Tax Evasion delinquent tax returns IRS tax attorney help with IRS issues

Income Tax Evaders May Still Face Big Fines And Up To Five Years In Jail After Coming Forward

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Tax cheats cost the government real money from the lost revenue and the costs associated with enforcement and collection of unpaid tax liabilities. On the Federal and State levels, enforcement of the tax laws is a priority task to ensure that everyone is paying their fair share. Recently, the South Carolina Department Of Revenue (“SCDOR”) charged 30 employees of the Boeing Company with tax evasion over several years going back to 2011. The employees voluntarily turned themselves in to SCDOR investigators but are still faced with the prospect of hefty penalties and a five-year jail sentence for each charge.

The SCDOR Investigation
According to the news release from the SCDOR, the Boeing employees filed W-4 forms claiming exemption from South Carolina’s state income taxes. Apparently, during tax years 2011 to 2014, the workers claimed state tax exemptions although they did not qualify under South Carolina’s individual income tax guidelines. During the years in question, these Boeing workers also failed to file their state tax returns.

It is important to note that the workers received notices from SCDOR encouraging them to comply with the tax laws prior to issuance of arrest warrants. These Boeing employees were given several opportunities to rectify their tax problems but failed to do so. The tax liabilities ranged from $4,000 to about $20,000 based on collective incomes exceeding $4 million. Boeing issued a statement saying that the company was aware of the employees’ tax issues and were proceeding with their own investigation. Aside from their tax troubles, these employees may face disciplinary action from their employer.

Understanding State Income Tax Regulations
The State of South Carolina collects income taxes from residents earning an income in the state. Residents who earn incomes outside South Carolina would pay state taxes to the second state. If that state does not collect income taxes, the taxpayer must pay state taxes to South Carolina as their residential state. Nonresidents who earn income from South Carolina employers must pay taxes to this state. The state does not use a separate withholding exemption certificate from the Federal Form W-4. Exemptions and deductions that are allowed on the federal form are accepted for the state tax returns. In general, employees who received a full refund of taxes withheld in the previous year and who anticipate no tax liabilities in the current year may claim exemption from state taxes.

Enforcement of state taxes varies depending on the prevailing tax code although the state Department of Revenue is charged with enforcement. The process and penalties may vary, so it is important to consult a tax professional when you are faced with any State as well as Federal tax liabilities.

What Constitutes Tax Fraud?
Tax fraud is the deliberate intent to avoid paying taxes through whatever means despite the taxpayer being fully aware that taxes are lawfully due.Tax fraud may trigger penalties under the definitions of Title 26 in the Internal Revenue Code.
Specifically, Title 26 U.S.C. Section 7201 states that tax evasion is a felony that carries a penalty of imprisonment for at most five years or a $250,000 fine for each charge for every individual or a combination of fine and imprisonment along with reimbursement of court costs.

Tax evasion is an example of tax fraud. Tax evasion refers to all deliberate acts where taxpayers misrepresent their taxable income on their tax returns. This would include actions such as inflating expenses for larger deductions, strategically under-reporting taxable income or failing to file tax returns in a mistaken attempt to avoid paying taxes.

The Truth about Dealing with the IRS and State Tax Agencies
There could be any number of reasons why individuals choose to forego filing their tax returns. In the case of the Boeing employees, it is difficult to say what, if anything, made them believe that they could get away with non-filing and non-payment of state taxes for an extended period. It is safe to say that their end-game was not prison, but it appears to be heading in that direction. Looking at the amount of tax liabilities that each individual owed the SCDOR, it would have been much more sensible to comply with state tax laws. The tax dues were miniscule compared to the criminal penalties should they be prosecuted for tax evasion.

The existing tax code is based on the premise that taxpayers are willing and able to honor their tax obligations as upstanding citizens. As such, the IRS and the State revenue offices have programs in place to encourage taxpayers to voluntarily come forward to resolve their non-compliant status instead of waiting for tax agency notices or letters. Voluntary disclosure by taxpayers may count in their favor when the revenue investigator decides if the case merits criminal prosecution. The IRS also allows payment plans and in some cases, reduction of tax liabilities for low-income taxpayers.

Redemption for Non-filers
Tax laws may be rigid, but the IRS and State Tax Agencies do not exist to go after taxpayers who make simple and unintentional mistakes on their tax returns. However, blatant fraud that includes non-compliance with tax filing regulations over several years and ignoring tax agency notices will trigger an investigation and prosecution if for fraud charges. The tax agencies do not need to prove how much you actually owe in taxes to charge you with tax fraud and possibly secure a felony conviction.

If for any reason you failed to file tax returns or you need to amend any of your returns from the last six years, it is best to consult a tax professional to make sure that you are making the right steps. When you work with a tax attorney or a tax expert, you may not have to deal directly with the IRS or State Tax Agency. Your tax representative takes charge of requesting tax transcripts from previous years if you don’t have them anymore. If you owe taxes and are unable to make full payment at the time your returns are filed, your tax representative can negotiate a viable payment plan.

Don’t wait for the IRS or State Tax Agency to contact you if you have not been filing your tax returns or need to amend information submitted in previous returns. For your peace of mind, consult a tax professional who can guide you through the process to ensure a positive outcome and avoid prosecution.

Where’s My Refund? Filed your tax return and still have not received your refund check from the IRS?

Where’s My Refund?

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So you filed your income tax return which showed an overpayment and you requested a refund. Most people knowing that they have money coming back to them have probably figured how they are going to spend that money.

The IRS issues more than 9 out of 10 refunds in less than 21 days. However, it’s possible your tax return may require additional review and take longer. The IRS has a tool on its website called Where’s My Refund? This link has the most up to date information available about your refund. The tool is updated no more than once a day so you don’t need to check more often.

