In the realm of consolidated corporate returns, the distinction between a mere clerical error and a fundamental defect can determine whether a district court possesses subject matter jurisdiction over a refund suit. In the recent decision of American Guardian Holdings, Inc. v. United States, the U.S. District Court for the Northern District of Illinois dismissed a refund claim under Federal Rule of Civil Procedure 12(b)(1). The court held that an amended return that fails to comport with consolidated return regulations, lacks required supporting schedules, and contains signature defects is not "duly filed," thereby depriving the court of jurisdiction.

The Tax Court’s recent memorandum opinion in Goodwill-Oikerhe v. Commissioner, T.C. Memo. 2026-18, serves as a stark reminder of the rigorous substantiation standards required to support deductions and the severe consequences of failing to meet them. The case involves a petitioner who was not only a taxpayer but a "highly educated individual" with a master’s degree in accounting and a professional tax return preparer.

The Court sustained the IRS’s disallowance of numerous personal and business deductions and, notably, upheld the imposition of Section 6663 civil fraud penalties. For tax professionals, this opinion reinforces the critical importance of maintaining adequate records and the futility of "implausible or inconsistent explanations" when facing examination.

For tax professionals representing clients in deficiency proceedings, the distinction between a rebate refund and a nonrebate refund is more than a semantic difference; it is a jurisdictional pivot point that determines whether the IRS may utilize deficiency procedures or must file a suit for erroneous refund. In the recent case of El v. Commissioner, T.C. Memo. 2026-17, the United States Tax Court addressed whether a massive refund generated by an IRS computer error constituted a rebate or a nonrebate refund. The Court’s analysis provides critical guidance on how Section 6211 defines a deficiency, particularly involving refundable credits and automated processing errors.

The interaction between bankruptcy proceedings and tax liability often creates complex evidentiary records. In Veeraswamy v. Comm’r of Internal Revenue, the United States Court of Appeals for the Second Circuit addressed a situation where a taxpayer attempted to disavow S Corporation ownership for tax purposes despite claiming equity ownership in concurrent bankruptcy proceedings to secure distributions. The Second Circuit’s summary order affirms the Tax Court’s decision, offering a stark reminder regarding the consistency required in taxpayer representations across different legal venues.

The determination of whether an activity is engaged in for profit under Internal Revenue Code Section 183 constitutes a frequent area of dispute between taxpayers and the Internal Revenue Service. For tax professionals, understanding how the Tax Court weighs the nine factors provided in the Treasury Regulations is essential for advising clients with dual-purpose activities or significant losses.

In the recent case of Kolar v. Commissioner, T.C. Memo. 2026-15, the Tax Court addressed the deductibility of farm expenses incurred by a taxpayer attempting to revitalize a multi-generational family ranch. Despite a history of significant losses and substantial income from other sources—factors often fatal to a profit motive argument—the Court ruled in favor of the taxpayer. This article details the factual background, the Court’s specific application of the Section 183 factors, and the rationale leading to the decision.

The recent Tax Court memorandum opinion in Clinco v. Commissioner, T.C. Memo. 2026-16, serves as a stark warning to tax practitioners regarding two critical areas of practice: the fundamental requirement of substantiating deductions and income, and the emerging ethical peril of utilizing Artificial Intelligence (AI) in legal research without verification. Judge Holmes’s opinion not only addresses standard unreported income and depreciation issues but also delivers a blistering critique of a brief containing fictitious case citations likely generated by an AI model.

The First Circuit Court of Appeals heard oral arguments on February 5, 2026, in Denham Capital Management LP v. Commissioner. While the tax community has been focused on the substantive split regarding the "limited partner" exception to self-employment tax—highlighted by the Fifth Circuit’s recent taxpayer-favorable ruling in Sirius Solutions LLLP—the First Circuit panel devoted the majority of the hour-long session to a threshold procedural question: Does the Tax Court effectively have jurisdiction under TEFRA to determine Net Earnings from Self-Employment (NESE)?

