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Showing posts with the label IRS

IRS Commits Tax Evasion with Immunity

On May 6th the Treasury Inspector General for Tax Administration  ("TIGTA" or internal government watchdog over the IRS) issued a scathing report that found, from 2003 through 2013, 1,580 IRS employees committed willful tax violations.   These cases included willful overstatement of expenses, claiming the First-Time Homebuyer Tax Credit without buying a home, and repeated failure to timely file required Federal tax returns.  

It should be noted that a willful act is the voluntary intentional violation of a known legal duty (timely filing of a tax return or accurate reporting of a tax obligation).   A willful violation of tax law is a criminal act.  This means jail time to the average person, but not IRS employees according to the TIGTA report.   

Current law requires that the IRS terminate employees who are found to have willfully violated tax law.  However, the law also gives the IRS Commissioner the sole authority to mitigate cases to a lesser penalty.  The TIGTA report di…

IRS Commits Tax Evasion with Immunity

On May 6th the Treasury Inspector General for Tax Administration  ("TIGTA" or internal government watchdog over the IRS) issued a scathing report that found, from 2003 through 2013, 1,580 IRS employees committed willful tax violations.   These cases included willful overstatement of expenses, claiming the First-Time Homebuyer Tax Credit without buying a home, and repeated failure to timely file required Federal tax returns.  

It should be noted that a willful act is the voluntary intentional violation of a known legal duty (timely filing of a tax return or accurate reporting of a tax obligation).   A willful violation of tax law is a criminal act.  This means jail time to the average person, but not IRS employees according to the TIGTA report.   

Current law requires that the IRS terminate employees who are found to have willfully violated tax law.  However, the law also gives the IRS Commissioner the sole authority to mitigate cases to a lesser penalty.  The TIGTA report …

Be Careful Claiming Your Charitable Deduction for 2014

The IRS loves to audit people who claim charitable deductions.  The reason is that there are very strict record-keeping rules when it comes to charitable deductions and most people are not aware of them so the IRS usually finds a way to disallow the deduction, which of course triggers increased taxes, penalties and interest.  Do not let this happen to you.

 Generally, to claim a charitable contribution deduction for gifts of $250 or more in cash or property to charity, donors must get a written acknowledgment from the charity.  This is usually not a big deal.  For donations of property, the acknowledgment must include, among other things, a description of the items contributed.  Typically the place you donate the property gives you a blank receipt.  So you need to fill it out and make sure you list all the items donate.  You also need to determine the value of the property contributed if it is not cash, which sometimes can cause problems if the amount determined is incorrect.

 The law a…

Be Careful Claiming Your Charitable Deduction for 2014

The IRS loves to audit people who claim charitable deductions.  The reason is that there are very strict record-keeping rules when it comes to charitable deductions and most people are not aware of them so the IRS usually finds a way to disallow the deduction, which of course triggers increased taxes, penalties and interest.  Do not let this happen to you.

 Generally, to claim a charitable contribution deduction for gifts of $250 or more in cash or property to charity, donors must get a written acknowledgment from the charity.  This is usually not a big deal.  For donations of property, the acknowledgment must include, among other things, a description of the items contributed.  Typically the place you donate the property gives you a blank receipt.  So you need to fill it out and make sure you list all the items donate.  You also need to determine the value of the property contributed if it is not cash, which sometimes can cause problems if the amount determined is incorrect.

 The la…

California Jury Aquits Banker of Conspiracy to Defraud Using Offshore Bank Accounts

On Halloween day, after just four hours of deliberation, a retired senior vice president at Israeli-based Mizrahi Tefahot Bank Ltd. (MZTF) was acquitted in Los Angeles federal court on charges he helped U.S. customers conceal their assets from the Internal Revenue Service.  

Shokrollah Baravarian, 82, was acquitted of charges of conspiring to defraud the U.S. and helping Mizrahi clients prepare false tax returns. Prosecutors claimed Baravarian helped clients who opened accounts in Israel, didn’t declare them to the IRS and accessed money through loans from the Los Angeles branch.  The jury was not persuaded.  