You can use Where’s My Refund? to start checking on the status of your return within 24 hours after the IRS has received your e-filed return or 4 weeks after you mail a paper return. Where’s My Refund? has a tracker that displays progress through 3 stages: (1) Return Received, (2) Refund Approved and (3) Refund Sent. You will get personalized refund information based on the processing of your tax return. The tool will provide an actual refund date as soon as the IRS processes your tax return and approves your refund.

Calling the IRS will not speed up your refund. The IRS phone and walk-in representatives can only research the status of your refund if it has been 21 days or more since you filed electronically, more than 6 weeks since you mailed your paper return, or Where’s My Refund?directs you to contact the IRS. If the IRS needs more information to process your tax return, the IRS will contact you by mail.

Ordering a transcript will not help you determine when you will get your refund. This is among the common myths and misconceptions that are often repeated in social media. The codes listed on tax transcripts do not provide any early insight into when a refund will be issued. The best way to check on your refund is by visiting Where’s My Refund?While transcripts include a lot of detailed information regarding actions taken on your account, the codes do not mean the same thing for everyone and they do not necessarily reflect how any of these actions do or do not impact the amount or timing of your refund. IRS transcripts are best and most often used to validate past income and tax filing status for mortgage, student and small business loan applications and to help with tax preparation.

If you owe past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or certain federal nontax debts, such as student loans, all or part of your refund may be used (offset) to pay the past-due amount. Offsets for federal taxes are made by the IRS. All other offsets are made by the Treasury Department’s Bureau of Fiscal Services (BFS). For federal tax offsets, you will receive a notice from the IRS. For all other offsets, you will receive a notice from BFS. To find out if you may have an offset or if you have any questions about it, contact the agency to which you owe the debt.

Another reason your refund amount may be different is if the IRS made changes to your tax return that changed your refund amount. In this case you will get a notice in the mail from the IRS explaining the changes.

If you filed a joint return and you are not responsible for your spouse’s debt, you are entitled to request a portion of the refund back from the IRS. You may file a claim for this amount by filing Form 8379 (PDF), Injured Spouse Allocation. The IRS can process your Form 8379 before an offset occurs. If you file Form 8379 with your original return, it may take 11 weeks to process an electronically-filed return or 14 weeks if you filed a paper return. If you file the Form 8379 by itself after a joint return has been processed, then processing will take about 8 weeks.

When filing Form 8379 by itself, you must show both spouses’ social security numbers in the same order as they appeared on your joint income tax return. You, the injured spouse, must sign the form. Follow the instructions on Form 8379 carefully and be sure to attach the required Forms W-2 and 1099 showing federal income tax withholding to avoid delays. Do not attach the previously filed joint tax return to the Form 8379 when filing it by itself. Send Form 8379 to the Service Center where you filed your original return and allow at least 8 weeks for the IRS to process your request. The IRS will compute the injured spouse’s share of the joint refund. If you lived in a community property state during the tax year, the IRS will divide the joint refund based upon state community property law. Not all debts are subject to a tax refund offset. So to determine whether an offset will occur on a debt owed you should check with a tax professional.

Be careful not to count on getting your refund by a certain date to make major purchases or pay other financial obligations. Many different factors can affect the timing of your refund after the IRS receives it for processing. Even though the IRS issues most refunds in less than 21 days, it’s possible your tax return may require additional review and take longer. Also, if you are anticipating a refund, take into consideration the time it takes for your financial institution to post the refund to your account, or for mail delivery.

You should choose to have a direct deposit of your refund. Eight in 10 taxpayers get their refunds faster by using e-file and direct deposit. The IRS claims it is the safest, fastest way to receive your refund and is also easy to use. Just select it as your refund method through your tax software and type in the account number and routing number. Or, tell your tax preparer you want direct deposit. You can even use direct deposit if you are one of the few people still filing by paper. Be sure to double check your entry to avoid errors.

Your refund should only be deposited directly into accounts that are in your own name; your spouse’s name or both if it’s a joint account. No more than three electronic refunds can be deposited into a single financial account or pre-paid debit card. Taxpayers who exceed the limit will receive an IRS notice and a paper refund. Whether you file electronically or on paper, direct deposit gives you access to your refund faster than a paper check.

Where’s My Refund? Filed your tax return and still have not received your refund check from the IRS?

Where’s My Refund?, Discussing Taxes, Human Resource Issues, Investing, and the IRS On ESPN Radio – Podcast

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Where’s My Refund? Discussing Taxes, Human Resource Issues, Investing, and the IRS On ESPN Radio – Podcast  & Transcript – May 27, 2016 Show

Topics Covered:

1. Interview with Ms. CJ Westrick, SPHR the Founder and Primary Consultant of HR Jungle – what you need to know about running your human resources.

2. What Would Mom Buy?

3. Where’s My Refund?

4. Questions from our listeners: What does it cost to invest in a fund – and do I need to understand stock, bond or money markets before I invest? What types of mutual funds are available?

*******************************************************************

Windus states: Yes sometimes we just have to take the money and run!

Good afternoon! Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.
My co-host, Board Certified Tax Attorney, Jeffrey B. Kahn, is out on assignment and so I will be leading today’s show.

Windus states:

You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

Windus states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Windus states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Windus states:

Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Windus states:

For today’s show we have coming up:

Segment 2 material: What Would Mom Buy??

Windus states:

Also coming up is:

Segment 3 material: Where’s My Refund?

And of course towards the end of our show, we will be answering some of your questions.

