Substantial Authority: They're Falling Like Flies

Monday, March 31, 2014

They're Falling Like Flies

Camp is not seeking re-election.

With Baucus to China and Camp now retiring, the two forces behind the drive for tax reform are now gone.

The issued their proposals and said "good luck boys - it's up to you to get it done."

Fat chance.

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Substantial Authority

Substantial Authority has a special meaning to tax practitioners. When somebody takes a questionable position on his tax return, the strength of that position depends on how well the authority - statutes, regulations, cases and ruling - supports the position. If your tax advisor says you have "substantial authority" for your position, it means the chances of success if the IRS should challenge your position are less than 50%, but you're not being negligent in taking the position.

In other words, if you have substantial authority for your position, you're probably going to lose, but you won't be penalized if you do, so what the hell?

Substantial Authority is a green light to play the audit lottery with no adverse consequences. Bless Congress for thinking it up....