Congress introduced the Employee Retention Credit (“ERC”) more than four years ago, but serious enforcement actions are just now getting underway. The IRS, as one part of its comprehensive strategy, has been implementing a multi-step plan designed to convince taxpayers to willingly return ERC payments that they did not deserve in the first place. This article, the latest in a series, analyzes the evolution of ERC benefits by Congress, the no-win situation facing the IRS initially, and some of the steps taken that the IRS has taken thus far to reduce the number of taxpayers it must pursue, including the introduction of its second voluntary disclosure program.

Taxpayers who engage in tax fraud face serious consequences, including steep penalties, endless assessment-periods, prolonged trials, reputational damage, and more. Mere allegations of fraud by the IRS can trigger these types of damaging outcomes. Cynics often argue that this is precisely the reason the IRS sometimes claims that fraud occurred in the first place. Fortunately for taxpayers, while alleging fraud is relatively easy, proving it can be hard for the IRS. Two recent Tax Court cases, analyzed in this article, demonstrate this reality.

Things constantly evolve when it comes to U.S. tax and information-reporting duties for foreign trusts. A major challenge for taxpayers is keeping up with all the changes because they derive from different sources, in different contexts, at different times. In an effort to clarify and update matters, this article offers a summary of foreign trust rules, followed by a chronological review of the latest enforcement actions, relief measures, cases, regulations, and more.

Are taxpayers who acquire Private Placement Life Insurance (“PPLI”) doing something wrong? Certain politicians and academics think so. They argue that taxpayers who have the financial ability to purchase PPLI are somehow “abusing” the system. This article explains the general tax rules favoring life insurance policyholders and their beneficiaries, recent reports and cases putting PPLI in a bad light, and three recent proposals urging legislative changes by Congress and/or increased enforcement by the Internal Revenue Service.

Congress instructed the IRS to publish guidance on specific, limited issues related to the Employee Retention Credit (“ERC”). The IRS did so, first issuing regulations about its ability to recapture “erroneous refunds,” followed by additional regulations about its authority to grab related interest payments. These new rules, if they withstand scrutiny, will enhance the IRS’s enforcement capabilities. This article, the latest in a long series, explores four major ERC laws, two sets of regulations recently introduced by the IRS, various assessment periods applicable to ERC claims, and how they all interrelate.

Enforcement actions regarding Employee Retention Credit (“ERC”) claims are on the uptick. An important question is how long the IRS and the Department of Justice have to carry out their missions. The normal rules on timing are straightforward, but things get complicated when one considers exceptions, special rules for particular quarters, potential changes contemplated by Congress, and a novel decision by a Court of Appeals that has received little attention. This article, the latest in a long series on ERC issues, explores the key timing issues, old and new, in the context of ERC disputes.

Many taxpayers parting ways with the United States must file Form 8854 (Initial and Annual Expatriation Statement). Failure to do so is problematic because it can expose taxpayers to the notorious “exit tax.” Few people have seemed to notice, but significant changes might be on the way. This article analyzes worldwide obligations of U.S. individual taxpayers, exit taxes, foundations for Form 8854 filing duties, legislative proposals for increased enforcement, a recent case invalidating the IRS document that introduced Form 8854, and IRS actions in other contexts where the courts have shot down administrative guidance.

The IRS tries to gather as much information and documentation as possible when conducting an audit. It attempts to get the data directly from the taxpayer, but it often turns to other sources, too. This is called making third-party contacts. The IRS has been criticized over the years for giving insufficient warnings to taxpayers before starting third-party contacts, and Congress took notice. It enacted a law creating safeguards against inappropriate third-party contacts and later strengthened it. Now, the IRS has issued proposed regulations that severely undercut historical taxpayer protections. This article analyzes the filing and record-keeping duties of taxpayers, information-gathering tools of the IRS, and changes in protections for taxpayers and third-parties over the years.