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Taxpayer prevailed, in spite of using wrong form

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A taxpayer who intended to file for innocent spouse relief (available when a joint filer claims no liability for items on a tax return), instead filed Form 8379, “Injured Spouse Allocation” (used when a joint filer loses all or part of a refund due to the spouse’s debts). The IRS and the U.S. Tax Court rejected her claim. But the 9th Circuit Court of Appeals found that she met the requirement of the “informal claim doctrine” and, therefore, her innocent spouse relief claim was timely filed.

Court grants anonymity to whistleblower, but it might not last

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The U.S. Tax Court granted a whistleblower’s motion to proceed anonymously in his whistleblower case. The basis: The social interests of protecting his identity as a confidential informant exceeded those of the people’s right to know. But the Court said that, as the whistleblower action proceeds, the balance of social interests may change and his anonymity could be lost. The IRS Whistleblower Office pays awards to people who provide “specific and credible information” on tax cheaters. (148 TC No. 7)

Offer In Compromise

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Under an IRS Offer in Compromise (OIC), a taxpayer can settle a tax debt for less than the amount owed if certain requirements are met. In one case, a man filed an OIC and the IRS rejected it because the taxpayer’s “collection potential” was higher. The IRS included an unpaid receivable as an asset because the taxpayer had control of the entity that owed him money. After his death, his estate fought the OIC rejection. The U.S. Tax Court upheld it, stating “it was based on a reasonable application of the IRS’ published guidelines.” (TC Memo, 2017-45)

Travel deductions denied

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Taxpayers traveling “away from home” can deduct ordinary and necessary expenses incurred in a trade or business. But when nonresident alien students at foreign universities, who participated in a summer work-travel program, deducted travel costs to and from the U.S. and certain living expenses while here, the IRS denied the deductions. The U.S. Tax Court agreed, stating that the students weren’t “away from home in pursuit of a trade or business,” so their travel and living expenses weren’t deductible. (Liljeberg, 148 TC No. 6)