2015: A New Year And A New Era – Number Of FATCA Compliant Countries Continues To Increase

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Under the Foreign Account Tax Compliance Act (“FATCA”), foreign banks, insurers and investment funds must send the Internal Revenue Service information about Americans’ and U.S. permanent residents’ offshore accounts worth more than $50,000. Institutions that fail to comply could effectively be frozen out of U.S. markets. As of this blog posting, the U.S. has entered into Intergovernmental Agreements (“IGA’s”) with 48 countries for the implementation of FATCA.

The 48 countries with IGA’s already in place are:

Australia Czech Republic Isle of Man Mexico
Austria Denmark Israel Netherlands
Bahamas Estonia Italy New Zealand
Barbados Finland Jamaica Norway
Belgium France Japan Poland
Bermuda Germany Jersey South Africa
Brazil Gibraltar Latvia Spain
British Virgin Islands Guernsey Liechtenstein Slovenia
Canada Hungary Lithuania Sweden
Cayman Islands Honduras Luxembourg Switzerland
Chile Hong Kong Malta Turks and Caicos Islands
Costa Rica Ireland Mauritius United Kingdom

Countries that have reached IGA’s in substance and have consented to being included on this list are:

Algeria Dominica Macao San Marino
Angola Dominican Republic Malaysia Saudi Arabia
Anguilla Georgia Montenegro Serbia
Antigua & Barbuda Greece Montserrat Seychelles
Armenia Greenland Moldova Singapore
Azerbaijan Grenada Nicaragua Slovak Republic
Bahrain Guyana Panama South Korea
Belarus Haiti Paraguay Taiwan
Bulgaria Holy See Peru Thailand
Cabo Verde Iceland Philippines Trinidad & Tobago
Cambodia India Portugal Tunisia
China Indonesia Qatar Turkey
Colombia Iraq Romania Turkmenistan
Croatia Kazakhastan St. Kitts and Nevis Ukraine
Curaçao Kosovo St. Lucia United Arab Emirates
Cyprus Kuwait St. Vincent and the Grenadines Uzbekistan

Click here for progress and developments IRS has made in gathering information from foreign banks and foreign governments.

Federal tax law requires U.S. taxpayers to pay taxes on all income earned worldwide. U.S. taxpayers must also report foreign financial accounts if the total value of the accounts exceeds $10,000 at any time during the calendar year. Willful failure to report a foreign account can result in a fine of up to 50% of the amount in the account at the time of the violation and may even result in the IRS filing criminal charges.

Time is running out. The IRS is giving taxpayers one last chance to come forward and voluntarily disclose foreign accounts and unreported foreign income before the IRS starts investigating non-compliant taxpayers.

Don’t let another deadline slip by. If you have never reported your foreign investments on your U.S. Tax Returns or even if you have already quietly disclosed or in 2012 OVDI, you should seriously consider participating in the IRS’s 2014 Offshore Voluntary Disclosure Program (“OVDP”). Once the IRS contacts you, you cannot get into this program and would be subject to the maximum penalties (civil and criminal) under the tax law. Taxpayers who hire an experienced tax attorney in Offshore Account Voluntary Disclosures should result in avoiding any pitfalls and gaining the maximum benefits conferred by this program.

Protect yourself from excessive fines and possible jail time. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Francisco, San Diego and elsewhere in California qualify you for OVDP.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems, get you in compliance with your FBAR filing obligations, and minimize the chance of any criminal investigation or imposition of civil penalties.

Jeffrey B. Kahn, Esq. discusses taxes on the November 23, 2014 radio show “Talking Money with Mr. C” on 760AM KFMB in San Diego

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Are you at risk for this major tax penalty?

Don’t let the hustle and bustle of the holiday season distract you into a hefty tax penalty come April. The Internal Revenue Service expects consumers to begin taking distributions from many of their retirement accounts-including 401(k) and 403(b) plans, and traditional IRAs-starting in the year they turn 70-and-a-half or the year when they retire, whichever is later. Fail to do so and the amount you should have withdrawn will be taxed at 50%. “It’s one of the biggest penalties in the tax code”.

IRS Attacks On Businesses – So where a business has been treating its workers as independent contractors and there is a concern that the IRS in an audit would not respect this arrangement, what can the business do?

The business should consider entering into the IRS’ Voluntary Classification Settlement Program (VCSP). The VCSP is a voluntary program that provides an opportunity for taxpayers to reclassify their workers as employees for employment tax purposes for future tax periods with partial relief from federal employment taxes. To participate in this voluntary program, the taxpayer must meet certain eligibility requirements and apply to participate in the VCSP by filing Form 8952, Application for Voluntary Classification Settlement Program, and enter into a closing agreement with the IRS.

IRS Agent Seduced Me, Then Didn’t Help Me With Audit, Oregon Man Claims

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Vincent Burroughs who lives in Oregon was selected by the IRS for an audit of his tax returns. Little did he know that the IRS was going to clean him out in more ways than just his bank account.

Let me explain – maintaining a friendly but professional demeanor can be important to an audit or tax dispute. But having sex with a government agent for a better audit result – well not such a good idea. Yet a lawsuit involving an allegedly alluring—and demanding—female IRS agent suggests that sometimes facts and figures can become overwhelming. If you believe the plaintiff, Mr. Burroughs, passion it seems can overtake a tax audit.

Unlikely? I agree. Preposterous? Perhaps. But Mr. Burroughs filed a lawsuit against the IRS alleging that IRS Agent Dora Abrahamson threatened him with penalties in his tax audit if he did not – let’s say, come across. And in this lawsuit Mr. Burroughs was seeking punitive damages.

What led to “the encounter”…

For a long time Mr. Burroughs said, he was making good money as a contractor. But when the economy hit the skids, his business dried up, quashing his hopes of becoming a full-time motorcycle racer. He got behind on his taxes — by about $20,000, he figured.
Then in August 2011, he was selected for an audit by the IRS. IRS Agent Dora Abrahamson was assigned to the audit. She allegedly told Burroughs that “she knew who he was, and that it was lucky for him that this was the case, and that they should meet”. Ms. Abrahamson allegedly flirted with him over the telephone and via text messages offering him massages and sent him a photo of herself in her underwear – not exactly IRS-approved business attire – and in a suggestive pose.