Windus states: Let’s introduce you to today’s guest:

Ms. CJ Westrick, SPHR the Founder and Primary Consultant of HR Jungle. Questions:

a. How do I apply for a FEIN?
b. What other types of business licenses or paperwork would a first time employer recruiting their initial employees need before hiring?
c. How do I make my business Compliance friendly with Employment laws?
d. What type of training is mandatory to new employees in the state of California?
e. When promoting current employees to Supervisory or Management positions, is there additional mandatory training? Or is their primary employee training enough?
f. How do you motivate employees to work harder without pressuring or over-stressing your staff?
g. An employee just isn’t working out, and you have to let them go. What type of documentation do you need to terminate? Paper trail? How do you terminate properly?
h. What is the minimum hourly wage in California? Is there a minimum exempt salary?
i. What are some examples of the top perks of working for companies that supplement on-the-job happiness factors in lieu of pay increases?
j. What are the updates to the Fair Employment and Housing Act? How does this affect Pregnancy Disability Leave?

Well it’s time for a break but stay tuned because we are going to tell you An Investor’s Credo to Live By: What Would Mom Buy?

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

An Investor’s Credo to Live By: What Would Mom Buy?

http://blogs.wsj.com/moneybeat/2016/05/13/an-investors-credo-to-live-by-what-would-mom-buy/

Windus: Don’t you think its high time individual investors had their own equivalent of a Bill of Rights?

Windus states: Earlier this month in a full page Wall Street Journal ad, eight pension funds requested that asset management firms sign a code of conduct, committing them to treating clients fairly.

This effort is already ten years in the making, but it still has a substantial way to go. First introduced in 2006, and sponsored by the CFA Institute (a not for profit association of financial analysts), the Asset Management Code of Professional Conduct asks investment firms to be ‘prudent, honest and ethical’.

Windus states: Think that’s not a lot to ask for? While 1,300 firms worldwide have adopted the code, tens of thousands more have not.

Probably the biggest reason investment firms tend to opt out of adhering to the voluntary code, is the long list of mandatory disclosures and other requirements already enforced by regulators.

Windus replies: Even still, some of the leading investors in the world are unimpressed with current regulations and believe that standards should be raised.

Michael McCauley is the senior officer for investment programs at the $170 billion Florida State Board of Administration and signatory of the conduct code. He agrees that, “if you have a firm that is adhering to the code, all else being equal, you’re less likely to have ethical missteps and systematic problems there.”

Windus continues: Furthermore, if half of all investors are not confident enough in a firm to recommend them to another, there is a substantial deficiency in ethical standards. A recent survey polling more than 3,800 investors in North America, Europe and Asia shows that only 51% of private investors and 41% of institutional investors were “very” or “extremely” likely to recommend an investment firm to another.

Even Paul Smith, the president of the CFA Institutes feels “the underlying reason is that the person on Main Street does not believe in the pit of their stomach that the industry is set up to benefit them.”

Windus continues: When it comes down to it though, what should this individual investor’s Bill of Rights look like??

To begin with: Asset Managers Shouldn’t Over Charge. These days, asset management companies are reaping net profit margins in excess of 25%. The investment research firm, Morningstar has reported only 7.3% of US stock funds charge 0.5% or less in annual expenses, whereas 56.7% charge more than 1%.

Windus replies: Greater than three-quarters of all stock funds charged no more than 0.5% in annual expenses, back in 1960. Even less than one-tenth charged more than 1%.

More surprising yet, asset-management companies ran an average of 18% net profit margin back then. Don’t you think we can afford to cut fees at today’s level?

Windus replies: The fact is, cutting fees may not only be the responsible thing to do, but may also be a matter of survival for asset managers. Running from high fees, investors continue to pull money from high-cost mutual funds in order to save a buck in cheap, market-tracking index funds.

In addition to cutting fees: Asset Managers Shouldn’t Outgrow Their Capacity to Do a Good Job.

Windus replies: Firms tend to lay focus on funds that are at their hottest returns. The influx of investments in areas such as small stocks, high-yield bonds and emerging-market securities, with high trading costs and hard to find bargain-investments, the sudden jump in activity sometimes makes it impossible for the manager to match past performance.

Then what are you supposed to do? An investment does well, you spread word to promote it and make your clients money, and then the rush of popularity comes too fast for the firms to manage. What are you supposed to do, stop taking new investments?

Windus replies: The best way to put it is, “it’s like running a clothing store and locking the doors as soon as word finally gets out among all the customers in town that your stuff is really good!” Or at least that’s how John Montgomery see it, chairman of Bridgeway Capital Management, a $6 billion investment firm in Houston. He’s had to close several funds to new investors over the years.

Realistically speaking, a firm shouldn’t launch a new portfolio without notification of how much money they can efficiently manage in that strategy, beforehand. Which entails, when they do reach that predesigned level, they need to refrain from taking in any additional business.

Windus states: Number three of four of the investors’ Bill of Rights: Firms Shouldn’t “Backtest” With Abandon.

“Backtesting” is when asset managers try various different strategies to see what would have worked best in the past.

Windus replies: In this case, asset managers would act with this data and introduce said prevailing strategy without any regard to disclosing how many others they tried.

Without this disclosure, a client would have no way of knowing how many other approaches a manager considered before making their decision. In other words, no way of knowing if the strategy was a “statistical fluke”.

Windus states: Plainly speaking, without listing the number of other strategies they’ve considered before rejecting, a firm should never offer backtested portfolios. This includes information regarding which data and time periods they’ve used for running tests.

Finally: Asset Managers Shouldn’t Market Portfolios They Wouldn’t Invest In Themselves.

Windus states: Mom always said, “Treat other’s the way you want to be treated.” Words to live by in my opinion. Now what we’re inferring, runs along the lines of the acronym “WWJD”, but instead reads “WWMB” (what would mom buy?).

The Wall Street Journal put it best with the statement, “If an investment manager wouldn’t want his or her mother to buy a new portfolio, then it has no business being sold to the investing public, either.”

