CHAPTER 1
Assessment, Collection, Settlement and Litigation: An Overview of the Players and the Process
§ 1.01 Introduction
[1] Application of Law
[2] Revenue Rulings, Private Letter Rulings and Revenue Procedures
[3] Code of Federal Regulations
[4] Internal Revenue Bulletin and Cumulative Bulletin
[5] General Counsel Memorandum
[6] Technical Advice
[7] Generic Legal Advice
[8] Action of Decision
[9] Technical Assistance Memoranda
[10] Chief Counsel Notices
[11] Compliance Officer Memoranda
[12] District Counsel Advice
[13] Field Directives
[14] Field Service Advice (“FSA”)
[15] Information Letters
[16] Legal Memoranda
[17] Litigation Guideline Memoranda (“LGM”)
[18] Office Memoranda
[19] Reviewed Briefs
[20] Service Center Advice
[21] Closing Agreement
[22] Advance Pricing Agreement
[23] Internal Revenue Service Publications
[24] Case Law
[25] General Rules Concerning Deference
[26] Circular 230
[27] Privileged Communication and Work Product Doctrine
§ 1.02 Taxpayer Advocates: Problems Resolution, and Taxpayer Services
[1] Problems Resolution
[2] Taxpayer Services
[3] Taxpayer Advocate and Form 911
§ 1.03 Taxpayer Selection and Processing a Tax Return
[1] Filing a Return with the Proper Campus
[2] Discriminant Function System
[3] Life Style Audits
[4] How to Obtain Copies of Documents Taxpayers Have Filed with the IRS
§ 1.03A The Modernized Structure of the IRS Follows a Taxpayer Classification System
[1] The Creation of Four Operating Divisions
[2] The Responsibilities and Structure of the Large Business and International Division (LB&I)
[3] Responsibilities and Structure of the Small Business/Self-Employed Operating Division (SB/SE)
[4] The Responsibilities and Structure of the Wage and Investment Operating Division (W&I)
[5] The Responsibilities and Structure of the Tax Exempt and Government Entities Division (TE/GE)
[6] Office of Chief Counsel Under the New Structure
§ 1.04 Assessment and Audit Examination Level
[1] Campus Conducts Correspondence Audits
[2] Random Audits via National Research Program
[3] Examination Division in Each of the Four Divisions Conducts Office and Field Audits
[4] What to Expect During an Examination
[5] Top Five Things To Keep In Mind During An Audit
[6] Industry Specialization Program
[7] Market Segment Specialization Program
[8] Internal Revenue Service Information Gathering Resources
[9] Meeting with Agents/Auditors
[10] “No Change” Letters Versus Adjustments
[11] Statute of Limitations
[12] Extending the Statute of Limitations for Tax Assessment
[13] Revenue Agent Report
§ 1.05 Collection Division
[1] Special Procedures Staff
[2] Revenue Officers
§ 1.06 Early Referral Program: Examination/Collection to the Appeals Division
[1] Mechanics of the Early Referral Program
[2] Procedures After Internal Revenue Service Approval of Early Referral Request
[3] Offer in Compromise, Form 656
[4] Review of Form 656 and Form 443-A/Form 443-B
[5] Negotiation of an Acceptable Offer
[6] Combination Offers
[7] Streamlining the Processing of an Offer
[8] Pilot Program
§ 1.07 Appeals Division
[1] Structure of the Appeals Division Under the Reorganized IRS
[2] Authority of Appeals Division
[3] Submitting a Written Protest to the Appeals Division
[4] Handling the Appeals Conference
[5] Settlement Positions in Negotiating with Appeals Division
[6] Evaluation of Settlement Prospects by Appeals
[7] Tactics to Follow upon Tentative Agreement
[8] Alternative Dispute Resolution
[9] Collection Due Process Hearings
[10] CDP Hearing Appeals to Tax Court
[11] Streamlined Installment Agreement
[12] Online Payment Agreement Application
§ 1.08 Economic Substance Doctrine
[1] Judicial History
[2] 2010 Codification and Penalties
§ 1.08A Sham Transaction Doctrine
§ 1.09 Other Sources
[1] Problem Resolution Contacts
[2] Account Related Inquiries
[3] Organizational Charts
[4] MSSP Audit Technique Guides
