Tax Problem Attorney Blog

Articles Posted in Miscellaneous Tax Information


If you were to ask people about the things that they should do every single year, they are likely to mention visiting the doctor for a physical, taking their car in for preventative maintenance, and maybe even a tradition that the person spearheads every year. It is unlikely, however, the individual will mention their yearly duty to file and pay taxes. While taxes are due each and every year, they are typically something that we prefer not to dwell on, unless forced to. In fact, many people will not even consider taxes until days before the due date when the media is saturated with messages about tax filing. As tax attorneys we work to provide strategies that mitigate the risk or consequences of civil or criminal tax exposure. The simplest one is to file your tax return on time!

Nearly all citizens and green card holders have an obligation to file taxes
Nearly all US citizens or legal permanent residents, have an obligation to file taxes due to their level of income or for other reasons. For instance for the 2014 tax year, an individual under age 65 who is filing as single would have an obligation to file taxes if he or she makes $10,150 or more. The same would apply to a married couple filing jointly if they earn more than $20,300 a year. In some cases even smaller amounts of income can require the filing of a tax return. In short, the income thresholds to trigger a tax reporting obligation are not high and apply to almost all US citizens and green card holders.

Failure to file can mean open-ended liability
The failure to file taxes extends the statute of limitations in perpetuity. In most tax situations not involving willful conduct if a tax return was filed, the IRS has 3 years to assess any additional the tax and another ten years to take any enforcement action. However, if you fail to file taxes, this time period is open-ended. While it is unlikely that the IRS would pursue very remote tax years, such a strategy is unnecessarily risky and is never advisable. Furthermore, failing to file taxes when a reporting obligation exists can result in harsh tax penalties.

The penalties for a failure to file are more severe than a failure to pay
While there are penalties that can be imposed for both the failure to file taxes and for the failure to pay taxes, the penalties for a failure to file are typically worse. A failure to file penalty can be punished by a 5% penalty on the unpaid amounts for each month it was due and owing, up to a maximum of 25%. Because the IRS counts a partial month – even a single day – the same as a month where the tax was owed the entire time, the total penalty for failure to file often exceeds the amount expected by the taxpayer. For instance, if a tax return was to be filed by April 15th, but the return is not filed until June 2nd then the failure to file penalty would apply to 3 months – the entire month of May and the partial months of April and June. If the return is filed more than 60 days late, a minimum penalty of 100% of the unpaid tax or $135 can apply.

Filing taxes can prevent the problems caused by tax scams
Electronic filing of taxes is extremely convenient as it allows taxpayers to receive a more timely notification that their return has been accepted by the IRS. However, there is a dark side to the electronic filing system. Unscrupulous individuals who steal your Social Security number and other personally identifying information can file taxes in your name. This filing will typically understate earnings or otherwise fraudulently maximize the refund issued. The scammer then steals the overstated refund. However, filing your taxes as soon as possible can prevent this scam and the serious consequences that can follow.

Filing a return is the only way to claim a refund
Even if you do not make enough to trigger the tax filing requirement, filing taxes can still be essential as it is the only way to claim any tax refund that you may be owed. If you fail to file taxes, you may be handing over your hard-earned money to the government unnecessarily. Unfortunately, many Americans are not diligent about filing to receive their tax refund. In March 2014 the IRS announced that there was still three-quarters of a billion dollars in unclaimed tax refunds available. For most people, the refunds from the 2010 tax year is no longer available because the law generally doesn’t allow for refunds on tax returns filed more than three years late.
However, refunds from the 2011 and later tax years are still available. The experienced tax professionals of the Brager Tax Law Group can discuss any unfiled tax returns, and develop a strategy for moving forward. To schedule a tax consultation call 800-380-TAX LITIGATOR.

