Federal Tax Procedure

  1. Assessment
    The amount the IRS says you owe
  2. Chevron
    If there is no unambiguous expressed intent on Congress, validates a reg it it is based on permissible construction of the statute
  3. Seminole Rock
    When determining the meaning of an ambiguous reg, should give controlling deference to an interpretation presented by the agency so long as it is not plainly erroneous or inconsistent with the reg.  Has not yet been adopted in tax context
  4. Formal Requirements of a Tax Return
    Must be submitted on Form §6011
  5. A "tentative return"
    • 1. Contains sufficient data to calculate txpyr's liability.
    • 2. Filed within prescribed time
    • 3. Purports to be a return
    • 4. Is an honest and reasonable attempt to satisfy the requirements of the law
    • 5. Is executed under penalty or perjury
  6. Bread
    Filing a defaced or modified IRS return does not qualify as filing a return
  7. Computing Tax Liability
    Taxpayer must compute his own tax liability in return unless he qualifies for and makes special election for IRS to do it.
  8. IRS Authority to Substitute return
    IRS has the authority to prepare a "substitute" return on the txpyr's behalf if the taxpyr does not do so
  9. Due Dates and Extensions
    1. Individual
    2. Corporations
    • 1. Individual return due April 15, extension is automatically given if filed.  Requires txpyr to make good faith estimate of net tax amount due. No penalty incurred if 90% of tax due is paid.
    • 2. Corporation due March 15th of subsequent year.  Automatic six month extension.  Required compute total amount of their tentative tax and must remit any balance due
    • *Extension does not extend time to submit estimated tax due.
  10. Holiday
    If due date falls on Sat, Sun or legal holiday, return is due next business day
  11. Mailbox Rule
    -Applies to...
    -Burden of proof
    • Timely mailing is considered timely filed:
    • - Postmark falls within the date for filing
    • - Txpyr deposits return or other doc in the mail in an envelope properly addressed to the appropriate IRS office
    • - Applies to tax returns, refund, claims, payments, petitions, and other docs
    • -If return timely filed but lost in transit, BOP the date of mailing is on txpyr.
  12. Amended Returns
    If txpyr files amended return before on or before the due date, amended return is considered the txpyr's return for that year.

    • IRS has the discretion to accept or reject an amended return filed after the due date.
    • *If accepted, orgin return is relvent for SOL
  13. Tax Payments
    Payment is due when return is due, regardless of extension.
  14. Extension
    • - Given at IRS discretion for up to 6 months
    • - Interest still runs from due date
    • - Requires txpry to show "undue hardship"
    • - Must file application before return payment due date
  15. Types of Examinations
    (Not Audits)
    • 1. IRS Investigatory Authorit
    • 2. Whistleblowers
    • 3. Audits
  16. IRS Investigatory Authority
    Gives the IRS the power to "examine any books, papers, records, or other date which may be relevant" to determining the correctness of any tax return
  17. Whistleblowers
    • Allows individual who provides info submitted under penalty of perjury that results in the collection of tax to receive "an award of at least 15% but less than 30% of the collected proceeds"
    • *Individual cannot collect if convicted of criminal conduct arising from the underpayment of the tax
  18. Audits
    • 1. Correspondence Audit (Mail)
    • 2. Field Audit (Agent comes to you)
    • 3. Office Audit (Txpyr goes to IRS office)
  19. Methods of Reconstructing a Taxpayer's Income
    • 1. Direct Method
    • 2. Indirect Method
    •     i. Networth Method
    •    ii. Estimating an opening Networth
    •   iii. Bank Deposits Plus Cash Expenditures
  20. Scope of IRS Summons Authority
    IRS has power to issue an administrative summons compelling the txpyr to turn over the records
  21. Elements of IRS Summons
    • 1. Must be left at txpyr's last and usual address
    • 2. Must contain name and address of person whose taxes are being inquired into along with the period under consideration
    • 3. Must contain the identity of person summoned. A summons served on a Corporation must be served on a director or other authorized personal
    • 4. Must contain a description of items summoned, which must be described with reasonable certainty.
    • 5. Must state the date, place, and time for compliance, giving at least 10 days for the party to respond.
  22. Summons Enforcement
    IRS must seek a summons order from a USDC and demonstrate good faith issuing summons.
  23. Summons "Good Faith"
    (Powell Factors)
    • 1. Legitimacy (being conducted for legit reason)
    • 2. Relevancy (Relevant to purpose)
    • 3. No Possession (IRS does not have)
    • 4. Procedure (followed admin steps)
    • *Once IRS establishes factors, BOP switches to challenger to demonstrate bad faith or improper purpose.
  24. Third-Party Summons
    • - IRS has authority to summons third party
    • - IRS must give txpyr notice before contacting
    •     *Allows txpyr to file motion to quash request
    • - 3rd party cannot avoid turning over records by giving them to atty
Card Set
Federal Tax Procedure
Short list