§ 1.10 Forms
[1] Form 872: Consent to Extend Time to Assess Tax
[2] Form 872A: Special Consent to Extend Time to Assess Tax
§ 1.11 IRS Strategic Plan 2009-2013
CHAPTER 1A
Litigation
§1A.01 Introduction
§ 1A.02 Burden of Proof
§ 1A.03 Prohibited Positions for the Government
§ 1A.04 Federal Rules of Evidence
[1] Scope
[2] Purpose and Construction
[3] Rulings on Evidence
[4] Preliminary Questions
[5] Limited Admissibility
[6] Remainder of Related Writings or Recorded Statements
[7] Judicial Notice
[8] Presumptions in General in Civil Actions and Proceedings
[9] Applicability of State Law in Civil Actions and Proceedings
[10] Relevant Evidence
[11] Relevant Evidence Generally Admissible; Irrelevant Evidence Inadmissible
[12] Rule 403: Exclusion of Relevant Evidence on Grounds of Prejudice, Confusion, or Waste of Time
[13] Character Evidence Not Admissible to Prove Conduct; Exceptions; Other Crimes
[14] Habit; Routine Practice
[15] Compromise and Offers to Compromise
[16] Inadmissibility of Pleas, Plea Discussions, and Related Statements
[17] Privileges
[18] Rule 502: Inadvertent Disclosure
[19] Rule 602: Lack of Personal Knowledge
[20] Rule 603: Oath or Affirmation
[21] Rule 607: Individuals Who May Impeach
[22] Rule 608: Evidence of Character and Conduct of Witness
[23] Rule 609: Impeachment by Evidence of Conviction of Crime
[24] Rule 610: Religious Beliefs or Opinions
[25] Rule 612: Writing Used to Refresh Memory
[26] Rule 615: Exclusion of Witnesses
[27] Rule 701: Opinion Testimony by Lay Witnesses
§1A.05 Hearsay
[1] Exceptions to the Hearsay Rule
[2] Rule 802, Hearsay Rule
[3] Rule 803. Hearsay Exceptions; Availability of Declarant Immaterial
[4] Rule 804: Hearsay Exceptions, Declarant Unavailable
[5] Rule 804(3)(b): Statement Against Interest
[6] Rule 805: Hearsay Within Hearsay
[7] Rule 806: Attacking and Supporting Credibility of Defendant
[8] Rule 807: Residual Exception
§ 1A.06 Authentication
[1] Rule 901: Requirement of Authentication or Identification
[2] Rule 902: Self-Authentication
[3] Originals Versus Duplicates
[4] Rule 1001: Definitions, Writings, Recording and Photographs
[5] Rule 1002: Requirement of Original
[6] Rule 1003: Admissibility of Duplicates
[7] Rule 1004: Admissibility of Other Evidence of Contents
[8] Rule 1006: Summaries
[9] Rule 1007: Testimony or Written Admission of Party
[10] Rule 1101: Applicability of Rules
§ 1A.07 Refund Versus Protest Routes
[1] Subjective Application of Variance Doctrine
[2] Tax Court Gives the IRS Ability to Raise Additional Items of Deficiency
§ 1A.08 Benefits and Burdens of Tax Court Versus Federal District Court
§ 1A.09 Federal District Court and Claims Court
§ 1A.10 United States Department of Justice Involvement
[1] Settlement Possibilities
[2] Delegation of Settlement Authority
[3] Classification of Settlement Option Procedure or Standard
[4] Amount at Issue Is Factor in Determining Level of Review
[5] Path of an Offer at the Tax Division
[6] Submitting an Offer
[7] Preservation of Evidence
§ 1A.11 Rule 30[b] [6] Deposition
[1] Background
[2] Obligations
[3] Designation of Witness(es)
[4] Witness Preparation Required
[5] e-Discovery
[6] The Deposition
[7] Privileged Communications
[8] Potential Problems
§ 1A.12 Sample Notice of Deposition
§ 1A.13 Checklist, Rule 30(b)(6) Deposition Outline
§ 1A.14 Sample Memorandum Regarding Preservation
CHAPTER 2
The Trust Fund Recovery Penalty
§ 2.01 Introduction
§ 2.02 Statutory Background
[1] Form 941 and Federal Tax Deposit
[2] Trust Fund
[3] Personal Liability
[4] Standard for Imposing Liability Under Section 6672
[5] Limited Liability Company Members
[6] Non-Tax Business Purpose to Planning
§ 2.03 Collection Division
[1] IRS Monitoring of Delinquent Businesses
[2] Investigation of Delinquent Trust Fund Taxes and/or Non-Compliance
[3] Procedures for Investigating Potential Section 6672 Penalty Assessment
