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STRATEGIC TAX LAWYERS:  TAX BLOG

Information on Offers in Compromise

Friday, January 2, 2015
The IRS has recently released procedures that provide rules to appeals the mediation process for Offer in Compromise (OIC). The Internal Revenue Service initiated the mediation process for OIC appeals years ago as a pilot program.   The IRS offers OIC as a way for taxpayers with a tax debt that needs to be settled.  The OIC process can help taxpayers that are financially distressed with a way or compromise to make a payment for the tax debt for an amount less than what is originally owed to the IRS.  An OIC is an option for taxpayers who cannot afford to pay their complete tax bill or if the amount they need to pay creates a financial hardship. There are certain guidelines for which taxpayers can qualify for an OIC. In general, the amount offered should be based on a taxpayer’s finances and the IRS will then assess the taxpayer’s income and assets to identify what a reasonable tax obligation will be.  In worst cases, the IRS will deny an OIC if a taxpayer can make a more significant payment than what was offered.  In order to qualify for an Offer in Compromise, a taxpayer should be current with their federal tax return status and they need to submit the all tax payments.  If the IRS approves the OIC, then there are also payment plan options for the taxpayer.  The IRS website offers an online OIC Pre-Qualifier tool, a newer form, to determine eligibility, but the fee is $186 to apply.  Many times, an Offer in Compromise lawyer can assist with the process.

The IRS mediation process for post-appeals is now available for taxpayers to help them to resolve tax disputes if they had unsuccessful negotiations with the IRS appeals office.  Mediation is available for appeals that are both factual and legal. The goal of mediation is to provide assistance to taxpayers that are attempting to reach an agreement with the IRS.  Offer in Compromise lawyers and experts say that the mediator will not necessarily have settlement authority.  There are Appeals Officers who are trained in mediation appeal processes that can serve as mediators, which is of no cost to the taxpayers, or they can opt to pay for a non-IRS mediator.   The IRS Appeals Office or taxpayers are able to request to have a nonbinding mediation if their case is eligible.  However, the taxpayer can decline the IRS Appeals Office request for a mediation process. The Offer in Compromise mediation process should be complete within 90 days the request has been approved, say Offer in Compromise lawyers and specialists.

If you or someone you has a tax debt that needs to be resolved, you may be eligible for an Offer in Compromise. You will want the Strategic Tax Lawyers, LLP on your side since they are Offer in Compromise lawyers.  Contact the reliable Los Angeles Offer in Compromise attorneys at the Strategic Tax Lawyers, LLP for a free consultation at (800) 669-4775.


Information about Tax Liens from Tax lawyer firm

Wednesday, December 31, 2014
Do you owe the IRS money from your past federal income taxes?  If you are past due on the taxes you owe the IRS, then the IRS can and will file a tax lien against your property.  Having a lien against your home can make selling or refinancing a complicated matter, says a Los Angeles tax attorney from the Strategic Tax Lawyer Firm.   In addition, the Los Angeles tax attorney relates that the IRS will send you an official Notice of Federal Tax Lien, if you owe over $5,000 to the IRS.  The lien means that the feds now have a legal claim to your assets, such as your home, in return for the tax liability that you owe them.  In general, federal tax liens will issue a tax lien if they believe it will be challenging to collect the delinquent tax liability within 10 years, which is the statute of limitations for paying the tax debt.

The Los Angeles tax attorney confirms that a tax lien is filed after the IRS assesses the debt due and they will issue an official notice which demands payment.  If within ten days you do not make a payment, then a tax lien is filed. However, if you receive a tax lien on your home, it does not necessarily mean that you will be forced to sell your home or that your house will be taken over by the federal government.  It does mean that if you choose to sell the property, then IRS can take their share from the proceeds of the sale in order to satisfy your debt.  Also, if refinancing is on the books, the IRS could subordinate the lien if the equity will be used to pay down your tax bill. The only issue is the tax lien could make it hard to qualify for refinancing. Also, a federal tax lien is a mark on your credit for seven years after the amount is paid which affects credit scores, states the Los Angeles tax attorney.

The Los Angeles tax attorney recommends the program that IRS created, called the Fresh Start program. With the Fresh Start program, taxpayers can request to have the lien withdrawn after it is paid off.  This is done by completing a form and sending all the information to the credit bureaus.  Then the credit bureaus will delete it from the file and it won’t appear on the credit report.