The U.S. has been campaigning heavily to curtail offshore tax evasion. The IRS, through the US Department of Justice, has charged more than 70 taxpayers and three dozen offshore bankers, lawyers and advisers in offshore tax evasions schemes.  More than 45,000 Americans have avoided criminal prosecution by voluntarily disclosing their offshore accounts to the IRS, paying $6.5 bil…

California Jury Aquits Banker of Conspiracy to Defraud Using Offshore Bank Accounts

On Halloween day, after just four hours of deliberation, a retired senior vice president at Israeli-based Mizrahi Tefahot Bank Ltd. (MZTF) was acquitted in Los Angeles federal court on charges he helped U.S. customers conceal their assets from the Internal Revenue Service.  

Shokrollah Baravarian, 82, was acquitted of charges of conspiring to defraud the U.S. and helping Mizrahi clients prepare false tax returns. Prosecutors claimed Baravarian helped clients who opened accounts in Israel, didn’t declare them to the IRS and accessed money through loans from the Los Angeles branch.  The jury was not persuaded.  

The U.S. has been campaigning heavily to curtail offshore tax evasion. The IRS, through the US Department of Justice, has charged more than 70 taxpayers and three dozen offshore bankers, lawyers and advisers in offshore tax evasions schemes.  More than 45,000 Americans have avoided criminal prosecution by voluntarily disclosing their offshore accounts to the IRS, paying $6.5 bil…

Taxpayer Prevails against the Franchise Tax Board after Ex-Spouse Attempts to Destroy her Tax Relief Case

Just like the IRS, the California Franchise Tax Board (FTB) also has a program to allow one spouse to be relieved of existing joint liabilities if that spouse can prove that she or he meets the requirements for "innocent spouse" relief. These types of cases whether at the IRS or FTB level can be hotly contested and the other ex-spouse can intervene and attempt to impede the determination to relieve the liability for the claimant spouse. In a recent case, McShea, California State Board of Equalization, No. 509192, April 22, 2014, released August 2014, a taxpayer demonstrated that the FTB erred in its denial of her request for innocent spouse relief from unpaid California personal income tax liabilities.

In the McShea case, the FTB initially granted the taxpayer complete equitable relief for 1993 and partial equitable relief for 1994. However, the taxpayer’s ex-husband appealed the grant of relief, arguing that they had agreed to share the tax liabilities for the tax years …

Taxpayer Prevails against the Franchise Tax Board after Ex-Spouse Attempts to Destroy her Tax Relief Case

Just like the IRS, the California Franchise Tax Board (FTB) also has a program to allow one spouse to be relieved of existing joint liabilities if that spouse can prove that she or he meets the requirements for "innocent spouse" relief. These types of cases whether at the IRS or FTB level can be hotly contested and the other ex-spouse can intervene and attempt to impede the determination to relieve the liability for the claimant spouse. In a recent case, McShea, California State Board of Equalization, No. 509192, April 22, 2014, released August 2014, a taxpayer demonstrated that the FTB erred in its denial of her request for innocent spouse relief from unpaid California personal income tax liabilities.

In the McShea case, the FTB initially granted the taxpayer complete equitable relief for 1993 and partial equitable relief for 1994. However, the taxpayer’s ex-husband appealed the grant of relief, arguing that they had agreed to share the tax liabilities for the tax years…

IRS Phone Scams Run Rampant - Tips to Keep Your Client Protected

The IRS has been issuing a number of alerts about telephone scams. I have personally had at least two clients who have been targeted by these phone scammers. Lucky for them I was able to warn them not to call them back and the phone scammers were unable to defraud my clients. Unfortunately, thousands and thousands of other people across the US have been the victims of these extremely slick phone scammers. They have defrauded people out of millions of dollars.

How it works is the scammers call people on their cell phone and home phones claiming to be employees of the IRS. They often demand money to pay taxes and threaten people by saying if you don't immediately pay they are going to seize their assets or have them arrested. Some may try to con you by saying that you're due a refund. The refund is a fake lure so you'll give them your banking or other private financial information. Don't be fooled by these scammers.

