Tax Problem Attorney Blog

A couple of weeks ago I was at the ABA Tax Section Meeting which as I mentioned previously gathered tax lawyers from around the country. Since I spent most of my time at meetings involving FBARs (Foreign Bank Account Report TD F90-22.1), I missed another meeting. It turns out that (according to published reports) Janet Johnson, the Internal Revenue Service deputy division counsel for criminal tax stated that that the IRS Criminal Investigation (CI) unit would subpoena accountants in criminal tax cases. By itself that’s hardly surprising since criminal tax attorneys have known for many years that IRS special agents routinely interview the tax preparer, and the accountant can wind up as the lead witness against his own client.

The part that was surprising was that she stated the government would issue a grand jury subpoena even to a Kovel accountant, i.e. one that was retained by a tax attorney for the purpose of assisting the tax attorney in advising the client.

In an ominous note Johnson stated , “Whether or not that accountant comes to testify can be very serious for the accountant. The grand jury may decide he is part of the problem.”

If you have a tax problem, or are a CPA who has a client with a tax problem feel free to contact the tax lawyers at Brager Tax Law Group, A P.C. for a consultation.

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Posted In: Miscellaneous Tax Information , Offshore Bank Account Problems , Tax Fraud , Tax Litigation and Tax Controversy , Tax Preparer Penalties

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The Internal Revenue’s (IRS ) tax lien filing polices were in the Taxpayer Advocate’s 2009 Report to Congress listed as the second most serious tax problem facing taxpayers today. This is not a big surprise to those tax lawyers who deal with IRS tax collection problems on a regular basis. I often tell clients that the most difficult objective is to try and get the IRS to release a tax lien prior to making full payment of a delinquent tax liability.

The Taxpayer Advocate’s Report details how the IRS files tax liens without regard to whether or not the taxpayer has assets, and despite the fact that in many instances the filing of a tax lien does not protect the IRS, and only exacerbates the taxpayer’s inability to pay. The Report also points out that the Internal Revenue Manual puts obstacles in the path of their employees who decide not to file a tax lien-- requiring managerial approval, and documentation of any decision not to file a tax lien.

One would only hope that the IRS tax Collection Division takes serious note of the criticisms by the Taxpayer Advocate, and that it not continue to file tax liens as method of punishing taxpayers; however, the IRS responses to the Report make clear that Congressional action will be necessary for any significant tax lien relief.

Taxpayers with tax problems must therefore continue to explore other avenues of relief including offers in compromise, installment payment agreements, audit reconsideration, and bankruptcy to resolve their tax problems.

If you have tax problems call the tax lawyers at Brager Tax Law Group, Inc. for a consultation.

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Posted In: Miscellaneous Tax Information , Tax Debt , Tax Litigation and Tax Controversy

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Nina Olson, the National Taxpayer Advocate, issued her annual report to Congress in which she lists the 20 most serious tax problems as required by Internal Revenue Code (IRC) § 7803(c)(2)(B)(ii)(III). They are:

1. The Complexity of the Tax Code
2. The IRS Needs to More Fully Consider the Impact of Collection Enforcement Actions on Taxpayers Experiencing Economic Difficulties
3. Understanding and Reporting the Tax Consequences of Cancellation of Debt Income
4. Employment Taxes
5. IRS Process Improvements to Assist Victims of Identity Theft
6. Taxpayer Service: Bringing Service to the Taxpayer
7. Navigating the IRS
8. IRS Handling of ITIN Applications Significantly Delays Taxpayer Returns and Refunds
9. Access to the IRS by Individual Taxpayers Located Outside the United States
10. Customer Service Within Compliance
11. Local Compliance Initiatives Have Great Potential But Face Significant Challenges
12. Customer Service Issues in the IRS’s Automated Collection Syste (ACS)
13. The IRS Should Proactively Address Emerging Issues Such as Those Arising From “Virtual Worlds”
14. Suitability of the Examination Process
15. The IRS Correspondence Examination Program Promotes Premature Notices, Case Closures, and Assessments
16. The Impact of IRS Centralization on Tax Administration
17. Incorrect Examination Referrals and Prioritization Decisions Cause Substantial Delays in Amended Return Processing for Individuals
18. Inadequate Files Management Burdens Taxpayers
19. The IRS Miscalculates Interest and Penalties But Fails to Correct These Errors Due to Restrictive Abatement Policies
20. Inefficiencies in the Administration of the Combined Annual Wage Reporting Program Impose Substantial Burden on Employers and Waste IRS Resources

Tax Problem 21 was an update of a previous item. According to the National Taxpayer Advocate the IRS’s private tax debt collection initiative is failing In most respects.

More detail on some of these tax problems in future blog posts. For the moment you may wish to check out the post at ataxingmatter describing the National Taxpayer Advocate's previous criticisms of the private tax debt collection initiative here.

If you are having tax problems contact the tax attorneys at Brager Tax Law Group, A P.C.

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Posted In: Miscellaneous Tax Information , Tax Debt , Tax Disputes

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Once investors get over their initial shock that they were being bilked by Bernard Madoff in a massive Ponzi scheme they will be looking for ways lessen the impact. One of those ways is through the tax laws. Our tax attorneys have identified at least two possibilities. The first is that investors may be entitled to a theft loss pursuant to Internal Revenue Code Section 165. Unfortunately the year the loss can be deducted will probably be the subject of a tax dispute. Generally theft losses are deductible in the year of discovery. However, if there is still a possibility of recovery the deduction may need to be deferred.

