#legal
Legal
Legal considerations for business finance and accounting compliance
Dee v. Commissioner: When Is an IRS Audit Still 'Open' for a Whistleblower Award?
In Dee v. Commissioner (167 T.C. No. 1, July 2026) the Tax Court ruled an IRS examination stays legally "open" for whistleblower jurisdiction until formally closed under Rev. Proc. 2005-32 — yet denied Dee an award because auditors had independently found the same $2 million deficiency a month before his tip, which was built entirely from public SEC filings.
DOL Opinion Letter FLSA2026-2: When a "Discretionary" Bonus Isn't — and What It Does to Overtime Pay
DOL Opinion Letter FLSA2026-2 (January 5, 2026) holds that a formula-driven safety and attendance bonus of up to $9.50/hour is nondiscretionary and must be included in the FLSA regular rate — turning a $12/hour base into a $21.50 regular rate and adding $107.50 of overtime pay in DOL's own 50-hour example. Here is the three-part test, which common bonus types fail it, and how to fix the payroll math.
Drake Plastics v. IRS: What the Micro-Captive Listed-Transaction Ruling Means for 831(b) Owners
In April 2026, a Texas federal court vacated the IRS rule that automatically branded micro-captives with loss ratios under 30% as listed transactions — eliminating the $200,000-per-year penalty tier — while upholding the 60% transaction-of-interest disclosure requirement. Here is what 831(b) captive owners must still file, and why loss ratios now determine your entire compliance posture.
Eiler v. Commissioner: When Winning an FCRA Lawsuit Leaves You With a Tax Bill Bigger Than Your Payout
In Eiler v. Commissioner (167 T.C. No. 3, July 14, 2026), the Tax Court held that $60,050 in contingency attorney's fees from a $64,750 FCRA settlement was the plaintiffs' gross income with no above-the-line deduction, producing an $11,423 deficiency against a $4,700 net recovery. Here's what the ruling means for anyone settling a lawsuit — and for employers who run background checks.
Estate of Fields: Why a Deathbed Family Limited Partnership Failed the Section 2036 Test
In June 2026 the Fifth Circuit affirmed that an FLP formed one month before Anne Fields's death failed IRC Section 2036's bona fide sale exception, pulling $17 million back into her taxable estate, erasing a 36.25% valuation discount, and adding a 20% penalty — a blueprint of what sinks last-minute succession plans.
Falco v. Intuit: What the Credit Karma Money Lawsuit Reveals About Fraud Protection for Business Accounts
A June 2026 class action alleges Intuit and Credit Karma failed to investigate unauthorized withdrawals within EFTA deadlines. Regulation E caps consumer fraud liability at $50 and requires provisional credit within 10 business days — but business accounts get none of those protections, a gap every freelancer banking at a neobank should understand.
Gravenstein 116 v. United States: Why Cannabis Businesses Can't Claim the Employee Retention Credit
The Court of Federal Claims dismissed Gravenstein 116, LLC's $322,016 Employee Retention Credit refund claim, holding that Section 280E bars cannabis businesses from refundable tax credits — refundability doesn't change what a credit legally is. Here's what the ruling means for dispensaries with pending or paid ERC claims, and why the 2026 Schedule III move doesn't rescue them.
The IRS Sent a $121,000 Refund by Mistake — Then Gave Itself Ten Years to Take It Back
In Hough Beck & Baird, Inc. v. Commissioner, 167 T.C. No. 2 (July 2026), the Tax Court held that when an IRS calculation error zeroes out a correctly reported $121,003 employment tax liability and triggers a mistaken refund, the IRS can fix it with a supplemental assessment under IRC § 6204 — gaining a ten-year collection window instead of the two-year erroneous-refund suit deadline of § 7405.
Jones Bluff v. Commissioner: Why LLC Members Get No Seat at the Table in a BBA Partnership Audit
In Jones Bluff, LLC v. Commissioner (166 T.C. No. 6, March 2026), the Tax Court dismissed a Fifth Amendment due-process challenge to the BBA centralized partnership audit regime on standing and ripeness grounds — confirming that individual partners get no notice or hearing rights during an entity-level audit. Here's how the regime works, who qualifies for the small-partnership election-out, and what LLC members should fix in their operating agreements before an audit starts.
Jones Bluff v. Commissioner: What the BBA Partnership Audit Ruling Means for Your Multi-Member LLC
In Jones Bluff, LLC v. Commissioner (166 T.C. No. 6, March 2026), the U.S. Tax Court rejected a due process challenge to the BBA centralized partnership audit regime, ruling partnerships lack standing to assert individual partners' rights. Here's what multi-member LLCs should do — from vetting the partnership representative to the 45-day push-out election and electing out of BBA.
Keysight v. United States: What the First Major Post-Chevron GILTI Ruling Means for Businesses with Foreign Subsidiaries
On July 2, 2026, the U.S. Court of Federal Claims invalidated Treasury Reg. 1.951A-2(c)(5) in Keysight Technologies v. United States, holding that Treasury exceeded its authority under Section 7805(a) — the first major tax-regulation strike-down since Loper Bright ended Chevron deference. Here's what U.S. owners of foreign corporations should know about open tax years, protective refund claims, and the coming NCTI regime.
LaRosa v. Commissioner: The Fourth Circuit Opens Innocent Spouse Relief to Erroneous Refunds
In LaRosa v. Commissioner, the Fourth Circuit rejected the Tax Court's rebate/nonrebate distinction and held that an unrepaid erroneous refund counts as "unpaid tax" under IRC Section 6015(f) — meaning taxpayers can seek innocent spouse relief from refund clawbacks. Here is what the ruling means for anyone who signs a joint return.