Tax Coda Weekly Digest — January 4, 2026
Happy New Year
The year closed with courts tightening lines and enforcement changing posture.
Criminal convictions held. Corporate separations collapsed. High-profile taxpayers pushed back on penalties. And collection continued to move forward as the primary point of contact between taxpayers and the IRS.
1. Former Illinois Lawmaker’s Tax Convictions Upheld on Appeal
United States v. Annazette Collins, No. 24-2161 (7th Cir.)
The Seventh Circuit upheld the tax convictions of a former Illinois lawmaker. The court rejected arguments challenging the sufficiency of the evidence and trial errors. The criminal tax convictions and related penalties remain intact.
Why It Matters:
Confirms appellate courts continue deferring to jury findings in tax prosecutions.
Reinforces the durability of criminal tax convictions once established at trial.
Signals’ limited tolerance for procedural challenges on appeal.
Takeaway:
Criminal tax convictions rarely unwind on appeal.
2. Court Treats Corporate Funds as Personal Income
Chernomordikov v. Commissioner, T.C. Memo. 2025-129 (Dec. 15, 2025)
The Tax Court treated corporate funds as the taxpayer’s personal income. The court found the taxpayer exercised control over the corporation and used its funds for personal expenses. The income was taxable despite the corporate form.
Why It Matters:
Reinforces substance-over-form analysis in closely held entities.
Shows courts look past paper structures to actual control.
Increases exposure when corporate formalities break down.
Takeaway:
Corporate accounts do not shield personal spending from taxation.
3. Britney Spears Disputes Flow-Through Income Adjustment and Accuracy Penalty
Britney J. Spears v. Commissioner, No. 16456-25 (U.S. Tax Court)
Britney Spears, yes, the singer, challenged IRS adjustments to flow-through income and related accuracy penalties for 2021. The case centers on allocation issues and whether penalties under §6662 apply. The matter remains pending before the Tax Court.
Why It Matters:
Highlights continued scrutiny of flow-through income reporting.
Shows penalties remain central even in technical disputes.
Demonstrates that high-profile cases still turn on routine tax mechanics.
Takeaway:
Flow-through adjustments often bring penalty exposure.
4. IRS Collection Shifts Shape as Technology and Courts Tighten Options
We examined how IRS enforcement is moving away from traditional audits and toward collection activity. Technology accelerates the identification of balances due, while courts narrow procedural detours. The collection now operates as the front door for enforcement.
Why It Matters:
Collection actions reach taxpayers earlier in the lifecycle.
Fewer procedural exits remain once balances are assessed.
Technology shortens the gap between liability and enforcement.
Takeaway:
Collection is no longer the end of enforcement. It is the beginning.
Overall Takeaway
The end of the year reinforced where the system is firm.
Criminal cases held. Corporate boundaries failed when facts collapsed. Penalties stayed central. And the collection continued its shift from background function to primary enforcement tool.