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Tax scams have likely been around for as long as taxes have been collected. In light of the significant penalties, fines, prison sentences and other consequences that can be imposed for tax non-compliance issues, taxpayers have good reason to be apprehensive or nervous if they are contacted by someone claiming to represent the Internal Revenue Service (IRS). Thus, if you are contacted by an IRS agent, it is always prudent to verify their identity, the fact that they are employed by IRS, and request a callback number at the IRS where the agent can be reached. Furthermore, if you are contacted by an individual claiming to represent the IRS or the US government, an experienced tax professional can often more readily recognize the signs of a tax scam.

At the Brager Tax Law Group we recognize that well-meaning taxpayers can face serious consequences if they are taken in by a tax scam. This post will identify and discuss a number of the more common tax scams and their consequences as identified by the IRS.

Tax preparer fraud can result in new tax problems

When selecting a tax professional, it is important that you work with an individual who is established, reputable and honest. While the IRS has taken measures to close down registered tax return preparers, others still exist. In many cases the hook utilized by a tax preparer is that they promise large, sometimes outlandish, refunds. Once ensnared, the dishonest preparer may unlawfully retain a portion of the tax refund without the individual’s knowledge or consent, misdirect funds that were intended to cover a tax obligation, or request excessive fees after obtaining your financial information.

The IRS now requires all for-profit tax preparers to obtain a preparer tax identification number (PTIN) which can be used as one aspect of your inquiry into the legitimacy of a tax preparer. However, you are ultimately responsible for the information contained within your tax returns. If you believe you have fallen victim to a tax scam, hiring an attorney to resolve your emerging problems and to protect you from allegations that may be levied by the IRS can result in a more favorable resolution.

An unanticipated phone call from someone claiming to represent the IRS may indicate fraud

If you receive a call from someone demanding a tax payment or requesting an urgent return call without first receiving written notice from the IRS, the caller is likely perpetrating a scam. These schemes can be sophisticated. They may spoof a caller ID to appear as if they are calling from the IRS. They may also know at least some information about you and your finances. Aside from the first indication of a lack of written notice, other tell-tale signs that the caller is actually a tax scammer include:

  • Threats to call the police to have you arrested for a failure to pay.
  • Requesting you to provide a credit card or debit card for payment over the phone.
  • A lack of respect for your rights as a taxpayer, including a lack of regard for the appeal process to which you are entitled.
  • Requiring you to pay in a certain form, often by prepaid debit card.

Understanding how a tax scammer operates can save you from the headaches, hassles and financial losses that can often accompany falling victim to a tax scam.

The IRS Announced FATCA Scammers are now Targeting Financial Institutions

While scammers have long leveraged the fears and anxieties felt by individual taxpayers, the aggressive moves by the IRS and the US government to detect American taxpayers with undisclosed overseas accounts has created similar compliance fears within the financial industry. According to a press release published by the IRS, scammers have recognized the new climate created by Foreign Account Tax Compliance Act (FATCA) and are attempting to exploit the fears of foreign and domestic banks to obtain confidential personal information.

For holders of foreign accounts and investments, this news provides yet another reason that an experienced tax lawyer can be extremely valuable. Even if you are unaffected by the scam, the Bank Secrecy Act creates an obligation to disclose foreign accounts where the aggregate value has exceeded $10,000 at any time during that tax year. Failure to comply can create huge liabilities.

Put our experience resolving tax problems to work for you

The tax attorneys of the Brager Tax Law Group work strategically and meticulously to help correct tax problems created by tax scams or noncompliance. To discuss your concerns confidentially, contact the Brager Tax Law Group online or call 800-380-TAX LITIGATOR to discuss your options.

The IRS’ tax lawyer, who failed to disclose multiple conflicts of interest.


While having an attorney-client relationship with the benefit plan’s promoter, the tax attorney wrote several opinions for prospective plan participants. These opinions pertained to a benefit plan’s qualification under Internal Revenue Code section 419A. The tax lawyer later became a co-trustee of the plan, and during his tenure, he represented individual participants before the IRS concerning their tax problems. The plan’s promoter was paying him throughout this time.

