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Tax Items of Interest (Misc):
U.S. 2nd Circuit Court of Appeals

Reimels v. Comm'r of Internal Revenue (02/01/06 - No. 04-6175)
Social Security disability benefits paid for an inability to work because of an injury or sickness resulting from active military service do not qualify as amounts received for that injury or sickness for purposes of exclusion from income taxes under the Internal Revenue Code.
http://caselaw.lp.findlaw.com/data2/circs/2nd/046175p.pdf [PDF File]
 

U.S. 8th Circuit Court of Appeals

Lindsey v. Comm'n of Internal Revenue (09/02/05 - No. 04-2978)
Tax Court properly assessed deficiencies against plaintiff where it did not err in finding that I.R.C. Sec. 104(a)(2), as amended, applied to the settlement taxpayers received.
http://caselaw.lp.findlaw.com/data2/circs/8th/042978p.pdf [PDF File]

U.S. District of Columbia Circuit Court of Appeals
JOMBO v. COMM'R OF INTERNAL REVENUE (02/22/05 - No. 03-1355)
A taxpayer who wins a lottery in one year, but receives installment payments over the next twenty years, does not constructively receive his entire winnings in the first year and is not exempt from federal taxation in later years.
http://caselaw.lp.findlaw.com/data2/circs/dc/031355a.pdf [PDF File]

U.S. 7th Circuit Court of Appeals
US v. GREENE-THAPEDI (02/17/05 - No. 03-3904)
To recover an erroneous tax refund, the government's two-year statute of limitations to file such a suit begins to run on the date when "the check cleared the Federal Reserve and payment to the taxpayer was authorized by the Treasury."
http://caselaw.lp.findlaw.com/data2/circs/7th/033904p.pdf [PDF File]

U.S. 1st Circuit Court of Appeals
JEAN v. US (02/03/05 - No. 04-1121 )
Plaintiff's suit to recover administrative and litigation costs, incurred in its successful defense of an IRS tax assessment, is dismissed where the government was substantially justified in issuing the assessment and pursuing the litigation.
http://laws.lp.findlaw.com/1st/041121.html


U.S. 4th Circuit Court of Appeals
PLEMONS v. GALE (02/03/05 - No. 04-1196)
In a tax sale of property, a party charged with giving notice must use reasonable efforts to identify and locate parties with an interest in the property, and the interested parties must be provided actual notice of the impending sale.
http://caselaw.lp.findlaw.com/data2/circs/4th/041196p.pdf [PDF File]

U.S. Supreme Court
COMM'R v. BANKS (01/24/05 - No. 03-892)
In calculating federal income tax, when a litigant's recovery constitutes income, the litigant's income includes the portion of the recovery paid to the attorney as a contingent fee.

U.S. 5th Circuit Court of Appeals

DOE1 v. KPMG, LLP (01/26/05 - No. 04-10470)
Equitable tolling may not be used to extend the three-year statute of limitations of Internal Revenue Code section 6501.
http://caselaw.lp.findlaw.com/data2/circs/5th/0410470p.pdf [PDF File]

U.S. 9th Circuit Court of Appeals

US v. TREVINO (01/18/05 - No. 02-10545)
Defendant's conviction for tax evasion is affirmed over her challenge that the trial court erred in failing to instruct the jury that her good faith belief that her tax returns were proper was a complete defense to the charges against her.
http://caselaw.lp.findlaw.com/data2/circs/9th/0210545p.pdf [PDF File]

CARTY v. ASHCROFT (01/19/05 - No. 03-71392)
The willful failure to file a tax return, with the intent to evade taxes, involves fraud, and thus constitutes a crime of moral turpitude for purposes of the Immigration and Nationality Act.
http://caselaw.lp.findlaw.com/data2/circs/9th/0371392p.pdf [PDF File]


United States Court of Appeals for the Federal Circuit

WASHINGTON INT'L INS. CO. v. US (01/18/05 - No. 04-1019)
The United States Customs Service properly denied plaintiff's request for a duty exemption, pursuant to Subheading 806.30 of the Tariff Schedules of the United States, for stainless steel sheets.
http://caselaw.lp.findlaw.com/data2/circs/fed/041019p.pdf [PDF File]

CENTEX CORP. v. US (01/19/05 - No. 03-5087)
The 1993 enactment of certain tax legislation breached a contract with plaintiff since the legislation changed the tax laws to abrogate tax benefits to which plaintiff was entitled to at the time the contract was executed.
http://caselaw.lp.findlaw.com/data2/circs/fed/035087p.pdf [PDF File]


U.S. 8th Circuit Court of Appeals

US v. KAISER (02/10/05 - No. 04-1349)
A district court order enforcing IRS summonses seeking tax shelter information is affirmed where the IRS had a legitimate purpose for its investigation and the information sought was relevant to such a purpose.
http://caselaw.lp.findlaw.com/data2/circs/8th/041349p.pdf [PDF File]