Windus states: Granted, we’re not looking at the investment appeal of the past, just the acting ethically. The investment world is still looking toward the future and its appeal to millennials. Whether it be exchange-traded funds specializing in organic food producers, developers of drone technology or marketers or products with special appeal to the nest generation. What to learn more?? Give me a call and…

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Have you been asking where’s my refund? Stay tuned because after the break we are going to tell you how to find the answer.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Windus states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Licensed Financial Planner, Windus A. Fernandez Brinkkord and Board Certified Tax Attorney, Jeffrey B. Kahn.

Calling into the studio from Walnut Creek is Jeff’s associate attorney, Amy Spivey.

Chit chat with Amy

Windus states: And to remind our listeners of Jeff’s offer: PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call Jeff’s office to make an appointment to meet with him right here in downtown San Diego or at one of his other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Where’s My Refund?

Windus states: So you filed your income tax return which showed an overpayment and you requested a refund. Most people knowing that they have money coming back to them have probably figured how they are going to spend that money.

Amy states: The IRS issues more than 9 out of 10 refunds in less than 21 days. However, it’s possible your tax return may require additional review and take longer. The IRS has a tool on its website called Where’s My Refund? This link has the most up to date information available about your refund. The tool is updated no more than once a day so you don’t need to check more often.

Amy continues: You can use “Where’s My Refund?” to start checking on the status of your return within 24 hours after the IRS has received your e-filed return or 4 weeks after you mail a paper return. “Where’s My Refund?” has a tracker that displays progress through 3 stages: (1) Return Received, (2) Refund Approved and (3) Refund Sent.

Amy continues: You will get personalized refund information based on the processing of your tax return. The tool will provide an actual refund date as soon as the IRS processes your tax return and approves your refund.
Windus asks: Will calling the IRS help a taxpayer get his refund any faster?

Amy replies: Calling the IRS will not speed up your refund. The IRS phone and walk-in representatives can only research the status of your refund if it has been 21 days or more since you filed electronically, more than 6 weeks since you mailed your paper return, or “Where’s My Refund?” directs you to contact the IRS. If the IRS needs more information to process your tax return, the IRS will contact you by mail.

Windus asks: Will ordering a transcript help you determine when you’ll get your refund?

Amy replies: No, a tax transcript will not help you determine when you will get your refund. This is among the common myths and misconceptions that are often repeated in social media. The codes listed on tax transcripts do not provide any early insight into when a refund will be issued. The best way to check on your refund is by visiting “Where’s My Refund?”  While transcripts include a lot of detailed information regarding actions taken on your account, the codes do not mean the same thing for everyone and they do not necessarily reflect how any of these actions do or do not impact the amount or timing of your refund. IRS transcripts are best and most often used to validate past income and tax filing status for mortgage, student and small business loan applications and to help with tax preparation.

Windus asks: What if the refund is different than the amount reflected on the tax return that was filed?

Amy replies: If you owe past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or certain federal nontax debts, such as student loans, all or part of your refund may be used (offset) to pay the past-due amount. Offsets for federal taxes are made by the IRS. All other offsets are made by the Treasury Department’s Bureau of Fiscal Services (BFS). For federal tax offsets, you will receive a notice from the IRS. For all other offsets, you will receive a notice from BFS. To find out if you may have an offset or if you have any questions about it, contact the agency to which you owe the debt. Another reason your refund amount may be different is if the IRS made changes to your tax return that changed your refund amount. In this case you will get a notice in the mail from the IRS explaining the changes.

Windus asks: What if you filed a joint return and you are not responsible for your spouse’s debt, are you entitled to request a portion of the refund back from the IRS.

Amy replies: Yes, you may file a claim for this amount by filing Form 8379 (PDF), Injured Spouse Allocation. The IRS can process your Form 8379 before an offset occurs. If you file Form 8379 with your original return, it may take 11 weeks to process an electronically-filed return or 14 weeks if you filed a paper return. If you file the Form 8379 by itself after a joint return has been processed, then processing will take about 8 weeks.

Amy continues: When filing Form 8379 by itself, you must show both spouses’ social security numbers in the same order as they appeared on your joint income tax return. You, the injured spouse, must sign the form. Follow the instructions on Form 8379 carefully and be sure to attach the required Forms W-2 and 1099 showing federal income tax withholding to avoid delays. Do not attach the previously filed joint tax return to the Form 8379 when filing it by itself. Send Form 8379 to the Service Center where you filed your original return and allow at least 8 weeks for the IRS to process your request. The IRS will compute the injured spouse’s share of the joint refund. If you lived in a community property state during the tax year, the IRS will divide the joint refund based upon state community property law. Not all debts are subject to a tax refund offset. So to determine whether an offset will occur on a debt owed you should check with a tax professional.

Windus asks: What if one is counting on my refund for something important? Can he or she expect to receive it on time?

Amy replies: Be careful not to count on getting your refund by a certain date to make major purchases or pay other financial obligations. Many different factors can affect the timing of your refund after the IRS receives it for processing. Even though the IRS issues most refunds in less than 21 days, it’s possible your tax return may require additional review and take longer. Also, if you are anticipating a refund, take into consideration the time it takes for your financial institution to post the refund to your account, or for mail delivery.

Windus asks: What if my return included a request for a refund of tax withheld on a Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. When can I expect my refund?

Amy replies: If you requested a refund of tax withheld on a Form 1042-S Foreign Person’s U.S. Source Income Subject to Withholding by filing a Form 1040NR U.S. Nonresident Alien Income Tax Return, we will need additional time to process the return. Please allow up to 6 months from the original due date of the 1040NR return or the date you actually filed the 1040NR, whichever is later to receive any refund due.

Windus asks: Is direct deposit of your refund the best option?

Amy replies: Eight in 10 taxpayers get their refunds faster by using e-file and direct deposit. The IRS claims it is the safest, fastest way to receive your refund and is also easy to use. Just select it as your refund method through your tax software and type in the account number and routing number. Or, tell your tax preparer you want direct deposit. You can even use direct deposit if you are one of the few people still filing by paper. Be sure to double check your entry to avoid errors.