To eliminate a tax lien, you should sell your home before an official federal tax lien is filed by the IRS. If you sell the property, you would gain the equity through the proceeds of the sale to pay your tax liability.  But, if there are no proceeds meaning no equity, then the IRS can release the lien or accept partial payment for the tax debt.  Other options include paying the full amount of the tax bill so that the IRS releases the lien, recommends the Los Angeles tax attorney.  You can also negotiate an installment plan if you owe under $50,000 and you enter into an installment plan with the IRS, you can get your tax lien withdrawn.  

There are options that taxpayers have if they receive a Notice of a Federal Tax Lien with the help of a qualified tax attoreny. If you are looking for a reliable Los Angeles tax attorney to assist with your federal tax lien, consider contacting the Strategic Tax Lawyers, LLP for a free consultation. Call the Strategic Tax Lawyers at (800) 669-4775.


Cheating on Taxes Cost Over $1 Billion for Taxpayers

Friday, December 26, 2014
Investment Company, the Vanguard Group which was launched in 1975 by John C. Bogle, has become one of the largest investment companies around the globe, with a portfolio of nearly $3 trillion.  The incredible growth seen at the Vanguard group is allegedly from the illegal manipulation of transfer pricing for the selling of services and goods between companies that are related, in order to lower the costs and taxes.  Although the companies are somewhat related, for tax and legal purposes they are considered separate organizations.  For these kinds of transactions, pricing is purposely kept low under what is considered the fair market value.  Keeping low transfer pricing practices means that they pay less taxes, much lower than their competitors.  This leads to transfer pricing abuse say business tax attorneys at the Strategic Tax Lawyers.

Business tax attorneys have long been dealing with large companies’ claims of transfer pricing abuse in domestic capacities.  Even big time players like Apple and Starbucks have been on the radar of the federal government, but these are different than accusations of shifting income to offshore tax havens, explains the business tax attorney.  The Vanguard Group admit charging at-cost prices for their services to manage investments.  The pricing is below market pricing in order to stay competitive, which is perfectly legal.  However, the Securities and Exchange Commission (SEC) agreed to these transactions for securities purposes, but not for tax purposes, which could be a violation.  The federal and state tax law violations could be costing over $1 billion for taxpayers. The lawsuit posed by a whistle blower, David Danon, a former business tax attorney at Vanguard for approximately five years, alleges that there are uneven tax costs which are not consistent with the costs of their competitors.  Unequal tax costs is a main reason for the Vanguard Groups tremendous growth which has outperformed their competitors.

Danon was aware of the arrangements that the Vanguard Group created for transfer pricing which was concerning when it was related to the corporate income tax returns.  The company was not concerned with Danon’s claims and he was fired.  In 2013, Danon filed a lawsuit against the Vanguard Group in the State of New York, even though the company’s headquarters are in Pennsylvania, but the penalties are only recognized in New York.  Since the case was brought by a third party whistleblower, it was sealed for one year.  A case was also filed with the SEC and IRS.  

The Vanguard Group alleged that Danon improperly accessed information and he illegally used confidential information for the lawsuit.  But these were dismissed since Danon did not conduct any transfer pricing transactions.  If Danon will be successful in his lawsuit, then he could collect a percentage of any New York State taxes that will be collected, saw business tax attorneys.

Although Danon unethically revealed classified client information and did not return these client documents, he claims he acted in tax fairness to let the public know about what the company was doing about transfer pricing practices.


Tax experts - Some Estate Planning Tips for the End of the Year

Monday, December 22, 2014
Tax experts, including tax attorneys say that Individual Retirement Accounts (IRA) are very good way to plan for retirement which plays an important part in your estate planning.  Our tax attorneys are providing you with ways that the IRS recommends saving for retirement.  Here are some important guidelines to follow for the end of the year if you have an IRA or plan on opening an IRA soon.

