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Illustrative Tax Representations
For two different taxpayers, the IRS rejected virtually all of the business expense deductions claimed by their small corporations, producing potential additional tax liabilities and penalties totaling several hundred thousand dollars. Working with the clients' bookkeepers and accountants, Stu developed evidence and arguments establishing the propriety of the claimed deductions. In a matter of months, he persuaded the IRS to concede virtually all of the asserted tax liabilities.
Another taxpayer called Stu after the IRS disallowed capital losses upon the sale of a large family business and issued a notice of deficiency imposing tax liabilities and penalties totaling well into six figures, asserting that the passive activity loss rules governed. Facing a soon-to-expire statute of limitations, Stu filed a petition in the US Tax Court challenging the IRS action. He then helped the taxpayer develop documentation establishing the executive's active participation in the business. Based upon that presentation, the IRS quickly conceded the case in its entirety.
Another taxpayer contacted the firm after the IRS assessed potentially-bankrupting penalties against him, contending that he was a tax shelter promoter. Stu developed extensive factual evidence and multiple legal arguments challenging the penalty assertions based upon many unique facts overlooked by the IRS and innovative arguments concerning a byzantine collection of statutes and regulations. Over a period of years, Stu represented the taxpayer before several different arms of the IRS. At each stage, the IRS conceded a portion of the penalties asserted. Eventually, he settled the case for pennies on the dollar of liability asserted.
A recurring problem faced by several of the firm's clients arise out of adjustments made by the IRS on the clients' personal returns based upon a comparison of the return with information provided to the IRS by employers and financial institutions. These adjustments are computer-generated and often proceed without the involvement of any human beings. The clients' lives got complicated when those adjustments were based upon computer errors. In two recent cases, Stu represented taxpayers who had tried to correct the errors by calling the IRS 800 number and mailing explanatory documents to the IRS. The IRS essentially ignored these efforts to fix the errors. Eventually, the taxpayers found themselves days away from losing the right to challenge the incorrect tax assessments. In these situations, Stu promptly filed a petition in the U.S. Tax Court to protect the firm's clients. Several months later, he persuaded the more senior IRS personnel assigned to the case that the agency had made a mistake and they conceded the case. In both cases, the taxpayer avoided potential tax liabilities roughly ten times greater than the legal fees they incurred.