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U.S. 7th Circuit Court of Appeals
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US v. FRONTONE (09/09/04 - No. 04-1051)
A claim by the IRS to recover an erroneous refund is not dischargeable
in bankruptcy.
To read the full text of this opinion, go to:[PDF File]
http://caselaw.lp.findlaw.com/data2/circs/7th/041051p.pdf

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U.S. 7th Circuit Court of Appeals
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US v. PREE (09/14/04 - No. 03-1516)
Defendant's conviction for tax fraud is affirmed, however, her sentence
is vacated pending the Supreme Court's decision in US v. Booker 2004 WL
1535858 (7th Cir. July 9, 2004).
To read the full text of this opinion, go to:[PDF File]
http://caselaw.lp.findlaw.com/data2/circs/7th/031516p.pdf

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U.S. 9th Circuit Court of Appeals
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US v. BOULWARE (09/14/04 - No. 02-10287)
Defendant's tax convictions are reversed where the district abused its
discretion by excluding evidence of a state-court judgment that directly
supported defendant's defense to the tax charges and that directly
contradicted the government's theory of the case.
To read the full text of this opinion, go to:[PDF File]
http://caselaw.lp.findlaw.com/data2/circs/9th/0210287p.pdf

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U.S. 10th Circuit Court of Appeals
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SORRENTINO v. IRS (09/15/04 - No. 02-1114, 02-1137)
A taxpayer's timely filing of a claim for refund or credit is a
jurisdictional prerequisite to maintaining a tax refund suit against the
government.
To read the full text of this opinion, go to:
http://laws.lp.findlaw.com/10th/021114.html

New Designated Private Delivery Services (PDSs)

Two new PDSs, FedEx International Priority and FedEx International First,
will provide delivery services to the United States from foreign
countries. For the complete list of designated PDSs, rules for
determining the postmark date for filing returns timely, and information
about applying to become a PDS, go to IRS Notice 2002-62 at
http://www.irs.gov/pub/irs-drop/n-02-62.pdf

Form 8546 (Rev Feb 2001) Claim for Reimbursement of Bank Charges
Incurred Due to Erroneous Service Levy or Misplaced Payment Check -
http://www.irs.gov/pub/irs-fill/f8546.pdf
Technical Advice Memorandum  - Under what circumstances a taxpayer's designation of a remittance as a payment of tax is to be respected when such remittance is made prior to the issuance of a revenue agent's or examiner's report? http://www.irs.gov/pub/irs-wd/0136005.pdf
*IRS Pub 1854 How to prepare a Collection Information Statement (Form 433-A) http://www.irs.gov/pub/irs-pdf/p1854.pdf
* IRS Pub 1066 Small Business Tax Workshop Workbook - the 176 page workbook they provide business owners at their workshops.
http://www.irs.gov/pub/irs-pdf/p1066.pdf
*Can the IRS reverse an offset of an overpayment where the IRS made an
error which prevented the Taxpayer Advocate Service from issuing a
hardship refund? [Yes] If, at the IRS has made the initial assessment of
a return, the IRS makes a subsequent adjustment which results in an
overpayment, can the IRS issue a hardship refund on this new overpayment
before the adjustment posts to the account and is offset against a
pending federal tax liability? [Yes]
http://www.irs.gov/pub/irs-wd/0135027.pdf

*If the IRS can treat an installment agreement as accepted on the date
it receives the written application for an installment agreement for
purposes of reducing the failure to pay addition to tax rate imposed
under Sec 6651(h)? [No]
http://www.irs.gov/pub/irs-wd/0135025.pdf
*Should the IRS continue to file Notices of Federal Tax Lien with the
clerk of the US District Court for Massachusetts? [question asked
due to a recent state law change.]
http://www.irs.gov/pub/irs-wd/0135030.pdf

*Concerning National IRS office previous advice recommending against the use of a joint notice of federal tax lien when spouses who own property as
tenants by the entirely are jointly and severally liable on a tax debt,
bars the filing of join notices? 
http://www.irs.gov/pub/irs-wd/0135028.pdf
*2000 IRS Data Book - How Much They Did During the Year

*The IRS has released their 2000 data book of tables. These tables tell
you most anything that might be of interest in knowing about how they
functioned in 2000.
 http://www.irs.gov/pub/irs-soi/00databk.pdf
*IRS Expands Authority for Taxpayer Advocate Service - News release  http://www.irs.gov/pub/irs-news/ir-01-12.pdf

IRS taking action against Trust Schemes  - Feb 16, 2001
Lawyer Leads IRS Crime Investigations
Office taking action against new trust schemes
Shannon P. Duffy
The Legal Intelligencer

February 16, 2001 Source: http://www.law.com
In the 1980s, the IRS was busy battling bogus tax shelters and the promoters who used them as get-rich-quick schemes -- often leaving unwitting taxpayers in a jam. Nowadays, this kind of promoter is hawking what the IRS calls the "abusive trust."

