Earlier this month the Tax Court issued its Opinion in Alon Farhy v. Commissioner of Internal Revenue, 160 T.C. No. 6 (T.C. April 3, 2023), holding that the IRS lacks statutory authority to assess penalties under IRC section 6038(b)(1) or (2) against the petitioner in...
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Appeals
Clarification for Out-of-State Entities Doing Business in California on Property Ownership Threshold
In a Pending Precedential Opinion by the California Office of Tax Appeals (OTA), the OTA clarified that in determining whether an out-of-state LLC doing business in California and therefore subject to the annual tax each year, the determination based on the property...
Finally, the Answer on Worker Classification in the California Trucking Industry
Last week the U.S. Supreme Court denied the request to hear the appeal of a case which ultimately resolves the worker classification rules for truckers in California that had been challenged since September 2019 when Assembly Bill 5 (AB 5) was enacted to codify the...
The IRS’ Position on Abusive Micro-captive Insurance Transactions is Upheld
While micro-captive insurance policies may be about as clear as mud to many people, what is crystal clear is that a U.S. Court of Appeals affirmed the IRS’ position that abusive micro-captive insurance transactions are sham transactions resulting in a disallowance of...
Rubber Checks Meet the Tax Evasion Road
Tax evaders can certain be creative when it comes to evading the assessment of tax, or evading the payment of tax, but they often get caught. This was the case for a Utah chiropractor who used a variety of tactics to avoid paying the IRS nearly $350,000 in tax. ...
OTA Reverses FTB Assessment of Out-of-State Contractor Income
The California Office of Tax Appeals (OTA) recently reversed a Franchise Tax Board (FTB) proposed assessment of a Texas-based independent contractor working for a California-based company. The OTA found that income reported to the contractor on a Form 1099-MISC did...
Ninth Circuit Confirms Tribal Manufacturers Are Subject to Tobacco Excise Tax
The U.S. Court of Appeals for the Ninth Circuit issued an opinion in U.S. v. King Mountain Tobacco Co., affirming that tribal manufacturers of tobacco products on land held in trust by the United States are subject to the federal excise tax on manufactured tobacco...
OTA Releases Inaugural Opinions on California Tax Matters
The new California Office of Tax Appeals (OTA) just released its first seven opinions. All seven opinions were decided in the favor of the Franchise Tax Board (FTB); none of the taxpayer-appellants opted for representation by an attorney, although three...
California Office of Tax Appeals Releases Draft Emergency Regulations
The new state Office of Tax Appeals (OTA) began hearing appeals cases as of January 1, 2018. California taxpayers may file an appeal with the OTA after receiving a Notice of Action or Notice of Determination from the Franchise Tax Board (FTB) or the new...
Fourth Circuit finds Fifth Amendment privilege inapplicable to documents required to be maintained under the Bank Secrecy Act
Last Friday, the Fourth Circuit Court of Appeals affirmed a district court's refusal to quash subpoenas related to foreign bank account records that were required to be maintained under the Bank Secrecy Act and Treasury Regulations.The case involves an investigation...