Another idea is filing amended income tax returns for the last three years, taking the position that the payments received which had been reported as capital gains, dividends or interest were in fact a return of capital, and therefore non-taxable. This position is supported by Greenberg v. Commissioner, a 1996 case decided by the United States Tax Court. The Internal Revenue Service ("IRS") believes, however, that the rule in Greenberg only applies in limited situations. IRS Legal Memorandum ILM 200305028. It is likely that those who file amended returns will be subjected to a tax audit, and that barring a change of heart by the Internal Revenue Service will need to hire a tax litigation attorney to assist them.

Generally the tax law allows only three years from the date the original tax returns were filed to file amended returns. For most taxpayers this means that if they act quickly they can file amended returns for 2005, 2006, and 2007.

If you have a tax problem call certified tax specialist Dennis Brager.

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Posted In: Miscellaneous Tax Information , Tax Disputes , Tax Litigation and Tax Controversy

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An article in the California Franchise Tax Board (FTB) November 2008 Tax News publication highlighted the other tax problems that can arise from a tax audit by the California State Board of Equalization (SBE or BOE). Many sales tax audits by the BOE result in a changes to a company’s gross receipts. The BOE tax auditors have instructions to provide the FTB with audit reports which show that not all sales were reported. In turn the FTB may open an income tax audit resulting in additional state income tax due.

Although not mentioned in the FTB Tax News article, when the FTB is done with its tax audit it routinely provides that information to the Internal Revenue Service (IRS), and the IRS may, in turn, begin a federal income tax audit. With all of these tax audits, and with potential tax penalties and interest there is the possibility that a business could wind up paying more to the taxing agencies then it took in.

For these and other reasons it is important to have a qualified tax attorney represent your business; especially if you believe that there are any significant issues on your California Sales tax returns. Feel free to call the tax problem attorneys at Brager Tax Law Group, A P.C.

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Posted In: California Franchise Tax Board , California Sales Tax Problems , Miscellaneous Tax Information

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On Nov. 7th I will be speaking at the at the 2008 Annual Meeting of the California Tax Bar on Sales and Use Tax Audits: A Guide for Tax Professionals. My co-panelist will be Robert Tucker, a tax specialist from the California State Board of Equalization (SBE or BOE). We will be discussing how to handle a sales tax audit including procedural rules and tips for dealing with the SBE.

The 2008 Annual Meeting of the California Tax Bar runs from Nov. 6 through 2008, and attracts hundreds of tax attorneys, and tax accountants from around the state. Additional topics include:

Criminal Tax Investigations
Offshore Enforcement
California Tax Litigation
SBE New Rules for Tax Appeals
Federal and California State Trust Fund Recovery (TFRP) Penalties

and much more.

For more information see http://www.calbar.ca.gov/state/calbar/calbar_generic.jsp?cid=11620.

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Posted In: California Sales Tax Problems , Miscellaneous Tax Information

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On Oct. 28th I will be moderating a tax controversy panel at the 2008 UCLA Tax Controversy Institute. The panel will include Steve Sims, Taxpayer Advocate, Franchise Tax Board, Todd Gilman, Taxpayer Advocate, State Board of Equalization, Michelle Mosley, Taxpayer Advocate, Employment Development Department, Dorothea T. Curran, Local Taxpayer Advocate, Internal Revenue Service (Los Angeles).

Other tax panels include:

Innocent Spouse
Independent Contractor Audits and
Criminal Tax Audits

If you would like to attend contact UCLA at www.uclaextension.edu/taxcon08

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Posted In: Miscellaneous Tax Information , Tax Disputes

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The California Franchise Tax Board (FTB) joined with the California Tax Education Council (CTEC) to warn taxpayers about unregistered tax return preparers. In California only certified public accountants (CPA), attorneys, Internal Revenue Service enrolled agents, and CTEC-Registered tax return preparers are legally permitted to charge for preparing tax returns. According to the FTB it is believed that there are 3,000 to 4,000 tax return preparers throughout California breaking the law. The FTB then set forth some signs that should set off alarm bells. For example if a tax preparer:

Claims to be a registered tax preparer but is not listed on CTEC’s Website.
Fails to give you a name, address, phone number, and bond information.
Refuses to sign your tax return.
Asks you to sign a blank tax form.
Refuses to provide copies of any documents you have signed.
Promises a refund, without even looking at your tax information.
Charges a fee based on a percentage of your refund.

If you are a tax return preparer who has been unjustly accused by the IRS or the Franchise Tax Board of filing improper tax returns call Los Angles, California State Bar Certified Tax Specialist Dennis Brager.

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Posted In: California Franchise Tax Board , Miscellaneous Tax Information

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California Certified Tax Specialist Dennis Brager the founder of the Brager Tax Law Group, a P.C. , was quoted in an article published in the March 7, 2008 edition of the Los Angeles and San Francisco Daily Journal, a leading California legal publication. The article discussed a new law which provides tax benefits for federal judges who sell their proposal to avoid recusals. Specifically Internal Revenue Code § 1043 provides that certain government officials such as federal judges including United States Tax Court judges who sells property to avoid conflict of interest rules may defer gain on the property if they acquire certain replacement property until the replacement property is sold.

If you have a tax problem and would like to have your case heard in the United States Tax Court, call tax litigation attorney Dennis Brager.

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Posted In: Miscellaneous Tax Information

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The Internal Revenue Service ("IRS") has released Notice 746 which provides information about penalties and interest, and lists the latest interest rates. According to the notice interest rates will go down one percentage point in January.

Not surprisingly the IRS generally pays 1% less on money it owes to taxpayers (overpayments) then it expects taxpayers to pay to it (underpayments). Interest is compounded daily, and is in addition to penalties. The interest rates on underpayments and overpayments are as follows:

Different rates may apply to corporations, or to certain tax motivated transactions. If you owe the IRS more than $75,000 and would like to find out if you can settle for less with the IRS contact tax problem attorney Dennis Brager.

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Posted In: Miscellaneous Tax Information

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