IRS Agrees To Hold Off Denying Passport Privileges For Certain Taxpayers

IRS Agrees To Hold Off Denying Passport Privileges For Certain Taxpayers

Taxpayers who are seriously behind on their taxes to the IRS are putting their passports in jeopardy!

Fixing America’s Surface Transportation Act

Under section 32101 of the Fixing America’s Surface Transportation Act (“FAST Act”), signed into law in December 2015, the IRS is required to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt (currently more than $52,000 and meeting certain other requirements under Internal Revenue Code § 7345(b)). Also see Notice 2018-1. The FAST Act also requires the State Department to deny their passport application or deny renewal of their passport. In some cases, the State Department may revoke their passport.

Which Taxpayers Are Impacted By The FAST Act?

Taxpayers affected by this law are those with a “seriously delinquent tax debt”.  A taxpayer with a “seriously delinquent tax debt” is generally someone who owes the IRS more than $52,000 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired or the IRS has issued a levy.

The IRS already began certifying certain taxpayers in phases and will continue certifying all seriously delinquent individual taxpayer accounts. The IRS will send a Notice CP 508C to your last known address at the time it certifies your seriously delinquent tax debt to the State Department.

How Can Taxpayers Avoid Notification To The State Department?

There are several ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. They include the following:

  • Paying the tax debt in full
  • Paying the tax debt timely under an approved installment agreement,
  • Paying the tax debt timely under an accepted offer in compromise,
  • Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice,
  • Having requested or have a pending collection due process appeal with a levy, or
  • Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

Taxpayers Not At Risk For Loosing Passport Privileges.

A passport will not be at risk under this program for any taxpayer: 

  • Who is in bankruptcy,
  • Who is identified by the IRS as a victim of tax-related identity theft,
  • Whose account the IRS has determined is currently not collectible due to hardship,
  • Who is located within a federally declared disaster area,
  • Who has a request pending with the IRS for an installment agreement,
  • Who has a pending offer in compromise with the IRS, or
  • Who has an IRS accepted adjustment that will satisfy the debt in full.

Also for taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the individual’s passport is not subject to denial during this time.

Additionally, as reported on September 3, 2019 in a blog put out by the National Office Of The Taxpayer Advocate (“TA”), the IRS recently agreed to temporarily exclude taxpayers with cases with the TA from passport certification and to reverse certifications for TA taxpayers who were certified before coming to the TA.

Timeframe And Process To Get IRS Clearance For Passport Renewal Or Application

When a taxpayer applies for a passport (either original issuance or renewal), the State Department, in general, will provide the applicant with 90 days to resolve their tax delinquency with the IRS before denying the application. If a taxpayer needs their passport to travel within those 90 days, the taxpayer must contact the IRS and resolve the matter within 45 days from the date of application so that the IRS has adequate time to notify the State Department.

The remedy for a taxpayer who believes that a certification to the State Department of a tax delinquency is erroneous or that the IRS incorrectly failed to reverse a certification because the tax debt is either fully satisfied or ceases to be a “seriously delinquent tax debt”, is to file an action in Federal District Court. However, taxpayers in this situation may be able to reach resolution within the IRS with the assistance of qualified tax counsel and thus avoid the delay and expense of bringing an action in Federal District Court.

What Should You Do?

If you have outstanding liabilities with the IRS or any State Tax Agency, protect yourself and preserve your right to travel 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 Orange County (Irvine), the San Francisco Bay Area (including San Jose and Walnut Creek) and elsewhere in California are highly skilled in handling tax matters and can effectively represent you 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. Additionally, if you are involved in cannabis, check out what a cannabis tax attorney can do for you.

What You Need To Know If You Received IRS Notice LT16 To Prevent An IRS Levy.

What You Need To Know If You Received IRS Notice LT16 To Prevent An IRS Levy.

Getting a notice in the mail from IRS usually causes much anxiety. After all the IRS has the power on its own to implement enforcement action which can include seizing your assets or wages. Enforcement action could also include the filing of a notice of federal tax lien, which could affect your credit score and ability to borrow.

