On March 20, 2025, the IRS revised its Employee Retention Credit (ERC) FAQs, providing critical guidance on income tax reporting. The updated section, 'Income tax and the ERC,' addresses scenarios where taxpayers failed to reduce prior-year wage deductions by the refunded ERC amount, either due to amended payroll tax returns or discrepancies between anticipated and actual refunds.

This article provides a detailed analysis of the recent case Express Scripts, Inc., and Express Scripts Holding Company v. United States of America, Case No. 4:21CV737 HEA, a decision from the United States District Court for the Eastern District of Missouri. This case addresses the applicability of the former Domestic Production Activities Deduction (DPAD) under 26 U.S.C. § 199 to a pharmacy benefit management company’s (PBM) claims adjudication software. 

The case specifically allows an insight into how a court applied the Supreme Court’s Loper Bright Enters. v. Raimondo, 144 S.Ct. 2244 (2024) decision to its analysis of the underlying IRS regulations.

This article provides a technical analysis of the recent Sixth Circuit Court of Appeals decision in Lonnie W. Hubbard v. Commissioner of Internal Revenue, offering insights for tax practitioners dealing with the complex intersection of criminal forfeiture and federal income tax law, particularly concerning individual retirement accounts (IRAs).

The United States Tax Court recently addressed the application of Internal Revenue Code (I.R.C.) § 7345, which governs the certification of seriously delinquent tax debts to the Secretary of State for potential passport denial, revocation, or limitation, in the case of Drew J. Pfirrman v. Commissioner, T.C. Memo. 2025-22. This memorandum opinion provides valuable insight for tax practitioners regarding the Tax Court’s role in reviewing these certifications and the substantive requirements for a "seriously delinquent tax debt" under the statute. This article will delve into the facts of the Pfirrman case, the taxpayer’s arguments for relief, the court’s analysis of the relevant law, its application of the law to the specific facts, and the ultimate conclusions reached by the Tax Court.

As CPAs in tax practice, we often encounter complex situations involving tax refunds and the intricacies of procedural requirements. The case of Carole S. Gauler, Personal Representative of the Estate of Paul L. Klein v. United States of America, Case No. 3:24-cv-00082-ART-CSD, heard in the United States District Court for the District of Nevada, provides a timely reminder of the critical importance of establishing proper jurisdiction in tax refund suits, particularly in the context of disruptive events like the COVID-19 pandemic. This article will delve into the facts of this case, the taxpayer’s arguments, the court’s analysis, and the key takeaways for tax practitioners.

This Chief Counsel Advice memorandum addresses the deductibility of theft losses under Internal Revenue Code (“Code”) § 165 for five hypothetical taxpayers (Taxpayers 1 through 5) who were victims of various scams in 2024. The memorandum aims to determine if these taxpayers sustained a theft loss deductible in 2024, considering the specific facts of each scenario and the relevant tax law.

The plaintiffs in both Hammill Manufacturing Co. v. United States and R.L. Morrissey & Associates, Inc. and American Ring Manufacturing, Inc. v. United States are making several claims regarding why their claims for refund under the Employee Retention Credit (ERC) should be granted. These claims can be broadly categorized into arguments for direct refund and challenges against IRS Notice 2021-20.

This case, Estate of Kalikow v. Commissioner of Internal Revenue, CA2, Case No. 23-7957, revolves around a dispute over the estate tax implications of a settlement payment to remedy the trustees’ failure to distribute all of the trust’s net income to Pearl Kalikow during her lifetime. The United States Court of Appeals for the Second Circuit affirmed the Tax Court’s judgment, holding that the settlement liability did not reduce the value of the trust’s assets included in Pearl’s estate.

In CF Headquarters Corporation v. Commissioner, 164 T.C. No. 5, filed March 4, 2025, the U.S. Tax Court addressed whether a corporation (CF Headquarters Corporation) had to include $3,107,500 in grant proceeds in its gross income for 2007 and whether it was liable for a 20% accuracy-related penalty under I.R.C. § 6662(a). The court, in Chief Judge Kerrigan’s opinion, held that the grant proceeds were includible in gross income but that the corporation was not liable for the accuracy-related penalty.

In Appeal of A. Markowski, the Office of Tax Appeals (OTA) considered A. Markowski's appeal of the Franchise Tax Board's (FTB) denial of his refund claim for the 2017 tax year. The key issues in this appeal were whether Markowski was provided proper notice of tax due, whether the FTB was required to obtain and review Markowski’s tax return before issuing its proposed assessment, and whether Markowski received taxable income from a California source in the 2017 tax year.

