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Deininger & Wingfield, P.A.
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Deininger & Wingfield, P.A., along with another local tax attorney, jointly represented taxpayer-clients in a complex class action suit filed in 1995 in Pulaski County Circuit Court. This class action case involved a constitutionally based challenge to the Arkansas Department of Finance & Administration’s (“DF&A”) administrative practice of “setting off” joint state income tax refunds acknowledged to be due and owing to married Arkansas taxpayers and turning those joint Arkansas income tax refunds over to the IRS to be applied toward the federal tax liability of only one of the spouses. The Arkansas DF&A paid over the amounts of such undisputed refunds to the IRS without allowing the non-debtor spouse-taxpayers an adequate opportunity to receive their portion of the refunds of Arkansas income taxes. This particular class action challenge lasted nine (9) years, but resulted in the administrative “setoff” practice of the Arkansas DF&A being held unconstitutional, with refunds being ordered to all members of the taxpayer class of Plaintiffs, and the complained of administrative “setoff” practice of the DF&A being permanently enjoined. Fulmer, et al. v. Weiss, Circuit Court of Pulaski County, Arkansas, Docket No. EQ-95-0898.
 
 

Deininger & Wingfield, P. A., represented a farmer who incurred large state and federal income taxes on “phantom” income generated the year he quit farming.  Although the taxpayer attempted to negotiate an Offer in Compromise with the IRS, the IRS insisted he could pay his tax liability, along with interest and penalties, in full.  The IRS forced the taxpayer to file a bankruptcy petition that resulted in the IRS receiving nothing.

In the Chapter 7 Bankruptcy and Adversary Proceeding, the Arkansas DF&A asserted that the farmer’s Arkansas income tax liabilities were not able to be discharged through bankruptcy.  The Arkansas DF&A alleged that the farmer, by making monthly voluntary payments to the IRS and Arkansas DF&A (in amounts agreed to by the IRS and DF&A) while consciously waiting out the mechanical time frames of the Bankruptcy Code, was willfully attempting to evade or defeat taxes under the provisions of §523(a)(1)(C) of the Bankruptcy Code.  The Bankruptcy Court held that the DF&A’s position had no legal or factual basis, discharged the farmer’s Arkansas individual income tax liabilities, and declared the tax liens filed by the DF&A against the farmer invalid.  In re: Dale Roper, Chapter 7, No. 01- 40616S; Dale Roper vs. Dick Barclay, Director, Department of Finance & Administration, State of Arkansas, AP No.  01-4036 (U. S. Bank. Ct., ED, Ark.)
 

 

Deininger & Wingfield, P.A., represented a taxpayer who invested in a partnership in 1982.  The partnership distributed a portion of its 1982 losses to the taxpayer, who deducted the losses on his 1982 federal individual income tax return.  The IRS challenged the taxpayer’s loss deduction administratively and the partnership’s losses in federal Tax Court.  The Tax Court proceeding lasted approximately 15 years.  While the Tax Court proceeding was pending, the partnership dissolved in 1995.  When the partnership dissolved, the individual’s capital account in the partnership was negative as a direct result of the 1982 losses that the IRS claimed were not deductible.  In reviewing his 1995 income tax return, the IRS took the position that the dissolution generated phantom “discharge of indebtedness” income for the taxpayer in the amount his capital account was negative and used that amount to compute an additional income tax liability.

The IRS began collection activities against the individual based on the income tax liability generated by the claimed “discharge of indebtedness” income.  The taxpayer agreed to accept the IRS’ determination of his 1995 tax liability and paid it in full.  The IRS then sent a bill for the 1982 income tax liability that resulted from their denial of the partnership loss deduction.  By this time, the amount of the 1982 tax liability included almost 20 years of interest and greatly exceeded the net worth of the taxpayer and his wife.

Deininger & Wingfield, P.A., filed and negotiated an innocent spouse claim on behalf of the taxpayer’s wife.  This relieved the taxpayer’s wife from all of the 1982 tax liability and allowed her to avoid filing a bankruptcy petition.

After appealing the IRS’ action administratively, Deininger & Wingfield, P.A., advised the taxpayer to file bankruptcy and challenge the liability the IRS claimed the taxpayer owed for 1982 in a Bankruptcy Court Adversary Proceeding.  The Bankruptcy Court decided that the IRS could not deny the taxpayer’s 1982 losses and then, in 1995, claim that the taxpayer was also liable for tax based on “discharge of indebtedness” income generated by those same 1982 losses.  The Bankruptcy Court held that the IRS was equitably estopped from assessing the 1982 liability after receiving payment in full for the 1995 liability that was based on a position that contradicted its basis for the 1982 liability.

Deininger & Wingfield, P.A., is currently litigating on behalf of the taxpayer to recover from the IRS the administrative and litigation costs incurred by the taxpayer during this multi-year representation.  In re: David L. Seay, Chapter 7, No. 4:05-bk-19608; David L. Seay vs. United States of America, Internal Revenue Service, AP No. 4:05-ap-01300 (U.S. Bank. Ct., ED, Ark.).
 