I have personally talked to the scammers after the…

IRS Phone Scams Run Rampant - Tips to Keep Your Client Protected

The IRS has been issuing a number of alerts about telephone scams. I have personally had at least two clients who have been targeted by these phone scammers. Lucky for them I was able to warn them not to call them back and the phone scammers were unable to defraud my clients. Unfortunately, thousands and thousands of other people across the US have been the victims of these extremely slick phone scammers. They have defrauded people out of millions of dollars.

How it works is the scammers call people on their cell phone and home phones claiming to be employees of the IRS. They often demand money to pay taxes and threaten people by saying if you don't immediately pay they are going to seize their assets or have them arrested. Some may try to con you by saying that you're due a refund. The refund is a fake lure so you'll give them your banking or other private financial information. Don't be fooled by these scammers.

I have personally talked to the scammers after t…

IRS Suffers Defeat in Appeals Court as Jury's Finding of Return Preparer Penalty Reversed

The IRS suffered a major defeat last week in the Eleventh Circuit Court of Appeals, in Carlson v. United States, Case No. 12-13736 (June 13, 2014), as the appellate court reversed in part and vacated and remanded in part a decision from a Florida district court holding a tax preparer liable for penalties under Code Section 6701.  The eleventh circuit held that the burden of proof was not the usual minimum of a "preponderance of the evidence" (sometimes described as "more likely than not") but the higher "clear and convincing evidence" usually applied in civil fraud cases.  (Note: the clear/convincing standard is lower than the "beyond a reasonable doubt" standard.)  Appellant, Frances Carlson, was a return preparer for Jackson Hewitt tax services.

Section 6701(a) of the Internal Revenue Code, 26 U.S.C., provides for a penalty to be imposed on any person:

(1)who aids or assists in, procures, or advises with respect to, the preparation or presentat…

IRS Suffers Defeat in Appeals Court as Jury's Finding of Return Preparer Penalty Reversed

The IRS suffered a major defeat last week in the Eleventh Circuit Court of Appeals, in Carlson v. United States, Case No. 12-13736 (June 13, 2014), as the appellate court reversed in part and vacated and remanded in part a decision from a Florida district court holding a tax preparer liable for penalties under Code Section 6701.  The eleventh circuit held that the burden of proof was not the usual minimum of a "preponderance of the evidence" (sometimes described as "more likely than not") but the higher "clear and convincing evidence" usually applied in civil fraud cases.  (Note: the clear/convincing standard is lower than the "beyond a reasonable doubt" standard.)  Appellant, Frances Carlson, was a return preparer for Jackson Hewitt tax services.

Section 6701(a) of the Internal Revenue Code, 26 U.S.C., provides for a penalty to be imposed on any person:

(1)who aids or assists in, procures, or advises with respect to, the preparation or presenta…

IRS Increases the FBAR Penalty for People with Offshore Accounts

In efforts to increase offshore tax compliance, the IRS just made brand new changes to its current offshore disclosure programs.  The streamlined procedures have been expanded to accommodate a wider group of U.S. taxpayers who have unreported foreign financial accounts.  This is a very good thing because now more people can use the procedures than could have before.

The original streamlined procedures announced in 2012 were available only to non-resident, non-filers. Taxpayer submissions were subject to different degrees of review based on the amount of the tax due and the taxpayer’s response to a “risk” questionnaire.
The expanded streamlined procedures are available to a wider population of U.S. taxpayers living outside the country and, for the first time, to certain U.S. taxpayers residing in the United States. The changes include:

•Eliminating a requirement that the taxpayer have $1,500 or less of unpaid tax per year;
•Eliminating the required risk questionnaire;
•Requiring the taxpaye…

IRS Increases the FBAR Penalty for People with Offshore Accounts

In efforts to increase offshore tax compliance, the IRS just made brand new changes to its current offshore disclosure programs.  The streamlined procedures have been expanded to accommodate a wider group of U.S. taxpayers who have unreported foreign financial accounts.  This is a very good thing because now more people can use the procedures than could have before.