Mr. Burroughs maintains that he initially ignored her advances until September 2011. That’s when Ms. Abrahamson arrived at his home for an arranged audit meeting. Only she wasn’t dressed much like an IRS agent. Mr. Burroughs said she showed up dressed provocatively and proceeded to proposition him threatening a 40% tax audit penalty if she didn’t get what she wanted.

The interview with ABC News.

Mr. Burroughs was interviewed by ABC News. Like many other taxpayers, Mr. Burroughs said that when he found out he was being audited “he started shaking immediately. His heart rate went up. He was looking to cooperate with the IRS as much as he could”. But IRS agent Ms. Abramson assured him that she was most eager to help out.

Mr. Burroughs stated, “She was sending me texts. Some of them made me feel like, I am lucky that she has got my audit, ’cause she is gonna help me. Then, some of them made me feel like, I think this girl wants something else”. A week or so after the audit began, Mr. Burroughs said, he hadn’t gathered the papers he needed. He said Ms. Abrahamson asked about stopping by to give him a hand. He agreed.

So in September 2011, at 9:00 p.m. on a warm night in Eugene, Oregon, Mr. Burroughs said he opened his front door to IRS agent Dora Abrahamson. It was the first time the two ever met. Mr. Burroughs said in the interview with ABC News that “she said she was going to do my paperwork. She came up the stairs, knocked on the door and I opened the door”.

That’s when the encounter allegedly occurred.

Mr. Burroughs described in greater detail what happened –“She just pushed me back, and I kind of went back, and I landed like that, and she immediately came over, got on top of me, started kissing on me. … [T]hen she leaned up and started tearing my shirt off.”

Mr. Burroughs said they then went into his bedroom.

That was Mr. Burroughs’ interview with ABC News. But let’s get back to the story and what happened after that encounter at Mr. Burroughs’ home.

Mr. Burroughs said that he received a call from Ms. Abrahamson informing him that she was stepping down from his audit due to a “conflict of interest”. A new IRS agent was assigned who came up with a report that Mr. Burroughs owed not the $20,000 he figured – but that Mr. Burroughs owed around $69,000!

Mr. Burroughs was not happy. He said, “somebody has to be accountable for what the IRS does, because they are unaccountable. They run with no leash on.”

Fifteen months go by . . .

Now not that the story isn’t already bizarre enough, but also raising eyebrows is the lack of formal protest. In the fifteen months that transpired after the encounter, Mr. Burroughs doesn’t seem to have made any form of complaint to the IRS or law enforcement in spite of his claims to have suffered much over the incident. But all that changed when, seemingly out of nowhere, in January 2013 he filed suit in the U.S. District of Oregon, Eugene Division (Burroughs v. Abrahamson et al (6:13-cv-00141-TC)).

In his lawsuit, he says he suffered “anguish, humiliation, mental distress, depression, lost income, and loss of trust in governmental authority.” At the time of the encounter with Ms. Abrahamson, he was in an “exclusive relationship with another woman,” he said, and because of the demanding IRS agent, that relationship also suffered.

He calls Abrahamson’s behavior “persistent sexual harassment” and says, among other things, that she was negligent in “permitting her carnal desires to overcome her judgment that it was inappropriate to pursue a sexual relationship with a taxpayer she was auditing.” Her advances, the complaint alleged, “were an excessive intrusion on his person.”

In the lawsuit he was seeking unspecified punitive damages. The lawsuit claimed that Ms. Abrahamson’s conduct caused the plaintiff distress and a rift in his relationship with a “significant other”.

The lawsuit also alleges that the government is liable for damages because IRS officials provided inadequate supervision. I guess Mr. Burroughs was expecting a ménage à trois?

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. If you are selected for an audit, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

Your Worst Nightmare: An IRS Audit

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Your business is growing and you are prospering. Business is good. Life is good. Then the unbelievable happens, which turns your world upside down and pushes you into pure panic.

This panic mode is instantly brought on by receipt of an IRS audit letter.

Most of us don’t fear something exploding or catching on fire as much as we fear an IRS audit. Of course, the best way to survive a tax audit and even to come out of it successfully is not to panic, but to prepare.

Take it seriously.

Even though IRS audits are fairly routine events, they should be taken with the utmost of seriousness. In the event you receive an audit letter, you should immediately spring into action to ready yourself for the audit. The IRS usually sets the time and place for the audit. If you try to put it off, any penalties and interest will just become that much bigger. If you choose to represent yourself, you should adjust your schedule to comply with their date. Think of not showing up for an audit the same as not showing up for trial in a courtroom. It is that serious.

The really, really bad news.

If you think there is nothing worse than you getting from the IRS than a standard or routine IRS audit letter – continue reading …

You can be investigated by the IRS through a civil tax audit (which is very serious) or through a criminal investigation (which is even more serious). The criminal investigation arm of the IRS can come bearing badges and guns, as it is an investigation of fraud against the United States government. In any such investigation, the IRS can (and probably will) obtain your bank records and other financial records, both business and personal.

Virtually all small businesses involve close ownership with profits or losses going ultimately to the business owner. This is why the IRS looks closely at your personal accounts. Any instance of depositing unreported income in a bank account will probably show-up in an IRS audit. Small businesses which prepare their own tax returns (as opposed to going through a tax professional such as a CPA) are more likely to be audited.

Why does the IRS exercise extra scrutiny over small businesses?

The IRS especially scrutinizes the self-employed because the agency claims that most tax cheating is done in small businesses. There is some logic to this because, in a self-employed business, there are many more opportunities to blur the difference between business expenses and personal expenses. Also, many self-employed people put the idea of proper record-keeping and the cost of hiring accounting and tax professionals at the bottom of their priority list. It is not uncommon for business owners to concentrate more on the operational side of the business than to properly accounting for the true business expenses and deductions.

It is a statistical fact: Self-employed individuals are much more likely to get audited than regular employees.

What the tax man looks for.