What Is So Special About IRS Notice LT16?

Look for the code or letter type in the upper right corner on the first page of your IRS Notice. If it shows that this a Notice LT16, keep in mind that there is not an IRS agent likely assigned to your case. It actually is a notice generated automatically by the IRS computers. Any immediate levy action is determined by the success of the IRS computer in trying to find information about your income from any W2 and 1099 information that has been reported by third parties.  Alternatively, your case could be assigned to a Revenue Officer who could promptly commence with enforcement action. Revenue Officers are the highest level IRS collection agents, work in your locale, and often start a collection case investigation by making a visit to your home or office.

What you need to do to avoid enforcement action:

  • Read your notice carefully: Following the instructions on your notice may stop enforcement action.
  • File missing tax returns (if any): If your notice indicates you have missing tax returns, file the missing returns as soon as possible.
  • If you can pay the unpaid balance in full, make payment: Interest and applicable penalties will stop being added as soon as you pay your balance in full.
  • If you cannot pay the full amount due: Pay as much as you can now and set up an installment agreement for the remaining balance. You must be current on your filings in order to apply for an installment agreement.

If you already have an approved installment agreement, then continue making payments per that agreement. Payments on your balance can take up to 21 days to post on your account so if you paid your balance in full within the last 21 days, you should be able to disregard the LT16 you received.

If You Cannot Pay in Full Now

Paying what you can now will reduce the amount of interest and applicable penalties added to the remaining balance in the future; however, it will not stop the IRS from taking enforcement action unless a formal plan is put in place. It would be in your best interest to first meet with a tax attorney to determine whether there are any further benefits to pay selected IRS liabilities and/or making a down payment that will bring the total balance owed to a level that qualifies for any one of the special programs offered by the IRS.

If You Are Experiencing A Financial Hardship

In some circumstances you may qualify for a status with IRS of marking your account as “currently not collectible” thus temporarily delaying collection action until your financial condition improves. Putting your account in currently not collectible status does not stop penalties and interest from being charged and it does not mean the debt goes away; it means the IRS has determined you cannot afford to pay any of the debt at this time. Because at some point in the future the IRS could resurrect collection action, many taxpayers prefer to seek permanent relief. An Offer In Compromise allows you to settle your tax debt for less than the full amount you owe. This may be a legitimate option if you cannot pay your full tax liability, or doing so creates a financial hardship. It would be in your best interest to meet with a tax attorney to determine whether you qualify as the IRS makes it very difficult for taxpayers to successfully get approval of an Offer In Compromise.

Penalties And Interest

The IRS charges penalties on your account when you do not pay your tax in full by the return due date (usually April 15), or if you’ve not made sufficient estimated tax payments (if required). Interest on the total amount you owe generally begins being charged daily from the return due date. If you do not pay in full (even if you have a pending or approved installment agreement) by the payment due date specified in any notice issued to you, additional interest and applicable penalties will continue to be added until you pay your balance in full. You may qualify for relief from penalties if you made an effort to comply with the requirements of the law, but were unable to meet your tax obligations, due to circumstances beyond your control. The IRS refers to this as having “reasonable cause”. It would be in your best interest to meet with a tax attorney to determine whether you qualify as the IRS makes it very difficult for taxpayers to successfully get abatement of penalties.

Your Appeal Rights

If the tax balance is in doubt, you dispute the amount of the tax, or cannot resolve a disagreement with the IRS, generally you are entitled to a hearing with the Office of Appeals. It is important that you take advantage of this option as your situation can then be evaluated by a Settlement Officer who is independent of IRS Collections. Knowing how to best present such cases in appeal, we have much success in reaching resolution with this Office. Since there is a short window to file an appeal (usually 30 days from the date of the Notice LT16), it would be in your best interest to meet with a tax attorney as soon as possible.

What Should You Do?