Amy continues: Your refund should only be deposited directly into accounts that are in your own name; your spouse’s name or both if it’s a joint account. No more than three electronic refunds can be deposited into a single financial account or pre-paid debit card. Taxpayers who exceed the limit will receive an IRS notice and a paper refund. Whether you file electronically or on paper, direct deposit gives you access to your refund faster than a paper check.

Windus states: PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call Jeff’s office to make an appointment to meet with him right here in downtown San Diego or at one of his other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Thanks Amy for calling into the show. Amy says Thanks for having me.

Windus states: Stay tuned as we will be taking some of your questions. You are listening to Licensed Financial Planner, Windus A. Fernandez Brinkkord and Board Certified Tax Attorney, Jeffrey B. Kahn, on Inside Advantage on ESPN.

BREAK

Windus states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call Jeff’s office to make an appointment to meet with him right here in downtown San Diego or at one of his other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.

If you would like to post a question for us to answer, you can go to Jeff’s website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

Sandy from San Diego asks: What does it cost to invest in a fund – and do I need to understand stock, bond or money markets before I invest? What types of mutual funds are available?

Windus responds.

Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Windus states: Have a great day everyone!

IRS hiring hundreds of new agents

IRS Hiring New Agents, IRS Criminal Investigation Division Discussed on ESPN Radio – Podcast

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Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses Investing and Taxes and the IRS On ESPN Radio – May 13, 2016 Show

Topics Covered:

  1. IRS Hiring Hundreds Of New Agents Can Spell “Tax Audit” For More U.S. Taxpayers.
  2. Is the Tech Bubble Popping?
  3. What To expect If The IRS Criminal Investigation Division Is Taking A Look At You.
  4. Questions from our listeners:
  • Are mutual fund expense ratios tax deductible?
  • Should I pay attention to all notices I may receive from the IRS?

***********************************************************************

Jeff states: Yes sometimes we just have to take the money and run!

Good afternoon! Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team.

Windus states:

And this is Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.
You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

Jeff states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Windus states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Jeff states:

Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Jeff states:

For today’s show we have coming up:

Segment 2 material: Is the Tech Bubble Popping?

Windus states:

Also coming up is:
Segment 3 material: What to expect if the IRS Criminal Investigation Division is taking a look at you.
And of course towards the end of our show, we will be answering some of your questions.

Jeff starts chit chat with Windus.

Jeff states: So for today’s top story:

IRS Hiring Hundreds Of New Agents Can Spell “Tax Audit” For More U.S. Taxpayers.

http://www.foxnews.com/politics/2016/05/05/lawmakers-demand-irs-explain-how-it-found-for-hundreds-new-agents.html

http://thehill.com/policy/finance/overnights/278600-overnight-finance-irs-hiring-hundreds-of-new-tax-enforcers

http://www.msn.com/en-us/money/markets/irs-loses-hundreds-of-criminal-agents-as-tax-cheats-take-heart/ar-AAfYwKX

Jeff states: The supposedly cash-strapped IRS is facing tough questions from Congress after claiming it just found the money to hire hundreds more enforcement employees.

Windus states: IRS Commissioner John Koskinen — who previously has cited budget woes to explain the agency’s shaky customer service and other issues — recently announced the IRS found the “resources” to hire between 600 to 700 new tax enforcement employees.

Windus continues: The IRS says those extra “resources” resulted from high attrition rates and worker efficiency, but skeptical lawmakers are demanding answers.

Jeff states: House Oversight Committee Chairman Jason Chaffetz (a Utah Republican) said “It was only weeks ago that they were saying they did not have the money to hire more employees and today they do have the money?”

Jeff continues: In an interview with FoxNews.com, the Utah Republican said he will be sending a letter to IRS Commissioner Koskinen seeking a full accounting of how it was determined the agency now has this extra money for hiring.

Windus states: Congressman Chaffetz you should know is a vocal critic of IRS Commissioner Koskinen who has led the effort to impeach him. The Congressman stated “The IRS is the worst-managed entity in all of government and this is the latest in a long list of examples of poor management. You cannot testify you can’t do something and then just go around hiring people.”

Windus continues: Now Congress did include a $290 million budget boost in the $1.1 trillion omnibus spending bill passed in December 2015 but those funds were earmarked to address problems with IRS customer service. I do not think anyone would think hiring more agents to audit or investigate U.S. taxpayers qualifies as an improvement in customer service.

Jeff states: The Wall Street Journal reported that IRS Commissioner Koskinen said that money indeed was used to hire 1,000 employees for their phone lines, calling “taxpayer service” the first priority. But he said they would also be making their “first significant enforcement hiring” in over five years with additional funds.

Jeff continues: IRS Commissioner Koskinen also added “In previous years, job losses across the agency have helped us absorb the funding cuts we have received, but left us with large gaps in various areas across the agency. This year, the IRS is determined that we have the resources available to hire these employees as a result of the rate of attrition in enforcement and your continuing dedication to find efficiencies to help us with the budget.”

Windus states: So this new funding has been good news for the IRS because the IRS has faced an ongoing staffing crisis as an increasing number of older employees retire. Since 2010, the IRS also has seen its budget decline by $900 million, with the total number of enforcement employees dropping by 24%.

Jeff states: Just last March during a speech at the National Press Club, IRS Commissioner Koskinen said the IRS workforce would “shrink by another 2,000 to 3,000 full-time employees this year,” which has impacted enforcement efforts. He also stated “As you might imagine, these staffing losses have translated into a steady decline in the number of individual audits over the past six years.”