The schemes are so new that the IRS has only been keeping statistics since 1998, but already more than 100 prosecutions have begun nationwide.

According to Jerome D. Lisuzzo, the newly appointed head of the IRS' criminal investigation field office in Philadelphia, lawyers can play a key role in preventing the schemes by making sure that their clients don't fall victim to such promoters.

"A significant portion of the American public doesn't understand the mechanics of how a trust works and what exactly it does," Lisuzzo said in a recent interview. "Combine that misunderstanding with a little bit of greed, and what you get is the perfect elixir for the charlatans who in the early '80s might have hawked bogus tax shelters to unsuspecting individuals."

The promoters, he said, are hawking the trust as a perfect solution to the taxpayer's problems by claiming they can be structured to drastically reduce or eliminate tax liability.

But to the unsuspecting consumer, the short-term savings can lead to long-term grief, Lisuzzo said, because what the promoters are calling a trust is "actually a vehicle with no economic substance whatsoever."

Some of the warning signs, he said, are that the proposed "trust" is billed as a mechanism that allows the taxpayer to retain "full control" in his or her property even after placing it in a trust and the promise that the trust will "somehow magically convert personal expenses into legitimate deductible expenses."

The payoff for the promoter is all in the fees -- for putting the trust together and administering it. Lisuzzo, who himself is a lawyer, said anyone approached by a trust promoter needs to "give it the sanity check" because "anything that looks too good to be true usually is too good to be true."

The classic abusive trust is a "layered affair," Lisuzzo said, in which a business is placed into trust where the income it earns can be reduced by charging off "expenses" -- such as rental of equipment the business actually owns or even fictitious expenses. The "beneficiary" of the trust is a second trust that deducts even more expenses, he said.

The abusive trust is often "vertically layered," he said, so that "by the time the income works its way through to the end, the taxpayer ends up with, instead of $200,000 in income, maybe only $20,000."

Often, Lisuzzo said, the structure of an abusive trust closely resembles money laundering and involves placing assets in foreign accounts in tax haven countries and later efforts to "repatriate" the money to the United States by using debit or credit cards.

Lisuzzo said lawyers and taxpayers should watch for "red flags" of abusiveness, including the "layering" of the trusts, the "virtual elimination" of all tax liability and the promise that the taxpayer will "relinquish no control" over the assets placed in trust.

Other red flags, he said, might be that the promoter doesn't have the trappings of a professional -- such as credentials and an office -- but instead is operating from a post office box.

Lisuzzo is the first lawyer to head Philadelphia's IRS criminal division.

A 1991 graduate of Wayne State University Law School in Detroit, Lisuzzo has been working with the IRS' criminal investigation division since 1983.

His first 11 years were in the field office in Detroit followed by two years in the national office working in the asset forfeiture section. From there, he moved to Virginia where he worked three years as a group supervisor, followed by two years in Chicago as an assistant chief.

Now Lisuzzo heads an office that handles all criminal tax investigations for the eastern two-thirds of Pennsylvania. He oversees seven groups of special agents -- five in Philadelphia, one in Harrisburg and one in Scranton.

With 63 agents, Lisuzzo said the Philadelphia field office is "a little low" right now since each team is budgeted for about 10 agents.

But the criminal investigation division of the IRS is dwarfed by the civil division, he said. Although the IRS employs about 100,000 nationwide, the criminal division has only about 3,000 employees.

Recently, Lisuzzo said, the IRS restructured in several ways.

Significantly, the criminal division's field offices now have a "direct line chain of command" to the top criminal agents in Washington instead of going through the local civil chiefs.

IRS agents have "exclusive jurisdiction" over crimes involving federal tax laws, he said, but also take part in investigating a wide variety of white-collar or financial crime investigations, as well as narcotics, gambling and health care frauds.

"We employ what I think are uniformly considered to be the finest financial investigators in the world," Lisuzzo said.

When it comes to "following the paper trail" and ferreting out complex financial crimes, he said, "that's something that we do better than any other agency out there."

In drug cases, Lisuzzo said, the IRS often helps to tie the kingpin to the drugs by linking him to the stream of cash. Sometimes, he said, the tax charges are "adjunct" to the drug charges, but in a few cases, the tax crimes are the only ones the government is able to prove.

Like the mobster Al Capone, he said, a few criminals go down only on the tax charges that result from proving that they led a lavish lifestyle and had access to significant wealth that was never reported.

Lisuzzo said the public doesn't often realize IRS agents are full law enforcement officers, who, just like FBI agents, carry guns, go undercover, execute search warrants and make arrests.
Prior Tips:

Year end planning - 2000

IRS targets fraudulent trusts

IRS Daily Tax Tips 2003 filing season - (click) 

IRS Daily Tax Tips 2002 filing season - (click)

IRS Daily Tax Tips 2001 filing season - (click)

The information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.

For assistance, please contact A. Nathan Zeliff, Attorney at Law

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