At some point during most audits, taxpayers will ponder whether, or to what extent, they should “cooperate” with the IRS. They also might ask what, exactly, cooperation means in a particular situation. These are critical questions to which many taxpayers lack clear answers, and this type of unawareness can lead to bad decisions. This article describes duties associated with foreign accounts, standards for reducing penalties, a new case in which taxpayers were stuck with higher sanctions because they failed to fully cooperate during a voluntary disclosure program, and other contexts in which cooperation has a significant effect on IRS disputes.

Fighting over when owners of limited partnerships must pay self-employment taxes has lasted nearly five decades. This struggle is attributable to several things, including the absence of applicable regulations, rapid evolution of business entities, and more. Uncertainty has caused taxpayers to claim disparate tax positions and triggered several big-dollar cases. This article, just one in a series, explores the relevant rules, a long list of arguments advanced by taxpayers and the IRS in two pending cases, and the recent Tax Court ruling that it must apply a “functional test” to determine whether a partner in a limited partnership meets the relevant exemption.

The IRS has a limited period to enforce the rules, and taxpayers hope to go unnoticed until that opportunity has passed. Timing issues do not disappear, though, simply because taxpayers get selected for audit or approach the IRS pro-actively. Indeed, they might become more important than ever, because many interactions with the IRS involve extensions of assessment-periods, some voluntary, others compulsory. This article analyzes the divergent and surprising rules applicable to taxes, on one hand, and FBAR penalties, on the other.