[4] Preliminarily Establishing Who Are Responsible Persons
[5] When Third Parties Direct Payments to a Company’s Employees: Surety, Lender, Contractor
[6] Trust Fund Recovery Interviews
[7] Evidence that may Support a Recommendation to Assess Section 6672 Penalty
§ 2.04 Defenses to the Section 6672 Penalty
[1] Transferring the Blame
[2] Lack of Authority
[3] Liability no Longer Exists
[4] Contributory Liability
[5] The Amount of the Assessment is Incorrect
§ 2.05 Success of Collecting a Section 6672 Penalty
§ 2.06 Revenue Officer’s Recommendation of Trust Fund Recovery Penalty Assessment
[1] Practitioner’s Preliminary Analysis of the Recommendation
[2] Procedure Following Recommendation
[3] Form 656, Offer in Compromise
[4] Pilot Program
§ 2.07 Delaying an Investigation of Section 6672 Penalty
§ 2.08 Installment Agreements
[1] Considerations for Installment Agreement with a Non-Business Taxpayer
[2] Considerations for an In Business Trust Fund Installment Agreement
[3] Taxpayer Compliance with the Installment Agreement
§ 2.09 Collateral Agreement
[1] Purpose of Collateral Agreement
[2] Guidelines for Securing Collateral Agreements
§ 2.10 Form 911, Application for a Taxpayer Assistance Order
§ 2.11 Appeals Consideration
§ 2.12 Procedures for Examination Division
§ 2.13 Application of Payments and Collection of the Penalty
[1] Designated Payments
[2] Accounting for Offers in Compromise
[3] Accounting for Payments, Abatements, and Adjustments
§ 2.14 Claim for Abatement
[1] Procedures for Claim for Abatement
[2] Grounds for Abatement
§ 2.15 Claim for Refund
[1] The Procedures for Filing a Claim for Refund
[2] Protective Claim for Refund
[3] Collection Activities Should Be Halted
[4] Discussing Settlement with the Tax Division Attorney
§ 2.16 Litigating the Trust Fund Recovery Penalty
[1] Burden of Proof
[2] Mediation Jurisdictions
[3] Factual Inquires Made by the Court in Determining Whether Liability Exists
[4] Defining a Responsible Person
[5] Defining Willfulness Under Section 6672
[6] Liability for Delinquent Taxes
[7] Conducting Discovery
[8] Electronic Discovery Plan
§ 2.17 Advice a Practitioner May Give a Client to Minimize the Section 6672 Penalty
§ 2.17A Criminal Prosecution
§ 2.18 Forms
[1] Collateral Agreement
[2] Form 433-D: Installment Agreement
[3] Form 911: Application for Taxpayer Assistance Order (ATAO)
[4] Form 4181: Questionnaire Relating to Federal Trust Fund Tax Matters of Employees
[5] Form 2674: Report of Trust Fund Tax Violations
[6] Form 4183: Recommendation re: Trust Fund Recovery Penalty Assessment
CHAPTER 3
Independent Contractor Versus Employee
§ 3.01 Introduction to Independent Contractor Misclassification
[1] IRS Motivational Factors
[2] Substance of the Relationship is Key
[3] Consequences of Misclassifying a Worker
[4] IRS Discovery of a Misclassification
§ 3.02 How to Determine a Worker’s Status
[1] Service Industries are Often Targets for Worker Classification Scrutiny
[2] Attorneys
[3] Twenty Factor Test
[4] Judicial Scrutiny
§ 3.03 Establishing Relief Under the Safe Harbor of Section 530
[1] Legislative History of Section 530
[2] Safe Harbor’s Filing Requirement
[3] Workers in Substantially Similar Positions
[4] Published Rulings or Judicial Precedent
[5] Prior IRS Examination of the Business
[6] Industry Practice
[7] Other Reasonable Basis
§ 3.04 Effect of Section 530 on Employees
§ 3.05 Preliminary Procedures During an Audit Examination of the Worker Classification Issue
[1] Scheduling a Meeting with the Agent
[2] Settlement Negotiations with the Agent
[3] Negotiations with the Appeals Division
§ 3.06 Audit Examination Techniques
[1] Four Steps to Agent’s Analysis
[2] Classification Settlement Program
§ 3.07 Audit Techniques Used to Determine if a Worker is Employee or Independent Contractor
[1] Does the Business Qualify for Safe Harbor?