Jeff continues: And just a month earlier than making that speech, in February 2016 IRS Commissioner Koskinen told congressional appropriators that the IRS “will not be able to replace” as many as 1,800 enforcement officials due to budget cuts.

Windus states: In fact the IRS has seen its staff shrink over the past several years as a result of the significant ongoing past budget cuts. Had it not had these additional funding resources available, IRS Commissioner Koskinen expected that by the end of this year, it will have lost more than 17,000 employees since 2010 with more than 5,000 of those workers have been in enforcement areas.

Windus continues: Last year, IRS Commissioner Koskinen also cited a cash crunch in explaining customer service issues. After getting additional funding, he told the House Ways and Means Committee in April that “significant improvements” were made in terms of customer service thanks to that.

Jeff states: So with all of this flip flop by the IRS Commissioner, one can understand why the public and Congress are skeptical of the Commissioner’s woes.

Jeff continues: Sen. Chuck Grassley, Iowa Republican and member of the Senate Finance Committee, questioned the IRS’ latest claims stating to FoxNews.com: “The IRS always seems to be able to find more resources when it wants to. Because of that, and because of non-taxpayer service activities, like union work on the taxpayer’s dime, the IRS deserves skepticism when it continuously seeks more money.”

Windus states: According to IRS Commissioner Koskinen, the new hires will be divided into two so-called waves with the first job announcements in the coming weeks. The second wave will provide “employees with promotional opportunities for higher-level enforcement positions,” and will focus on “high-profile enforcement areas, including international tax issues, refund fraud and identity theft.”

Jeff states: And you can expect that IRS Commissioner Koskinen will still be lobbying Congress with additional requests for budget increases in the coming months as he claims that “While adding 600 to 700 new enforcement hires will not replace those who have left, it will help fill key gaps in our enforcement workforce created by years of attrition.”

Windus states: The 2016 hiring addition that the IRS is starting will be the agency’s first significant enforcement hiring in more than five years. IRS Commissioner Koskinen said in a message to agency employees: “This is a good development for our tax system because when you look at the IRS overall, every dollar invested in the IRS returns at least $4 to the Treasury. The numbers are even higher when it involves enforcement. Each enforcement position typically returns almost $10 to the U.S. Treasury for every dollar spent — and in many instances, much more.”

Jeff states: Of all the agents who work for the IRS, IRS Criminal Investigation agents (known as Special Agents or CI agents) are the elite special forces in the never-ending war on tax evasion. They are feared among criminals for their unmatched ability to follow the money, assess net worth and find fraud in corporate books. They have been at the center of major tax and money-laundering cases involving Swiss banks, FIFA soccer officials, and the Costa Rican digital currency company, Liberty Reserve.

Windus states: Claire Rossini, a former Special Agent who spoke to Bloomberg News said that “As a Special Agent, your job is to find those facts and put criminals in jail. If you know that somebody is getting away with something because you don’t have the manpower, that’s very disheartening.”

Jeff states: CI agents help federal prosecutors build corruption, narcotics and money-laundering cases. Agent attaches are stationed in 10 foreign countries. They work undercover, use wiretaps and rely on informants. They are the only ones authorized to investigate federal tax crimes, including evasion and failing to file returns. It’s painstaking work and cases often take years of work to meet the legal threshold of proving beyond a reasonable doubt the intent to cheat on taxes.

Windus states: CI agents are also involving in fighting fraudulent refunds and identity theft. In 2011, the IRS paid out $3.6 billion in potentially fraudulent refunds, an amount that swelled to $5.8 billion in 2013. The IRS said its own website got hit in June, with thieves stealing information on about 100,000 taxpayers to generate $39 million in refunds. Identity theft rose to 28% of all new investigations in 2013. Though such cases have since been declining nationally, they account for about half of investigators’ time in South Florida.

Jeff states: But now there are more CI agents working today on cybercrimes, and they use analytical software to mine data from the Treasury Department’s Financial Crimes Enforcement Network (known as FinCEN). This is the same network that has been receiving information from foreign governments and foreign financial institutions and matching it up to foreign account information reported directly by U.S. taxpayers or missing from U.S. income tax returns filed by taxpayers.

Jeff continues: So beware with more agents out there, you can bet that there will be more taxpayers now having tax problems with the IRS.

Jeff states: Well it’s time for a break but stay tuned because we are going to find out if the Tech Bubble is ready to pop.

Jeff states: You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Jeff states: And so before we start with this next segment, Windus would like to remind you of her offer:

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Is the Tech Bubble Popping? Ping Pong Offers an Answer

www.wsj.com/article_email/is-the-tech-bubble-popping-ping-pong-offers-an-answer-1462286089-lMyQjAxMTE2MjAxMzYwOTMyWj

Jeff starts: That’s right folks, of all the possible indicators, we may be getting our best information regarding how the tech industry is fairing based on Ping Pong sales reports.

Windus replies: This coincident comes to light after dismal first quarter reports for Twitter troubled investors. Interestingly enough, if the company would have paid attention to a single key indicator, they could have predicted the downturn.

Jeff continues: Specifically, regular shipments of ping pong tables. You heard right, ping pong tables. As a corner stone of most start-up companies, ping pong tables are a popular way of spending break hours to help employees distress.

Windus states: Twitter had been ordering these tables regularly until late 2014 when their requisitions to Billiard Wholesale stopped. The store’s owner had figured that social media company had either run out of space or worse yet, were having company problems.

Jeff replies: Now analysts are becoming increasingly unsettled by Twitter’s slowing user growth and even more alarming weak revenue growth in the first quarter.

Windus continues: When Twitter spokesperson Jim Prosser was questioned as to why the company had stopped its orders of ping pong tables, he responded with a simple “I guess we bought really sturdy ones.”

Jeff states: An additional spokesperson, Natalie Mikaye, added that they’re “more of a Pop-A-Shot company now”, in reference to an indoor basketball game.