You should think of the IRS Notice LT16 as a heads-up that the IRS is getting ready to start collection enforcement and that during this period before that action starts you get proactive to come up with plan 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 Orange County (Irvine), San Diego County (Carlsbad) 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. And if you are involved in cannabis, check out what a cannabis tax attorney can do for you.

Beware That Divorce Or Separation May Have An Effect On Your Taxes

Beware That Divorce Or Separation May Have An Effect On Your Taxes

Taxpayers should be aware of tax law changes related to alimony and separation payments. These payments are made after a divorce or separation. The Tax Cuts and Jobs Act changed the rules around them, which will affect certain taxpayers when they file their 2019 tax returns next year.

Old Law Still Applies To Agreements Executed On Or Before December 31, 2018.

Alimony paid to a spouse or a former spouse under a divorce or separation instrument (including a divorce decree, a separate maintenance decree, or a written separation agreement) may be alimony for federal tax purposes. Alimony is deductible by the payer spouse, and the recipient spouse must include it in income.

Alimony Requirements

A payment is alimony only if all the following requirements are met:

  • The spouses don’t file a joint return with each other;
  • The payment is in cash (including checks or money orders);
  • The payment is to or for a spouse or a former spouse made under a divorce or separation instrument;
  • The divorce or separation instrument doesn’t designate the payment as not alimony;
  • The spouses aren’t members of the same household when the payment is made (This requirement applies only if the spouses are legally separated under a decree of divorce or of separate maintenance.);
  • There’s no liability to make the payment (in cash or property) after the death of the recipient spouse; and
  • The payment isn’t treated as child support or a property settlement.

Alimony doesn’t include:

  • Child support,
  • Noncash property settlements, whether in a lump-sum or installments,
  • Payments that are your spouse’s part of community property income,
  • Payments to keep up the payer’s property,
  • Use of the payer’s property, or
  • Voluntary payments (that is, payments not required by a divorce or separation instrument).

New Law Applies To Agreements Executed On Or After January 1, 2019 And Certain Pre-2019 Agreements modified after 2018.

The new law relates to payments under a divorce or separation agreement. This includes divorce decrees, separate maintenance decrees and written separation agreements.

Beginning January 1, 2019, alimony or separate maintenance payments are not deductible from the income of the payer spouse, or includable in the income of the receiving spouse, if made under a divorce or separation agreement executed after December 31, 2018. 

If an agreement was executed on or before December 31, 2018 and then modified after that date, the new law also applies. The new law applies if the modification does these two things:

    • It changes the terms of the alimony or separate maintenance payments.
    • It specifically says that alimony or separate maintenance payments are not deductible by the payer spouse or includable in the income of the receiving spouse.

Agreements executed on or before December 31, 2018 follow the old law. If an agreement was modified after that date, the agreement still follows the previous law as long as the modifications don’t do what’s described above.

Other Rules That Apply Under Both The Old And New Law

Child support is never deductible and isn’t considered income. Additionally, if a divorce or separation instrument provides for alimony and child support, and the payer spouse pays less than the total required, the payments apply to child support first. Only the remaining amount is considered alimony.

Reporting Alimony

If you paid amounts that are considered alimony, you may deduct from income the amount of alimony you paid whether or not you itemize your deductions. Deduct alimony payments on Form 1040, U.S. Individual Income Tax Return and attach Form 1040 Schedule 1, Additional Income and Adjustments to Income. You must enter the social security number (SSN) or individual taxpayer identification number (ITIN) of the spouse or former spouse receiving the payments or your deduction may be disallowed and you may have to pay a $50 penalty.

If you received amounts that are considered alimony, you must include the amount of alimony you received as income. Report alimony received on Form 1040 Schedule 1 or on Form 1040NR Schedule NEC, U.S. Nonresident Alien Income Tax Return. You must provide your SSN or ITIN to the spouse or former spouse making the payments, otherwise you may have to pay a $50 penalty.

What Should You Do?