[2] Fact-Finding Investigation
[3] Adapting the Twenty Factor Test to the Case
§ 3.08 Choosing a Forum for Litigation
[1] Preliminary Considerations of Litigation
[2] United States Tax Court
[3] Expert Testimony
[4] Factual Development is Most Important to Defeating the Government’s Case
§ 3.09 Planning to Survive Independent Contractor Scrutiny by the IRS
[1] Written Agreement
[2] Competitor/Industry Information
[3] Form 4667, Examination Changes-Federal Unemployment Tax
[4] Record Keeping
[5] Document Practice Points
§ 3.10 Source Material
[1] Petition to United States Tax Court
[2] Form 4667
CHAPTER 4
Jeopardy and Termination Assessments
§ 4.01 Introduction to Jeopardy and Termination Assessments
[1] Judicial Review
[2] Taxes Subject to Jeopardy and Termination Assessments
§ 4.02 IRS Investigation Prior to Making Assessment
[1] Areas of Inquiry
[2] Methods for Verification of Income
[3] Review of Books and Records
[4] Accounting Method
[5] Mark-Up
[6] Initial Interview Is Crucial to Setting the Focus of the Audit
[7] Checklists of Issues for Which to Prepare the Client
[8] Agent’s Analysis
§ 4.03 Procedures for Making a Jeopardy or Termination Assessment
[1] Approval Authority
[2] Recommendation for Jeopardy Assessment
[3] Informing the Taxpayer of Assessment and Levying Assets
[4] Service of the Notice
§ 4.04 Appeal Process
[1] Appeals Division
[2] Arguments in Support of Abatement
§ 4.05 Posting Bond to Stay Collection
§ 4.06 Summary Judicial Review of Assessment
[1] Arranging Payment Pending Judicial Review
[2] Time Period Governing Judicial Review
[3] Standard for Judicial Review Under Code Section 7429 is the “Reasonableness” of the Assessment
[4] Second Inquiry of Code Section 7429 Summary Review is the Amount of the Assessment
[5] District Court’s Determination is Final and not Open to Appeal
§ 4.07 Complaint for Review of Jeopardy Assessment
CHAPTER 5
Refunds, Credits, and Abatements
§ 5.01 Introduction
§ 5.02 Procedural Requirements of Seeking a Refund or Credit
[1] Establishing the Existence of an Overpayment
[2] Claim for Refund or Credit of Overpayment
[3] Time Period Limitation on Filing Administrative Claim
[4] Determining when a Return is Considered Filed
[5] Limitations on Amount Allowed for the Refund or Credit
[6] Determining when Payment of Taxes Occurred
[7] IRS Processing of Claim for Refund or Credit
[8] Jurisdictional Requirements of Initiating a Refund Suit
[9] Application of Judicially-Created Doctrines
§ 5.03 Abatement Claims
[1] Abatement of Taxes and Penalties
[2] Requirements for Abatement of Interest Claims
§ 5.04 Doctrines Which May Be Invoked to Effect the Period of Limitations
[1] Equitable Recoupment or Setoff
[2] Equitable Estoppel
[3] Equitable Tolling of Statute of Limitations
[4] Mitigation Provisions, Sections 1311 through 1314
§ 5.05 Procedural Requirements for the IRS to Recover an Erroneous Refund
[1] Statute of Limitations for Bringing Suit
[2] Recovery of Interest
[3] Section 6676 Penalty
[4] Burden of Proof
[5] Deficiency Procedures in lieu of Erroneous Refund Suit
§ 5.06 Complaint for Tax Refund
§ 5.07 Forms
[1] Instructions for Form 843
[2] Form 843: Claim for Refund and Request for Abatement
CHAPTER 6
Wrongful Levy
§ 6.01 Introduction
§ 6.02 Third Party Must Initiate Challenge Within Nine Months of Date of Levy
[1] General Nine Month Rule
[2] Obtaining an Extension Period
§ 6.03 Legal Standards Governing Adjudication of Wrongful Levy Action
§ 6.04 Nominee and Alter Ego Theories
[1] Nominee Situations
[2] Alter Ego Situations
[3] Fraudulent Conveyance Situation
§ 6.05 Transferee Theory of Liability
[1] Elements of Transferee Liability
[2] Proving Transferee Liability at Law
[3] Asserting Transferee Liability at Equity
[4] Definition of Transferee Under the Internal Revenue Code
[5] Transferee Acting as Fiduciary Can Be Liable for a Personal Penalty
[6] Transferee as Limited Liability Company Member
[7] Statute of Limitation for Transferee Liability
[8] Procedures for Litigating the Transferee Liability
§ 6.06 Defenses for Refuting an Assessment Based on Alter Ego/Nominee and Fraudulent Conveyance Theories
[1] Exercise of Dominion and/or Control
[2] No Record Assets
[3] Developing Evidence
[4] Relief Available
§ 6.07 Third Parties and Section 1346(a)(1) Versus Section 7426
[1] The Decision of United States v. Williams
[2] Wrongful Levy Exclusivity After Williams
[3] Substance Versus Form of IRS Collection Activity
[4] Post-Williams Statutory Relief
