This article examines the decision reached by the Office of Tax Appeals (OTA) in In the Matter of the Appeal of: J. Lunt, OTA Case No. 230112468, concerning a proposed assessment of additional tax, a late filing penalty, and applicable interest for the 2018 tax year. The case provides guidance regarding the respective burdens of proof borne by the Franchise Tax Board (FTB) and the taxpayer when residency and income sourcing are disputed, and an initial return was never filed. The FTB proposed an assessment totaling $12,315 in tax and a late filing penalty of $3,078.75, plus interest.

This article analyzes the standards and application of 26 U.S.C. § 6672 concerning the Trust Fund Recovery Penalty (TFRP) as determined by the United States District Court for the Eastern District of Pennsylvania in United States of America v. Kathryn S. Flaim. The court granted the Government’s Motion for Summary Judgment, finding the defendant liable for unpaid federal employment taxes totaling $204,466.54 (as of September 29, 2025). This analysis focuses on the court’s determination that the taxpayer qualified both as a "responsible person" and acted "willfully" in failing to remit trust fund taxes.

The memorandum opinion in Paul-Adams Quarry Trust, LLC, Francis L. Adams, Tax Matters Partner, v. Commissioner Of Internal Revenue, T.C. Memo. 2025-112, addresses the proper valuation of a qualified conservation contribution under Internal Revenue Code (I.R.C.) § 170(h), specifically focusing on whether the highest and best use of the property supported the substantial charitable deduction claimed, and whether accuracy-related penalties applied.

The distinction between ordinary income and capital gains remains paramount in federal taxation. Taxpayers often seek to characterize income as capital gains, which are frequently taxed at lower rates than ordinary income, such as interest. Congress enacted 26 U.S.C. § 483 in 1964 specifically to combat the practice of taxpayers converting what should be ordinary interest income into capital gain by structuring installment contracts without explicitly providing for interest payments. Section 483 ensures that if a deferred payment on a sale or exchange of property fails to provide adequate stated interest, a portion of that payment is imputed as "unstated interest" and taxed as ordinary income.

A recent decision from the United States Court of Appeals for the Third Circuit addresses the application of this statute in the context of a short-form merger settlement. In Trust Under the Trust of Charles G. Berwind Trust, F/B/O David M. Berwind, Jr., et al. v. Commissioner of Internal Revenue, the Third Circuit affirmed the Tax Court’s decision, concluding that the $191 million settlement payment received by the minority shareholder trusts (collectively, the "DB Trust") must include an imputed interest component under Section 483.

As CPAs and EAs advising taxpayers on compliance and controversy matters, understanding shifts in IRS procedural requirements is critical, especially concerning immediate assessments based on mathematical or clerical errors. The One Hundred Nineteenth Congress enacted H.R. 998, officially cited as the "Internal Revenue Service Math and Taxpayer Help Act". This legislation mandates substantial changes to the content and delivery of notices issued under Section 6213(b)(1) of the Internal Revenue Code of 1986 (the Code), requiring significantly enhanced specificity and transparency from the IRS.

As identical bills have been passed by both houses, it will become law once sent to the President so long as he signs the bill.

As tax professionals, CPAs and EAs operate under stringent ethical and legal requirements. Violations of judicial decrees, particularly permanent injunctions related to tax preparation, carry severe consequences, often resulting in findings of civil contempt and substantial monetary sanctions. The recent ruling in United States of America v. Kevin Hardy, 05-CV-3847 (KMW) (S.D.N.Y. October 28, 2025), provides a critical examination of the standards required to prove civil contempt when an individual violates a permanent injunction prohibiting future tax preparation activities.

This analysis addresses a recent ruling by the United States Bankruptcy Court for the Northern District of Mississippi in the case of In re Benjamin Douglas Morris (Case No.: 12-12886-JDW) concerning the duration of the automatic stay under 11 U.S.C. § 362(a) following the administrative closure of an individual Chapter 11 bankruptcy proceeding. The court’s decision underscores the specific termination triggers set forth in the Bankruptcy Code, even when a case is closed solely for the purpose of avoiding U.S. Trustee (UST) fees.

The United States District Court for the District of Maryland recently issued a Memorandum of Decision in United States of America v. Isaac M. Neuberger, Civil Action No. EA-22-2977 (D. Md. Oct. 23, 2025), addressing the personal liability of a corporate officer and director for a corporation’s outstanding tax debt under the Federal Priority Statute (FPS), specifically 31 U.S.C. § 3713(b). This analysis details the facts leading to the imposition of liability and the court’s technical application of the three core elements required for the United States’ claim.

This article examines the decision in Community Worship Fellowship v. United States, No. 19-352 (Fed. Cl. Oct. 23, 2025), concerning the revocation of tax-exempt status under 26 U.S.C. § 501(c)(3). This case provides essential guidance for tax professionals regarding the absolute nature of the private inurement doctrine, particularly within organizations controlled primarily by family members.

As CPAs and Enrolled Agents (EAs), understanding the standards for awarding administrative and litigation costs under 26 U.S.C. § 7430 is crucial, especially concerning the intricacies of the Qualified Offer Rule. The recent case of Crystal N. Greenwald v. United States of America, Civil Action 2:23-cv-4100 (S.D. Ohio, Oct. 23, 2025), provides a detailed examination of whether a government concession following a qualified offer constitutes a "settlement" that bars the recovery of attorney’s fees.