If you are involved in a divorce, you need to know where you would stand on taxes whether you are paying or receiving party and avoid any potential tax problems from past or future years. 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 Orange County (Irvine), San Diego County (Carlsbad) 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. And if you are involved in cannabis, check out what a cannabis tax attorney can do for you.

Facts To Know When The IRS Sends A Private Debt Collection Service To Collect On IRS Debt.

Facts To Know When The IRS Sends A Private Debt Collection Service To Collect On IRS Debt.

You would think that with all the fraudulent calls being made by parties presented themselves as working for the IRS to scam taxpayers out of money, the IRS would crackdown on this problem and tighten its reins. But instead the IRS does the opposite and began a new private collection program of certain overdue federal tax debts selecting four contractors to implement it.

IRS Using Private Collection Agencies For the Collection Of Outstanding Inactive Tax Receivables

The new program, authorized under a federal law enacted by Congress, enables these designated contractors to collect, on the government’s behalf, outstanding inactive tax receivables. Authorized under a federal law enacted by Congress in December 2015, Section 32102 of the Fixing America’s Surface Transportation Act (“FAST Act”) requires the IRS to use private collection agencies for the collection of outstanding inactive tax receivables. As a condition of receiving a contract, these agencies must respect taxpayer rights including, among other things, abiding by the consumer protection provisions of the Fair Debt Collection Practices Act.

This is not the first time that Congress has authorized the IRS to out-source its collection functions and each time the IRS has tried to out-source collections they have failed miserably. After all the IRS is the most powerful debt collector in that without formal court action can quickly file tax liens and levy your accounts and garnish your sources of income without any consideration of how much you need to pay bills or obligations.

So this time the IRS says that the type of taxpayer accounts that will be turned over to private collection are those where taxpayers owe money but the IRS is no longer actively working their accounts. Several factors contribute to the IRS assigning these accounts to private collection agencies, including older, overdue tax accounts or lack of resources preventing the IRS from working the cases. So if the really difficult accounts are being turned over for private collection, what tactics do you think that private collectors may take to secure payment from taxpayers and how are taxpayers supposed to know they are dealing with an authorized contacted agent versus a scam artist?

The IRS says it will do everything it can to help taxpayers avoid confusion and understand their rights and tax responsibilities, particularly in light of continual phone scams where callers impersonate IRS agents and request immediate payment. So the IRS will give each taxpayer and their representative written notice that their account is being transferred to a private collection agency. The IRS will then send a second, separate letter to the taxpayer and their representative confirming this transfer. Private collection agencies will be able to identify themselves as contractors of the IRS collecting taxes.

Employees of these collection agencies must follow the provisions of the Fair Debt Collection Practices Act and must be courteous and respect taxpayer rights. Furthermore, private collection agencies will not ask for payment on a prepaid debit card. Taxpayers will also be informed about electronic payment options for taxpayers on IRS.gov/Pay Your Tax Bill. Private collection agencies will not ask for payment on a prepaid debit, iTunes or gift card. Taxpayers will be informed about electronic payment options for taxpayers on IRS.gov/Pay Your Tax Bill. Payment by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency.

Authorized Private Collection Agencies

The IRS has selected the following contractors to carry out this program:

  • CBE
    P.O. Box 2217
    Waterloo, IA 50704
    1-800-910-5837
  • ConServe
    P.O. Box 307
    Fairport, NY 14450-0307
    1-844-853-4875
  • Performant
    P.O. Box 9045
    Pleasanton CA 94566-9045
    1-844-807-9367
  • Pioneer
    PO Box 500
    Horseheads, NY 14845
    1-800-448-3531

Taxpayer Accounts Not Assigned To Private Collection Agencies

The IRS will not assign accounts to private collection agencies involving taxpayers who are:

  • Deceased
  • Under the age of 18
  • In designated combat zones
  • Victims of tax-related identity theft
  • Currently under examination, litigation, criminal investigation or levy
  • Subject to pending or active offers in compromise
  • Subject to an installment agreement
  • Subject to a right of appeal
  • Classified as innocent spouse cases
  • In presidentially declared disaster areas and requesting relief from collection

Private collection agencies will return accounts to the IRS if taxpayers and their accounts fall into any of these 10 situations after assignment to the private collection agencies. 

