Gift Tax Statute of Limitations

IRC 6501(a) defines the statute of limitations on assessment of a gift tax return as three years from when it is filed.


IRC 6501(c)(9) provides an exception if a gift is not reported on the return to extend the statute of limitations.


In Chief Counsel Advice 201643020, the IRS determined that prior year gifts that were not disclosed on a gift tax return do not count as unreported gifts under IRC 6501(c)(9). If a taxpayer fails to disclose prior year gifts on a gift tax return, then the 3 year statute of limitations will still apply.


Relevant Cites:
Chief Counsel Advice 201643020
IRC 6501

IRS Auditors Need to Consider Collectability More Often

TIGTA just released a new report detailing the IRS' lack of following established procedures for determining collectability during audit.


56 percent of cases sampled did not follow collectability procedures. TIGTA estimated that 1,731 office audits and1,445 field audits were closed where the auditor did not follow established collectability procedures. These cases were later closed out as Currently Not Collectable by the IRS Collection division.


This is really important. Representatives need to bring this issue up more for their clients. Under the IRM, collectability needs to be considered throughout the audit process. If circumstances change, clients can get no change audit reports due to their inability to pay the audit adjustments.


IRM management is going to take corrective actions proposed by TIGTA to try to eliminate this issue in the future.


Relevant Cites: TIGTA Report

Admitting to Income in Non-Tax Cases

An Tax Court order was released in Swartz v. Commissioner. Swartz worked for Tyco and during his time there proceeded to steal $12.5 million through loan write-offs. A criminal case arose from the theft and Mr. Swartz was found guilty of theft.


The IRS used the criminal conviction to assert that Mr. Swartz had $12.5 million of income in the year he stole the money. The Tax Court found that he was collaterally estopped from arguing that he did not receive the $12.5 million. Under IRC 61(a), income from criminal endeavors are considered taxable income.


This case brings up a big issue for tax practitioners. When representing a client, there can often be many different things that can be affected by a single decision. Here, Mr. Swartz may have had a chance to settle his criminal case out of court. If he had, then he would not have been collaterally estopped from arguing he did not receive the income and may have avoided a hefty tax bill.


Relevant Cites: Tax Court order, Mark H. Swartz, Docket No. 3583-10

IRS e-Services Update Delayed

The IRS has decided to delay their e-Services update that would require users to re-register and validate identities. Originally, this was planned to take place on October 24th. The IRS has suspended this indefinitely.

Taxing Olympians

Obama has signed into law a bill that will exclude from income Gold, Silver, and Bronze metals for US Olympians and Para-Olympians. The bill also excludes money received from the US Olympic Committee as cash bonuses for winning a medal at the Olympics.


The exemption only counts for athletes making less than $1,000,000 ($500,000 if filing married filing separately). So, the NBA players and endorsement rich athletes will still most likely need to pay taxes on these earnings, but it goes a long way for some of the athletes with less means.

Disputing Tax Liability in a CDP Hearing

TC Memo 2016-186, Smith v. Commissioner was released and brings up interesting procedural issues for Collection Due Process Hearings (CDP).


In the case, the taxpayer wanted to raise whether or not he was liable for the taxes being collected. However, this was denied. A taxpayer may raise a doubt as to liability claim in a CDP hearing, but only if he has not previously had a chance to dispute the liability or he did not receive a statutory notice of deficiency for the liability.


The chance to challenge the determination also includes previous chances to go to a CDP hearing.


The procedural reasoning is pretty clear: taxpayers should get one bite at the apple and to allow multiple challenges to the same issue can take time away from more legitimate claims that the IRS needs to process.


Relevant Cites: TC Memo 2016-186

OIC Fee Increase

IRS released Proposed Regs. that will increase the OIC fee from $186 to $300. The effective date would be on February 27, 2017.


One can only hope an increased in fees will lead to a quicker turnaround on OICs.


Relevant Citations: Proposed Reg. 300.3

IRS E-Services Security Updates Coming

For those who haven't seen yet, the IRS is projecting October 24th to update e-services. The update will require everyone to re-register and verify their identities.


Hopefully the process goes well, but if anyone remembers originally registering, especially to get Transcript Delivery working, this has the potential to be an issue for practitioners.


Hopefully this does not interrupt anything with transcript delivery, but practitioners should be aware of it and may want to schedule sometime that day in case they need to take with the IRS help desk.
If you registered for Get Transcripts after June 2016, then you should be okay.


Relevant Citations: IRS: Important Update about Your e-Services Account