Planning to Opt Out from the IRS OVDI program? Consider These Things First

There is more chance that you might be troubled by the IRS as they have authority to tax any income you get from around the world. They won’t leave you that easily once you come under their radar. That’s why of all the government agencies, IRS is among the most hated by the Americans. IRS Offshore Voluntary Disclosure Initiative (OVDI) is a complicated program and many people don’t know how to handle them effectively. Persons who are immigrants, expats or having dual citizenship are the most affected by this program. An OVDI attorney can be extremely helpful in getting you through this problem safely.

The Offshore Voluntary Disclosure Initiative (OVDI) was introduced in the year 2009 to help the taxpayers who holds undisclosed foreign bank accounts to voluntarily disclose the information to the IRS. A person needs to pay the taxes with interest along with 20% penalty on the highest balance they have on their overseas accounts. Nearly 5000 people have opted for this program. By doing this, you not only protect your family and assets but also avoid criminal prosecutions. If you have more than $10000 on your offshore bank account, you have to report it to the IRS.

In the 2011 OVDI, IRS corrected many of the hiccups in the 2009 OVDP since the penalty is same for the taxpayers who made honest mistake in reporting and those who made intentional omission. Opt-out procedure was introduced but the overall penalty structure went higher. The new penalty framework requires individuals to pay 25% of the amount in the foreign banks (which was 20% earlier) and instead of six, IRS looked for last eight years to get the highest aggregate account balance. But the good news for those who actually made a mistake or did not intentionally evaded taxes can now ask for a reduced FBAR penalty rate. In these special cases, a taxpayer can qualify for just 5% penalty.

IRS increased the FBAR penalty once again to 27.5% in the 2012 OVDI. This substantial fine made taxpayers to look for other ways such as ‘quiet disclosures’. But a person should never go for it since the IRS department can initiate criminal proceeding against people who try to utilize it. A good tax firm will tell clients that it is worth to come clean as it can avoid all the hassles even though it may be expensive. During the first half of 2012, nearly 2500 OVDI’s were filed. The IRS is now completely overwhelmed by number of OVDI reports and sheer number of tax related court cases. Thus there is a great chance of IRS being unreasonable with your OVDI penalties and you can do nothing about it. An OVDI attorney is the only person you can trust to work you through the OVDI process.

Opting out of the OVDI program may result in reduction of penalties but the taxpayer need to carefully weigh the other consequences before doing so. It is always safe to come clean since the IRS is very strict with FBAR reporting. They not only make you to pay big penalties but also can impose hefty sanctions on you such as prison time. Seek the help of an OVDI Lawyer immediately to get all the assistance with the OVDP Procedure.

Universal tax jurisdiciton absurdities - IRS Medic

What other country taxes its citizens like the United States? The only two countries that come close are (1) one you likely never heard of, and (2) a state-sponsor of terrorism. It would be nice if Americans could stop terrorizing themselves and reject universal tax jurisdiction.

Universal tax jurisdiciton absurdities - IRS Medic

Treasury Inspector General audit report on "executive" compensation at the IRS. 

Overall, I give the report a "meh."

The only outrage is that the Treasury Inspector General refers  to IRS higher-ups as executives.

They are not executives.

They are bureaucrats.

Or, as some may argue, political operatives.

Title 26 is not Title 31. Nor does any of this make much sense, except to say "this bites."

Or wait...let me lay it down in a language you're even less certain to understand: Don't think you can CDP a FNOITL of an FBAR. That just ain't going to be.

New web portal: Connecticut tax Attorneys

IRS expatriation tax - IRS Medic

I guess if the IRS could tax you on your heavenly rewards, they would.   Thinking of leaving the country. oh yeah, there's a tax for that.

IRS expatriation tax - IRS Medic

Even if you thing the IRS is targeting you unfairly

Especially if you think the IRS is targeting you unfairly. 

What do do when you get certified mail from the IRS

At What Times, the Taxpayer Should Not File an Offer in Compromise

The IRS Offer in Compromise provides the taxpayer an excellent chance to settle all tax financial obligations with the IRS permanently. it's true that several tax relief companies like Taxmaster, American Tax Relief and RoniDeutch went out of their business as the result of their failure to match up their promises and many new ones show up on the internet frequently, but on the other side, each year many taxpayers get benefited from OIC program which helps to get rid of their tax money owed once and for all.

One of things you must take into consideration though - is the Internal Revenue Service isn't stupid. They aren’t going to accept your offer blindly just because you approached them with a tax attorney or just for the sake that you requested it. Their ultimate goal would be that the offers must be in the best interest of the IRS. There is where a tax lawyer can play a major role in persuading the IRS to prove it is within their best interest.