Opting Out Of Private Collection Agencies

If you do not wish to work with the assigned private collection agency to settle your overdue tax account, you must submit a request in writing to the private collection agency.

What Should You Do?

While I am skeptical that the outcome of this program will be any different than previous collection out-sourcing programs, we see it as an opportunity to provide taxpayers with a chance for a better resolution than what the IRS could offer. The tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), San Francisco Bay Area (including San Jose and Walnut Creek) and elsewhere in California know exactly what to say and how to handle issues with the IRS as well as State Tax Agencies.  Our experience and expertise not only levels the playing field but also puts you in the driver’s seat as we take full control of resolving your tax problems. Also, if you are involved in cannabis, check out what our cannabis tax attorney can do for you.

Warning: State Department May Deny Passport Renewals And Applications If You Owe The IRS

Taxpayers who are seriously behind on their taxes to the IRS are putting their passports in jeopardy!

Fixing America’s Surface Transportation Act

Under the Fixing America’s Surface Transportation Act (“FAST Act”), signed into law in December 2015, the IRS is required to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt. See Notice 2018-1. The FAST Act also requires the State Department to deny their passport application or deny renewal of their passport. In some cases, the State Department may revoke their passport.

Which Taxpayers Are Impacted By The FAST Act?

Taxpayers affected by this law are those with a “seriously delinquent tax debt”.  A taxpayer with a “seriously delinquent tax debt” is generally someone who owes the IRS more than $51,000.00 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired or the IRS has issued a levy. The IRS announced that it is implementing this provision in the law staring January 2018.

How Can Taxpayers Avoid Notification To The State Department?

There are several ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. They include the following:

  • Paying the tax debt in full
  • Paying the tax debt timely under an approved installment agreement,
  • Paying the tax debt timely under an accepted offer in compromise,
  • Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice,
  • Having requested or have a pending collection due process appeal with a levy, or
  • Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

Taxpayers Not At Risk For Loosing Passport Privileges.

A passport will not be at risk under this program for any taxpayer: 

  • Who is in bankruptcy,
  • Who is identified by the IRS as a victim of tax-related identity theft,
  • Whose account the IRS has determined is currently not collectible due to hardship,
  • Who is located within a federally declared disaster area,
  • Who has a request pending with the IRS for an installment agreement,
  • Who has a pending offer in compromise with the IRS, or
  • Who has an IRS accepted adjustment that will satisfy the debt in full.

Also for taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the individual’s passport is not subject to denial during this time.

Timeframe And Process To Get IRS Clearance For Passport Renewal Or Application

When a taxpayer applies for a passport (either original issuance or renewal), the State Department, in general, will provide the applicant with 90 days to resolve their tax delinquency with the IRS before denying the application. If a taxpayer needs their passport to travel within those 90 days, the taxpayer must contact the IRS and resolve the matter within 45 days from the date of application so that the IRS has adequate time to notify the State Department.

The remedy for a taxpayer who believes that a certification to the State Department of a tax delinquency is erroneous or that the IRS incorrectly failed to reverse a certification because the tax debt is either fully satisfied or ceases to be a “seriously delinquent tax debt”, is to file an action in Federal District Court. However, taxpayers in this situation may be able to reach resolution within the IRS with the assistance of qualified tax counsel and thus avoid the delay and expense of bringing an action in Federal District Court.

What Should You Do?

If you have outstanding liabilities with the IRS or any State Tax Agency, protect yourself and preserve your right to travel 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 Orange County (Irvine), Walnut Creek and elsewhere in California are highly skilled in handling tax matters and can effectively represent you 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.

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

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.

