Carolyn Schenck Comments on New IRS Playbook for Deferred Legal Fees in Tax Notes

New IRS training materials aim to get auditors up to speed on suspected tax schemes in complex deferred legal fee deals enabled by third-party loans, which are testing the boundaries of a 32-year-old Tax Court ruling.

The 240-page slideshow, obtained by Tax Notes through a Freedom of Information Act request, shows how the agency is proceeding with compliance efforts announced in December 2024 — a project expected to turn on “issue-based examinations and educational soft letters.”

. . .

Tax professionals who reviewed the instructional materials praised the fact patterns presented and detailed case studies woven throughout the IRS Large Business and International Division’s three-day workshop.

“They clearly have examples of abusive cases, which is how they came up with this playbook,” Carolyn A. Schenck, a former IRS national fraud counsel, said of the line-by-line walk-through and transaction-specific flowcharts. “This is a postmortem.”

To read the article in full, please visit Tax Notes’ website.