§ 6.08 Quiet Title, Wrongful Levy, and Real Property
CHAPTER 7
The Reasonable Cause Defense
§ 7.01 The Reasonable Cause Defense
[1] Penalties
[2] Employment Taxes
§ 7.02 Administrative Procedure and Assessment
[1] Establishing Reasonable Cause at the Revenue Agent/Audit Level
[2] Practical Planning for Escaping Imposition of Certain Penalties
[3] Alternatives for Disputing Penalty Recommendation
[4] Deductibility of Civil Tax Penalties
§ 7.03 Establishing Reasonable Cause in Litigation
[1] Supreme Court Precedent
[2] Being Too Busy Does Not Establish Reasonable Cause
[3] Financial Instability May Establish Reasonable Cause
[4] Affirmative Action by Taxpayer to Comply with Law Must Be Evidenced
[5] Burden of Proof
[6] Abatement
§ 7.04 Developing the Case
[1] Checklists of Inquiries Concerning the Delinquencies
[2] Erroneous Calculation of the Assessment
[3] Common Considerations in Reviewing a Client’s Case
§ 7.05 Sample Complaint Requesting Recovery of Employment Tax Penalties
CHAPTER 8
The Innocent Spouse Defense
§ 8.01 Innocent Spouse Defense
§ 8.02 Administrative Procedures
[1] Filing Deadline
[2] Nonrequesting Spouse’s Right to Appeal
[3] Collection Due Process Matters
§ 8.03 Theories of Innocent Spouse Relief
[1] Innocent Spouse Relief
[2] Separation of Liability
[3] Equitable Relief
§ 8.04 Litigation
[1] Federal District Court and Federal Court of Claims
[2] Tax Court Review
[3] Bankruptcy Court
CHAPTER 9
Collection Activities Via the Tools of Liens and Levies
§ 9.01 Introduction
§ 9.02 Creation of the Federal Tax Lien
[1] An Overview of the Federal Tax Lien
[2] What Constitutes a Proper Assessment?
[3] What Constitutes a Proper Notice and Demand for Payment?
[4] Taxpayer’s Failure to Pay Liability
[5] Filing of the Notice of Federal Tax Lien
[6] Scope of the Federal Tax Lien
§ 9.03 Priority Issues
[1] Two Step Inquiry
[2] Federal Tax Lien Act of 1966
[3] State Law Considerations
[4] Federal Law
[5] Superpriorities and Instances Where Federal Tax Lien May Be Defeated
§ 9.04 Certificate of Subordination of Federal Tax Lien
[1] Prerequisites for Certificate of Subordination
[2] Obtaining Certificate of Discharge or Subordination
[3] Investigation of Application for Discharge or Subordination
[4] Issuing the Certificate of Discharge Subordination
§ 9.05 Revocation of Certificates of Release of Federal Tax Lien
§ 9.06 Certificate of Nonattachment of Federal Tax Lien
§ 9.07 Withdrawal of the Filed Notice of Federal Tax Lien
[1] Content of the Request for a Withdrawal
[2] Instances Where a Request for Withdrawal Should Be Submitted
[3] Notice of Lien Withdrawal Will Facilitate Collection of the Tax Liability
[4] Withdrawal Based on the Best Interests of the Government and Taxpayer
[5] Installment Agreements and the Notice of Withdrawal
[6] Withdrawal May Be Issued Without Taxpayer Intervention
§ 9.08 The Special Liens for Estate and Gift Taxes
[1] Special Estate Tax Lien
[2] Special Gift Tax Lien
§ 9.09 The Levy
[1] IRS Procedures Prior to Issuing Notice of Levy
[2] Duty and Consequences of the IRS Levy
[3] Two Defenses to Failure to Honor Levy
[4] The Nature and Extent of a Notice of Levy
[5] Property Exempt from Levy
[6] Property Subject to a Levy
§ 9.10 Seizure and Sale of Property Subject to Federal Tax Lien or Levy
[1] Notice of Seizure
[2] Verifying Clear Title and Minimum Bid Price
[3] Notice of Sale
[4] Sale Conducted Within Ten to Forty Days of Notice of Sale
[5] Sale of Property Co-Owned with a Delinquent Taxpayer
[6] Appealing Seizure of Property
[7] Redemption
§ 9.11 The Administrative Appeals Process
[1] Overview of the Administrative Appeals Process
[2] Collection Appeals Program
[3] Due Process Hearing
§ 9.12 Judicial Proceedings of Tax Liens or Levies
[1] Reducing Assessments to Judgment and Government Foreclosure Action
[2] Non-government Lienholder Seeking Foreclosure and Discharge of Property from Lien
[3] Interpleader
[4] Declaratory Judgment
[5] Quiet Title
[6] Injunctions
[7] Writ of Entry
[8] United States’ Right of Intervention
§ 9.13 Challenging the Validity of a Federal Tax Lien
[1] Checklist of Issues on IRS Procedures for Issuing a Federal Tax Lien
[2] Record Retention
CHAPTER 10
Tax Return Preparers and Tax Shelter Promoters
§ 10.01 Introduction
[1] Ministerial Violations
[2] Uncertain Tax Positions
§ 10.02 Overview of Preparer Penalties and Standards of Conduct
[1] Who May Qualify as a Return Preparer Under the Internal Revenue Code?