A tax auditor is looking for certain things when they audit you and your business. The IRS training manuals note that the auditors are examining you and not just your business tax return. Your lifestyle may be checked against your reported income to see if there is a discrepancy which shows skimming, diversion of funds or deception. For example, that mansion with the truck-mount van parked out front may send up the wrong “economic reality” flag.

Travel and entertainment deductions in a business are usually suspect as some people try to deduct personal entertainment and meal “business” expenses. You must be able to clearly explain the business relationship in a credible fashion. Taking your friends out to the ballpark or taking the family on a vacation to that industry conference may not quite pass the litmus test of an audit. Writing off your legitimate business entertainment expenses requires detailed explanation of the reason for the expense, as well as a receipt.

Your calendar will undoubtedly be scrutinized to make sure there are no glaring gaps between possible work, vehicle or equipment usage and the income reported. As an example: If you are claiming 100% business vehicle usage but your calendars do not confirm the times and locations of service stops, you may be open to an analysis of possible personal use of the vehicle. Entries in a business diary or calendar help to justify an expense to an auditor as long as it appears to be reasonable.

Business credit cards are also highly scrutinized as they have a high potential for misuse (such as use for a personal vacation or personal expenses). Keep these only for legitimate business expenditures (places where company checks won’t do). Too many times a small business owner says that they will “reimburse the business later” for that personal expense put on the business card. That routine just opens you up for closer inspection.

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. If you are selected for an audit, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

Creed’s Singer Scott Stapp Alleges IRS Error Left Him Penniless & Homeless

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In the late 90s and early 2000s, Scott Stapp and his band, Creed, topped charts with songs like “Higher” and “With Arms Wide Open.” The band sold more than 50 million albums worldwide, making frontman Stapp a millionaire who at the height of his popularity had an estimated net worth between $10 and $30 million.

What a difference a few years can make.

Recently, Stapp shocked fans by posting a 15-minute video to his Facebook page, claiming that he’s now broke and homeless.

In the odd clip, shot in black and white, Stapp addressed his fans directly; assuring fans that he is drug-free and sober. However, recent papers filed in a divorce proceeding by Stapp’s estranged wife, Jaclyn Stapp, tell a different story: in the divorce petition, Jaclyn Stapp claimed that Stapp had recently been taking a number of drugs, including amphetamines, crystal meth and steroids.

Stapp is no stranger to addiction, having admitted to abuse of alcohol and prescription drugs in the past, but insists that his current problems have nothing to do with drugs or alcohol. Instead, he says in the video, during “an audit of my record and my personal finances… a lot of things were uncovered.” Stapp goes on to claim that “a lot of money was stolen from me” and “all hell broke loose.”

Included in Stapp’s litany of accusations is his claim that Internal Revenue Service (IRS) has frozen his bank accounts on a number of occasions. Stapp says that the accounts were frozen “all of the sudden” – although it’s important to understand that the IRS doesn’t freeze your bank account or take your money without proper notice. The seizure is referred to as a levy and it’s rarely a surprise when it happens.

For the IRS properly levy you, the IRS must first issue an assessment, explaining that tax is owed. Next, the IRS sends a Notice and Demand for Payment. If you don’t respond to that Notice, the IRS then sends a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (“Final Notice”) at least 30 days before the levy. It is the non-response to the Final Notice (which is sent by certified mail) that now gives the IRS the green light to start levy action.

Levies can be placed on tax refunds, wages, bank account or other property. If the levy causes a hardship, you can ask that it be lifted – although any tax obligation would remain in place.

Stapp says, however, that when he called the IRS to find out what happened to the money, he was told, “Oh we had an address mix-up, it was a clerical error, so we’ll return your funds in 9-10 months.” That seems unlikely but Stapp maintains that is what happened. He goes on to say, in the video, “I don’t understand how that’s fair in America, in the country that we live in.”

When a bank levy is issued, the IRS allows up to 21 days before the frozen funds must be released by the bank to the IRS. The purpose of allowing this amount of time is to allow a taxpayer to show to the IRS the hardship such a seizure would cause or raise other defenses such as the levy was somehow wrongful. If the IRS agrees, the funds would be promptly unfrozen – not take 9 to 10 months as Stapp so claims he was told.

Stapp also claims that his banks accounts have been hacked and someone has changed his online passwords and transferred all of the money out of his bank accounts.

A bank levy by IRS attaches to whatever funds are in your account on the date of the levy notice. If you have outstanding checks which have not yet cleared the bank, those checks would now not be honored by the bank as the account is now frozen; however, any funds deposited after the date of the levy notice would not be subject to the freeze. If there was nothing in Stapp’s bank accounts when the levy was issued, there would be nothing for the bank to freeze for the IRS.

Stapp says, “Between IRS attacking me… between the banks basically saying ‘yeah, all of your money has been taken out of your accounts’,” he has no money. He has, he says, been living in the Holiday Inn and has been forced to sleep in his truck. He has no money for food and as a result, ended up in the emergency room.

Stapp says he is looking for an attorney and plans to fight those who are persecuting (his word) him. Remarking on his alleged tax issues, he says that it’s not fair that he has been “targeted by IRS because of a clerical error.” Stapp we are available to help you.

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. If you are in danger of wage garnishments or bank levies or having a tax lien placed against your property, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

Jeffrey B. Kahn, Esq. Discusses Celebrities And Their Tax Problems On ESPN Radio – November 21, 2014 Show

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Topics Covered:

1. “Celebrities And Their Tax Problems” – Lauryn Hill, Wesley Snipes, Richard Hatch, Willie Nelson and Chris Tucker.

2. Lien vs. Levy

3. Aggressive Actions Beyond Liens And Levies Taken By California Tax Agencies- Franchise Tax Board (“FTB”), Board Of Equalization (“BOE”) and the Employment Development Department (“EDD”).

4. Questions from our listeners:

a. How long should I keep my tax papers?

b. How long should I worry if I haven’t filed tax returns that I should have filed?

c. If I can’t pay my taxes, should I file my return anyway?

d. Who has access to my IRS file?

Yes we are all working for the tax man!

Good afternoon! Welcome to the KahnTaxLaw Radio Show

This is your host 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. And I am so proud to have with me in the studio today my co-host, Susannah Kahn.