 

Deininger & Wingfield, P.A., represented a taxpayer in collection proceedings before the IRS.  The taxpayer owned a business that generated significant income on paper, but left the taxpayer without any real economic income.  The IRS was pursuing enforced collection measures against the taxpayer, who was being pressured to close his business and sell his real estate to pay for his taxes.  Deininger & Wingfield, P.A., assisted the taxpayer in filing a tax return that deducted an offsetting loss carried forward from an earlier year.  The deduction resulted in the taxpayer having virtually no tax liability for the year.  The IRS audited the return and denied the deduction. 

Deininger & Wingfield, P.A., defended the taxpayer against the IRS in federal Tax Court.  The United States Tax Court held that the taxpayer’s carried forward loss deduction was properly taken.  The successful defense resulted in virtually eliminating the taxpayer’s liability, prevented the IRS from seizing his assets, and allowed the taxpayer to continue to operate his business.  Baldwin v. C.I.R., T.C. Memo. 1993-433, 1993 WL 358533, 66 T.C.M. (CCH) 769, T.C.M. (RIA) 93,433 (U.S.Tax Ct. Sep 16, 1993) (NO. 315-91).
 
 

Deininger & Wingfield, P.A., represented a company that specialized in leasing portable toilets.  The Arkansas DF&A assessed the company a sizeable sales tax liability.  Deininger & Wingfield, P.A., defended the company against the DF&A in Circuit Court by arguing that an exception for sanitary sewers applied and excluded the portable toilets’ leases from the assessment of sales tax.  Although the company’s position was successful at the trial court level, it was later overturned by the Arkansas Supreme Court.  Weiss v. Best Enterprises, Inc., 323 Ark. 712, 917 S.W.2d 543 (Ark., 1996).
 
 

An elderly client sought advice from Deininger & Wingfield, P.A., after the Internal Revenue Service selected his tax returns for audit.  His original returns reported a loss from the business he operated for over twenty years.  The client’s bookkeeping and accounting practices used to prepare the returns did not meet the IRS’ standards.  After the audit, the IRS claimed that he had unreported income items and underreported income items that resulted in a tax liability in excess of his net worth.

Deininger & Wingfield, P.A., helped the taxpayer incorporate the business prior to the IRS filing Notices of Federal Tax Liens against him.   Thereafter, the client sold his business to his son for the net value of the business’ assets, which was fairly nominal.  The sale caused the taxpayer to incur additional income tax liability, but allowed his son to receive a “stepped-up” tax basis in the business’ assets.  This strategy allowed the business to continue operating without interruption, and allowed the client to transfer the business to his son, a long-time employee of the business.  The IRS was prevented from seizing only the assets with realizable equity and leaving only the assets that were worth less than the amount owed on them, thereby forcing the client into filing bankruptcy.  Ultimately, Deininger & Wingfield, P.A., assisted the client in negotiating an Offer in Compromise that resolved both his audited income tax liability and the income tax liability generated by the sale of the business.  The approach Deininger & Wingfield, P.A., recommended also benefited the business’ purchaser, the client’s son, by allowing him to receive a “stepped-up” in the corporation he purchased for future depreciation purposes.

 
 

Deininger & Wingfield, P.A., represented a client who had availed himself of monies belonging to a trust of which he was trustee.  After the client stopped embezzling from the trust, the trust claimed a business bad debt loss to the extent of the embezzlement.  The IRS disagreed, but allowed the trust to deduct an embezzlement loss that benefited the trust more than a bad debt loss deduction would have.  However, the trust’s embezzlement loss required the taxpayer trustee to include the amount of the trust’s loss in his personal income and generated a significant income tax liability for the taxpayer trustee.  Thereafter, Deininger & Wingfield, P.A., helped the taxpayer trustee, now insolvent, to negotiate a very low Offer in Compromise for his significant income tax liability.  Ultimately, this also generated a significant tax deduction for the trust that allowed it to offset the actual economic loss caused by the embezzlement.
 
 

Deininger & Wingfield, P.A., represented a client before the Arkansas DF&A in a situation in which the DF&A prepared and filed substitutes for the client’s returns.  The DF&A’s returns resulted in significant state tax liabilities, and were followed by the DF&A filing priority notices of tax liens.  Deininger & Wingfield, P.A., argued those priority tax liens served to reduce the equity available in the client’s house for purposes of an Internal Revenue Service Offer in Compromise.  The IRS agreed and accepted a federal Offer in Compromise computed with the state tax liens.  After the IRS Offer in Compromise was paid, the client filed actual returns with the Arkansas DF&A that significantly reduced the client’s state tax liability, as well as the state liens against the property.

 

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The results of the cases portrayed in this advertisement were dependent on the facts of those cases, and the results of these cases will differ if based on different facts. As such, depending on the facts and circumstances of your case, your results may vary. No guarantees, predictions, or actions should be inferred from these actual cases. In addition, no representations are made that these actual cases are typical. Consequently, the firm of Deininger & Wingfield, P.A., is not responsible for any damages which may arise from the misuse of the information stated on this website.

 

  
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DEININGER & WINGFIELD, P.A. ©
920 W. 2nd Street, Little Rock, Arkansas 72201
501.372.3843