[2] Disclosure Rules and Standards
[3] Preparer Penalty Standards Under the Emergency Economic Stabilization Act of 2008
[4] Negligence
[5] Willful Conduct
[6] Fraud
§ 10.03 Assessment and Appeal Procedures of Preparer Penalties
[1] Assessment and Appeal Rights
[2] IRS Development of the Section 6694 Penalty Examination and Assessment
[3] Evaluation of Whether Substantial Authority Penalty Applies
[4] Examples of the Section 6694(a) Penalty Application
[5] Reckless or Intentional Disregard
[6] Understatement of Liability
[7] Unrealistic Position
[8] Examples of the Section 6694(b) Penalty Application
[9] Circumstances Where Preparer Is Subject to Multiple Penalties
[10] Statute of Limitations
§ 10.04 Overview of the Return Preparer Penalty Program
[1] Program Structure
[2] Penalty Screening Committee
[3] Role of the Return Preparer Coordinator
[4] Role of Revenue Agent or Auditor
§ 10.05 Program Action Cases
[1] Return Preparer Coordinator’s Recordkeeping
[2] Return Sampling
[3] Interviews with the Clients of the Subject Tax Preparer
[4] Accuracy Related Penalty and the Reasonable Cause and Good Faith Defense
§ 10.06 Preparer Defenses
[1] Adequate Disclosure Defense
[2] Substantial Authority Defense
[3] Reasonable Cause/Good Faith Defense
[4] Reduction of Amount Assessed Where Both Penalties Under Sections 6694(a) and 6694(b) Apply
§ 10.07 Electronic Filing Program
[1] What is the Electronic Program?
[2] Obligations of an Electronic Filer Participant
[3] Penalties for Preparer’s Noncompliance with the Electronic Filing Program Obligations
[4] IRS Monitoring of Electronic Filers
[5] Director of Practice
§ 10.08 Litigation Involving the Preparer Penalties
[1] Injunction
[2] Refund Suits and Burden of Proof
§ 10.09 Practical Methods for Developing a Defense in a Preparer Case
[1] Factual Development
[2] Checklist of Criteria for Imposing the Section 6694(a) Penalty
[3] Summary Checklist of Criteria for Imposing the Section 6694(b) Penalty
§ 10.10 Responsibilities and Penalties of Tax Shelter Promoters
[1] Registration Responsibilities, In General
[2] List Retention Requirements of Promoters of Potentially Abusive Tax Shelters
[3] Disclosures Requirements
[4] Promoters Have Affirmative Duty Not To Provide False Information
[5] Fees
[6] Automated Process for Certain Penalties in Listed Transaction Situations
§ 10.11 Penalties for Failing to Comply with Code Requirements
[1] Penalty for Failure to Comply with Registration Process
[2] Calculation of the Penalty
[3] Protective Registration
§ 10.12 Use of Lists by the IRS
[1] General Rule: Seven Year Retention Period
[2] How the IRS Will Use the Lists
[3] Consequences of Noncompliance with List Retention Requirements
§ 10.13 Lawyer As Witness
§ 10.14 Unreasonable Conduct by IRS
CHAPTER 11
Recovering Monetary Damages from the Federal Government
§ 11.01 Introduction
§ 11.02 Disclosure of Tax Return Information
[1] Section 6103
[2] Statutory Exceptions to Confidentiality Which Permit Disclosure of Tax Return Information
[3] Disclosure Made In Good Faith Is Not Actionable
§ 11.03 Actual Damages
[1] Overview
[2] Establishing a Causal Relationship Between the Unauthorized Disclosure and the Actual Damage
[3] Establishing Proof of Causation
[4] Economic Loss as Element of Actual Damages
[5] Emotional Distress as an Element of Actual Damages
[6] Physical Harm as an Element of Actual Damages
§ 11.04 Punitive Damages
[1] In General
[2] View that Punitive Damages Are Recoverable Only When Actual Damages Are Proven
[3] View that Punitive Damages Award Does Not Require a Showing of Actual Damages
[4] Defining What Constitutes a Willful Disclosure
[5] Defining What Constitutes Gross Negligence
[6] Establishing Willful Disclosure and Gross Negligence for Punitive Damage Award
§ 11.05 Recovery Under the Privacy Act of 1974
§ 11.06 Government’s Right of Set-Off
§ 11.07 Recovery for Damages for Failure to Timely Release a Federal Tax Lien
§ 11.08 Recovery for Damages for Unauthorized Collection Actions
§ 11.09 United States Must Be Named as a Defendant
§ 11.10 Constitutional Torts