Chit chat with Susannah.

Jeff says, On our weekly radio show we talk everything about taxes from the ESPN 1700 AM Studio in San Diego, California.

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!

So it is my objective to make you smarter so that you legally pay the least tax as possible, avoid tax problems and be aware of the strategies and solutions if you are being targeted by the IRS or any State tax agency.

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

Being in California we have many celebrities around – and they are not immune from having tax problems and getting into tax trouble. So since I have Susannah on the show with me today, I thought that we could do our own entertainment spread called “Celebrities And Their Tax Problems”.

Susannah discuses Lauryn Hill

Legendary hip hop artist and eight-time Grammy winner Lauryn Hill started serving her three-month prison sentence in Connecticut on July 8, 2013 after pleading guilty to tax evasion charges. The South Orange, N.J. native and mother of six admitted in a state court that she hadn’t filed tax returns from 2005 to 2007. During that time, Hill, at age 37, had earned more than $1.5 million and she failed to pay over $1 million in taxes. After her period of incarceration, she was on parole for one year, spending the first three months under house arrest. 

Jeff discusses Wesley Snipes

Wesley Snipes tried nearly every defense to avoid paying taxes. Star of the Blade trilogy and White Men Can’t Jump, Snipes narrowly escaped tax-fraud charges in 2008 after a lengthy trial in which he blamed his advisers for bad information and claimed, at various points, that the IRS was an illegitimate government agency, that he was a nonresident alien, that he had received bad information from his associates … and on and on. The excuses weren’t enough to dodge a conviction on the charge of not filing a tax return, and Snipes received a three-year prison sentence for his malfeasance.

The Wesley Snipes saga began in 2006 when he was accused of tax fraud. He was originally indicted on charges of attempting to claim nearly $12 million in fraudulent tax refunds and not filing any tax returns for several years. Snipes pleaded not guilty on all counts. The matter did go to trial in 2008. Despite a lengthy list of potential witnesses, and claims that the defense to the trial could take up to a month, the Snipes defense team rested – after less than an hour – without offering any witnesses. Snipes was eventually acquitted of felony federal tax fraud and conspiracy charges. However, he was convicted of failing to file tax returns from 1999 to 2004, which were misdemeanor charges. He faced up to three years in prison for the failure to file and he received the maximum sentence.

Snipes reported to prison on December 9, 2010, at McKean Federal Correctional Institution, in northwest Pennsylvania. On April 2, 2013 Wesley Snipes was released from prison and put on house arrest until July 19, 2013.

Susannah discusses Richard Hatch

Richard Hatch outwitted, outplayed and outlasted everyone on the first season of Survivor. The Internal Revenue Service, however, is a completely different kind of opponent. Despite being one of the most publicized TV-show winners ever, Hatch somehow thought he could get away with not paying taxes on his million-dollar bounty.

Since 2005, he’s been battling with the IRS. Hatch was charged with ten criminal counts, including tax evasion. If convicted on all charges, Hatch faced up to 47 years in prison. Still, Hatch refused to take a plea. Instead, he rolled the dice and went to trial. He was eventually convicted on two of those charges (one count of “attempting to evade taxes” and one count of “filing a false tax return” relating to his 2000 and 2001 returns). A Rhode Island jury sentenced him to 51 months in prison.

Hatch spent several years in federal prison before being released in 2009. He was sent back to prison at that time for not amending his 2000 and 2001 tax returns, as ordered by the judge. Hatch said that he was told that he could not amend them because of the ongoing investigation. He’s right. Once a criminal investigation has begun, a taxpayer may not attempt to fix the problem by filing old or amended returns or by paying the tax due. After he served additional time, the requirement that he file those amended returns was eventually dropped.

Jeff discusses Willie Nelson

It’s tough to be mad at Willie Nelson. So when Willie got into tax trouble, his fans were there to bail him out. Nelson’s tax trouble started in 1984, when the IRS began looking into his returns stretching back to 1972. After years of investigation, the IRS declared that Nelson had underpaid taxes for six years, primarily because of invalid deductions he had taken after investing in tax shelters the IRS subsequently nixed. Nelson protested, but the U.S. Tax Court ruled in favor of the government, and the musician grudgingly agreed to pay $6 million in back taxes, plus more than $10 million in penalties and interest. After the IRS hit the country crooner in 1990 with a bill for $16.7 million in unpaid back taxes, Nelson had to hand over many of his possessions to stay out of prison.

Ultimately, Nelson lost virtually everything he had, including his Texas ranch. The property was returned to him, thanks to a generous fan who purchased the ranch on behalf of a group of farmers who promptly gave it back to him, as a gesture of gratitude for his ongoing Farm Aid support.

When Nelson was unable to pay off his substantial debt, in spite of the seizure of all of his property, he released a compilation album, ‘The IRS Tapes: Who’ll Buy My Memories?’ with the agreement that he would share the proceeds with the IRS.

Nelson settled his debt with the IRS for an undisclosed amount, and it was considered cleared by 1993.

Susannah discusses Chris Tucker

Chris Tucker has recently joined the ranks of Wesley Snipes and Willie Nelson of Celebrities Having Faced Tax Problems after it was discovered that he owes $14 million to the IRS, a bill that’s either outstanding or paid in full, depending on whether you believe Tucker’s publicists.

Tucker was just hit with a brand new federal tax lien for $2.5 million. The liens that were filed by IRS showed that Tucker failed to pay a total of $2,496,138.24 in 2008 and 2010. So when adding the back taxes for 2001 through 2006 that came to a grand total of over $14 million. Tucker has since been able to settle up with IRS but this story demonstrates how powerful a tax lien can be.

After the break we will have more on celebrities and their tax troubles and what we can learn from their stories to avoid tax problems. This is the KahnTaxLaw Radio Show on ESPN.

BREAK

Welcome back. This is KahnTaxLaw Radio Show on ESPN and you are listening to Jeffrey Kahn the principal tax attorney of the kahntaxlaw team and my co-host Susannah Kahn.

Today’s theme is “Celebrities And Their Tax Problems”.