This article draws on the latest revisions to the Internal Revenue Service’s Frequently Asked Questions (FAQs) concerning Form 1099-K, Payment Card and Third Party Network Transactions, as detailed in Fact Sheet FS-2025-08, published in October 2025. These updated FAQs supersede the prior guidance posted in FS-2024-03. For tax professionals, understanding the finalized reporting thresholds, compliance obligations, and the nuanced guidance on reporting erroneous forms and personal item sales is critical.

It is important to note that these FAQs provide general information and have not been published in the Internal Revenue Bulletin; therefore, they will not be relied upon by the IRS to resolve a case. However, a taxpayer who reasonably and in good faith relies on this guidance will not be subject to penalties, such as a negligence penalty or other accuracy-related penalties, which impose a reasonable cause standard for relief, to the extent that such reliance results in an underpayment of tax. These FAQs were announced in IR-2025-107.

This advisory draws upon the guidance provided by the Internal Revenue Service (IRS) in its Frequently Asked Questions (FAQs) released as FS-2025-07 on October 22, 2025, announced via IR-2025-106. These FAQs specifically address the stringent compliance and limitation provisions affecting the Employee Retention Credit (ERC) as enacted by the One, Big, Beautiful Bill Act (OBBBA). While this guidance is intended to provide general information to tax professionals as expeditiously as possible, it is important to remember that these FAQs have not been published in the Internal Revenue Bulletin and will not be relied upon by the IRS to resolve a specific case; the underlying tax law controls the taxpayer’s liability. Nonetheless, a taxpayer who reasonably and in good faith relies on these FAQs may be shielded from penalties, such as negligence or other accuracy-related penalties, to the extent such reliance results in an underpayment of tax, provided the reasonable cause standard for relief is met.

Due to a lapse in appropriations, Internal Revenue Service (IRS) operations are currently limited. Despite these limitations, the underlying tax law remains fully in effect, requiring all taxpayers—individuals, corporations, partnerships, and employers—to meet their tax obligations as normal. The IRS has published an update on the impact of the government shutdown on taxpayers and IRS services.

In Andrew Mitchell Berry and Sara Berry v. Commissioner, T.C. Memo. 2025-109, the United States Tax Court addressed a determined deficiency of $88,695 and an accuracy-related penalty of $17,739 under section 6662(a) for the petitioners’ 2016 tax year.

The United States Tax Court, in North Wall Holdings, LLC, Schuler Investments, LLC, a Partner Other Than the Tax Matters Partner v. Commissioner of Internal Revenue, 165 T.C. No. 9 (2025), addressed a foundational issue regarding the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) unified audit and litigation procedures: whether the statutory deadlines for filing a petition for readjustment of partnership items are jurisdictional limitations or merely claims processing rules subject to equitable tolling. The Court ultimately held that the deadlines prescribed in I.R.C. § 6226(a) and (b) are jurisdictional and that equitable tolling is inapplicable.

The Internal Revenue Service (IRS) has issued Notice 2025-57, providing transitional guidance regarding the implementation of new information reporting requirements concerning interest received on specified passenger vehicle loans. This guidance is directed at those entities receiving such interest, referred to as “recipients,” and applies specifically to reporting obligations for the 2025 calendar year.

As tax professionals (CPAs and EAs), we rely on timely and accurate guidance from the Internal Revenue Service (IRS) to determine proper inflation adjustments and interpret legislative changes. Rev. Proc. 2025-32 sets forth critical inflation-adjusted items for various provisions of the Internal Revenue Code (Code) for the 2026 taxable year, reflecting amendments made by the One, Big, Beautiful Bill Act (OBBBA), Public Law 119-21, 139 Stat. 72 (July 4, 2025).  On October 17, 2025 the IRS announced changes to be made to the Revenue Procedure’s numbers, a new section was added and an updated version was posted on the IRS website.

The issuance of a revised version of Rev. Proc. 2025-32 on October 17, modifying the original October 9 version, signals necessary corrections and additions impacting several key inflation-adjusted amounts and the procedural description of OBBBA changes. This article details the specific modifications incorporated into the revised document, focusing on the affected Code sections and the magnitude of the changes.

The Treasury Department has released Proposed Regulations under IRC Section 897 to withdraw the domestic corporation look-through rule that was adopted in final regulations issued in 2024 (Proposed Reg. Section 1.871-1, REG-109742-25, published in the Federal Register October 21, 2025).

This article addresses the memorandum opinion in Avalon Home Health, Inc. v. Commissioner, T.C. Memo. 2025-107, a Collection Due Process (CDP) case that provides essential insights into the Internal Revenue Service (IRS) Independent Office of Appeals’ (Appeals) requirement to properly verify statutory requirements and consider collection alternatives under section 6330(c)(3) of the Internal Revenue Code. This case resulted in a partial denial of the Commissioner’s Motion for Summary Judgment and a remand to Appeals due to significant deficiencies in the administrative process.

The United States Tax Court, in Potts v. Commissioner, T.C. Memo. 2025-108, addressed a deficiency of $431,691 and an accuracy-related penalty of $86,338 under Section 6662(a) determined by the Commissioner of Internal Revenue (Respondent) against petitioners Craig K. and Kristen H. Potts for the 2014 taxable year. The predominant issue concerned the disallowance of a $2 million theft loss deduction claimed by the petitioners pursuant to Section 165.