Tax attorneys recommend knowing the limits, especially when estate planning.  Tax experts recommend contributing up to $5,500 or $6,500 if you over age 50 to an IRA, either Roth traditional.  You and your spouse can both contribute to the IRA even if you are filing a joint return. It does not matter if only one person has an income that is taxable.  When looking to the future and looking out for your family holdings, it may be necessary to decrease the amount you deduct for your traditional IRA contribution if either person in the household is contributing to a work-sponsored retirement plan and you earn an income above a certain amount.  In general, you can contribute to your IRA until you submit your 2014 federal income tax return on April 15, 2015.

Tax attorneys also advise against contributing in excess because you will need to pay a 6% tax on the excess amount over the IRA limits for the year for each year that you exceed the amount.  The good news is that you can avoid paying the tax by taking out the overage from the account before you submit your 2014 federal income tax return.

Also, tax attorneys recommend taking required distributions which will be helpful for your estate planning, especially if you have reached the age of 70½ when you will be required to take minimum distribution from your traditional IRA, not the Roth IRA, by December 31, 2014.  Remember that if you have multiple traditional IRAs, then you need to calculate the minimum distribution for each IRA separately.  In addition, you always have the option of withdrawing the entire amount, but if you neglect to take the minimum distribution in a timely manner, then you will face an excise tax, approximately 50%, on the minimum distribution that you did not withdraw.

Finally, tax attorneys recommend claiming the saver’s credit, also known as the retirement savings contributions credit, to optimize your asset planning.  To qualify for the saver’s credit you need to contribute to a retirement plan or an IRA which can either add to your refund or decrease your tax owed.  

The Strategic Tax Lawyers are staffed with credible tax attorneys and estate planning attorneys who can assist you take care of your estate in order to make sure that your family and loved ones are taken care of. Call the Strategic Tax Lawyers at (800) 669-4775 for a free case consultation.



Can the IRS Control Outside Employment of IRS Employees?

Monday, December 22, 2014

Is it a problem that the IRS cannot control its employees outside business endeavors?  A report released by the IRS’ governing body, TIGTA discovered that the Internal Revenue Service does not have a way to control their outside working activities.  In general, employees need to secure written approval in order to participate in any outside business activities.  California tax attorneys believe that if the IRS would have control over the outside employment of their employees it could greatly reduce conflicts of interest which may result in decisions that may not be in the taxpayer’s best interest.

TIGTA attempted to determine if there were any controls in place to make sure that IRS employees were making requests about outside employment and whether these were recorded and assessed for conflicts of interest with the official duties of IRS employees.  According to the data, there were approximately 3,000 out of over 6,000 full-time IRS employees who had outside employment or business activities in 2011 without getting prior approval as was required.  California tax attorneys agree that this is a large percentage of employees with unapproved outside employment.  Additionally, the IRS is not authorized to identify employees using taxpayer information to investigate those who hold outside employment and collect an income.  Tax data is not meant for this purpose and it would be hard for the IRS to monitor IRS employees outside employment status since over 90% of the records that exist are out of the date range.  California tax attorneys say that it can also be that if employees request approval for outside employment is may not always get officially documented on the database.  This is a logistic matter that can be corrected to eliminate the incomplete guidance.

It is important to improve these guidelines since there are many IRS employees that have conflicts of interest with their outside employment.  For example, an IRS employee was found guilty for accessing taxpayer information in order to conduct his tax and accounting business.  In addition over 40 of the agency’s employees were found guilty of preparing income tax returns for compensation which is prohibited by law according to California tax attorneys.  Also 20 IRS employees were identified having conflicts of interest by receiving income from outside sources without any documented authorization.  California tax attorneys say that receiving outside income could make an impact on how effective the employee is on the job.

Therefore, it was recommended that the IRS create stricter guidance for employees to request outside employment or business authorization to assess whether it is ethical or not and to determine whether there is a conflict of interest.  

If you need a California tax attorney to assist you with any tax-related matter, contact the Strategic Tax Lawyers, LLP for a free consultation. Call the Strategic Tax Lawyers at (800) 669-4775.


Estate Taxes for Artwork

Monday, December 15, 2014
Imagine owning over $35 million in collectable artwork from artists such as Pablo Picasso and Jackson Pollock among a list of modern greats.  A very prominent businessman, James A. Elkins Jr., collected an enviable portfolio of art amassed over the years that was every collector and museum could only dream of.  But that $35 million collection is the dream of the Internal Revenue Service since Mr. Elkins passed away in 2006.  Mr. Elkin’s estate had to pay millions of dollars in taxes for the artwork yet the IRS was not satisfied and mandated another $9 million. This has left the estate planning attorney battling in court ever since.  The main issue is how to value, also known as valuation, the fine art for tax purposes.  