Jeff says, If you owe taxes to the IRS or State Tax Agency, you do not want to let your situation get to a point where tax liens are being filed.

PLUG: The Law Offices Of Jeffrey B. Kahn will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the KahnTaxLaw Radio Show when you call to make an appointment. Call our 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.

So a lot of people get confused between Tax Liens and Tax Levies – we will try and break this down for you.

Lien vs. Levy

Sue states – A lien is not a levy. A lien secures the government’s interest in your property when you don’t pay your tax debt. A levy actually takes the property to pay the tax debt. If you don’t pay or make arrangements to settle your tax debt, the IRS can levy, seize and sell any type of real or personal property that you own or have an interest in.

Jeff asks, when would the IRS file a Tax Lien?

Sue replies, the IRS will file a lien when the agency feels there is a chance that collection is in peril. It does not just grab your assets. Filing of a tax lien is normally dictated by the dollar amount; the IRS’s Fresh Start program has increased the lien threshold from $5,000 to $10,000.

Jeff asks, where does the lien get filed?

Sue replies, the Notice of Federal Tax Lien is filed in the public records office of each county where you own property and thus attaches to any property you own. If you sell the property, proceeds will be used to satisfy the lien. Any person or company pulling a credit report on you will see the tax lien. This will damage your borrowing ability, making it difficult to refinance your home, get an auto loan, credit card, or business loan. Also, if you are looking to refinance your loan, the lien would have to be satisfied at closing in order for the lender in the new loan to retain a senior creditor’s position.

Jeff asks, what can a taxpayer where in a refinancing the tax lien would still not be satisfied?

Sue replies, a taxpayer can request that the IRS subordinate their lien to the new lender. In the process, even though the tax lien would be older than the new loan, the IRS agrees to stand behind the new lender should the loan be defaulted and the new lender now seeks to foreclose on the property. There are specific requirements that must be followed to accomplish this so you should involve tax counsel to make sure this can be successfully and timely completed before closing.

Jeff, I heard that certain taxpayers who enter into payment plans with the IRS can get tax liens withdrawn even before the liability is paid in full?

Sue, that’s correct. If you enter into a Direct Debit installment agreement, you may have your lien withdrawn.

Eligibility Requirements are:

  1. The current amount you owe must be $50,000 or less
  2. If you owe more than $50,000, you may pay down the balance to $50,000 prior to requesting the lien withdrawal to be eligible
  3. Your Direct Debit Installment Agreement must full pay the amount you owe within 60 months or before the Collection Statute expires, whichever is earlier
  4. You must be in full compliance with other filing and payment requirements
  5. You must have made three consecutive direct debit payments
  6. You cannot have previously received a lien withdrawal for the same taxes unless the withdrawal was for an improper filing of the lien
  7. You cannot have defaulted on your current, or any previous, direct debit installment agreement

Jeff asks, how does this impact a taxpayer on a regular installment agreement?

Sue replies, If are currently on a regular installment agreement, you may convert to a Direct Debit Installment Agreement. Bear in mind that if you default on your Direct Debit installment agreement after the lien is withdrawn, a new notice of lien may be filed and collection efforts may resume.

Jeff, says so it should be clear that a lien just makes sure the IRS eventually gets paid. A levy means now the IRS gets paid.

Jeff discusses Tax Levies.

A levy is a legal seizure of your property to satisfy a tax debt. Levies are different from liens. A lien is a claim used as security for the tax debt, while a levy actually takes the property to satisfy the tax debt.

If you do not pay your taxes (or make arrangements to settle your debt), the IRS may seize and sell any type of real or personal property that you own or have an interest in.

For instance,

  • The IRS could seize and sell property that you hold (such as your car, boat, or house), or
  • The IRS could levy property that is yours but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions).

Sue asks, what due process must IRS follow before they can levy?

Jeff replies, the IRS will levy only after these three requirements are met:

  • The IRS assessed the tax and sent you a Notice and Demand for Payment;
  • You neglected or refused to pay the tax; and
  • The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. The IRS will give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested.

Sue asks, so it sounds like that Final Notice is your last warning?

Jeff says, that’s right and it is such an easy notice to miss.

Sue asks, is there a difference between a bank levy and a wage levy?

Jeff says, if the IRS levies your bank account, your bank must hold funds you have on deposit, up to the amount you owe, for 21 days. This holding period allows time to resolve any issues about account ownership. After 21 days, the bank must send the money plus interest, if it applies, to the IRS.

If the IRS levies your wages, salary, federal payments or state refunds, the levy will end when:

  • The levy is released,
  • You pay your tax debt, or
  • The time expires for legally collecting the tax.

Sue asks, now what if the levy is creating an immediate economic hardship?

Jeff, it is possible that the levy may be released and we have had many cases where we were able to show this and get a full or partial release of the levy.

PLUG: And that is where we come in. The Law Offices Of Jeffrey B. Kahn will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the KahnTaxLaw Radio Show when you call to make an appointment. Call our 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.

Stay tuned because after the break we are going to tell you how the State Of California also gets into the act in causing tax problems for celebrities and us regular folks.

You are listening to the KahnTaxLaw Radio Show on ESPN.

BREAK

Welcome back. This is KahnTaxLaw Radio Show on ESPN and you are listening to Jeffrey Kahn the principal tax attorney of the kahntaxlaw team along with my co-host, Susannah Kahn.

Today’s theme is “Celebrities And Their Tax Problems”.

Sue discusses O.J. Simpson

For a man who never met a legal problem he didn’t like, O.J. Simpson finds his tax troubles the least of his concerns. The CourtTV regular was one of a slew of celebrities called out by California when the state released a list of its most delinquent citizens. The Juice apparently owes the state $1.4 million in back taxes. Good luck collecting that, though. Tracking down the ex-football star isn’t the issue. He’s living in a Nevada prison on a kidnapping and armed-robbery conviction for the foreseeable future.

Jeff discusses Sinbad

Joining O.J. Simpson on the list of California’s biggest tax debtors is comedian Sinbad – real name David Adkins – who owed the Golden State $2.5 million in personal income tax.

 

Whether you are a celebrity or a regular person, if you have tax problems, ignoring them will not make them go away.

