The results of the cases portrayed in this advertisement were dependent on the facts of those cases, and the results of these cases will differ if based on different facts. Depending on the facts and circumstances of your case, your results may vary. No guarantees, predictions, or outcomes should be inferred from these actual cases. No representations are made that these actual cases are typical.
Neil Deininger and his partner of Neil’s former firm, represented a husband and wife who were forced by their banker to quit farming, but did not seek advice prior to liquidating their farming enterprise. As a result, the taxpayers did not declare bankruptcy during the liquidation of their equipment and crops that would have caused the tax liability to be realized by the Bankruptcy Trustee and avoided by the taxpayers. The taxpayers worked hard to pay all of their known debts during the liquidation of their farming enterprise. In addition, the taxpayers failed to obtain advice to file married filing separately rather than married filing jointly. As a result, the taxpayers had income tax on “phantom” income realized at the end of the year after all of the crops and equipment were sold and the funds used without any cash actually being received. As a result, the taxpayers were surprised with large Federal and Arkansas income tax liabilities.
The taxpayers entered into an Installment Agreement with the Federal and Arkansas taxing authorities for a minimal amount to partially pay their tax liabilities, and after waiting out the required time frames for bankruptcy, they filed a Chapter 7 bankruptcy to discharge their tax liabilities.
During the Chapter 7 bankruptcy, an Adversary Proceeding was filed by the Arkansas Department of Finance & Administration (“DFA”), who asserted that the taxpayers’ Arkansas tax liabilities were not dischargeable in a Chapter 7 bankruptcy. The DFA alleged that the taxpayers, by making monthly voluntary payments to the Internal Revenue Service (“IRS”) and DFA (in amounts agreed to by IRS and DFA), while consciously waiting out the required time frames for bankruptcy, was willfully attempting to evade or defeat taxes under the provisions of § 523(a)(1)(C) of the Bankruptcy Code, a felonious act. The Bankruptcy Court held that the DFA’s position had no legal or factual basis, discharged the taxpayers’ Federal and Arkansas individual income tax liabilities, and declared the tax liens filed by the DFA against the taxpayers invalid. The DFA appealed the Bankruptcy Court’s decisions to the United States Court of Appeals for the Eight Circuit.
After all of the taxpayers’ income tax liabilities were discharged, Neil Deininger and his former partner were able to negotiate with the IRS for the post-bankruptcy release of a tax lien against the taxpayers’ significant equity in their homestead (which was sufficient to almost full pay the Federal individual income tax liabilities).
Neil Deininger and his former partner, along with another local tax attorney, jointly represented low-income taxpayers in a complex class action suit filed in 1995 in Pulaski County Circuit Court. This class action case involved a constitutionally based challenge to the Arkansas Department of Finance & Administration’s (“DFA”) administrative practice of “setting off” joint state income tax refunds acknowledged to be due and owing to married Arkansas taxpayers and turning those joint Arkansas income tax refunds over to the IRS to be applied toward the Federal tax liability of only one of the spouses. The DFA paid over the undisputed refunds to the IRS without allowing the non-debtor spouse-taxpayers an adequate opportunity to claim their portion of the refunds of Arkansas income taxes. This particular class action challenge lasted nine (9) years, but resulted in the administrative “setoff” practice of the DFA being held unconstitutional as lacking due process, with refunds being ordered to all members of the taxpayer class of Plaintiffs, and the complained of administrative “setoff” practice of the DFA being permanently enjoined.
Neil Deininger and his former partner represented a taxpayer who invested in a “tax shelter” partnership in 1982. The partnership allocated a portion of its 1982 losses to the taxpayer, who deducted the losses on his 1982 Federal Individual Income Tax Return creating a $16,000 refund, filing a joint return with his new wife. Thereafter, the taxpayers took no more deductions from the partnership because they felt uneasy. The IRS challenged the partnership’s losses in the United States Tax Court through lengthy litigation, which lasted approximately fifteen (15) years. While the Tax Court proceeding was pending, the partnership “dissolved” in 1995. When the partnership dissolved, the IRS assessed a 1995 tax liability for $16,000 as if the partnership losses claimed by the taxpayers in 1982 were legitimate. A local IRS auditor assured the taxpayers and their counsel that the minor 1995 tax liability being assessed ended the taxpayers’ potential liability from the 1982 tax shelter litigation. The IRS further assured the taxpayers and their counsel that the minor 1995 tax liability was indeed the proper liability from the taxpayers’ 1982 investment, despite the ongoing partnership Tax Court litigation. A year or so later, the taxpayers agreed to accept the IRS’ determination of their 1995 tax liability of $16,000 and paid it in full. The IRS later sent a bill for the 1982 income tax liability that resulted from the denial of the partnership loss deduction. By this time, the amount of the 1982 tax liability included almost twenty (20) years of interest amounting to $350,000 and greatly exceeded the net worth of the taxpayer and his wife.