The tax attorney, who was not identified, never advised any of his clients of the conflicts and failed to obtain informed consents from any of the parties involved. The conflicts arose when the attorney agreed to represent multiple parties with opposing interests, to become the co-trustee of the plan and to receive compensation from the promoter. His obligations to other parties and his own self-interest limited his ability to represent each of his clients successfully. Because they were unaware of the conflicts, the clients were unable to seek alternative legal counsel.

The attorney has agreed to cooperate in the investigation, recognized his violations and will take additional continuing education ethics classes over the next two years. The IRS’ OPR Director Karen L. Hawkins reminded attorneys that informing clients of conflicts of interest “is not a mere nicety.” She continued, “Taxpayers who pay handsomely for tax advice and representation have a fundamental right to expect competent and diligent representation unfettered by a practitioner’s responsibilities or obligations to someone else, or by the practitioner’s self-interest.”

Those who violate Circular 230 are subject to monetary penalties, censure, suspension and disbarment. Not just tax attorneys, but also enrolled agents, and CPAs are subject to the provisions of Circular 230, and therefore must avoid representing conflicting interests, unless appropriate conflict waivers are obtained.
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Brager Tax Law Group appreciates all the votes that came in for our Tax Problem Attorney Blog and is proud to announce that Tax Problem Attorney Blog has been named one of the top 20 Tax Law Blogs by LexisNexis.

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The IRS Office of Professional Responsibility (OPR) alleged that Joseph Kozelsky did not file timely tax returns for 2001 through 2007 and did not timely pay his federal tax liability. As a result of his tax problems he was disbarred from practice before the Internal Revenue Service. Mr. Kozelsky didn’t help himself very much, since he failed to respond to the IRS’s complaint within 30 days. As a result the facts alleged by the IRS were deemed admitted, and the administrative law judge (“ALJ”) issued an order that Mr. Kozelsky engaged in disreputable conduct and should be disbarred.

The IRS publishes rules for professionals practicing before the IRS, and those rules are set forth in Circular 230. We have previously published an article on the procedures involved in an OPR disciplinary matter. Circular 230 includes rules for individuals preparing tax returns, providing tax advice, and representing individuals before the IRS. Failure to timely file tax returns constitutes disreputable conduct under Circular 230 and subjects the offender to sanctions. In the case of Mr. Kozelsky, the IRS proposed disbarment from practice before the IRS and the ALJ presiding over the case agreed and ordered disbarment on November 17, 2010 since Mr. Kozelsky failed to respond to the OPR’s complaint.

If no appeal is filed within 30 days of the ALJ’s default order, the default order becomes final. Since Mr. Kozelsky appealed the ALJ decision to the IRS’s Appellate Authority on December 23, 2010, 6 days after the 30 day deadline, his appeal was not considered, and his disbarment became final.

Enrolled Agents are subject to the same Circular 230 rules as CPAs, and in a separate case, an Enrolled Agent was also disbarred from practice before the IRS. OPR filed a complaint against Susan Tomsha-Miguel alleging her failure to file timely tax returns, she failed to respond within 30 days, and the ALJ presiding over the case entered a default judgment for the IRS. The ALJ determined that the appropriate sanction was disbarment from practice before the IRS. In addition to CPAs and Enrolled Agents, Circular 230 rules and sanctions regarding failure to file tax returns also apply to tax attorneys (see post titled “Attorney Disbarred under Circular 230 Rules for Failure to File Tax Returns”).
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Tax lawyers representing a man accused of failing to file business income tax returns told the judge that obsessive-compulsive disorder was responsible for their client’s tax problems, the Calgary Herald reported.

Business tax debt can sink a business; frequent issues tax attorneys are called to deal with include payroll tax problems and tax audits.
That’s not to say OCD is involved in the majority of the cases. But in this case, the man blames the condition for his inability to file business income tax returns. He faces 60 days in jail and a $10,000 fine if convicted of disobeying a court-issued compliance letter. The company, Harvest Brewing, is accused of not filing returns in 2004 and 2005. His attorney said Ronald Thomsen’s personal taxes are up to date because they are easy to file and the taxes are deducted right from his pay.