[1] Qualified Immunity Defense of Government Employees for Constitutional Violations
[2] No Relief When Other Remedies Are Available
[3] No Relief for Torts in the Assessment and Collection Context
[4] Factual Circumstances Where Relief Was Afforded for a Constitutional Tort
§ 11.11 Recovery Pursuant to the Federal Tort Claims Act (FTCA)
§ 11.12 No Right to Jury Trial in Actions Brought Under Sections 7432 and 7433
CHAPTER 12
Recovering Administrative and Litigation Expenses from the Government
§ 12.01 Introduction
§ 12.02 Pre-Suit Review of Award for Administrative Costs
[1] Recovery of Costs Incurred
[2] Jurisdiction
[3] Procedures for Recovering Administrative Costs
[4] Filing Deadline for Recovery of Administrative Costs
[5] Time Period During Which Costs Are Recoverable
[6] Appeals Division Determination
[7] Settlement of Claims for Attorneys’ Fees
§ 12.03 Appealing the IRS’ Disallowance or Partial Disallowance of an Award
[1] Procedures for Appeal
[2] Section 6673
§ 12.04 Post-Litigation: Seeking Reasonable Litigation and Administrative Costs and Fees
[1] Section 7430, in General
[2] Defining Reasonable Administrative Costs
[3] Defining Reasonable Litigation Costs
[4] Qualifications for an Award
[5] Examples
[6] Who Can Qualify as a Prevailing “Party” for Purposes of Recovering Litigation Expenses?
[7] Exhausting Administrative Remedies
[8] Unreasonably Protracting Proceedings
[9] Determining Whether a Party is a Prevailing Party
[10] Court Discretion in Award
[11] Evidence Supporting Reasonable Litigation Fees Award
[12] Burden of Proof
[13] Suits Where Recovery of Reasonable Litigation Fees Should Be Sought
[14] Determining Whether the United States Can Offset a Section 7430 Award
[15] Recovering Attorneys’ Fees in Bankruptcy Court
§ 12.05 Sanctions
[1] Government Award of Fees as Sanction Against Taxpayer
[2] Taxpayer Awarded Sanctions Against Government
[3] Fraud on the Court
§ 12.06 Practical Advice
§ 12.07 Checklists
[1] Evidentiary Checklist for Recovery of Fees in Administrative Proceeding
[2] Evidentiary Checklist for Recovery of Fees in Civil Tax Litigation
CHAPTER 13
Criminal Tax Investigations
§ 13.01 Introduction
§ 13.02 Example of a Typical CID Investigation
[1] Phase One
[2] Phase Two
[3] Phase Three
[4] Phase Four
[5] Phase Five
§ 13.03 The Structure and Purpose of CID
[1] Offenses Investigated by CID
[2] Triggers for Criminal Investigation
[3] Special Agent Responsibilities
[4] Responsibilities of Service Center Criminal Investigation Branch
[5] Three Categories of Investigations Conducted by a Special Agent
§ 13.04 Civil Audit/Assessment Must Be Stayed Pending Criminal Investigations
[1] Due Process Concerns
[2] Civil Versus Criminal Violations
[3] Civil Penalties that May Arise During Criminal Investigation
§ 13.05 Taxpayer Information that May Be Disclosed by Special Agent in Conducting Investigation
§ 13.06 Guidelines Special Agent Must Follow in Conducting Investigation
§ 13.07 Fifth Amendment Privilege
§ 13.08 Miranda Warning
§ 13.09 Fourth Amendment
[1] Probable Cause
[2] Requirement of Particularity
[3] Examination of the Scope and Execution Method
[4] Notice, Inventory Return
[5] Suppression and Standing
[6] Applicability of “Good Faith” Exception
§ 13.09A Privileged Communications/Documentation
[1] Attorney/Client Privilege
[2] Accountant/Client Privilege
[3] Attorney Work Product
[4] Corporate Privileges
§ 13.10 Information Gathering Tools Used by Special Agent
[1] Summons Power, Generally
[2] Third Party Record-Keeper Summons
[3] John Doe Summons
[4] Government Enforcement of Summons
[5] Compulsion Order
[6] Immunity
[7] Search Warrants
[8] Electronic Surveillance and Interception
[9] Electronic Tracking Devices (Beepers)
[10] Pen Registers and Trap and Trace Devices (Grabbers)
[11] Informants
[12] Mail Covers
[13] Hardware and Software Evidence
§ 13.11 Record-Keeping Resources of Taxpayer Information
[1] Currency Transaction Reports
[2] Suspicious Activity Report (SAR) Forms
[3] Report of Cash Payments Over $10,000 Received in a Trade or Business
[4] Social Security Administration
[5] State Department