The panel, consisting of Chief Judge Barron and Judges Lipez and Rikelman, vigorously questioned counsel on the statutory interpretation of "partnership items" versus "affected items," suggesting a possibility that the court could dispose of the case on jurisdictional grounds without reaching the merits of Section 1402(a)(13).

For tax professionals and estate planners advising clients on ERISA-governed retirement accounts, the designation of beneficiaries remains a critical area of compliance. The United States Court of Appeals for the Seventh Circuit recently issued a decision in Packaging Corporation of America Thrift Plan v. Langdon, No. 25-1859 (7th Cir. Feb. 2, 2026), addressing the "substantial compliance" doctrine in the context of a post-divorce beneficiary change. This article details the procedural history, factual background, and the panel’s technical analysis regarding why an informal request to change a beneficiary failed to override the plan documents.

For tax professionals representing clients in partnership proceedings, the procedural requirements of Internal Revenue Code Section 6751(b) remain a critical area of litigation. A recent Order from the United States Tax Court in Palmwood Holdings, LLC v. Commissioner, Docket No. 17489-23, provides significant clarity regarding the "initial determination" of penalties asserted for the first time in an answer. The Court granted the Commissioner’s motion for partial summary judgment, firmly rejecting the taxpayer’s attempt to expand discovery based on speculative theories regarding IRS internal communications.

In the realm of the Section 41 credit for increasing research activities, the timing of substantiation and the documentation of the scientific process are perennial battlegrounds between taxpayers and the IRS. In George v. Commissioner, T.C. Memo. 2026-10, the Tax Court confronted a massive deficiency case involving a large integrated poultry producer. The central tension of the case was the retrospective nature of the credit study versus the contemporaneous business activities. As Judge Greaves noted in the opening of the opinion: “Forget the proverbial chicken or the egg; today we are called to answer which came first, the research or the research credit study?”.

This article details the facts, legal analysis, and conclusions of the court, offering vital technical insights for tax professionals regarding substantiation requirements, the "pilot model" concept under Section 174, and the calculation of the fixed base percentage.

For tax professionals handling partnership audits under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), the role of the Tax Matters Partner (TMP) is paramount in negotiating settlements with the IRS. In the recent case of Walker Church Greene 819, LLC v. Commissioner, T.C. Memo. 2026-11, the United States Tax Court addressed a significant procedural conflict: whether partners holding a majority interest in a partnership may intervene to block a settlement negotiated by the TMP after the litigation has effectively concluded. The Court’s opinion reinforces the "high bar" required for partners to participate at the entry of decision stage, even when those partners collectively own a controlling interest in the entity.

Tax professionals are once again monitoring IRS contingency plans due to an appropriations lapse, mirroring a similar situation just a few months prior. Initially, the IRS expects operations to remain largely business-as-usual for the first seven days. However, failure to resolve the funding impasse by the end of this period will likely lead to more substantial cuts in IRS services.

The following technical analysis details the contingency plan authorized by the Department of Treasury on January 30, 2026, specifically examining the interaction between the Anti-Deficiency Act and the supplemental appropriations provided by the Inflation Reduction Act.

In a significant ruling for the cannabis industry and tax practitioners representing clients in the sector, the United States Court of Federal Claims has issued a memorandum and order in Gravenstein 116, LLC v. The United States. The decision provides a strict statutory interpretation of Internal Revenue Code (I.R.C.) § 280E, rejecting the taxpayer’s novel argument that the refundable portion of the Employee Retention Credit (ERC) constitutes a "non-tax refund" rather than a credit subject to the 280E disallowance.

The Office of Chief Counsel recently released Field Service Advice 20260401F, addressing a promoted strategy involving the transfer of nonvoting limited liability company (LLC) units to a tax-exempt entity. This Field Service Advice (FSA) provides a critical roadmap for tax professionals regarding the Service’s aggressive application of the economic substance doctrine, the assignment of income doctrine, and partnership validation rules under Section 704(e) to dismantle purported tax-minimization structures involving charitable giving.

