Wednesday, November 13, 2013

Purpose for "JOTTG" - Welcome

In 1989, my late law partner and friend, Marvin Gutter and I decided to limit our federal tax practice to tax controversy matters. Over the years we were never able to carry out that mission of exclusivity. Instead, we bowed to the pressures of our active tax practice taking on the not only tax controversy matters but many tax planning and transactional matters which we could not seem to "turn away."

Now, almost 15 years later, its time to return to the passion of tax controversy, and in particular the "tax gap."   The "tax gap" is the focus of the federal tax compliance and enforcement issues which are in the forefront of my practice today,  impacting our clients and our system of tax administration.

The "tax gap" is defined by the IRS as the amount of taxes due but not paid on time. In this Blog, and at this time, the "tax gap" will refer to the following:

          1. Gross income which is unquestionably reportable but not reported on income tax returns, for example: income from offshore accounts the subject of current IRS efforts;

        2. Taxable income not reported and not determined to be due during the statutory period for assessment and collection of taxes, for example: income "sheltered" by deductions which would be determined improper if examined and determined judicially;

        3. Taxes other than income taxes which would be due if transactions were reported during the statutory period for assessment and collection of taxes, for example: (i) gift or estate taxes reduced or eliminated due to improper valuations or, (ii) self-employment taxes which, if examined and determined judicially, would be imposed on an S corporation’s sole shareholder who is a professional (such as an attorney, physician, or engineer), and reports no earned income subject to self-employment tax; and

        4.  Tax which is shown as due and owing on tax returns but is not paid in, for example: (i)  payroll taxes shown as collected on the employer’s employment tax returns, but not paid in and as to which the employer’s principals are hopelessly "responsible" or, (ii) amounts owed for whatever and stated as not reasonably collectible in an "offer-in-compromise."

Civil compliance will be emphasized although criminal enforcement and penalties will be included when necessary.

I am hopeful that some of the posts and comments which will find their place in this Blog will spur further thoughts which will motivate positive changes in our federal tax system.

Your thoughts and comments are welcome and will be appreciated.

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