Document Summaries for the week of June 6, 2022
Tax document summaries for the week of June 6–10, 2022, covering individuals; IRS procedure; and more.
Taxpayer qualifies for innocent spouse relief
The Tax Court held that a taxpayer qualified for relief from her 2006, 2007, and 2008 federal tax liabilities under the innocent-spouse provisions of Sec. 6015(f). Pocock, T.C. Memo. 2022-55 (6/6/22).
Tax attorney cannot challenge tax liabilities in Tax Court after receiving notice of deficiency
The Tax Court held that a taxpayer, a tax attorney, was precluded from challenging his tax liabilities for 2008, 2009, and 2010 because he had a prior opportunity to do so when he received a notice of deficiency. The court also found that the IRS settlement officer did not abuse her discretion in sustaining a collection action for those years. Chinweze, T.C. Memo. 2022-56 (6/7/22).
Lack of substantiation dooms most of taxpayer's claimed deductions
The Tax Court held that a taxpayer was not entitled to deduct all of his claimed contract labor expenses, car and truck expenses, and repair and maintenance expenses related to his business of providing nonemergency transportation services to medical patients, because he failed to adequately substantiate the expenses. However, applying the Cohan rule, the court allowed a deduction for a portion of the claimed contract labor expenses. Spencer, T.C. Summ. 2022-8 (6/7/22).
IRS updates standard mileage rates for second half of 2022
Sale of land resulted in capital, not ordinary, loss
The Tax Court held that a land developer's sale of four lots in Brunswick County, N.C., did not result in an ordinary loss, as he had reported on his Schedule C, Profit or Loss From Business, because in his hands the lots were capital assets and generated a capital loss. Musselwhite, T.C. Memo. 2022-57 (6/8/22).
Appeals court upholds willful FBAR penalty
The Third Circuit upheld a lower court's order imposing civil penalties on a taxpayer for failing to report ownership of multiple foreign bank accounts on FinCEN Form TD-F 90-22.1 (subsequently renumbered 114), Report of Foreign Bank and Financial Accounts (FBAR), and affirmed the lower court's holding that the taxpayer's failure to report was a willful violation of the Bank Secrecy Act. Collins, No. 21-1935 (3d Cir. 6/6/22).
Appeals court upholds dismissal of action against Sec. 965 repatriation tax
The Ninth Circuit affirmed a district court's dismissal of an action that sought to invalidate the Sec. 965 one-time mandatory repatriation tax. The court held that the tax does not violate either the U.S. Constitution's Apportionment Clause or the Fifth Amendment's Due Process Clause. Moore, No. 20-36122 (9th Cir. 6/7/22).
FAQs address relation of Russia sanctions to provision of tax services
An FAQ posted by Treasury describes scenarios in which services to a non-Russian subsidiary of a Russian person would or would not be prohibited, including the provision of tax advisory and preparation services to the U.S. subsidiary of a Russian company. Frequently Asked Questions No. 1059 (6/9/22) (see related news story).
IRS 'Dirty Dozen' list continues
IRS warns of OIC mills and ghost preparers
IRS warns of impostors in 'Dirty Dozen'
Thieves looking to file a fraudulent refund claim by using a taxpayer's information may try to steal that information by such ruses as posing as an IRS representative, the IRS said in its ongoing "Dirty Dozen" series. IR-2022-121 (6/8/22) (see related news story).
Spear phishing targets tax professionals
Tax professionals can fall prey to attempts to steal clients' tax information, the IRS said in the eighth item of this year's "Dirty Dozen" tax-related scams and criminal threats. IR-2022-122 (6/9/22) (see related news story).
'Dirty Dozen' ends with tax-avoidance schemes