opinion Flags Hazards Of Unauthorized Practice
The Texas Professional Ethics Committee's recently issued proposed opinion finding that in-house counsel providing legal services to the company's clients constitutes the unauthorized practice of law is a valuable clarification given that a UPL violation — a misdemeanor in most states — carries high stakes, say Hilary Gerzhoy and Julienne Pasichow at HWG.
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How High Court Approached Time Limit On Reg Challenges
The U.S. Supreme Court's decision in Corner Post v. Federal Reserve Board effectively gives new entities their own personal statute of limitations to challenge rules and regulations, and Justice Brett Kavanaugh's concurrence may portend the court's view that those entities do not need to be directly regulated, say attorneys at Snell & Wilmer.
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How To Clean Up Your Generative AI-Produced Legal Drafts
As law firms increasingly rely on generative artificial intelligence tools to produce legal text, attorneys should be on guard for the overuse of cohesive devices in initial drafts, and consider a few editing pointers to clean up AI’s repetitive and choppy outputs, says Ivy Grey at WordRake.
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A Tale Of 2 Trump Cases: The Rule Of Law Is A Live Issue
The U.S. Supreme Court’s decision this week in Trump v. U.S., holding that former President Donald Trump has broad immunity from prosecution, undercuts the rule of law, while the former president’s New York hush money conviction vindicates it in eight key ways, says David Postel at Henein Hutchison.
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Industry Self-Regulation Will Shine Post-Chevron
The U.S. Supreme Court's Loper decision will shape the contours of industry self-regulation in the years to come, providing opportunities for this often-misunderstood practice, says Eric Reicin at BBB National Programs.