February 2012 Archives

Quick Tips on Offshore Bank and Financial Accounts

February 6, 2012,

169849_tax.jpgIn January I appeared on a panel with several other tax lawyers at the 2012 University of Southern California Tax Institute. One of the topics was Quick Tips on Offshore Bank and Financial Accounts. The presentation was intended for tax attorneys, CPAs, and other tax professionals. However, anyone who has FBAR issues including the non-filing of the Foreign Bank Account Report, TDF 90-22.1 may find the outline that I distributed at the meeting to be helpful. For that reason I have posted a copy of the outline on our website.

The outline includes a look at the various options open to taxpayers who have failed to file FBARs, and some of the factors that our tax lawyers consider in advising clients on how to proceed.

Continue reading "Quick Tips on Offshore Bank and Financial Accounts " »

Failure to Pay Payroll Taxes Leads to Criminal Tax Charges

February 1, 2012,

Last month, while most people were preparing their Christmas lists, Louis Alba, a New York contractor, plead guilty to criminal tax charges of failing to pay over to IRS employment taxes withheld from employee wages in the amount of almost $780,000 over approximately six years. Failure to pay over payroll taxes is considered a felony under Internal Revenue Code (IRC) Section 7202. It is punishable by up to five years in jail, and a fine of up to $250,000.
Accounting on Folder.jpg
In the current economic environment business owners who are strapped for cash sometimes decide to "borrow" from the IRS by not paying the payroll taxes. The theory is that if cash is tight, and the vendors aren't paid there will be no more merchandise to sell, and therefore the business will go under quickly. The same with the landlord; don't pay the rent, and one can expect an eviction notice in short order. The IRS on the other hand moves slowly, and the temptation is to believe that if you have another 6 months or so business will turn around, and the IRS can be paid back.

Unfortunately in many cases that doesn't happen. The IRS doesn't look on this as borrowing; it views the failure to pay payroll taxes as stealing. Even if criminal tax charges are not brought, so-called responsible officers who fail to pay over corporate payroll taxes can be held personally liable under IRC Section 6671. More and more, however, the IRS is bringing criminal tax fraud charges. For the record persons convicted of tax crimes still must pay the taxes. It's not one or the other.

Continue reading "Failure to Pay Payroll Taxes Leads to Criminal Tax Charges " »