By Megan L. Brackney
Journal of Passthrough Entities
January - February 2017 Edition
Under the new Bipartisan Budget Act of 2015 (the “BBA”), there are significant changes to the partnership audit rules. Like TEFRA, the BBA requires partnership-level resolution of partnership income, gain, loss, deduction, and credits. Unlike TEFRA, under the BBA, the IRS will assess tax at the partnership level (as opposed to the partner level) based on an imputed underpayment amount at the highest applicable federal tax rate, subject to some key exceptions. The BBA also contains numerous changes to the procedures for assessment and collection of tax, and for judicial review.
Megan L. Brackney and Bryan C. Skarlatos presented "Effectively Representing Taxpayers Before the IRS" at the Sid Kess All-Star Series
On December 28th at the New York State Society of CPAs, we followed the journey of Joe & Mary through the IRS process. This full-day program used a particular client’s fact pattern to highlight the various areas of the IRS representation process and the opportunities and pitfalls for practitioners and their clients.
By Megan L. Brackney
NJ Taxing Times
Winter 2016 - 2017 Edition
NEITHER THE INTERNAL REVENUE CODE (“I.R.C.”) nor Treasury Regulations requires taxpayers to file amended returns. However, the ethical rules of Circular 230, the NAEA, and the AICPA call for tax practitioners to advise their clients about errors or omissions in their tax filings. Once you have advised your client about an error, the client likely will ask you “should I correct the error, and, if so, how?” Under certain circumstances, a qualified amended return, or “QAR,” may provide a method for correcting an error without penalties.
Tax practitioners often give tax advice on things like how to structure an investment in a business venture, sell an asset, plan for retirement or pass wealth to the next generation. Sometimes a practitioner’s tax advice turns out to be wrong and the IRS assesses a tax deficiency against the taxpayer.
Typically, the question of whether the tax practitioner could be subject to a penalty for providing faulty advice would be governed by the standards under Code Sec.6694—i.e., whether the advice had a reasonable basis and was adequately disclosed, or was supported by substantial authority or, in the case of a tax shelter, it was reasonable to believe that the position was more likely than not to be sustained on its merits. However, another standard also could apply to the tax advisor’s advice. Under Code Sec. 6700, the IRS could attempt to impose a much larger tax shelter promoter penalty if the advisor “had reason to know” the advice was wrong. Most practitioners believe that the penalty under Code Sec. 6700 is designed for abusive tax shelters that are marketed by unscrupulous tax shelter promoters. While that appears to have been the purpose behind the enactment of Code Sec. 6700, the statute itself contains some technical yet broad language which, taken literally, possibly could apply to a wide variety of arrangements that involve tax benefits. There is nothing in the body of the statute that limits the penalty to tax practitioners or tax return preparers, defines the type of investment plan or arrangement that is covered or requires any specific marketing efforts. Thus, the IRS could attempt to argue that Code Sec. 6700 applies to ordinary tax advice if the practitioner giving the advice “knew or had reason” to know that the advice was wrong.
The Bipartisan Budget Act of 2015, which President Obama signed into lawonNovember, 2015, repealed the complex and much-criticized TEFRA partnership entity-level audit rules, including the electing large partnership rules. On December 18, 2015, Congress passed, and President Obama signed into law, the Protecting Americans From Tax Hikes (PATH) Act of 2015. This act sets forth certain corrections to the new audit rules.
In this course, Jerald David August and Megan L. Brackney will review the updates to the TEFRA Partnership Audit Rules Repeal.
The 2016 Private Wealth and Taxation Institute was an exceptional program this year. It was highly informative for private clients and their advisors. The speakers will included Paul Lee, from Northern Trust, Gideon Rothschild, Sandy Schlesinger, Professor Jerome Hesch, Dick Nenno and Sharon Klein from Wilmington Trust, Bryan C. Skarlatos and Megan L. Brackney from Kostelanetz & Fink, LLP, and Jeffrey Goldenberg from Goldman Sachs to name a few. In addition, there was also be a strong representation from the public sector including the Taxpayer Advocates for the Federal, State, and NYC governments, a Tax Court Judge, and the Suffolk County Surrogate Court Judge. Of course, there was plenty of local talent that presented, including several attorneys from The Private Wealth & Taxation Group of Meltzer Lippe and presenters from other Long Island Law Firms and Accounting Firms.
Years ago, women tax lawyers were a rare sighting at the Tax Section meetings. Looking around we know that the demographics have changed dramatically. Where are women tax lawyers in government, private practice, teaching and the judiciary and how have they impacted the ever-changing tax laws. Panelists reflected upon what inspired them to become tax lawyers, what have been the rewards and what have been the challenges.
Time Will Not make This Problem Disappear: The Open-Ended Statute of Limitations for Taxpayers with Delinquent Foreign Information Returns
By Megan L Brackney
ABA Tax Times - Vol. 35 No. 2
February 2016 Edition
Although section 6501(c)(8) has been in the Code for several years, many tax practitioners remain unaware of this exception to the general three-year statute of limitations for assessment of tax for delinquent foreign information returns. This exception can significantly influence a taxpayer’s decision as to whether, and how, to correct past non-compliance. This article first discusses the exception, and then describes the alternative methods for late filing of foreign information returns.
Megan L. Brackney Presented, "To File or Not to File – That is the Question” at American Bar Association, Section of Taxation, 2016 Midyear Meeting
Los Angeles, CA welcomed the ABA Section of Taxation to the 2016 Midyear Meeting on January 28-30, 2016.
Attendees were able to explore a full range of current tax issues in over 35 areas of tax law with Committee and Subcommittee programming on Friday and Saturday. Featured as a speaker was Megan L. Brackney, of Kostelantez & Fink LLP, presenting "To File or Not to File - That is the Question".