Who wants to get involved with the Internal Revenue Service if they don't have to?
With the IRS, you generally want to keep a low profile and stay under the radar. You definitely don't want to draw attention to yourself. Even if you're not quite sure about the legitimacy of a certain deduction or whether or not a particular gift needs to be reported as income, you're probably better off asking an accountant – rather than calling the IRS helpline to ask for advice about a “hypothetical” situation.
It's not just that you're likely to get different answers every time you call. It's the possibility of a long silence after your inquiry, and the challenge--why do you ask?
You could have gone ahead and filed your return with your own favorable interpretation and it might have gotten through. Or, it might have been disallowed and you'd have had to ante up some more. But now you've red-flagged yourself and you don't dare try anything too creative.
So, who can blame St. Louis attorney Stephen Tillery for not wanting to get the revenuers involved in the establishment of a juicy settlement trust fund erected on the carcass of a collapsing Kmart?
Tillery represents the estate of James Garbe, an Ohio pharmacist who sued Kmart under the False Claims Act for allegedly charging higher prices to customers relying on insurance rather than paying out of pocket.
The problem was that the settlement Tillery came up with included certain provisions involving tax questions subject to the purview of the IRS. Assistant U.S. attorney Gerald Burke pinpointed those questionable provisions and protested, accusing Tillery of infringing on IRS jurisdiction.
District Judge Nancy Rosenstengel declared the provisions inappropriate, in a separate order establishing a trust fund with former Missouri Supreme Court Justice Michael Wolff as trustee.
Speaking of red flags, maybe it’s worth a look at some of Tillery’s other settlement arrangements. You never know.