Having said that, would you believe that there are situations where it is not to best to file an offer in compromise? It’s true. And here they are…

1. If you have old taxes and you were thinking about filing bankruptcy

Could you believe that one could file Chapter Seven bankruptcy to totally wipe out old individual tax debts? So why bother paying out even a nickel to the IRS if you can move on without having to pay anything at all. I see advertising from tax so- called relief firms who state that Bankruptcy is not a good idea. However, the hidden truth is that these companies can't get a good income once you go for Chapter 7. My firm doesn't file bankruptcy and we want to assist clients in getting the very best resolution even should there be no money involved for us. Yes, this makes us busy enough.

2. Offer in Compromise and the tax code compliance

Among the less known facts of an Offer in Compromise, is that in order to be‘permanently’ accepted, the tax payer need to remain in complete compliance with the tax rule for a period of five years after the offer was accepted. Failure to do so, by not submitting returns or running up a new liability, means that the offer is undone. So for our many clients, who have trouble being in compliance, we advise yet another plan of action to settle tax debts.

3. When you had rejections from previously filed Offer in Compromise

IRS doesn’t want to see several Offers in Compromise from a taxpayer. It will only result in a rejection. Same thing could happen when the amount you offered isn’t competitive. To get your offer accepted, you must come up with a story based on reality and also making the most of the few unknown tax rules and exceptions which combinedly persuades the IRS person to think about your proposal. When you ignore this, your offer can get rejected or end up paying too much.

 

The IRS just has 10 years to recover the tax arrears, after that they no more can claim the debt legally and they write it off. But there are certain activities that may stop the ten year time clock from running. One such thing would be the offer in compromise. This is called as tolling the statute of limitations. Suppose your tax return was filed for the fiscal year 2001 on-time. Your tax assessment took place on the following year (15th April, 2002) and had some tax liabilities. Assuming nothing tolled the statute of limitations, IRS officially won’t able to pursue collection of the debts right after 16th of April 2012. Yes, it means you owe nothing now.

But by filing offers in compromise, the time can stop running. This example gives an idea - an attorney submitted six Offers in Compromises for the year 2002 taxes. For each Offer in Compromise filed, the time limit will increase by a year. That means with this case, Internal Revenue Service can demand the tax owed right up till 2018. In case the lawyer didn't proceeded to go for offer in compromise to solve his tax issue, then at this point every problem could well be gone.

4. Taking advantage on the Statute of Limitations

Now let’s suppose that the attorney I mentioned above made a timely filing of his 2002 1040 on April 15, 2003. And he never went for any options that can toll the clock from running. As of now, the total tax arrears along with penalties come around $250,000.  Should he go for filing an offer?

Well, maybe not. If we calculate, only 7 months the IRS has got to come after him to recover unsettled dues. Maybe this lawyer would be better off through getting the IRS to accept a partial payment installment agreement for $1000 a month for the next 7 months as opposed to an offer in Compromise. Why this option? The reason is after 16th April 2013, it’s all over. For his $250,000 tax debt, he repaid only $7000. But, this method has one downside. When there is tax lien against this taxpayer, it cannot be removed or withdrawn. The tax lien would appear in as a debt on his credit, essentially a write- off. But an accepted offer in compromise that pays off the debt will likely be considered as full payment and this usually will have a positive effect on credit report.

IRS Medical Deductions Allowed - IRS Medic

Even if you are chronologically disadvantaged, unlike my father, you should still keep track of your medical expenses.

IRS Medical Deductions Allowed - IRS Medic

The IRS's Taxpayer Protection Program Improves Identity Theft Detection, But Case Processing Controls Need to Be Improved

But what about the thieves inside the government stealing confidential information? 

The IRS's Taxpayer Protection Program Improves Identity Theft Detection, But Case Processing Controls Need to Be Improved

Oldy but an goody. How the Federal Reserve is stealing from you right now.

Five Secrets That You Want To Know About the IRS

A real story from my life: In the year 1997, I was fresh out of my college with a finance degree and was beating along the pavement for some kind of job. When scanning through the various job lists, I found through an ad at Career Services that there were openings for the post of Revenue Officer at IRS office in New Haven. I thought - hey, I can be a tool of the man. And So I interviewed. They considered I’d be great, but I was told that budget was not allocated to the IRS to hire new persons.  So I was sent back again to the pavement to try elsewhere.