Very often, wealthy businessman amass sizable art collections.  The Elkins family had issued partial ownership of the paintings to their three children.  The artwork was divided into partial shares of groups of paintings, creating fractional ownership, in order to reduce their estate tax bill.  For fractional ownership to work, each year the owner will possess the painting for an amount of time that is equal to their share.

Upon his death, Elkins still owned a 50% share in three pieces of artwork by Picasso, Pollock, and Henry Moore that was estimated to be worth $10.6 million.  He also had a 73% share in 61 other pieces that were worth over $24 million.  Typically, the IRS will allow discounts on the assets, the artwork, for the purposes of estate taxes which amounts to 30% to 50% of what the artwork is estimated to be valued at.  This is done so that the artwork could be sold to other collectors who are not family.

Many wealthy art collectors donate percentages of a painting to a museum in order to have the deduction match their income with the goal of giving 100% of the artwork to the museum.

In this case, the IRS did not want to apply a discount to the artwork so the estate ended up in court. It initially got less than it wanted. Tax court agreed that the discount that the Elkins wanted was too high so a 10% markdown was applied.  The tax court ruled in favor of Elkins by awarding a refund of $14 million to the estate, plus interest and discounts, and reprimanded the IRS for not providing substantial evidence for their position.  This is good news for wealthy families and taxpayers, say estate planning attorneys, yet it may not be as easy for estates to get artwork estate discounts.  Now families with expensive collections could start dividing up artwork in order to receive an estate tax break.

Estate planning attorneys advise their clients with extensive art collections to make sure if they have fractional ownership to place their art collection into a limited liability corporation (LLC) or a family limited partnership. However, this process has additional set-up and administration costs associated with it. Or the owner of the artwork has the option of giving artwork to their family and renting it from them.  It should be understood that valuation of artwork is not easy to appraise since many times the collectors’ passion makes it an emotional value.

Estate planning attorneys can assist you take care of your estate so that your family and loved ones are taken care of. If you are looking for a reliable Los Angeles estate planning attorney consider contacting the Strategic Tax Lawyers, LLP for a free consultation. Call the Strategic Tax Lawyers at (800) 669-4775.


California tax attorneys: The IRS Dilemma with Prisoner Tax Fraud

Monday, December 15, 2014
The Internal Revenue Service is facing a serious problem regarding prisoner tax fraud, specifically refund fraud associated with prisoner Social Security Numbers.  Despite efforts made by the IRS, the problem has escalated with the number of fake tax returns being filed using the Social Security Number of prisoners.  These numbers of fake claims have gone through the roof and increased by more than 37,000 to 137,000 tax returns from 2007 to 2012.  These claims have increased over the years from $166 million to approximately $1 billion.  The California tax attorneys of the Strategic Tax Lawyers have commented that the Treasury Inspector General for Tax Administration, TIGTA, has watched over the IRS to make sure that the agency will increase efforts to decrease and combat prisoner tax fraud.  In addition, the CA tax attorney also feels that this problem can become a larger problem for the state of California, as well as the entire nation if actions are not taken to prevent tax fraud, especially in prisons.

The IRS can hone down on prisoner tax fraud by sharing the relevant prisoner tax return information with prison officials, both federal and state.  In addition, the IRS needs to submit prisoner fraud annual reports to Congress in a timelier manner in order to address the impact of prisoner fraud.   The California tax attorney also agrees with the recommendations of TIGTA to make sure that the IRS is submitting the obligatory annual prison fraud report to Congress in a timely manner.  The CA tax attorney believes that could start making a difference with the problem. Timeliness is not the only issue with the reports.  The IRS also needs to make certain to develop procedures that could identify if tax returns filed have similar information of fraudulent prisoner tax returns.  That way they can decide if those tax returns need to be shared with Congress. In addition, each filed tax return associated with a prisoner Social Security Number needs a prisoner indicator assigned to it.