PLUG: The Law Offices Of Jeffrey B. Kahn will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the KahnTaxLaw Radio Show when you call to make an appointment. Call our 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.

Jeff says, California is unique in the structure of its tax system. Most States operate under a single tax agency. The Federal government uses a single tax agency called the IRS. But California has three tax agencies!

Sue, that’s right they are the Franchise Tax Board (“FTB”), Board Of Equalization (“BOE”) and the Employment Development Department (“EDD”).

Sue asks, What does FTB cover?

Jeff replies, The FTB administers the income tax. Applies not only to individuals, but also to sole proprietorships, partnerships, estates, and trusts. In addition, the income “passed through” to individuals by Subchapter S corporations and certain other entities is subject to State Personal Income Taxation. The tax is applied to all sources of income unless specifically excluded, including wages and salaries, interest, dividends, business-related income, and capital gains.

Sue asks, What does BOE cover?

Jeff replies, The BOE administers the Sales and Use Tax. The tax in a specific California location has three parts: the state tax rate, the local tax rate and any district tax rate that may be in effect. Sale and Use Tax is the second largest tax levied in California and is assessed at both the state and local levels.

Sue asks, What does EDD cover?

Jeff replies, EDD involves payroll taxes which includes all employer paid taxes, State Income Tax Withholding of employees, State Disability Insurance (“SDI”) Taxes and Unemployment Insurance (“UI”) Taxes.

Aggressive Actions Beyond Liens And Levies Taken By California Tax Agencies.

Sue asks, what can the FTB do that goes beyond liens and levies?

Jeff replies, the FTB publishes Top 500 Delinquent Taxpayers (one list for personal and one for corporate)

FTB is required by law to post this information at least twice annually.

  • The FTB will notify each taxpayer by certified mail 30 days before they post their information.
  • As cases are resolved, those taxpayers are removed from the list, reducing the total number of listings from the original 500.
  • Removal of this tax delinquency information, as well as the FTB’s authority to publish this list, is pursuant to California Revenue & Taxation Code Section 19195.

If your name is on this list:

  • Your occupational and professional licenses, Including your driver license may be suspended under Business and Professions Code Section 494.5.
  • State agencies will not enter into contracts for the acquisition of goods and services with you under Public Contract Code 10295.4.

Sue asks, what can the BOE do that goes beyond liens and levies?

Jeff replies, The BOE will revoke your seller’s permit. If your seller’s permit is revoked, you cannot sell your goods.

Also, did you know as a corporate director, officer, member, manager, or other person having control or supervision of the filing of returns or payments of taxes, you may become personally liable for any unpaid sales and use taxes, interest, and penalties?

Such personal liability for any unpaid taxes and interest and penalties on those taxes is triggered upon termination, dissolution, or abandonment of a corporate business or limited liability company, any officer, member, manager, or other person having control or supervision of, or who is charged with the responsibility for the filing of returns or the payment of tax, or who is under a duty to act for the corporation or limited liability company in complying with any requirement of this part. Section 6829 of the Revenue and Taxation Code

Sue asks, what can the EDD do that goes beyond liens and levies?

Jeff replies, The IRS has the Trust Fund Recovery Penalty (also known as the 100-percent penalty). The EDD has something similar referred to as “CUIC 1735”. But CUIC goes way beyond the IRS’ version. Not only does the EDD assert a full 100-percent exposure of the employees tax withholdings AND the employer’s share of payroll taxes to targeted responsible individuals but also a 10% nonabatable assessment penalty (it should be noted that the IRS version is limited only to the employee’s share of FICA and withheld federal income taxes, roughly 60 % of the corporate employer’s overall liability).

The two key elements of CUIC 1735 are responsibility and willfulness. The EDD must have both elements before they can make the 100% assessment stick.

Any officer, major stockholder, or other person in charge of the affairs of the business can be held responsible. Before the assessment can become final, the targeted responsible person must be given notice, an opportunity for an administrative hearing, and an appeal. If the targeted individual loses his or her administrative hearing and appeal, and does not pay within 10 days after assessment, her or she will be penalized a further 10% pursuant to CUIC 1135.

PLUG: The Law Offices Of Jeffrey B. Kahn will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the KahnTaxLaw Radio Show when you call to make an appointment. Call our 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.

Stay tuned as we will be taking some of your questions. You are listening to the KahnTaxLaw Radio Show on ESPN.

BREAK

Welcome back. This is KahnTaxLaw Radio Show on ESPN and you are listening to Jeffrey Kahn the principal tax attorney of the kahntaxlaw team along with my co-host Susannah Kahn.

If you would like to post a question for us to answer, you can go to our 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 Susannah, what questions have you pulled from the kahntaxlaw inbox for me to answer?

1. How long should I keep my tax papers?

At least three years, but six years is preferable. The IRS has three years after you file a tax return to complete an audit. For example, if you filed on April 15, 2006, for 2005, keep those records until at least April 16, 2009.

The IRS can audit you for up to six years if it suspects that you underreported your income by 25% or more. If the IRS suspects fraud, there is no time limit for an audit, although audits beyond six years are extremely rare.

Keep records of purchases of real estate, stocks, and other investments for at least three years after the tax return reporting their sale was filed.

2. How long should I worry if I haven’t filed tax returns that I should have filed?

At least six years. The government has six years from the date the nonfiled return was due to criminally charge you with failing to file. There is no time limit, however, for assessing civil penalties for not filing. If you didn’t file for 1958, you still have an obligation if you owed taxes for that year. Not until you actually file a return does the normal audit time limit—three years—and collection time limit—ten years—start to run.

Don’t over worry about a nonfiled return due more than six years ago if you haven’t heard from the IRS. The IRS usually doesn’t go after nonfilers after six years—unless the IRS began its investigation before the six years elapsed. After six years, the IRS transfers its computer files to tape for storage.

3. If I can’t pay my taxes, should I file my return anyway?

Yes. Filing saves you from the possibility of being criminally charged or, more likely, from being hit with a fine for failing to file or for filing late. Interest continues to build up until you pay. Of course, filing without paying will bring the IRS collector into your life, but she’ll be friendlier if she doesn’t have to hunt you down. The sooner you start filing, the better.