The original streamlined procedures announced in 2012 were available only to non-resident, non-filers. Taxpayer submissions were subject to different degrees of review based on the amount of the tax due and the taxpayer’s response to a “risk” questionnaire.
The expanded streamlined procedures are available to a wider population of U.S. taxpayers living outside the country and, for the first time, to certain U.S. taxpayers residing in the United States. The changes include:

•Eliminating a requirement that the taxpayer have $1,500 or less of unpaid tax per year;
•Eliminating the required risk questionnaire;
•Requiring the taxpay…

Tax Problems Facing Marijuana Dispensaries, This Time From the City of Los Angeles

The LA times published an interesting article about marijuana dispensaries operating in Los Angeles.  The article focuses on the interesting fact that as Los Angeles tries to clamp down on the number of marijuana dispensaries operating in Los Angeles by making them follow Proposition D requirements, more than 450 medical marijuana shops filed business tax renewals with the Office of Finance.  This number is more than three times as many stores than what is estimated to be allowed to stay open.  So while local lawmakers are troubled by the number of medical marijuana shops that still exist in Los Angeles, the Office of Finance has no problem cashing in on all the taxes being collected from them.  The article states that Los Angeles collected roughly $2.1 million from medical marijuana tax renewals this year, an Office of Finance staffer told a City Council committee Monday.

The interesting thing about this article is that City Council is upset that these people are paying business taxes…

Tax Problems Facing Marijuana Dispensaries, This Time From the City of Los Angeles

The LA times published an interesting article about marijuana dispensaries operating in Los Angeles.  The article focuses on the interesting fact that as Los Angeles tries to clamp down on the number of marijuana dispensaries operating in Los Angeles by making them follow Proposition D requirements, more than 450 medical marijuana shops filed business tax renewals with the Office of Finance.  This number is more than three times as many stores than what is estimated to be allowed to stay open.  So while local lawmakers are troubled by the number of medical marijuana shops that still exist in Los Angeles, the Office of Finance has no problem cashing in on all the taxes being collected from them.  The article states that Los Angeles collected roughly $2.1 million from medical marijuana tax renewals this year, an Office of Finance staffer told a City Council committee Monday.

The interesting thing about this article is that City Council is upset that these people are paying business tax…

IRS (Probably) Spent More Money than Tax Owed in Symbolic Tax Court Victory

Symbolic of what?  I'll leave that to you.  From a Tax Court opinion released earlier this week, file this under Ridiculous Things the IRS Does:

Taxpayers filed a perfectly correct return listing their taxable social security income on the correct line.  IRS received the return and, using its big brain, decided the social security income was nontaxable, recalculates the tax, and issued the taxpayers an additional $548 refund.  Somehow, the IRS later realized the taxpayers were right and they shouldn't have sent the extra dollar bills, so they audited the couple and demanded they repay the $548.  When the couple declined, the IRS issued a notice of deficiency, on which the couple appealed to the tax court.  Somehow, probably driven by the couple's righteous indignation, the case went all the way to trial, where it was decided in a judicial opinion.  The taxpayers argued they shouldn't have to pay for the IRS's mistake, but the court found in favor of the…

IRS (Probably) Spent More Money than Tax Owed in Symbolic Tax Court Victory

Symbolic of what?  I'll leave that to you.  From a Tax Court opinion released earlier this week, file this under Ridiculous Things the IRS Does:

Taxpayers filed a perfectly correct return listing their taxable social security income on the correct line.  IRS received the return and, using its big brain, decided the social security income was nontaxable, recalculates the tax, and issued the taxpayers an additional $548 refund.  Somehow, the IRS later realized the taxpayers were right and they shouldn't have sent the extra dollar bills, so they audited the couple and demanded they repay the $548.  When the couple declined, the IRS issued a notice of deficiency, on which the couple appealed to the tax court.  Somehow, probably driven by the couple's righteous indignation, the case went all the way to trial, where it was decided in a judicial opinion.  The taxpayers argued they shouldn't have to pay for the IRS's mistake, but the court found in favor of t…

Tax Court Draws Bright Line in Completed Contract Method of Accounting Cases