For CPAs and Enrolled Agents advising clients on complex estate planning or charitable strategies, this memorandum serves as a stark warning against arrangements where the taxpayer retains dominion and control over assets nominally transferred to a charity.

In Aventis, Inc. v. Commissioner, 166 T.C. No. 1 (2026), the United States Tax Court issued a significant opinion regarding the validity of a Financial Asset Securitization Investment Trust (FASIT) structure. Although Congress repealed the FASIT rules in 2004, this case provides a critical retrospective analysis of statutory compliance for securitization vehicles and the boundaries of the substantial compliance doctrine. The Court ruled in favor of the Commissioner, determining that the taxpayer’s arrangement failed to qualify as a FASIT from inception and that the purported debt instrument held by a foreign affiliate was, in substance, equity. Consequently, the petitioner was liable for deficiencies exceeding $38 million for the tax years 2008 through 2011.

For tax practitioners representing clients with insolvency issues, the Federal Priority Statute, 31 U.S.C. § 3713, presents significant personal liability risks. Under Section 3713(b), a representative who pays any part of a debt of the person or estate before paying a claim of the Government is liable to the extent of the payment for unpaid claims of the Government.

While liability determinations often focus on insolvency and knowledge, a recent decision from the U.S. District Court for the District of Maryland, United States v. Neuberger, No. 1:22-cv-02977, provides critical guidance on the quantification of that liability. Specifically, the court addressed whether a representative’s personal liability includes after-accruing penalties and statutory interest under the Internal Revenue Code (IRC) or if it is capped at the amount of the claim known at the time of the wrongful distribution.

The Internal Revenue Service (IRS) has released significant updates regarding the implementation of Executive Order 14247, "Modernizing Payments To and From America’s Bank Account." On January 27, 2026, the Service issued IR-2026-13 and a substantially revised Fact Sheet (FS-2026-02), aiming to "help taxpayers, businesses, and other stakeholders understand the changes" mandated by the order.

For tax professionals, the shift away from paper-based financial transactions requires immediate attention to client advisory protocols, particularly regarding the sunsetting of Electronic Federal Tax Payment System (EFTPS) enrollments for individuals and the procedural mechanics of missing direct deposit information.

For tax professionals, the shift away from paper-based financial transactions requires immediate attention to client advisory protocols, particularly regarding the sunsetting of Electronic Federal Tax Payment System (EFTPS) enrollments for individuals and the procedural mechanics of missing direct deposit information.

The IRS has posted a web page outlining information about the CP53E notice that will be issued to taxpayers when the IRS does not have valid direct deposit information when the taxpayer is due a refund.  The notice will be sent either if the tax return does not contain bank account information or the bank account information on the return proves to be incorrect.

For tax professionals, the requirement to maintain adequate books and records under Internal Revenue Code (IRC) section 6001 is foundational. However, when a fellow practitioner fails to adhere to these standards, the resulting litigation offers a stark reminder of the judicial application of the bank deposits method and the doctrine of dominion and control. In the recent case of Algarawi v. Commissioner, T.C. Memo. 2026-8, the United States Tax Court addressed the tax liability of a prolific tax return preparer who commingled business receipts, alleged charitable donations, and personal funds, ultimately sustaining the IRS’s deficiency determinations and accuracy-related penalties.

In two recent Orders, Kristen B. Hillenbrand v. Commissioner and Shea M. Hillenbrand v. Commissioner, the United States Tax Court addressed the critical procedural intersection between proper mailing of a Notice of Deficiency (NOD) and a taxpayer’s actual receipt of that notice. For tax professionals representing clients in Collection Due Process (CDP) hearings, these cases provide a significant precedent regarding the evidentiary weight of taxpayer testimony against United States Postal Service (USPS) tracking records when contesting underlying tax liabilities.