California tax attorney believes that the IRS will improve its detection of prisoner fraud based on TIGTA’s strong recommendations. Even though the IRS cannot develop certain processes at this time that could identify whether other filed tax returns have the similar information as fake prisoner returns.

An inmate in prison has admitted that he defrauded the IRS out of hundreds of thousands of dollars with fake tax refund claims.  He says there are many inmates who have done the same and it was one of the easiest things he had ever done. The inmates believe that together they stole approximately $4 million over 10 years by claiming tax refunds in the amounts of $3,000 to $6,000 and by using taxpayer’s identifying information, such as names and Social Security Numbers.

The Strategic Tax Lawyers are qualified California tax attorneys that are here to help you if you are charged with tax fraud.  Call (800) 669-4775 to get a free consultation with professional tax attorneys and experts in the field.


Tax Fraud For Not So Happy, Happy’s Pizza

Friday, December 12, 2014
Tax relief lawyers are representing the founders of Happy’s Pizza in Detroit after the founder was charged and found guilty of over 30 tax crimes, including the defrauding of the U.S. government. The chain of over one hundred independently owned restaurants which opened in 1996 are operated throughout the nation.  After over four hours of deliberation, the jury convicted Happy Asker on one count of impede the Internal Revenue Code, three counts of falsifying tax returns and 28 counts of falsifying returns for all the Happy’s Pizza franchises.  In addition, the investigation by the federal government discovered that the owner also cheated on income tax returns and payroll taxes.  Happy Asker now faces a prison sentence of up to five years as well as a monetary fine of $250,000 for attempting to defraud the IRS and government.  

Since 2010, the pizza establishment was under surveillance by the IRS, DEA and ATF with approximately 30 agents uniting to investigate Happy Pizza’s corporate offices. The agents seized all the records that they could find to prove any form of tax fraud.  Two of the agencies did not find any evidence for Happy’s Pizza performing any fraud.  The Internal Revenue Service, however, did find evidence of wrongdoing and they found evidence of the owner of Happy’s Pizza incorrectly or under reporting the businesses’ income of some of the independent franchises.  Only nine of the hundreds of Happy Pizza franchises were targeted.  The evidence found that the owners were defrauding the government from 2004 until 2011.  They took representation from qualified tax relief lawyers to assist with the charges against them.

In court, the prosecutors ascertained that the owners and employees would reduce gross sales and show payroll amounts that were less than the actual amounts.  This under reporting was also done on income tax returns, as well as payroll taxes, for approximately 60 of the franchises in various states.  During the trial, the documents showed that approximately $6 million was redirected from 35 if the Happy’s Pizza franchises.  To add to the deceit, Happy Asker and the franchise owners split the cash profits each week.  Leading up to the trial, Mr. Asker maintained that he did not know the other owners, yet this was proven to be a lie during the trial.  In addition, some of the defendants pleaded guilty to the charges of conspiracy to defraud the government even before the trial began.  They admitted that they kept falsified accounting records and maintained two sets of accounting books, and falsely reported income and payroll taxes to the IRS.  Basically, the owner would provide the tax preparers and the accountants fake income and payroll information.  In addition, employees were paid in cash and declared less money on their own tax returns.  

Contact the Strategic Tax Lawyers who are tax relief lawyers if you have any issues with the Internal Revenue Service regarding tax fraud.  For more information and a free consultation, contact the Strategic Tax Lawyers at (800) 669-4775.  


California Tax Refund Check Cashing Scam

Monday, December 8, 2014
This past Monday a 37-year-old man from Van Nuys, California received a sentenced for a 30 months prison sentence due to laundering over $860,000 he received from a tax-fraud scheme.
In July, a women, Mr. Aharonian, admitted his guilty actions in assisting the scammer with money laundering.  He plead guilty to laundering and cashing approximately 34 third-party checks which totaled over $184,000 which was cashed all at once on one day in September 2012.  During this time he was also involved in a different criminal case.  He was indicted on a total of seven counts of money laundering.  Six of those counts had been dismissed when he agreed to work with prosecutors.  Tax attorneys in Los Angeles say that during a two year period from 2010 to 2012, Aharonian had cashed over $860,000 to scammers who had obtained tax refunds illegally.

