I have prepared thousands of tax returns since 1969. I have prepared individual, corporate, fiduciary, and partnership tax returns for the last 46 years. I have seen the tax laws go through a myriad of changes.
When I first starting preparing taxes, the maximum federal tax rate was 77%! (now it is only 39.6%, so that is good, thanks in large part to Ronald Reagan.). On the other hand, when I first started doing taxes, the social security earnings ceiling was $7,800. In 2010 it was $118,500! Many business owners now pay more in social security tax than they do in income tax.
You have probably heard in news stories about how the same set of numbers can be given to 10 different accountants, and you will get 10 different tax returns from these accountants.
This is probably true. You want to pick out the accountant that 1) gives you the lowest tax figure possible and 2) gives you a defensible tax return if you get audited. Balancing those two factors can require good judgement which years of experience can give.
If you want your tax return prepared, you should call me.
In today’s bad economy, many people find that they cannot pay their taxes. I have 40 years experience in stopping IRS collections, stopping bank levies and wage garnishments, and resolving IRS or state tax debt. There are several options open to a taxpayer who cannot pay his or her taxes besides the standard payment plan arrangement or Offer in Compromise that most tax attorneys and CPA’s offer as pat solutions.
I routinely work out payment plans, but often an IRS payment plan can be too burdensome to a taxpayer or leave the taxpayer unable to pay his basic bills. I have handled millions of dollars of IRS tax debt during my career. If you need help with IRS collections, you should call me for the simplest solution suited to your case.
Tax Payment Plans
If your unpaid back taxes mount up to a point where you cannot afford to pay them all at once, and the other tax strategies discussed here do not work for you, then IRS allows taxpayers to set up payment plans to pay off your back taxes gradually. Unfortunately, during all this time, interest continues to accrue.
To apply for a payment plan, IRS will ask you for a full, detailed set of financial statements, a Form 433-A, 433-F, and/or a Form 433-B if you have your own business. These are kind of a “tell all” set of questions that will reveal to IRS where all your assets and income sources are. The Forms are signed under penalty of perjury, so you must be truthful and complete.
Like all other aspects of tax practice, however, there can be an art to submitted a payment plan application and the negotiations with IRS that can follow. I have handled hundreds of payment plans during my career, so if you think you want a payment plan with IRS or the state taxing authorities, you should call me.
I usually find IRS audits fun, which I guess is one reason why I enjoy earning my living as a tax attorney.
Much has been written over the years about IRS audits and the do’s and don’ts and how to avoid them and so on. Some of it is factual, and some of it is urban legend. I have handled thousands of IRS audits, so I know what is real and what is not.
And when I prepare a tax return, I always have an eye to what may trigger an audit.
Other than just substantiating your income and expenses, which is the mechanical part of any IRS audit, the rest of an IRS audit has much to do with the rapport your tax attorney has with the IRS agent and the tax attorney’s skill at presenting the financial information and discussing tax issues with the IRS agent. How to prepare for an audit and what to say and what not to say during an audit representation can become a form of art that only years of experience and judgement can provide.
If you find you are going to have a tax audit, you should call me.
Asset protection strategies are the devices and legal tools you can use to protect your assets from creditors, including the IRS. Without expert asset protection you can find yourself in a situation similar to driving without car insurance or leaving your house during the day without locking the door. Much of expert asset protection is simple common sense, often overlooked when you need to protect against lawsuits, protect against creditors, and protect against the IRS.
If you are unable to enter into a payment plan or other settlement with IRS or while you are working on a settlement with IRS, asset protection strategies are used to protect your assets from levy and seizure. There is nothing wrong or “illegal” with protecting your assets, no more than it is illegal to put your money into a safe or closing up your wallet after paying a bill. And there is nothing more upsetting than waking up in the morning and discovering that all your checks have bounced because of a bank levy.
Call me if you need an asset protection attorney.
US Tax Court
The United States Tax Court hears cases brought by taxpayers who are disputing a proposed tax assessment, usually the result of an IRS audit. If an IRS audit or other proposed assessment goes forward without an agreement from the taxpayer to pay, IRS is then required by law to issue by certified mail a “Notice of Deficiency” to the taxpayer. This notice is a kind of final warning giving the taxpayer exactly 90 days to file a petition with the US Tax Court. If the 90 days lapses without a petition being filed, then the taxpayer by law then owes the money to IRS.
Unfortunately, I have seen many taxpayers receive a Notice of Deficiency (“NOD”), ignore it or file it away, and then a few months later to their amazement, their bank account gets seized.