How The IRS Can Make Your Business A Statistic

The Collection Division of the IRS composes of Revenue Officers whose job is to collect outstanding IRS liabilities from taxpayers as quick as possible. These Revenue Officers have access to intelligence collected by other divisions of the IRS and they will scope out your financial moves, and garnish your wages and other sources of income, and seize houses, cars and bank accounts.

The most common sort of collection case involves a small business that has fallen behind in payment of withholding taxes. A Revenue Officer’s inventory is brimming with cases like these. Revenue Officers are told to go out and use a firm enforcement image in collecting the outstanding IRS liabilities and also be mindful of statistics compiled by the IRS to measure the Revenue Officer’s effectiveness. The IRS will maintain statistics on seizures of property, levies conducted and case status including the shut-down of a business. So when a business continues to ignore the IRS or the business is not paying its liabilities as quick as the Revenue Officer would like to see, that Revenue Officer will now change his stance from collecting the tax to making the business a statistic by shutting it down.

Feuer Trucking Company Shut Down

If you think I’m exaggerating, listen to this true story of how the Feuer Trucking Company of Yonkers, New York, was closed by IRS agents. Two and a half years ago prior, Feuer’s owner admitted to his employees that the company was hauling more red ink than anything else. Feuer was two million dollars in debt – and half a million of that was owed in back taxes to the IRS. The taxes plus the heavy interest payments marked Feuer for bankruptcy.

To save their jobs, many of the employees got together and offered the owner $25,000 for the company. The owner accepted. Feuer Trucking began repaying its debts both to its creditors and to the IRS, negotiating installment payments of $3,000 a week to pay off back taxes while it continued to pay current taxes. But because of the high interest rates and penalties the IRS was charging on the old taxes – 26% – the IRS debt was growing faster than Feuer could pay it off. It passed $800,000.

Just before Christmas the IRS struck. Revenue Officer Donald Raftery seized the $60,000 in Feuer’s bank account, and notified Feuer’s customers to pay their bills not to Feuer, but directly to the IRS. He also demanded a down payment of $400,000 on back taxes. Feuer didn’t have it. So the next day a squad of IRS officers backed up by a small army of U.S. marshals, swooped down on Feuer. Pay up the $851,000 in back taxes, the officers barked, or we will seize and sell everything. Of course, Feuer still didn’t have the money, so the IRS Revenue Officer tagged everything in the office for seizure – including desks, computers and file cabinets.

Feuer’s office manager confronted Revenue Officer Raftery. “Mr. Raftery, do you recall in July that I told you what we were worth? I spelled it all out to you in black and white on paper?” Raftery agreed that he knew that Feuer, which leases its trucks and building, had less than 10% of the $851,000 in assets.” The office manager then inquired, ‘Why did you take this action?”. But the office manager did not get a response back from the Revenue Officer who just shrugged his shoulders.

The IRS eventually returned Feuer’s computers and desks, but kept the $60,000 it had seized from the bank account. Even more devastating to Feuer, the IRS did not return its Interstate Commerce Commission license to operate. Without a license, the trucks couldn’t legally go anywhere. Feuer was out of business. The IRS had shut down a company that was paying current taxes and paying its employees. Fifty workers were added to the unemployment dole.

No matter how you add it up, you would think that the government is losing by closing the company down.

You would think that this headline report on the blind-siding of Feuer was a shocking expose of an IRS action that turned fifty taxpayers into welfare cases. But the Feuer case is not a story in which an IRS agent has careened out of control or the bureaucracy has mistakenly made a seizure that is not cost-effective for the government. In fact, the IRS never makes calculations of whether closing down a firm will add or subtract from the Treasury’s balance.

The Revenue Officers of the IRS Collection Division are among the most powerful people in government. Ten days after demanding payment the IRS can seize a taxpayer’s house, car, land, or business for subsequent sale at public auction. They can serve a levy on a third party, such as a bank, an employer, or anyone who owes the taxpayer money. If they suspect you might skip town without paying they can seize right away. All of this can be done without a court order. And if they so desire they can file a Notice of Federal Tax Lien at the local courthouse, which freezes a taxpayer’s title to property and puts the IRS at the head of the line of creditors.

