by Brian Mahany
The genesis of this article comes from a newsletter published by accounting firm Wegner, LLP. The title reminds me of those late TV commercials featuring Roni Deutch, America’s self-proclaimed tax lady, telling people they could just pay the IRS pennies on the dollar. It didn’t work for Roni (for more articles on her click here and here.) The Wegner article discusses a federal court ruling that says taxpayers cannot cite a television commercial that mischaracterizes certain tax rules as authority to support the position taken on a tax return.
According to the court opinion, Ralph and Jacqueline Grosso bought a house for their adult son. They also claimed the first time home buyer’s credit of $6,500. The problem is that Mr. & Mrs. Grosso never lived in that house nor did they intend to. The plain language of the home buyer credit says you must live in the home.
The case should have ended right there after an audit reversed the credit. The Grossos, however, claimed they were entitled to the credit because they learned about it on a TV commercial. They say that because the commercial was misleading, somehow they were excused from the law requiring purchasers to live in the home.
The court concluded that a misunderstanding of the tax law does not excuse the clear requirements of the Internal Revenue Code (Grosso v. U.S., Eastern District of Pennsylvania Nov. 30, 2011).The fact that Ralph and Jacqueline had enough money to buy their kid a house suggests that they didn’t even need the $6,500 credit but that’s another story. The moral of the story? Don’t believe everything you see on TV.
A few minutes with an accountant early in the game can save a lot of aggravation (and attorneys fees) later.
If you are facing an audit or court battle with the IRS, don’t go alone. The tax attorneys at Mahany & Ertl have helped many people with a wide variety of tax issues. For more information, contact attorney Brian Mahany at (414)m 704-6731 (direct) or by email at All inquiries are confidential.
Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & San Francisco, California (California office taxes only).