But when it comes to the business taxes, his client’s medical condition prevents him from dealing with the paperwork. The business taxes were about $45,000 a year in the five years prior to the years in question. However, Canada Revenue Agency does not know how much is now owed because they haven’t received any documentation in years. The business’s accountant has told Thomsen she would have the outstanding taxes filed by May but he has refused to turn over the paperwork.

That refusal is part of the medical condition, according to his tax attorneys.
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I found the following tips to eliminate tax problems in an old file. Not sure if a tax lawyer came up with them, but thought I would pass them along.

* Always put staples in the right hand corner. Go ahead and put them down the whole right side. The extractors who remove the mail from the envelopes have to take out any staples in the right side.

* Never arrange paperwork in the correct order, or even facing the right way. Put a few upside down and backwards. That way they have to remove all your staples, rearrange your paperwork and re-staple it (on the left side).

* Line the bottom of your envelope with elmer’s glue and let it dry before you put in your forms, so that the automated opener doesn’t open it and the extractor has to open it by hand.

* If your very unfortunate and have to pay taxes, use a two or three party check.

* On top of paying with a three party check, pay one of the dollars you owe in cash. When an extractor receives cash, no matter how small an amount, he has to take it to a special desk and fill out of few nasty forms.

* Write a little letter of appreciation. Any letter received has to be read and stamped regardless of what it is or what its on.

* Write your letter on something misshapen and unconventional. Like on the back of a Kroger sack.

* When you mail it, mail it in a big envelope (even if it’s just a single EZi form). Big envelopes have to be torn and sorted differently than regular business size ones. An added bonus to the big envelope is that they take priority over other mail, so the workers can hurry up and deal with your mess.

* If you send 2 checks, they’ll have to staple your unsightly envelope to your half destroyed form.

* Always put extra paper clips on your forms. Any foreign fasteners or the like have to be removed and put away.

* Sign your name in ink on every page. Any signature has to verified and then date stamped.

* These are just a few of the fun and exciting things you can do to the man. These methods are only recommended when you owe money.

If you would like to talk to one our tax lawyers for more realistic solutions to solving your tax problems contact the tax litigation attorneys at Brager Tax Law Group, AP.C.

According to a complaint Part 2) filed by the California Attorney General against a well known tax debt problems through tax debt resolution services. Deutch tells clients that once they retain Roni Deutch A P.C., the clients are not legally obligated to continue making installment payments to the IRS.

* Roni Deutch’s tax attorneys each regularly carry caseloads as high as 600 to 700 clients at one time, but during especially busy periods can service as many as 1,200 clients at one time.

* Roni Deutch tell clients that their success rate in resolving clients’ back tax liability with the IRS is as high as 99%. In fact, her success rate is dramatically lower. In a majority of their clients’ cases, Deutch never actually submits a request for offer in compromise service, only 10% successfully receive an tax debt resolution services in a number of ways, including a television and radio advertising campaign. In these advertisements, Roni Deutch gives clients specific and non-representative examples of clients who have purportedly reduced their tax liability by as much as $150,000 by hiring Roni Deutch A P.C. At least some of these representations are false and misleading.

* The advertisements list a toll-free telephone number for consumers to call to receive a free “tax analysis.” When consumers dial the telephone number listed, the “tax analysis” they receive is a sales pitch for Ronni Deutch’s tax problem resolution services from her sales agents, who are hired solely for their ability to sell. Their sales agents are not required to have any background, experience, or familiarity with federal tax law or the IRS.

Of course these are only allegations, and not proven facts, and Roni Deutch has released a statement saying she will fight the suit. If the allegations are true, however, it will probably mean the end of Ronni Deutch’s tax problem resolution service business, and probably her career as a tax attorney as well. The complaint is a cautionary tale for those taxpayers with tax problems. As in all areas of life if the promises sound too good to be true then it’s time to take a closer look.

If you have a tax problem in excess of $75,000, and would like to learn more about your options contact the tax litigation attorneys at Brager Tax Law Group, A P.C.