I did not understand why they published an ad for a job they don't have and toy with me, but that was the last time I had dealt with IRS world of bureaucratic impossibilities. The pavement led me to law school and my career as an IRS tax resolution lawyer.

But actually, you came up here for the top-five list, so let’s get down to it.

1. Revenue Officials and Revenue Agents are not the same
There exists a distinction between an IRS Revenue Officer and an IRS Revenue Agent. Revenue Officers typically work at the collection office of the IRS. Their role is to collect funds. A Revenue Agent, on the contrary, is someone who is employed by the Internal Revenue Service to audit taxpayers. The one who increases your taxes through an audit will never be the person who be attempting to collect the required taxes from you. If the tax amount you owe is low, a revenue official role is minimal. Your collection case could stay with the centralized Automated Collections System (ACS).

2. Revenue Officers don’t possess rights to arrest an individual
Several believe that revenue officers can arrest a taxpayer, but the truth is they can’t. They do not have the authority to take this process. It's easy to recognize a scam attorney or CPA and steer clear of them, if they tell that they could stop the criminal arrest action from Revenue Officials. These experts, which they call by themselves, don’t even have the basic knowledge about IRS principles. A Revenue Officer has got rights only to make referral to CID and they accept only a fraction of these cases referred.

3. A Revenue Officer does not need a financial qualification for the job
Just a college degree is sufficient to become a Revenue Officer. They just might hold a Bachelor of Science degree and still be qualified.  That's why Revenue Officers in the beginning participate in several months of training after which weeks of training on an on- going basis.

4.  Revenue Officers possess only limited power
The IRS cannot seize your homes or assets that easily. The reason is that the Revenue and Reform Act of 1998 made it to be very hard to carry out. So what can a Revenue Officer do? Levy the accounts receivable. Lien Property. Garnish pension funds. Levy salary and banking accounts. Subpoena documents. However, if the tax payer conceals their financial particulars or enters into new liabilities, it can infuriate the Revenue Officer’s group manager. As the result, the chance of getting favorable due process rights will become almost zero.

5. Revenue Officers must contact the tax payer in person
People get shocked to see a Revenue Officer appearing all of a sudden to your location or perhaps in a family get together. Could they be jerks? No, they're not jerks and the reason for face to face contact is that as per the IRS guide, the Revenue official has to make the very first contact in person with the taxpayer. Get in touch with the IRS immediately if the Revenue Officer leaves their card at your location or in your car since they leave them when you are not at home during their first visit.

There are two things which typically occur in many of the taxpayer's life. One, they don't be in a position to make payment for installment agreement or they will stop paying tax for the current year altogether. In any event, it indicates default of payments. During these situations, a new Revenue Officer will take charge of your case and furthermore, the taxpayer cannot appeal for the due process legal rights. It doesn't imply that there is no way to reach an agreement, but many times the Revenue Official might not have the total authority to agree a proposal. You might still request for appeal, but the IRS will consider it an equivalent hearing.

FBAR penalty procedures - IRS Medic

FBAR penalty procedures - IRS Medic

How is your small business doing?

How is your small business doing?

Were you issued an IRS CP 2000 for stock sales or or mutual funds?

The IRS has new enhanced stock sales reporting. But this does not help taxpayers who purchased stock prior to 2011 --- as the the IRS only mandates that brokerage houses report cost basis on the sale of stock and mutual funds purchased after 2011. While this change helps millions of taxpayers who sold stock that they purchased after 2011 avoid the dreaded CP2000 letter, this does not help people who sold stock purchased before 2011 and have had recent gains.

What is a CP2000?

A CP 2000 is a type of audit (although technically not a field or corr audit). It is a little bit different, but the results, if things go bad, especially when it comes to stock sales can be real bad.
The CP 2000 is a letter the IRS sends that proposes to increase your taxes and this increase is... "based on a comparison of the income, payments, credits, and deductions reported on your tax return with information on these items reported to us by employers, banks, businesses, and other payers. The CP 2000 also reflects any corrections we made to your original return when we processed it."

What is the big deal about CP2000 stock sales, and mutual funds?

