Welcome to the bimonthly publication, IRS Insights, produced by Deloitte's Tax Controversy Services Group to keep our clients abreast of current issues related to the Internal Revenue Service.

In this month's issue:

• Penalty Upheld for Failing to Deposit Taxes Electronically – In a recent District Court decision, the court upheld the failure-to-deposit penalties pursuant to section 6656 against a taxpayer for not depositing employment taxes electronically even though the taxes were otherwise timely deposited with an approved federal bank in the correct amount.
• Tax Court Upholds Equitable Recoupment Defense – The Tax Court recently decided that a taxpayer can raise the doctrine of equitable recoupment in order to offset income tax deficiencies against the overpayment of Federal Insurance Contribution Act ("FICA") taxes when the Tax Court does not otherwise have subject matter jurisdiction over FICA taxes.
• Tax Controversy Updates: IRS Issues Guidance on Adequate Disclosure – On January 25, 2008, IRS issued annual Revenue Procedure 2008-14 to identify circumstances under which disclosures on a tax return are adequate for purposes of avoiding accuracy-related penalties on substantial underpayments of tax under section 6662(d) and for avoiding return preparer penalties under section 6694(a).
• Tax Controversy Updates: Fiscal Year 2007 Enforcement and Services Results – Recently, the IRS released its fiscal year ended September 30, 2007 enforcement and services results. The IRS reported an increase in the number of audits and enforcement revenue during 2007. The number of individual audits rose by 7 percent and the number of business audits rose by 14 percent. The enforcement revenue increased from $48.7 billion in 2006 to $59.2 billion in 2007.
• Recent Guidance: Final Substitute Return Regulations – On February 5, the Treasury Department and the IRS issued final regulations relating to returns prepared or signed by the Commissioner or other Internal Revenue Officers or employees under section 6020.
• Recent Guidance: Distressed Asset Trust Transaction – On February 28, the Treasury Department and the IRS issued Notice 2008-34 which provides that a "distressed asset trust" transaction, and substantially similar transactions, are listed transactions for purposes of reg. section 1.6011-4(b)(2) and sections 6111 and 6112.
• Tax Controversy Dbriefs Webcast Series

See attached file for details.

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