Publications

Marital Privileges

By Caroline Rule
The Journal of the Section of Litigation
Vol. 45 No. 4 Summer 2019

Marriage is perplexing, and the marital privileges even more so. Contradictory views determine when they apply and what they protect. In many states, statutes, rather than case law, govern, but federal law leaves it to the courts, which sometimes results in conflicting decisions among the circuits.

There are two quite different and separate safeguards for spouses. One is the confidential marital communications privilege, which, with some exceptions, allows a spouse to refuse to testify about, or produce documents evidencing, any confidential communication made during a marriage and allows the other spouse to prevent that testimony or document production.

The other privilege is the adverse spousal witness privilege, which applies in criminal proceedings and allows one spouse to refuse to testify against the other spouse. This privilege belongs only to the non-defendant spouse, however. Unless the defendant can invoke the confidential marital communications privilege, she cannot prevent her spouse from testifying against her if he decides to do so. This form of the privilege applies only while the marriage exists. And numerous states have repealed the adverse spousal witness privilege entirely.

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Tax Controversy Corner: The Internal Revenue Code Injunction Statutes

By Megan L. Brackney
Journal of Passthrough Entities
May - June 2019 Edition

Under the injunction statutes in the Internal Revenue Code, the U.S. government has broad discretion to seek—and the federal courts to order—the injunction of the preparation of false or fraudulent returns, as well as the aiding and abetting of false tax returns, and the promotion of abusive tax shelters. This power includes enjoining persons and businesses from engaging in specific conduct, and other equitable remedies, such as requiring preparers and promoters to turn over their clients’ identities, notify their clients of the injunction, and disgorgement of fees. The injunction statutes provide a powerful civil enforcement tool for the Department of Justice and the IRS. In many ways, the injunction action is a much worse consequence for a tax promoter or preparer than civil penalties because the action is part of the public record (unlike the results of a preparer or promoter audit, which would be subject to taxpayer confidentiality under Code Sec. 6103), and the court may shut down the preparer’s practice altogether. This column discusses the injunction statutes and two recent cases filed against alleged tax shelter promoters.

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On Congressional Subpoenas to Accounting Firms

By: Brian P. Ketcham
The CPA Journal
July 2019 Edition

Recently, a midsize accounting firm that had prepared financial statements and reports for President Donald Trump and various entities associated with him for many years received a subpoena from the House of Representatives Committee on Oversight and Reform seeking a broad array of documents and communications regarding the firm’s work in that capacity. The subpoena, which seeks six years of personal and corporate financial records, may lead to troubling precedent and a sharp increase in broad subpoenas to accounting firms in all manner of cases. Indeed, although the subpoena itself is not yet publically available, a letter from Elijah Cummings (D-Md.), the chairman of the Oversight Committee, to the chairman and CEO of the accounting firm can be found online, and excerpts from the subpoena are quoted in publically filed court documents. The subpoena, if ultimately enforced, will have a chilling effect on the relationship between taxpayers and their accountants.

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Tax Controversies: Audits, Investigations, Trials

By: Robert S. Fink
LexisNexis
38th Ed. 2019

The 38th edition of “Tax Controversies: Audits, Investigations, Trials” has published and is available on Lexis-Nexis. Authored by Kostelanetz & Fink co-founder Robert S. Fink and the attorneys of Kostelanetz & Fink, Tax Controversies is the recognized guide to all stages of tax examination, investigation, litigation, and prosecution -- civil or criminal -- including coverage of:

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FARA Enforcement Is No Slam-Dunk For Prosecutors

By: Jay R. Nanavati
Law360
Expert Analysis - Opinion

In the wake of the Mueller investigation and the U.S. Department of Justice Office of the Inspector General’s 2016 “Audit of the National Security Division’s Enforcement and Administration of the Foreign Agents Registration Act,” Attorney General William Barr and DOJ National Security Division head John Demers have signaled an increased appetite for enforcing alleged Foreign Agents Registration Act registration violations more aggressively, and members of Congress have been agitating for the DOJ to do just that.

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Recovering Fees from the IRS

By: Megan L. Brackney
The CPA Journal
June 2019 Edition

Although some are unaware of the fact, taxpayers can recover fees and costs from the government if the IRS has taken an unreasonable position against them. The IRS may be responsible for fees due to unreasonable positions that it took during audit, on appeal, in connection with a refund claim or collection matter, or as related to a summons.

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Could the Tax Cuts and Jobs Act Mean More State Income Tax Audits?

By: Michael Sardar
The CPA Journal
May 2019 Edition

The Tax Cuts and Jobs Act (TCJA), signed into law on December 22, 2018, delivered sweeping changes to the federal tax code. These changes brought with them ambiguity and uncertainty, which will likely lead to federal tax audits and disputes on how such provisions should be applied and interpreted. One of the TCJA’s changes, however, is expected to trigger state tax collateral consequences that may lead to an increase in state and local income tax audits and disputes, specifically audits by states and localities to determine if a taxpayer is a resident and thus subject to tax on all income. These are often called residency audits.

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Avoiding Litigation When Auditing Government Contractors

By: Claude M. Millman
The CPA Journal
April 2019 Edition

Government contracting is big business. More than 4 million contractors serve the U.S. government, and they collectively receive more than $500 billion per year. While many people think of those federal contracts when they refer to “government contracts,” states and municipalities also have substantial contracting budgets. For example, New York City (where the author used to serve as chief procurement officer) spends close to $20 billion per year through roughly 40,000 procurement actions.

Of course, government contractors need tax preparation and auditing services. While CPAs can be of great service to such clients, government contracting involves special risks that can affect contractors and the accountants they retain. Before agreeing to audit a government contractor, it is useful to consider these issues, recognize how they may lead to controversies and litigation, and take steps to mitigate the chances that small problems will become big ones.

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IRS Issues New Guidance For Offshore Voluntary Disclosures

By: Michael Sardar
Tax Stringer
April 2019 Edition

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On March 13, 2018, the IRS announced that it would end its long-running Offshore Voluntary Disclosure Program (“OVDP”) on September 28, 2018. With the closure of one of the IRS’s most successful compliance enforcement programs, practitioners were anxious for the IRS to announce a new program to take its place. On November 20, 2018, the IRS issued a memorandum titled “Updated Voluntary Disclosure Practice,” which announced new guidance for the way the IRS would process new voluntary disclosure applications made after the closure of the OVDP.

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The People Of The State Of New York Vs. M. Robert Neulander - Brief For Amicus Curiae In Support Of Defendant-Respondent

Caroline Rule, as Counsel to the New York Council of Defense Lawyers, authored an Amicus Curiae brief in the New York Court of Appeals in regards to the case People v. Neulander in which the prosecution is appealing the Appellate Division, Fourth Department’s grant of a new trial to Mr. Neulander on the grounds of juror misconduct.  The Amicus brief urges the Court of Appeals to affirm the Appellate Division’s decision, based both on New York law and on decisions from other jurisdictions around the country.

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