It is highly unlikely that Revenue Officer Donald Raftery when he shut down Feuer Trucking Company got in hot water with his bosses. They probably toasted him with champagne. Besides generating all that good publicity for the IRS, Raftery racked up some marvelous statistics. He seized a bank account, tagged property, shut a business down, and closed the case. I guarantee that the Feuer case had been a thorn in the side of the local IRS office. Group managers hate over-age cases like the Feuer case. They have to regularly file reports on why they continue to carry them in their inventory and send those reports up the chain of command. This makes the chain of command very angry because an over-age case is not a nice clean statistic they can file to show what a good job they are doing – and what’s worse is an over-age case implies that the network has gone soft. So the word goes out to close cases and build statistics.

The IRS is a law unto itself.

Everything the IRS did to Feuer is legal and the shutting down of Feuer Trucking Company was completely consistent with IRS policy. This report was not a mortal blow against the IRS by unveiling its tactics against Feuer Trucking. Instead, you should think of the report as free publicity for the IRS, opportunely placed just after the week most folks got their W-2’s in the mail and started to look their 1040’s over. The message is this: The IRS is a law unto itself. Watch out!

Not every taxpayer is treated equally by the IRS. Each group manager is allowed incredible latitude in interpreting the collection manual, a freedom that gives rise to cavalier and arbitrary methods of enforcement. The IRS looks like an unbeatable army, with intelligence divisions scoping out your financial moves, cracking troops of auditors probing your returns for weaknesses, and a corps of revenue officers winning the property battle by seizing houses, cars, and bank accounts. It should be no surprise that some of the best Revenue Officers have spent time in military service.

The IRS Revenue Officer typically shows up to a taxpayer’s home or place of business when the taxpayer is in debt to the IRS. This Revenue Officer will also make a personal visit to a taxpayer’s home or place of business in tax cases where a taxpayer owes the IRS employment taxes. The IRS Agent who comes to a taxpayer’s home or place of business is not making the personal visit to take a taxpayer satisfaction survey. The sole purpose is to collect money for the IRS. Regardless of how civil and pleasant the Revenue Officer initially appears to be – remember they are not there to be your friend – they want your money.

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

Protect yourself. If you have outstanding liabilities with the IRS or any State Tax Agency, stand up to them 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.

Is Social Security Taxable?

A classic case of the government giveth and the government taketh away.

One of the most common web-search phrases entered is this: “Is social security taxable”? The answer: It all depends on your income and filing status. If you file taxes as an individual and your combined income — that’s your adjusted gross income plus one half of your annual Social Security benefit — is less than $25,000, you won’t pay federal income taxes on your benefits.

But once you get past that $25,000 mark, that’s when you start seeing taxes. People who earn between $25,000 and $34,000 could have up to half of their benefits taxed, and people who earn more than $34,000 could see up to 85% of their benefits taxed.

Things are slightly different if you’re married. Married couples with a combined income of less than $32,000 won’t see their benefits taxed at all.

What If You Owe The IRS?

The Federal Payment Levy Program (“FPLP”) allows the IRS to levy 15% of your Social Security benefit payments to pay your delinquent tax debt. Mind you that the gross amount of the benefits is still considered as potentially taxable by the IRS.

Before your Social Security benefits are included in the FPLP, the IRS will send you a Final Notice Of Intent To Levy. This notice is only issued once and provides valuable appeals rights. You have 30 days from the date of this notice to make arrangements to pay your tax debt before the IRS will begin deducting 15% from your monthly benefit.

Keep in mind that the IRS is not just limited to levying social security benefits but can levy other sources of income, issue bank levies and file tax liens. Remember the IRS wants to collect its money as quick as possible.

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. 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. You do not want to ignore this notice.

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 and your State Tax Agency 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.