In Martino v. Commissioner, CA 11, Case No. 24-11438, March 3, 2025, the Eleventh Circuit Court of Appeals upheld the Tax Court’s decision to deny Joseph Martino’s claimed alimony deductions for the 2017 and 2018 tax years. The court found that payments made by Martino to his ex-wife, Cindy Roberts, did not meet the requirements for deductible alimony under Section 71 of the Internal Revenue Code.

The Treasury Department announced in a news release on March 2, 2025, that they will not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners concerning the Corporate Transparency Act.

According to the U.S. Department of the Treasury’s March 2, 2025, announcement, they will not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners for not complying with the Corporate Transparency Act. Furthermore, the Treasury Department intends to issue a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.

In United States of America v. Allen R. Davison, the U.S. District Court for the District of Kansas (Case No. 24-CV-02144, February 27, 2025) addressed the government’s action to reduce civil tax penalties to judgment against Allen R. Davison, a former CPA and attorney, related to his involvement with Cash Management Systems, Inc. (CMS) and its "tool plan" tax shelters. The court granted the government’s motion for summary judgment, preventing Davison from relitigating the penalties.

On February 27, 2025, FinCEN announced that it will not issue fines, penalties, or take enforcement actions against companies that fail to file or update Beneficial Ownership Information (BOI) reports by the current deadlines.

The IRS has released Notice 2025-15 providing guidance on issuing certain health insurance coverage statements to individuals under provisions added to the law by the Paperwork Burden Reduction Act.

This case involves Dolores J. Murphy, as Trustee of the Charles M. Murphy Administrative Trust, seeking a refund of tax penalties and related interest imposed by the IRS for the late filing of the 2016 and 2017 tax returns for the trust, as well as penalties assessed in the 2021 tax year and declaratory relief (Dolores J. Murphy et al. v. United States, US DC ED CA, Case No. 1:24-cv-00260, February 19, 2025). The government moved to dismiss the refund claim related to the 2016 tax year as untimely under Federal Rule of Civil Procedure 12(b)(1) and both the 2016 and 2017 claims under Rule 12(b)(6), asserting that Murphy had not set forth any facts that would constitute reasonable cause for the late filing. The government also sought dismissal of the requests for declaratory relief as statutorily barred and dismissal of the claims related to the 2021 tax year as moot or jurisdictionally barred. The court denied in part and granted in part the government’s motion to dismiss.

In Robert Donlan, Jr. and Kegan Donlan v. Commissioner of Internal Revenue, 164 T.C. No. 3, the U.S. Tax Court addressed the issue of whether a petition filed using the court’s online petition generator, which does not bear a handwritten signature, is considered properly signed under the Tax Court Rules of Practice and Procedure. The Commissioner filed a Motion to Dismiss for Lack of Jurisdiction, arguing that the petition was not properly signed. The Tax Court denied the Commissioner’s motion, holding that a person’s name on a signature block on a paper that the person authorized to be filed electronically constitutes the person’s signature, as per Tax Court Rule 23(a)(3).

Following the stay issued in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.), beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are back in effect.  FinCEN has posted information on the https://www.fincen.gov/boi website and released FIN-2025-CTA1, “FinCEN Extends Beneficial Ownership Information Reporting Deadline by 30 Days; Announces Intention to Revise Reporting Rule” to explain these developments.

In Blum v. Commissioner, TC Memo 2025-18, the Tax Court addressed a dispute concerning the disallowance of a $78.5 million tax shelter loss, penalties, and the validity of notices issued by the IRS. The central issues revolved around the petitioners’ participation in a Bond Linked Issue Premium Structure (BLIPS) tax shelter, the IRS’s notification procedures, and various legal arguments raised by the Blums.

The Cannon Corporation and Subsidiaries ("Cannon") appealed a Tax Court decision that upheld the Commissioner of Internal Revenue’s determination of a tax deficiency for the 2011 tax year. The central issue was whether Cannon, as a designer of energy-efficient buildings, could retroactively report Section 179D deductions for the 2007-2010 tax years on its 2011 tax return as an accounting method change, and whether its equitable estoppel, equitable recoupment, and duty of consistency claims were valid. The Court of Appeals affirmed the Tax Court’s judgment, finding that Cannon could not claim the deductions as an accounting method change and that its equitable claims lacked merit.