Windus questions: Which leads us back to the original question, is the tech bubble popping? Can ping pong table sales direct us to the general wellness of a tech company’s growth??

Jeff states: Well, Mr. Ng of Billiard Wholesale insists that sales of these tables track the tech economy. In his business “last year, the first quarter was hot.” But now, “there’s a general slowdown.”

Windus replies: His 2016 first quarter sales reflected a drop of about 50% down from the previous quarter. Dow Jones VentureSource, which tracks venture financing, reports that US startup funding in that period fell 25%.

Jeff continues: This “table tennis indicator” is a glimpse into Silicon Valley culture. Chief technology officer, Sunil Rajasekar, of Lithium Technologies explains that, “if you don’t have a ping pong table, you’re not a tech company.”

Windus states: Don’t believe him? Look at the 30-year old head of marketing at the start up that was recently bought by BlackRock Inc. As number 2 in the internal ping pong rankings, Joe Fahr believes that the table is an equalizer that “breaks down the hierarchy”. Joe keeps his $100 Butterfly-brand paddle with him at his desk in a special bag.

Jeff replies: It’s believed that the incorporation of table tennis into the workplace sends a psychological message to the founders and employees that “we’re not your father’s company.” Somewhat equivalent to “we don’t wear suits.”

Windus continues: Now this isn’t all about fun and games nor in the slightest bit, about goofing off at work. It’s more of an activity carefully selected to benefit employees who spend a good portion of their day, sitting at a desk, staring at a screen, for the sake of their corneas. And, it helps build culture.

Jeff states: But when the Nasdaq fell to its lowest in over a year this past February, Mr. Ng sold the fewest tables to companies since he started keeping track in 2014.

Windus replies: Yahoo!, who has been hit hard by weakening revenue, hasn’t purchased new items in a long time. Intel stopped buying new tables over a year ago, and recently announced 12,000 job cuts last month.

Jeff continues: Google just bought a ton of stuff regardless of missing Wall Street estimates. Even still, they did post a healthy increase in profits and revenue in the first quarter.

Windus states: We’re not telling you to start basing all of your investing in the tech industry primarily on ping pong table sales though. Whereas sales may track the tech economy, it far from predicts it.

Jeff replies: In the grand scheme of things, you could probably also track Odwalla juices, as they maintain a similar culture. Or for that matter, substitute table tennis out for foosball tables.

Windus states: During the original dot-com boom, which ended in 2000, pool (or billiards) was the popular table. The transition from pool to ping pong, may suggest growing practicality among entrepreneurs.

Jeff replies: Unlike billiard tables though, ping pong tables have an inferior return when companies hit a downturn and require downsizing and selling assets to raise funds or reimburse their creditors or investors.

Windus continues: In more plain terms, you could purchase a brand new, high-end Butterfly-brand table for $2,300, but you couldn’t sell them back to the wholesaler since nicks in the table make them worthless. Not to mention, used ping pong tables only fetch about $5 or $10 anyway.

Jeff states: Whereas pool tables tend to maintain a higher resale value. Also good to keep in mind when you’re investing in your own recreational equipment.

Windus finishes: On the same topic of investing, if you’re not sure where you’re heading but want to make sure that your future is clearly mapped out for success with regards to market volatility, you can call or email us….

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Jeff states: Stay tuned because after the break we want to do what to expect if The IRS Criminal Investigation Division is taking a look at you.
You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

Jeff states: But before we start with this next segment, I want to remind our listeners of my offer:

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Is The IRS Criminal Investigation Division Taking A Look At You?

Jeff states: If the motive of the crime is money, chances are the IRS Criminal Investigation (CI) special agents are involved in tracking the money from the crime to the criminal.

Windus states: And with the ever more sophisticated schemes to defraud the government and the American economy occurring now, there is a greater demand for the financial analytical ability of forensic investigators to wade through complex paper and computerized financial records.

Amy states: CI is comprised of nearly 3,500 employees worldwide, approximately 2,500 of whom are special agents whose investigative jurisdiction includes tax, money laundering and Bank Secrecy Act laws. While other federal agencies also have investigative jurisdiction for money laundering and some bank secrecy act violations, IRS is the only federal agency that can investigate potential criminal violations of the Internal Revenue Code.

Jeff states: Compliance with the tax laws in the United States relies heavily on self-assessments of what tax is owed. This is called voluntary compliance. You do this every time you file your income tax return. When individuals and corporations make deliberate decisions to not comply with the law, they face the possibility of a civil audit or criminal investigation which could result in prosecution and possible jail time. Publicity of these convictions provides a deterrent effect that enhances voluntary compliance.

Amy states: As financial investigators, CI special agents are trained to recover computer evidence. Along with their financial investigative skills, special agents use specialized forensic technology to recover financial data that may have been encrypted, password protected, or hidden by other electronic means.

Windus asks: So how is CI organized?

Amy replies: The Criminal Investigation Division is divided into three main programs:
1. Legal Source Tax Crimes;
2. Illegal Source Financial Crimes; and
3. Narcotics Related and Counterterrorism Financial Crimes.

Amy continues: These three programs are mutually supportive and encourage utilization of all statutes within CI’s jurisdiction, the grand jury process and enforcement techniques to combat tax, money laundering and currency crime violations.

Jeff states: And because CI’s investigations tend to be long and thorough, CI typically picks only those significant financial investigations that will generate the maximum deterrent effect, enhance voluntary compliance and promote public confidence in the tax system.

[Windus to reach off each CI program, followed by Amy explanation and Jeff comment.]

Legal Source Tax Crimes. The Legal Source Tax Crimes Program includes those cases that threaten the tax system, such as the Questionable Refund Program (QRP) cases, unscrupulous return preparers and frivolous filers/non-filers who challenge the legality of the filing requirement.