4. Who has access to my IRS file?

Federal law makes IRS files private, not public records. The law has many exceptions, however. IRS files can be legally shared with other federal and state agencies. Most leakage comes as a result of sloppy state agencies that are granted access to IRS files. Furthermore, IRS employees have been caught snooping, and computer hackers have broken into government databases. While violation of the Privacy Act is a crime, rarely is anyone prosecuted for it, though IRS personnel can be fired if caught.

PLUG: The Law Offices Of Jeffrey B. Kahn will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the KahnTaxLaw Radio Show when you call to make an appointment. Call our 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.

Well we are reaching the end of our show.

You can reach out to me on Twitter at kahntaxlaw. You can also send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com. That’s k-a-h-n tax law.com.

Have a great day everyone!

London Mayor Refuses To Pay U.S. Tax Bill

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London Mayor Boris Johnson is being pursued by U.S. tax officials while his former New York counterpart Michael Bloomberg was given an honorary knighthood by Queen Elizabeth last month.

Beware As The U.S. Tax Net Closes On Thousands Of U.S. Citizens Living Abroad.

The Conservative mayor of London – who was born in New York and holds an American passport – just revealed he is being pursued by the U.S. authorities for an unpaid tax demand. The demand reportedly relates to his first home in the UK, which he said was not subject to capital gains tax in England. According to U.S. tax law all citizens are required to file a tax return and pay U.S. taxes, even those with dual citizenship and those who earned income abroad.

The British Newspaper “The Telegraph” reports the home, in Islington, north London, was bought by Mr. Johnson and his barrister wife in 1999 for £470,000. They sold the house for £1.2million in 2009. As mayor of London, Mr. Johnson earns a salary of £144,000 and on top of that he is paid £250,000 a year for his column in the Telegraph. While in the U.K. he would not have been liable for capital gains tax as residents do not pay it on the sale of their first home, Mr. Johnson could be facing a bill of over £100,000 to the U.S.

U.S. tax laws which are administered by the Internal Revenue Service mandate that if you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad.

Quite simply: Your worldwide income is subject to U.S. income tax, regardless of where you reside.

When questioned in a recent interview on NPR, Mayor Johnson complained that he had been hit with an IRS demand for capital gains tax. He said the U.S. demand related to his first home in the U.K., even though it is not subject to capital gains tax in England. Mr. Johnson thinks it is outrageous to tax U.S. citizens everywhere no matter what. He exclaimed that he hasn’t lived in the U.S. since he was five years old!

Still, U.S. tax law is what it is and the IRS demands its money. Asked whether he would pay the bill, Johnson replied: “No is the answer. I think it’s absolutely outrageous. Why should I? I pay the lion’s share of my tax, I pay my taxes to the full in the U.K. where I live and work.”

Renouncing U.S. Citizenship Is Not The Cure.

A foreign-based person looking to renounce U.S. citizenship is treated as “exiting the U.S.” To exit, you generally must prove five years of U.S. tax compliance, and in some cases you pay an exit tax which is equal to 15% of the value of all your assets! Long-term residents giving up a Green Card can be required to pay the tax too.

Will The IRS Chase Mayor Johnson Down?

Yes and if you are in the same situation the IRS should be coming after you too. We encourage taxpayers who are concerned about their undisclosed offshore accounts to come in voluntarily before learning that the U.S. is investigating the bank or banks where they hold accounts. By then, it will be too late to avoid the new higher penalties under the OVDP of 50% percent – nearly double the regular maximum rate of 27.5%.

Don’t let another deadline slip by. If you have never reported your foreign investments on your U.S. Tax Returns or even if you have already quietly disclosed or in 2012 OVDI, you should seriously consider participating in the IRS’s 2014 Offshore Voluntary Disclosure Program (“OVDP”). Once the IRS contacts you, you cannot get into this program and would be subject to the maximum penalties (civil and criminal) under the tax law. Taxpayers who hire an experienced tax attorney in Offshore Account Voluntary Disclosures should result in avoiding any pitfalls and gaining the maximum benefits conferred by this program.

Protect yourself from excessive fines and possible jail time. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Francisco, San Diego and elsewhere in California qualify you for OVDP.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems, get you in compliance with your FBAR filing obligations, and minimize the chance of any criminal investigation or imposition of civil penalties.

Why You Don’t Mess With California – A Primer On California Tax Collection Actions.

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California is unique in the structure of its tax system. Most States operate under a single tax agency. The Federal government uses a single tax agency called the IRS. But California has three tax agencies! They are the Franchise Tax Board (“FTB”), Board Of Equalization (“BOE”) and the Employment Development Department (“EDD”).

What does FTB cover?

The FTB administers the income tax. This tax applies not only to individuals, but also to sole proprietorships, partnerships, estates, and trusts. In addition, the income “passed through” to individuals by Subchapter S corporations and certain other entities is subject to State Personal Income Taxation. The tax is applied to all sources of income unless specifically excluded, including wages and salaries, interest, dividends, business-related income, and capital gains.

What does BOE cover?

The BOE administers the Sales and Use Tax. The tax in a specific California location has three parts: the state tax rate, the local tax rate and any district tax rate that may be in effect. Sales and Use Tax is the second largest source of tax revenue in California and is assessed at both the state and local levels.

What does EDD cover?

EDD involves payroll taxes which includes all employer paid taxes, State Income Tax Withholding of employees, State Disability Insurance (“SDI”) Taxes and Unemployment Insurance (“UI”) Taxes.

The California Tax Agencies can go way beyond liens and levies to enforce collection and put pressure on taxpayers.

The FTB publishes Top 500 Delinquent Taxpayers (one list for personal and one for corporate). The FTB is required by law to post this information at least twice annually. California Revenue & Taxation Code § 19195.

  • The FTB will notify each taxpayer by certified mail 30 days before they post their information.
  • As cases are resolved, those taxpayers are removed from the list, reducing the total number of listings from the original 500.
  • Your occupational and professional licenses, Including your driver license may be suspended under Business and Professions Code §494.5.
  • State agencies will not enter into contracts for the acquisition of goods and services with you under Public Contract Code §10295.4.