Neil Deininger and his former partner sought and favorably concluded an Innocent Spouse Claim on behalf of the taxpayer’s wife. This relieved the taxpayer’s wife from all of the 1982 tax liability and allowed her to avoid filing a bankruptcy proceeding. After appealing the IRS’ action administratively without success, no avenue to contest the tax liability was available without paying the tax liability, except for filing a bankruptcy proceeding. The taxpayers filed a bankruptcy proceeding asserting the tax liability to be dischargeable and challenged the substance of the tax liability the IRS claimed the taxpayers owed for the large sum for the 1982 tax year. The Bankruptcy Court decided that the IRS could not deny the taxpayers’ 1982 partnership losses because the IRS assessed the 1995 tax as if the 1982 partnership losses were valid. The Bankruptcy Court held that the IRS was equitably estopped from assessing the 1982 additional liability after receiving payment in full for the small 1995 income tax liability that was based on a position that contradicted the IRS’ own basis for the large 1982 income tax liability. Neil Deininger and his former partner recovered from the IRS the administrative and litigation costs incurred by the taxpayers during this multi-year representation.
Neil Deininger represented a taxpayer in collection proceedings before the Internal Revenue Service (“IRS”). The taxpayer owned a business that generated significant income on paper, but left the taxpayer without any real economic income. The IRS was pursuing enforced collection measures against the taxpayer, who was being pressured to close his business and sell his real estate to pay his taxes. Neil Deininger assisted the taxpayer in filing a tax return that deducted an offsetting loss carried forward from an earlier year. The deduction resulted in the taxpayer having virtually no tax liability for the year of collection. The IRS audited the return and denied the deduction.
Neil Deininger represented the taxpayer against the IRS to the United States Tax Court. The Tax Court held that the taxpayer’s carried forward loss deduction was properly taken. The successful defense resulted in virtually eliminating the taxpayer’s liability, prevented the IRS from seizing his assets, and allowed the taxpayer to continue to operate his business.
Neil Deininger and His former partner represented a company that specialized in leasing portable toilets (“porta potties”). The Arkansas Department of Finance & Administration (“DFA”) assessed the company a sizeable sales tax liability based on short-term rentals. Neil Deininger and his former partner defended the company against the DFA in Circuit Court by arguing that an exception for sanitary sewers applied and excluded the short-term lease of the portable toilets’ from the assessment of sales tax. Although the company’s position was successful at the trial court level, it was later overturned by the Arkansas Supreme Court.
Neil Deininger and his former partner recognized that the Arkansas Department of Finance & Administration (“DFA”) was inappropriately charging interest at ten percent (10%) when it filed its Certificates of Indebtedness (liens for taxes) and hence, the enforced collection was an illegal exaction under the Arkansas Constitution. Neil Deininger and his former partner originally prevailed in Circuit Court, which allowed the case to proceed as a class action. Further, it was argued that the DFA was charging interest, without statutory authority, against some of Arkansas’ poorest taxpayers who couldn’t pay all the Arkansas tax liabilities they owed at the time of filing their returns.
When appealed to the Arkansas Supreme Court, the decision was that collecting illegal interest charged on a tax was not an illegal exaction, despite the clear language of the Arkansas Constitution and almost 150 years of case law holding that the constitutional provision prohibiting “any illegal exaction, whatever” was to be liberally construed. Disappointedly, the Arkansas Supreme Court reached the (erroneous) conclusion that it had never held illegal interest on a tax to be the subject of an illegal exaction, that the liberal construction of the constitutional protection of taxpayers didn’t meet the definition of “any illegal exaction whatever,” and the case spanning four (4) years or so was concluded against the poorest Arkansas taxpayers.
Most cases are resolved without resorting to litigation
An elderly, uneducated, and self-employed taxpayer sought advice from Neil Deininger after the Internal Revenue Service (“IRS”) selected his tax returns for audit. The taxpayer’s returns reported losses each year from the business he operated for over twenty (20) years. The taxpayer’s bookkeeping and accounting practices used to prepare the returns were inaccurate given the taxpayer’s lack of education. After the audit, the IRS claimed that the taxpayer had underreported income that resulted in a tax liability in excess of the taxpayer’s net worth.
Neil Deininger helped the taxpayer incorporate his small trucking business prior to the IRS filing Notices of Federal Tax Liens against him. Thereafter, the client sold his incorporated business to his son for the net value of the business’ assets, which was fairly nominal. The sale caused the taxpayer to incur additional income tax liability, but allowed his son to receive a fair market value tax basis in the business’ assets. This strategy allowed the business to continue operating without interruption, and allowed the client to transfer the business to his son, a long-time employee of the business. The IRS was prevented from seizing only the specific vehicles with realizable equity and leaving only the assets that were worth less than the amount owed on them, thereby forcing the taxpayer out of business with unpaid business debts.