[6] Securities and Exchange Commission (SEC)
[7] Comptroller of Currency
[8] Customs Records
[9] Bureau of Alcohol, Tobacco and Firearms Records
[10] Federal Bureau of Investigation Records
[11] Drug Enforcement Agency Records
[12] United States Postal Service Records
[13] Financial Crimes Enforcement Network (FinCEN)
[14] Financial Institutions
[15] FinCEN, Financial Institutions, and the USA PATRIOT Act
[16] Foreign Corrupt Practices Act
[17] Hiring Incentives to Restore Employment (HIRE) Act
§ 13.12 Special Agent’s Prosecution Report
[1] History of the Taxpayer
[2] Taxpayer Contacts
[3] Theory of the Case
[4] Reconciliation of Books and Records to Tax Returns
[5] Other Evidence for use in Criminal Proceedings
[6] Evidence of Intent
§ 13.13 Taxpayer Conferences with the Government
[1] Conference with the Special Field Agent and Group Manager
[2] Conference with Field Counsel
[3] Conference with the Tax Division
[4] Conference with the United States Attorney’s Office
§ 13.14 Expedited Plea
[1] Taxpayer’s Representative Must Initiate Plea Discussion
[2] Justice Department Authority and Jurisdiction
[3] Evidentiary Analysis
[4] Affect of Plea Negotiations on Civil Liability
[5] Citizenship
§ 13.15 Bank Secrecy Act: Title 31 Referral Guidelines for Civil Penalties
[1] Severity of Violations
[2] Inconsequential Violations
[3] Disclosure of Tax Return Information Based on Related Statute Test
[4] Criteria for Determining Whether Bank Secrecy Act Violations Warrant a Penalty Referral
[5] Mitigating Factors to Offer in Defense to Bank Secrecy Act Violations
§ 13.16 Grand Jury Matters
[1] Function of a Grand Jury
[2] Challenging a Grand Jury Subpoena
[3] IRS Initiation of a Grand Jury Investigation
[4] Initiation of Grand Jury by Department of Justice
[5] Grand Jury Secrecy
[6] Use of Subpoenas Duces Tecum in Grand Jury Investigation
[7] Immunity
[8] Informants
[9] Grand Jury and the Corporate Taxpayer
[10] IRS Final Report on Grand Jury
[11] Inappropriate Prosecutorial Actions
[12] Sentencing Guidelines
§ 13.17 Criminal Tax Prosecution
[1] Dual and Successive Prosecution
[2] Pleas After Arrests
[3] Indictment
[4] Information
[5] Complaint
[6] Warrant or Summons
[7] Preliminary Hearing
[8] Arraignment
[9] Invoking the Fifth Amendment During Discovery and/or Trial
[10] Discovery and Inspection
[11] Trial Preparation Methods
[12] Sentencing in Criminal Tax Prosecutions
§ 13.18 Taxpayer Defenses
[1] Preparation for the Taxpayer Interview with the Special Agent
[2] Production of Evidence
[3] Cooperation with the Special Agent
[4] Affidavits
[5] Voluntary Disclosure Policy
[6] Attacking the Method of Proof Used by CID
[7] Statute of Limitations
[8] Suppression of Evidence as Remedy for Improper Use of Immunized Testimony During Prosecution
[9] Suppression of Evidence Due to Prosecutorial Misconduct
[10] Appeal of Conviction or New Trial
§ 13.19 Forfeitures
[1] Seizures
[2] IRS Internal Forfeiture Procedures
[3] Quick Release of Property Procedures
[4] Administrative Review
[5] Judicial Forfeiture
[6] Role of the United States Attorney’s Office
[7] Judicial Action
[8] Defenses to Forfeiture
§ 13.19A Multiple or Dual Representation Problems
[1] Potential for Ethical Dilemma
[2] Disqualification Upon Showing of Conflict of Interest
[3] Government Motion to Disqualify Counsel
[4] Conflicts of Interest Resulting in Disqualification
§ 13.20 Recovering Attorney Fees in a Criminal Case
[1] Defining a “Prevailing Party”
[2] Burden of Proof
[3] Final Judgment
[4] Net Worth Requirement
[5] The “Position of the United States”
[6] Discovery of the Conduct of the Government May Be Allowed
[7] Scope of Record
[8] Deadline for Filing Claim
[9] Common Government Arguments to Refute Award Under Hyde Amendment
[10] Statutory Loophole of Special Circumstances Making an Award Unjust
[11] Practical Advice
§ 13.21 Title 18 Bootstrap
§ 13.22 Sample Petition to Enforce Summons and Accompanying Declaration of Revenue Agents
§ 13.23 Report of Cash Payments Over $10,000 in a Trade or Business
§ 14.05 Internal Jurisdiction and Settlement Authority Between the IRS and the Department of Justice