Tax Enforcement Going Forward: Resources, Cheating, and Perceptions of Fairness

IRSAs we head into the New Year and look back on 2015, this blog reflects on one facet of the future of tax enforcement, at least in the near term. The trend in decreasing resources devoted to tax enforcement may erode widespread respect, and therefore compliance, with the tax code. One reason for this is because if people don’t believe that the tax code is fairly and uniformly enforced against tax cheats, they themselves will be more inclined to cheat.

Although this is presumably an obvious or intuitive point, the psychology behind it is perhaps more complex than simply observing that people are more inclined to cheat if they believe that they can get away with it.Read More

A Switch in Time: The Sixth Circuit Examines the Limitations Period for the Prohibited Allocation Excise Tax, Part II

ESOPOn Tuesday, September 15, I reported on a recent Sixth Circuit opinion Law Office of John H. Eggertsen, P.C. v. Commissioner, No. 14-2591, 2015 U.S. App. LEXIS 15930 (6th Cir. Sept. 8, 2015), which dealt with a substantive issue under Section 4979A of the Internal Revenue Code, as well as the relevant limitations period. The limitations issue is interesting because there were two statutes that might control and because the government flip-flopped on which should apply.

Although there was an express provision in Section 4979A, the Sixth Circuit concluded that the general assessment limitation in Section 6501(a) applied and that the excise tax was assessed on a timely basis, as the taxpayer had failed to file the requisite excise tax return.… Read More

Tax Code Complexity at Sentencing Hearings: The Ally of the Defense

UBS, Hough, Tax Code Complexity, Tax Controversy PostsAs illustrated by a recent case involving a doctor convicted at trial for subscribing to false tax returns and conspiring to defraud the IRS, practitioners can try to use the tax code’s complexity to their clients’ advantage at sentencing. In United States v. Hough, No. 14-12156 (11th Cir. Sept. 9, 2015), the Eleventh Circuit, after affirming the defendant’s convictions, reversed and remanded to the district court for further findings for the purposes of determining her sentence; the court’s sentencing discussion is the focus of this blog. Although on remand the defendant ultimately may receive the same sentence, Hough involves a technical discussion of tax regulations that rarely appears in opinions on sentencing in criminal tax cases.… Read More