An NOD is one IRS notice you cannot ignore. Although I have successfully defended cases where an NOD has lapsed, that can be a major and expensive hassle.
I have overseen the filing of nearly 2,000 cases before the US Tax Court.
If you need to file before the US Tax Court, you should call me.
Offers in Compromise
An Offer in Compromise (“OIC”) is one of the more famous of IRS tools, probably because of its sexy “pennies on the dollar” aspect that you hear so much about in TV and radio ads from tax promoters who give examples of their ecstatic clients settling with IRS for mere pennies on the dollars.
What these ads often don’t tell you is that you have to be nearly a pauper in most cases to get an OIC approved by IRS. An OIC application can take quite a few months to process, and often a taxpayer is asked to submit not only his full set of financial statements with his original offer, but when IRS gets around to examining the offer months later, IRS often then asks for another full set of updated financial statements.
OIC’s are also popular because they toll (freeze) collection actions while the offer is pending. As a result, some uninformed taxpayers are lulled into a sense of security because IRS is doing nothing bad to them for several months, and the taxpayer thinks everything is “ok” or maybe the debt is gone. But if the offer is finally rejected, as often occurs, you are back to square one. Also, the collection statute (the 10 years IRS has to collect back taxes from you) is also tolled (frozen) while an OIC is pending, which can haunt you later on when you think your taxes might be due to expire.
However, given the right circumstances, an OIC can work and be an effective tool for settling an IRS debt.
If you want to file an OIC, you should consult with me.
IRS “hardship status”
Although this is generally not a technique for a higher income taxpayer, this is one of my favorite IRS categories to win for some of my more overwhelmed clients.
What it basically means is that although you still owe the back taxes to IRS, IRS will just leave you alone for now and not try to collect from you at all. You pay them nothing. And sometimes that “for now” can last for several years. Interest will still of course accrue, but – don’t forget – if you can wait ten years it can all go away.
To gain hardship status, you submit the usual set of financial statements to IRS to prove you cannot afford to pay them anything, even on an installment basis.
If IRS approves this status, IRS then leaves you alone, usually for at least one year before coming back to review your status to see if you are doing any better.
The wonderful thing though about the vast IRS bureaucracy is that often IRS takes quite a few years before they come back to review this status, especially if in the meantime you have complied by filing and paying your later years taxes since you got your hardship status.
If you want experienced help in applying for hardship status, you should call me.
IRS Tax Liens – IRS Tax Levies
People often get mixed up between liens and levies. The best way to recall the terms is that a lien is kind of a “passive” thing that just sits there at the County Recorder, whereas a “levy” is active, meaning a levy is an actual “taking” of your money right now.
The purpose of a lien is to tell the world at large, via public record, that you owe money to IRS. Aside from screwing up your credit, what is the purpose of that? The purpose is to tell people like title companies that if you were to sell say, your house, that IRS has a claim on some of the proceeds of the sale of your house (at least in the county where the lien is recorded). In other words, the lien protects the IRS from your selling or mortgaging certain assets and allows the IRS to get their fingers on it first. By making the lien public record, other parties, like property buyers and title companies, can also become liable for your taxes themselves if they ignore the IRS lien and give you all the money.
A levy, on the other hand, is an actual seizing of your money, from say your bank account or your paycheck. Some levies can be “continuous,” as with your paychecks, and some can be just for a point in time, such as a bank levy. (although IRS can levy your bank account over and over if they want, there are usually varying gaps of time between bank levies while your IRS collection agent is chasing after someone else.)
If you are suffering from liens or levies, you should call me.
Unpaid Trust Fund Taxes
Trust fund taxes are that portion of payroll taxes that represent the taxes withheld from the employee’s paychecks. This is in contrast to payroll taxes that are purely the employer’s expense, such as the matching social security tax, or the unemployment insurance.
The IRS considers trust fund taxes in some sense “sacred” because the money was never really the employer’s in the first place. The money rather was withheld in trust from the employees paycheck to pay over quickly to the IRS. When employers instead keep this money for themselves, this money can generate a “trust fund penalty” to certain responsible individuals even if the employer is a corporation, LLC, or other type of business entity that would otherwise protect such individuals from liability.
To determine whether IRS can come after an individual for this money, IRS will conduct a “Trust Fund Recovery Penalty Interview” with certain persons to determine whether that person is a “responsible party” for the unpaid money. If IRS determines that the person is liable, then IRS can bypass the corporation or LLC and come after this person individually.
I have successfully defended millions of dollars of Trust Fund Recovery cases in my career. If you have a Trust Fund Recovery problem, you should call me.