The Internal Revenue Service issued tax refunds that were directly deposited into the scammers bank accounts as the conspiracy entailed submitting fraudulent tax returns using the names of actual taxpayers to the IRS.  Then Aharonian admitted to taking blank, signed third-party checks to a fishy check-cashing business which was also known for money laundering and the owners, who have remained unidentified due to another pending case, would request money using Post-it notes.  Court records show that they admitted their guilt to money-laundering charges.

In August 2012, the owners of the money laundering business cooperated with the Internal Revenue Service and the admitted that they worked with three different customers who would bring very large amounts of checks to have cashed at their business, one of which was Aharonian.  Then over the next two months, the investigators were monitoring any correspondence between Aharonian and the owners of the check cashing business.  During that time Aharonian had brought over $700,000 to the check cashing business. In 2010 until 2011 Aharonian was incarcerated and subsequently he was found guilty and convicted for a different scheme where he conspired to commit racketeering in a money laundering and Medicare scam.  The court documents that were filed by Aharonian's tax attorney, said that he amounted to criminal activity because he was financially struggling and was in the United States without a green card.  Post November 2012, Aharonian was out of prison and plans to rebuild his life buy staying out of trouble.  However this was until he was arrested February 2013 for cashing checks and wire fraud.  

Tax attorneys can assist both taxpayers who have been a victim of tax fraud or accused of tax fraud. If you are looking for a reliable Los Angeles tax attorney for assistance regarding an IRS-related tax issue, contact the Strategic Tax Lawyers, LLP to speak to an experienced tax attorney for a free consultation. Call the Strategic Tax Lawyers at (800) 669-4775.


Tax Evasion Situation for Jersey Shore’s The Situation

Monday, December 8, 2014
There is a situation brewing for reality star Mike “The Situation” Sorrentino from the Jersey Shore MTV show.  Mike Sorrentino and his brother were schedule for federal trial for tax fraud and tax evasion on December 2, 2014.  The reality star is used to being in the limelight, but this situation may mean a different kind of limelight with a serious federal felony investigation. Fortunately for the brothers, the trial has been delayed until March 2015.  Currently the brothers are out on $250,000 bail.  This time has allowed them and their taxation attorneys to have more time to strengthen their case against the serious tax fraud charges.

 

Taxation attorneys are currently representing the Sorrentino brothers for filing falsified personal and business and tax returns over three years from 2010 to 2012.  The charges claim that the brothers have avoided paying close to $9 million in income taxes.  The reality star and his brother both face two and three counts, respectively of filing falsified tax returns.  It seems the brothers did not learn from the famous Wesley Snipes tax case where he was charged for falsifying his tax returns.  This charge is more serious than failure to file a tax return, which is a misdemeanor.  Taxation attorneys want taxpayers to understand that when you file falsely, then the charges are more serious, meaning it is a felony.  As taxes are filed yearly, you sign off on your tax returns and if you knowingly sign under penalties of perjury and commit fraud, than the federal government has a felony case against you, explain the taxation attorneys. There have been subpoenas given to the Sorrentino’s business associates for copies of payments, canceled checks and other correspondence to serve as evidence in the trial.

 

Mike Sorrentiono did not file a 2011 tax return after making nearly $2 million. In addition, together, the brothers did not pay their federal income taxes for both their companies, MPS Entertainment and Situation Nation. The brothers even proceeded to write off cars and clothes for their business expenses.  They also put money from their businesses into their individual personal accounts.  These brothers need good taxation attorneys on their side to defend them because if they are convicted they may face time prison time as well as heavy monetary fines.  Chances are the judge will want to make an example out of the famous reality star who falsified his taxes, just like celebrity singer Lauryn Hill who completed three months in federal prison for tax fraud and failing to pay her taxes.

 

In addition, the Internal Revenue Service can and will take severe action against taxpayers, such as the Sorrentino brothers, who either fail to pay or falsify their tax return by issuing a federal tax lien.  In this capacity, IRS can ensure that the taxpayer will pay them what is owed by claiming their income, property, and other assets.

 

The moral of this story is that no one, not even a celebrity is exempt from the consequences set by the IRS.  Contact a reputable taxation attorney at the Strategic Tax Lawyers to help with IRS-related problems.  Call for a free consultation today at (800) 669-4775.