A CP 2000 "audit" letter on the sale of stocks or mutual funds causes thousands of Americans each year to overpay their taxes. The IRS issues a Form CP2000 stating that shares of stock were sold and provides the taxpayer with an estimate of the taxes owed. If no action is taken, the IRS assumes that there is no cost basis and that the stock or mutual funds were purchased for nothing!
Say you sold $50,000 worth of technology mutual fund in 2012 that you purchased in 2000 that you believe you paid $100,000 for, if you were issued a CP 2000 and don’t have the actual cost basis, it is very likely that the IRS assumed that you purchased the mutual fund for nothing! Someone in this circumstance is owed a capital loss and potentially lots of tax deductions and should not pay taxes on money not earned.
Another common situation is the IRS issues a CP 2000 for stock sold in 2012 and the taxpayer does not know the cost basis because the stock sold was purchased many years ago. Let’s pretend this taxpayer had a brokerage account at Merrill Lynch, DLJ, UBS, or Morgan Stanley and in 2005, they transferred or ACAT their account to Scottrade, e-trade or AmeriTrade to take advantage of $7 trades. In this transfer they sent over stock and mutual funds. Good luck finding the cost basis from accounts that were purged from brokerage house records. Its an excruciating process that rarely end with success. Though it is likely that stock held for many years has appreciated greatly, the tax liability should not be based on the entire sale, only the gain.

This is what the IRS assumes with a CP2000 --- all your stocks were purchased for zero!

The way the IRS calculates gains, it assumes the taxpayer has a zero basis. That is, someone was kind enough to just hand over a bunch of valuable securities for no consideration (the IRS sure has some sunshine assumptions about society, doesn't it?).
The way to fix this is by getting the cost basis information. Your tax liability will go down dramatically. If you do not have a cost basis, or you are involved in mark-to-market accounting on mutual funds or PFICs, this is where things get more complicated.
A tax attorney can assist with uncovering the cost basis or provide evidence to a reasonable estimate to the satisfaction of the IRS. There are proven ways to discover cost basis. But they are complicated and need a hyper-organized approach
Too many times, we see taxpayers get overwhelmed by the paperwork required and they get overwhelmed by a CP2000, and then try to ignore it. While we are always able to undo the damage of a CP2000, it is always quicker and cheaper for us to deal with the issue when it first appears.

IRS lien or levy

IRS Lien or Levy Help: The Difference, and what action you can take now

BY: MICHELLE D. WYNN, ESQ.
Many people that we talk to, both prospective clients and long-time clients alike, tell us numerous times “I can’t have the IRS file a lien against me.” Sometimes, these people understand what a lien is and why an IRS lien is bad. But more often, they are confused about what a lien is and what they are really worried about is the IRS taking their money or property.

Connecticut DRS Tax Amnesty

What the 2013 Connecticut DRS Tax Amnesty is about

To fight the budget crunch, the state of Connecticut is hoping that a state tax amnesty program will convince both businesses and individuals to come forward and pay the taxes they owe to the state government. Lawmakers expect that this Amnesty program will generate $40 million for the state. As an incentive, effective July 1, 2013, business and individuals have an opportunity to enter Connecticut Tax Amnesty and get a whopping 75% off interest and penalties. For those accepted into the program, the Connecticut Department of Revenue will waive civil penalties and criminal prosecution for program participants.
This program affects Connecticut businesses that have yet to pay, are late paying, or may have audit issues; and individuals who have yet to pay their entire tax liabilities or have underreported their liabilities. However, if you fail to participate in the program, you lose the right to the lower interest rates and will end up paying the full 12% annual interest, up from the discounted 3% rate, and face a 25% penalty.

Connecticut Tax Amnesty Program

If you currently owe money to the State of Connecticut or if you have returns that are late and have not yet been filed, you can save a lot of money by getting into compliance with the State of Connecticut. The State will have an tax amnesty program running from September 16, 2013 through November 15, 2013. In this program, the state will accept payment of only the taxes owed and 25% of the interest normally charged for any delinquent taxes (for tax periods due before November 30, 2012). The State will waive all penalties and will not pursue criminal prosecution for the unfiled returns or unpaid taxes.
There is a flip-side to this though: If you have unfiled returns for tax periods due before November 30, 2012 (for any type of tax) and you do not file an amnesty application, you will receive an additional 25% penalty.
If you would like more information about the amnesty program or if you would like us to represent you for this program, contact us.

Warning: You may lose your State of Connecticut license if you have an unresolved state of Connecticut tax problem

The State of Connecticut will no longer issue or renew the following types of licenses if you owe taxes to the state unless you pay the delinquent taxes or you have made a satisfactory payment arrangement for the taxes owed. This pertains to the following licenses:
1. Cigarette dealer, distributor, or manufacturer's license;
2. Tobacco product distributor license; and
3. Sales tax seller's permit.
If you owe money to the State of Connecticut and you know that you will need to apply for a new license or need to renew your current license soon, you will want to get this issue addressed right away - and the Connecticut tax amnesty program may be the cheapest way to get this accomplished.