Lots of taxpayers are thinking about Employee Retention Credit (“ERC”) matters these days. Most are focused on employment tax issues, but they should be considering related tax issues, too. Specifically, they might analyze how the potential reduction or elimination of ERC amounts will affect income tax returns, when such events will occur, and what should be done in the meantime. This article, another in a series by the author, explains the relevant laws, relationship between ERCs and income taxes, timing issues, and filing “protective” amended returns as a solution ..read more

The Employee Retention Credit (“ERC”) is a polarizing tax benefit, but there are a few things on which most everyone can seem to agree. First, guidance regarding the ERC is dense and complicated. Second, ERCs often involve big money, for employers who obtain them, professionals who assist in procuring them, and others. Third, parties working toward the mutual goal of submitting proper ERC claims sign agreements, the terms of which are sometimes subject to different interpretations. These three realities have converged to trigger disputes, with the IRS, and among various par ..read more

Things are dynamic when it comes to the Employee Retention Credit (“ERC”). Among the most recent events is the introduction of the Voluntary Disclosure Program, which is designed for taxpayers that previously filed ERCs claims, got paid, later questioned their eligibility, and now want to give the money back with minimal financial downsides. This article, the latest in an ongoing series, compares methods used by the IRS in addressing conservation easement donations and ERCs, and then presents some questions to consider ..read more

Congress took action to help taxpayers economically suffering because of COVID, including creating the Employee Retention Credit (“ERC”). The number of claims filed, amounts sought, and grounds for relief far surpassed what was expected. These and other factors led to problems, among them the IRS’s struggle to administer the ERC program. The IRS has experienced challenges separating the wheat from the chaff, so to speak. Therefore, following its standard playbook, the IRS has introduced both carrots and sticks, the effectiveness of which is yet to be seen. This article, the latest in a long se ..read more

Most battles over “syndicated” conservation easements focus on the partnerships that made the donations. This is logical because they took the key actions, claimed the tax deductions, and then allocated them to the partners. A recent case, Glade Creek Partner, shows that the IRS is looking at other parties, too. These include the original landowners, who contribute the property on which the easement is later donated. Why would the IRS scrutinize original landowners? How long they held the property and for what purpose directly affect the size of the charitable tax dedu ..read more

Gifting can be rewarding, but it can also generate problems with the IRS. The applicable tax and information-reporting rules are complicated when foreign persons are involved. The IRS has attempted to capitalize on this reality in two recent cases, asserting large penalties against a U.S. individual receiving a gift from a foreign relative, and seeking significant gift taxes and penalties from another U.S. individual making a gift to a foreign relative. Although the IRS lost in both instances, these types of challenges serve as a warning to taxpayers to better understand interna ..read more

Taxpayers often lack the time or patience to read an entire court decision. This is understandable, but it leads to problems. When taxpayers focus only on headlines, they tend to overlook important rulings that might be helpful to themselves and others. This is precisely what has happened with a recent conservation easement dispute, Mill Road 36 Henry. The ultimate outcome was not good for the taxpayer in that case, but those who persevered discovered that the Tax Court made six rulings favorable to all taxpayers involved in conservation easement disputes. This article ..read more

Enforcement actions against alleged promotors of abusive transactions and taxpayers who participate in them are firmly linked. Therefore, effectively defending against IRS challenges requires an understanding of the overlapping rules, standards, and procedures. Many taxpayers are myopic, thinking solely about how certain events will affect them personally and immediately. This is understandable, but it rarely achieves the best overall result when it comes to multi-faceted disputes with the IRS. This article explains unique aspects of promoter penalties, various actions the IRS takes in promote ..read more

If people have learned anything from the recent disputes over conservation easement donations, it is that IRS has a playbook. It involves announcing that the main problem is excessive valuation, followed by attacking essentially everything but what the donation is worth. The IRS often concludes that taxpayers should get a tax deduction of $0, and steep penalties apply. The IRS has already experienced problems using this strategy in the easement context, and things might get harder if it plods ahead in the same manner when it comes to art donations. This article explains the gen ..read more

Congress realized that taxpayers desperately needed financial help during the COVID crisis, so it created the Paycheck Protection Program and the Employee Retention Credit. Taxpayers that got dual relief are beginning to understand that enforcement actions, timeframes, and consequences differ for each. This article, the latest in a multi-part series, explains the fundamentals of these benefits, interplay between the two, and distinct mechanisms used to recoup benefits that were improperly issued to taxpayers ..read more