Illegal Source Financial Crimes.

Amy states: The Illegal Source Financial Crimes Program recognizes that money gained through illegal sources, such as dollars obtained through illegal gambling operations, is part of the untaxed underground economy. Remember that under the Internal Revenue Code all income is taxable, from whatever source derived regardless of whether it was legal.

Jeff states: When money is derived through illegal sources, the primary concern for the criminal is to legitimize the dollars. This process of “cleaning” the illegally obtained dollars is termed “money laundering”. Money laundering activity is considered to be “tax evasion in progress”.

Amy states: Historically, money launderers used legitimate businesses to “launder” their illegal proceeds. Now money launderers use various schemes and types of transactions to conceal their income and/or assets. Some of these schemes include the manipulation of numerous currency reporting requirements and the layering of transactions. The schemes are frequently international in scope.

Jeff states: The Illegal Source Financial Crimes Program encompasses all tax and tax-related violations, as well as money laundering and currency violations. In fact, money laundering and currency violations are often intertwined with tax violations. As part of the criminal charges against an individual, Criminal Investigation (CI) makes effective use of the forfeiture statutes. Forfeiture statutes deprive individuals and organizations of their illegally obtained cash and assets.

Narcotics-Related Financial Crimes and Counterterrorism Financing.

Amy states: One look at the daily newspaper is proof enough that crimes dealing with or motivated by money make up the majority of current criminal activity in the nation. Tax evasion, public corruption, health care fraud, and even drug trafficking are all examples of the types of crimes that revolve around money. In these cases, a financial investigation often becomes the key to a conviction.

Amy continues: Traditional law enforcement relies on investigative tools such as crime scene analysis, physical evidence, fingerprint identification or eyewitness accounts. The limitations of these techniques become obvious to those who are trying to prove wrongdoing in a sophisticated financial crime. With no proof, there is no conviction.

Jeff states: When the IRS astounded Public Enemy Number 1 “Al Capone” by obtaining a conviction for tax evasion and demanding millions of dollars in back taxes, Capone said, “They can’t collect legal taxes from illegal money”. But it’s really pretty simple: No matter what the source of income — all income is taxable.

Windus asks: And this creates a real problem for drug dealers. What are they going to do with their money — so that IRS won’t find it?

Jeff states: Well usually it involves some level of foreign banking. And speaking about taxpayers who have undisclosed bank accounts, about 60,000 U.S. taxpayers have come forward in special voluntary disclosure programs established by IRS to avoid criminal prosecution and benefit from lower penalties than the maximum provided by law.

Amy states: By law, many U.S. taxpayers with foreign accounts exceeding certain thresholds must file FinCEN Form 114, Report of Foreign Bank and Financial Accounts, known as the “FBAR.” It is filed electronically with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

Windus asks: So what are the Filing Requirements if someone has foreign bank accounts?

Amy replies: Taxpayers with an interest in, or signature or other authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2015 must file FBARs. It is due by June 30 and must be filed electronically through the BSA E-Filing System website.

Amy continues: Generally, U.S. citizens, resident aliens and certain non-resident aliens must report specified foreign financial assets on Form 8938 if the aggregate value of those assets exceeds certain thresholds. Reporting thresholds vary based on whether a taxpayer files a joint income tax return or lives abroad. The lowest reporting threshold for Form 8938 is $50,000 but varies by taxpayer.

Windus asks: But I thought that if income was earned abroad, it does not get reported on a U.S. income tax return?

Amy replies: Many people mistakenly believed that. The law requires U.S. citizens and resident aliens to report worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

Amy continues: Additionally by law, Americans living abroad, as well as many non-U.S. citizens, must file a U.S. income tax return. In addition, key tax benefits, such as the foreign earned income exclusion, are only available to those who file U.S. returns.

Windus asks: So what are the penalties for non-compliance?

Amy replies: Civil Fraud – If your failure to file is due to fraud, the penalty is 15% for each month or part of a month that your return is late, up to a maximum of 75%.

Amy continues: Criminal Fraud – Any person who willfully attempts in any manner to evade or defeat any tax under the Internal Revenue Code or the payment thereof is, in addition to other penalties provided by law, guilty of a felony and, upon conviction thereof, can be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than five years, or both, together with the costs of prosecution (Code Sec. 7201).

Jeff states: Now if the IRS are targeted you for investigation or even started a random audit of your tax returns, you are locked out of going into any voluntary disclosure program. Which is why ….

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Thanks Amy for calling into the show. Amy says Thanks for having me.

Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

And Windus and I always pleased to make our offers to our listeners where… PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.

Jeff states: If you would like to post a question for us to answer, you can go to my website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

OK Windus, what questions have you pulled for us to answer?

Question from Chelsea of San Diego: Are mutual fund expense ratios tax deductible?

Windus answers.

Question from Martin of Newport Beach: Should I pay attention to all notices I may receive from the IRS?

Jeff answers: Definitely yes! Look, the IRS does not send out junk mail or mass mailers. The IRS sends notices and letters for the following reasons:

• You have a balance due.
• You are due a larger or smaller refund.
• The IRS has a question about your tax return or is changing it.
• The IRS needs to verify your identity.
• The IRS needs to notify you of delays in processing your return.

It is important to read the notice to see what it is about. For example, if the IRS changed your tax return, compare the information the IRS provided in the notice with the information in your original return.

Then check and see if a response is required. If your notice requires a response by a specific date, you will want to comply to minimize additional interest and penalty charges and to preserve your appeal rights if you do not agree.

I believe that IRS notices are designed to confuse laypersons so that they unknowingly waive their appeals rights. That’s why if you receive a notice from the IRS, take it seriously and engage a tax professional such as myself to handle this matter for you.

Jeff states: Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Windus states: Have a great day everyone!