Every year the tax court looks at different cases and makes rulings that greatly affect taxpayers. We’re going to look at several different tax court cases and how they affect taxpayers and what the biggest takeaways are. This blog will cover the case of Kane v Commissioner, which directly affected businesses and professionals who may do accounting work for them.
Kane v Commissioner teaches two important lessons; First, that people who have check signing authority for your business may be held responsible for the taxes you don’t pay. Secondly, it is important you have an experienced professional represent you when dealing with the Tax Court.
In Kane v Commissioner, Ms. Kane was a tax professional who helped various businesses with their bookkeeping. This included different services, such as writing and signing checks for the companies. One of Ms. Kane’s clients failed to pay taxes he owed for his business and the IRS held Ms. Kane personally responsible for the trust fund taxes that were not paid by the business. The IRS held Ms. Kane responsible because she had check signing authority for the business.
Ms. Kane appealed the IRS’s assessment on the grounds that this business was only one of her clients and she did not make the decision not to pay the taxes due by the business. Unfortunately, Ms. Kane failed to attend her appeal hearing. This led the Appeal Hearing Officer to issue a determination in favor of the IRS’s assessment that said that the IRS had not been wrong to hold Ms. Kaine personally responsible for the taxes.
Once the Appeals Officer issued the determination, Ms. Kane then appealed it to the Tax Court. Ms. Kaine was able to argue the merits of her case before the tax court in hopes of avoiding the determination. Unfortunately, the grounds on which she appealed her case to Tax Court only provided Tax Court with the opportunity to determine if the Appeals Officer had abused their discretion in their determination. They weren’t able to rule on if she was herself, responsible for the taxes owed by her client. The Tax Court ruled that the Appeals Officer hadn’t abused their discretion as Ms. Kaine did not appear at the hearing. Ms. Kaine was still being held responsible for the unpaid taxes. It appears that the Tax Court had sympathy for her plight because although they did not reverse the assessment against her, they provided her with some guidance on other avenues to pursue.
Ms. Kaine’s case shows the importance of appearing at IRS’s hearings and having good representation when dealing with the IRS and the tax court, as your representation can help you avoid major pitfalls that could lead you to owing more money to the IRS. If you need representation, Polston Tax can help. Give us a call at 844-841-9857 or click below to schedule a free consultation.