The BOE will revoke your seller’s permit. If your seller’s permit is revoked, you cannot sell your goods. Also, as a corporate director, officer, member, manager, or other person having control or supervision of the filing of returns or payments of taxes, you may become personally liable for any unpaid sales and use taxes, interest, and penalties. Such personal liability for any unpaid taxes and interest and penalties on those taxes is triggered upon termination, dissolution, or abandonment of a corporate business or limited liability company, any officer, member, manager, or other person having control or supervision of, or who is charged with the responsibility for the filing of returns or the payment of tax, or who is under a duty to act for the corporation or limited liability company in complying with any requirement of this part. Section 6829 of the Revenue and Taxation Code.

The IRS has the Trust Fund Recovery Penalty (also known as the 100-percent penalty). The EDD has something similar referred to as “CUIC 1735”. But CUIC goes way beyond the IRS’ version. Not only does the EDD assert a full 100-percent exposure of the employees tax withholdings AND the employer’s share of payroll taxes to targeted responsible individuals but also a 10% nonabatable assessment penalty (it should be noted that the IRS version is limited only to the employee’s share of FICA and withheld federal income taxes, roughly 60% of the corporate employer’s overall liability). The two key elements of CUIC 1735 are responsibility and willfulness. The EDD must have both elements before they can make the 100% assessment stick. Any officer, major stockholder, or other person in charge of the affairs of the business can be held responsible. Before the assessment can become final, the targeted responsible person must be given notice, an opportunity for an administrative hearing, and an appeal. If the targeted individual loses his or her administrative hearing and appeal, and does not pay within 10 days after assessment, her or she will be penalized a further 10% pursuant to CUIC 1135.

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. Federal and State Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS and State tax problems to allow you to have a fresh start.

What You Need To Know About Levies By The IRS.

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A Federal Tax Lien just makes sure the IRS eventually gets paid. A levy means now the IRS gets paid.

A levy is a legal seizure of your property to satisfy a tax debt. Levies are different from liens. A lien is a claim used as security for the tax debt, while a levy actually takes the property to satisfy the tax debt.

If you do not pay your taxes (or make arrangements to settle your debt), the IRS may seize and sell any type of real or personal property that you own or have an interest in.

For instance,

  • The IRS could seize and sell property that you hold (such as your car, boat, or house), or
  • The IRS could levy property that is yours but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions).

What due process must IRS follow before they can levy?

The IRS will levy only after these three requirements are met:

  • The IRS assessed the tax and sent you a Notice and Demand for Payment;
  • You neglected or refused to pay the tax; and
  • The IRS sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. The IRS will give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested.

The Final Notice of Intent to Levy and Notice of Your Right to A Hearing is your last warning before the IRS starts levy action. You do not want to ignore this notice.

Difference between a bank levy and a wage levy.

If the IRS levies your bank account, your bank must hold funds you have on deposit, up to the amount you owe, for 21 days. This holding period allows time to resolve any issues about account ownership. After 21 days, the bank must send the money plus interest, if it applies, to the IRS.

If the IRS levies your wages, salary, federal payments or state refunds, the levy will end when:

  • The levy is released,
  • You pay your tax debt, or
  • The time expires for legally collecting the tax.

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. If you are in danger of wage garnishments or bank levies or having a tax lien placed against your property, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

The Power Of The Federal Tax Lien.

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A lot of people get confused between Tax Liens and Tax Levies – let us break this down for you.

A lien is not a levy. A lien secures the government’s interest in your property when you don’t pay your tax debt. A levy actually takes the property to pay the tax debt. If you don’t pay or make arrangements to settle your tax debt, the IRS can levy, seize and sell any type of real or personal property that you own or have an interest in.

When would the IRS file a Federal Tax Lien?

The IRS will file a lien when the agency feels there is a chance that collection is in peril. It does not just grab your assets. Filing of a tax lien is normally dictated by the dollar amount; the IRS’s Fresh Start program has increased the lien threshold from $5,000 to $10,000.

The Notice of Federal Tax Lien is filed in the public records office of each county where you own property and thus attaches to any property you own. If you sell the property, proceeds will be used to satisfy the lien. Any person or company pulling a credit report on you will see the tax lien. This will damage your borrowing ability, making it difficult to refinance your home, get an auto loan, credit card, or business loan. Also, if you are looking to refinance your loan, the lien would have to be satisfied at closing in order for the lender in the new loan to retain a senior creditor’s position.

Alternatively, a new lender should be willing to make the new loan where the IRS agrees to subordinate its lien. A taxpayer can request that the IRS subordinate their lien to the new lender. In the process, even though the tax lien would be older than the new loan, the IRS agrees to stand behind the new lender should the loan be defaulted and the new lender now seeks to foreclose on the property.

Federal Tax Liens Do not Necessarily Have To Remain In Place While You Are Under A Payment Plan.

It is true that certain taxpayers who enter into payment plans with the IRS can get tax liens withdrawn even before the liability is paid in full. You must enter into a Direct Debit installment agreement and also meet the following to request that the Federal Tax Lien be withdrawn:

  1. The current amount you owe must be $50,000 or less;
  2. If you owe more than $50,000, you may pay down the balance to $50,000 prior to requesting the lien withdrawal to be eligible;
  3. Your Direct Debit Installment Agreement must full pay the amount you owe within 60 months or before the Collection Statute expires, whichever is earlier;
  4. You must be in full compliance with other filing and payment requirements;
  5. You must have made three consecutive direct debit payments;
  6. You cannot have previously received a lien withdrawal for the same taxes unless the withdrawal was for an improper filing of the lien; and
  7. You cannot have defaulted on your current, or any previous, direct debit installment agreement.

An existing installment agreement not structured as a Direct Debit Installment Agreement can be converted so that you can now qualify for this relief for lien withdrawal. Bear in mind that if you default on your Direct Debit Installment Agreement after the lien is withdrawn, a new notice of lien may be filed and collection efforts may resume.

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. If you are in danger of wage garnishments or bank levies or having a tax lien placed against your property, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.