Ultimately, Neil Deininger assisted the taxpayer in negotiating an Offer in Compromise that resolved both his audited income tax liability and the income tax liability generated by the transfer of the business to the taxpayer’s son. The taxpayer was able to increase the tax liability he was not going to be able to pay, stopped the IRS from forcing him out of business, and was able to provide additional tax benefits to his son whom the business was transferred to. In addition, Neil Deininger was able to eliminate the fraud penalty of fifty percent (50%) of the tax by arguing that the IRS shouldn’t penalize the taxpayer after the IRS took twenty (20) years to do its job and determine what was an obvious problem.
Neil Deininger represented a wealthy attorney who had “borrowed” monies belonging to his childrens’ trust, of which he was trustee, to fund a drug and gambling habit. After the taxpayer stopped embezzling from the trust, the trust claimed a “business bad debt loss” to the extent of the embezzlement, benefitting the childrens’ trust. The Internal Revenue Service (“IRS”) disagreed, but allowed the trust to deduct an embezzlement loss requiring the taxpayer trustee to include $10 million in his personal income and generating a several million dollar income tax liability. Thereafter, Neil Deininger helped the taxpayer trustee, now insolvent, negotiate a Federal Offer in Compromise for about three percent (3%) of his income tax liability. The result was the childrens’ trust saved a several million dollars in tax allowing it to offset the actual economic loss caused by the embezzlement in exchange for a large tax liability of the taxpayer trustee who settled it for virtually nothing.
Neil Deininger and his former partner represented a taxpayer before the Arkansas Department of Finance & Administration (“DFA”) in a situation where the DFA prepared and filed substitute returns for a taxpayer who failed to file his own returns. The DFA’s returns resulted in significant Arkansas tax liabilities, and were followed by the DFA filing first priority tax liens. Neil Deininger and his former partner argued those priority Arkansas tax liens served to reduce the equity available in the taxpayer’s house ($100,000) for purposes of significantly reducing the amount of the taxpayer’s Federal Offer in Compromise. The Internal Revenue Service (“IRS”) agreed and accepted a lesser Federal Offer in Compromise computed based on the amount of the filed Arkansas tax liens. After the Federal Offer in Compromise was concluded, the taxpayer filed actual income tax returns with the DFA, significantly reducing the taxpayer’s Arkansas tax liabilities, as well as the Arkansas tax liens as a result of the returns prepared by the DFA, which were over inflated.
Almost ten (10) years after an Internal Revenue Service (“IRS”) audit adjusting inventory, the IRS challenged the adjustment of the next year’s opening inventory in the very same amount the IRS asserted was proper. A tax due to a timing difference between two (2) years, under obscure provisions of the Internal Revenue Code provided for alleviating timing adjustments of this nature, long after the fact, but the IRS failed to follow the law. As the taxpayer geared up for litigation, the IRS “number crunchers” erroneously computed the taxpayer’s tax liability in the amount the taxpayer asserted was proper. The tax liability was paid and never arose again.
A taxpayer made an election six (6) days too late to rollover the retirement plan he had inherited. Because of some unusual circumstances, the Internal Revenue Service (“IRS”) asserted a tax liability that would have wiped out fifty percent (50%) of the value of an IRA. Neil Deininger was able to successfully conclude a Federal Offer in Compromise as to “effective tax administration,” thereby eliminating the loss in value.
The Office of Professional Responsibility attempted to suspend an attorney’s ability to practice before the Internal Revenue Service (“IRS”) because of inappropriate language in letters written to the IRS. Neil Deininger and his former partner tried the case before an Administrative Law Judge with evidence of the attorney’s extreme stress, a debilitated client, and clerical errors to successfully defend the attorney.
A taxpayer left her physically abusive husband when he was forced to quit farming, although she filed a married filing joint return showing large “phantom income,” which generated a large tax liability. Thereafter, the taxpayer wife moved to California. Although the taxpayer regularly filed her income tax returns thereafter, only after nine (9) years, did the Internal Revenue Service (“IRS”) attempt to collect from the taxpayer a tax that had significantly increased due to interest. Neil Deininger argued that the IRS failed to take appropriate “managerial” action, which would have negated the vast majority of the tax liability. The judge held that the failure of the IRS to act was “ministerial,” not “managerial,” so the taxpayer lost. However, the law was subsequently changed to include situations like the taxpayer experienced.
The results of the cases portrayed in this advertisement were dependent on the facts of those cases, and the results of these cases will differ if based on different facts. Depending on the facts and circumstances of your case, your results may vary. No guarantees, predictions, or outcomes should be inferred from these actual cases. No representations are made that these actual cases are typical.