Jack Fisher CPA: Tax Compliance Issues and Legal Challenges

Jack Fisher, a Certified Public Accountant (CPA), has been involved in various tax compliance issues and legal challenges. His cases highlight the complexities of federal tax regulations and the consequences of disputes between taxpayers and the IRS. Understanding these issues is essential for professionals and individuals navigating similar financial matters.

Tax Court Litigation Process

Taxpayers who dispute an IRS determination can challenge it in the United States Tax Court before making any payment. This specialized court allows individuals and businesses to contest IRS findings without first paying the disputed amount. The process begins with the taxpayer filing a petition within 90 days of receiving a Notice of Deficiency, a formal letter stating the amount owed and the basis for the assessment.

After filing, the IRS responds, and both parties engage in pretrial proceedings, including discovery, motions, and settlement discussions. The IRS Office of Chief Counsel often seeks to resolve cases before trial. If no settlement is reached, the case proceeds to trial, where a judge—without a jury—reviews evidence, hears testimony, and issues a decision. The burden of proof generally falls on the taxpayer, except in cases involving fraud or certain penalties, where the IRS must provide clear and convincing evidence.

Tax Court decisions are issued as either regular or memorandum opinions. Regular opinions address new or significant legal issues, while memorandum opinions apply existing law to specific facts. These rulings set precedents that influence future cases. Decisions can be appealed to the U.S. Court of Appeals, but taxpayers must weigh the costs and risks of further litigation.

Appeals in Federal Cases

If a taxpayer disagrees with a Tax Court ruling, they can appeal to a U.S. Court of Appeals by filing a Notice of Appeal within 90 days. Unlike the initial trial, appellate courts do not re-examine evidence or hear witness testimony. Instead, they assess whether the Tax Court correctly applied tax laws and legal principles. Appeals are particularly relevant when cases involve ambiguous statutes or conflicting precedents.

Each Court of Appeals follows the legal framework established in its jurisdiction, meaning tax interpretations can vary across different circuits. This can create inconsistencies in tax law application, sometimes leading to Supreme Court review if the issue has broad implications. For example, appellate courts have issued differing rulings on Internal Revenue Code 6662, which governs accuracy-related penalties.

Legal arguments at the appellate level focus on whether the Tax Court properly interpreted the Internal Revenue Code, Treasury Regulations, or prior case law. Attorneys rely on legislative history, administrative guidance, and judicial precedent to support their positions. In some cases, third parties with expertise in tax law submit amicus curiae briefs to provide additional context. These briefs can be influential in cases involving corporate tax structures, international tax compliance, or complex financial transactions.

If a taxpayer wins in the Court of Appeals, the IRS may petition the Supreme Court for review. However, the Supreme Court hears only a small number of tax cases, typically those with significant policy implications. If the appellate court upholds the Tax Court’s decision, the taxpayer must comply with the ruling, which may involve paying assessed taxes, penalties, and interest. Given the financial and legal risks, taxpayers must carefully consider whether an appeal is worth pursuing.

Conservation Easement Considerations

Conservation easements allow landowners to preserve natural resources while receiving potential tax benefits, but structuring these arrangements incorrectly can lead to IRS scrutiny. A properly executed easement involves donating development rights to a qualified organization, such as a land trust, restricting future land use to conservation purposes. In return, the donor may claim a charitable deduction under Internal Revenue Code 170(h), provided the contribution meets statutory requirements. The IRS closely examines these deductions, particularly when inflated appraisals or improper valuation methods are used to increase tax savings.

One of the most common pitfalls involves easement valuation. The deduction amount is determined by the difference between the property’s fair market value before and after the easement is granted. Overstating this reduction can trigger IRS audits, leading to disallowed deductions and penalties. The IRS has identified syndicated conservation easements—where multiple investors claim deductions on the same property—as a frequent area of abuse. Treasury Regulations and IRS Notice 2017-10 classify certain syndicated transactions as “listed transactions,” requiring additional disclosures to avoid severe penalties under Internal Revenue Code 6662A.

Beyond tax implications, conservation easements impose long-term restrictions that can affect property liquidity and financial planning. Landowners must consider how these limitations impact resale potential, estate planning, and property tax assessments. Some states offer additional tax incentives for conservation donations, but these benefits vary widely and may have their own compliance requirements. Failing to adhere to these rules can result in state-level tax consequences, further complicating financial planning.

Repercussions of Noncompliance With Tax Regulations

Failing to comply with tax regulations can result in financial, civil, and criminal penalties. The IRS imposes accuracy-related penalties under Internal Revenue Code 6662, which can add 20% to the underpayment amount for negligence or substantial understatement of income tax. More serious violations, such as willful tax evasion under Internal Revenue Code 7201, carry criminal consequences, including fines up to $100,000 for individuals ($500,000 for corporations) and imprisonment for up to five years. These penalties are compounded by interest charges under Internal Revenue Code 6601, which accrue daily from the original due date of the tax liability.

Businesses that fail to meet payroll tax obligations face aggressive enforcement measures. Employers must withhold federal income tax, Social Security, and Medicare taxes from wages and remit them promptly. Under the Trust Fund Recovery Penalty (Internal Revenue Code 6672), responsible parties—including business owners, CFOs, or payroll managers—can be held personally liable for unpaid employment taxes. The IRS prioritizes payroll tax enforcement because these funds are held in trust for employees, and noncompliance is considered a serious violation of fiduciary duty.