Articles Tagged with Tax litigation

IRS “Substance Over Form” Argument Fails
The Sixth Circuit reversed a Tax Court decision and denied the IRS’s “substance over form” argument by allowing a clever tax reduction technique that was legal under the letter of the law. In Summa Holdings v. Commissioner, the court rejected the IRS’s position and declined to let Congress off the hook for allowing a loophole that was used by the taxpayer to avoid the contribution limits on Roth IRAs.

The Beneson family used a domestic international sales corporation” (DISC) to transfer money from their family-owned company to their sons’ Roth IRAs. DISC dividends are subject to a tax on unrelated business taxable income, but once the DISC dividends go into a Roth IRA, the earnings would grow tax-free, and the distributions would also not be subject to tax.

In other words, the Benesons avoided the Roth IRA contribution limits (currently $5,500 per account annually) using this strategy. Between 2002 and 2008, the Benesons transferred over $5 million into two Roth IRA accounts.

Can a California Tax Lawyer Help Me with Tax Problems in Other States
Tax laws vary greatly from state to state, and in fact, nine states don’t even charge a state income tax. With such diversity of tax laws, it isn’t feasible for a tax lawyer to be fully versed in the statutes of all the other 41 states. However, federal tax laws apply to all 50 states, and a tax attorney with experience dealing with the IRS may be able to assist you with federal tax problems even if you live or do business in another state.

A California Tax Lawyer for State and Federal Tax Problems

For federal tax problems, it’s important to find an attorney that specializes in tax matters. The United States Tax Court will admit attorneys that are members of the bar in any state or Washington D.C. without requiring an examination. If you have a case before the Tax Court, an attorney from another state can help you if they are admitted to practice before the Tax Court.

Tax litigation
Tax laws change regularly, and are a challenge to adequately decipher under the best of circumstances. Even with the requisite due diligence and the help of a CPA, you may find yourself the recipient of a letter from the IRS “inviting you to an audit.” If you’ve been audited by the IRS and disagree with their findings, all is not lost.

Your rights as a U.S. taxpayer include the right to contest an IRS bill which you feel is inaccurate or unfair by filing an appeal. The key to gaining a satisfactory result from an appeal is strict adherence to each step of the process. Guidelines and deadlines must be closely followed.

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