Archive for the ‘Attorney’ Category
Monday, May 16th, 2011
The IRS has spoken. It has has no current plans to increase the standard mileage rate of 51¢ per mile for business miles driven, despite the big boost in gasoline prices.
Simplified deduction method. The optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) is 51¢ per mile for business travel after 2010. (The 2011 rate for using a car to get medical care or in connection with a move that qualifies for the moving expense deduction is 19¢ per mile, 2.5¢ more per mile than the 16.5¢ for 2010.) ( Rev Proc 2010-51, 2010-51 IRB 883 )
The mileage allowance deduction replaces separate deductions for lease payments (or depreciation if the car is purchased), maintenance, repairs, tires, gas, oil, insurance, and license and registration fees. The taxpayer may, however, still claim separate deductions for parking fees and tolls connected to business driving. ( Rev Proc 2010-51 )
The standard mileage rate may not be used for a purchased auto if: it was previously depreciated using a method other than straight-line for its estimated useful life; a Code Sec. 179 expensing deduction was claimed for the auto; the taxpayer has claimed the additional first-year depreciation allowance; or the taxpayer depreciated it using MACRS under Code Sec. 168.
A taxpayer who uses the mileage allowance method for an auto he owns may switch in a later year to deducting the business connected portion of actual expenses, so long as he depreciates it from that point on using straight-line depreciation over the auto’s remaining life. The depreciation deductions would still be subject to the Code Sec. 280F dollar caps. ( Rev Proc 2010-51 )
Additionally, employers may reimburse employees who are required to provide their own cars for business use at a rate that doesn’t exceed the standard mileage rate. A mileage rate that doesn’t exceed the standard mileage rate is treated as made under an accountable plan if the mileage is properly substantiated (time, place, mileage, and business purpose).
I handle IRS problems for my clients. If you get a letter from the IRS, and you are worried or have questions, send me an e-mail or, if urgent, call me.
Lowrance Law LLC
Friday, April 15th, 2011
The IRS issued a press release advising taxpayers of payment options when you file your income tax return. The release is IR 2011-42. I have placed it in the blog below. The most important thing for you to know is if you owe taxes but you cannot pay the full amount file your tax return and make a payment. Fill out and attach to your return Form 9465 — Installment Agreement Request. The IRS will contact you to work out a payment plan. Read the information below.
Remember, I am a tax attorney having worked in Office of Chief Counsel, IRS. If you have questions or need help with the IRS, just let me know.
Lowrance Law LLC
IRS reminds taxpayers with a balance due that there are several payment options available [IR 2011-42]: Taxpayers who have a balance due when they file their 2010 federal individual income tax returns have several payment options.
Payments can be made by electronic funds withdrawal, credit or debit card, the Electronic Federal Tax Payment System, or check or money order. According to IRS, some taxpayers who itemize their deductions may be eligible to claim as a miscellaneous itemized deduction the convenience fee charged to pay individual income taxes by credit or debit card.
Along with a check or money order, a taxpayer must include Form 1040-V, Payment Voucher. If a return has already been submitted but additional payment is due, a check or money order should be mailed to IRS with Form 1040-V. “For members of the military and others serving in combat zones, the filing and payment deadline is normally postponed until at least 180 days after the service member leaves the combat zone,” IRS said. “If you are eligible, you get the extra time without having to ask for it,” IRS added.
The agency advises taxpayers with a balance due to pay as much as possible by April 18 to avoid penalties and interest. Those who cannot pay in full have several options to consider. The first is an installment agreement. In most cases, this can be done in several minutes by using the IRS website, the agency said. The second payment option is an Offer in Compromise, which is an agreement between a taxpayer and IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. It is subject to acceptance based on legal requirements. The news release can be viewed on the IRS website.
Wednesday, April 13th, 2011
The IRS just sent out IRS Tax Tip 2011-73. The notice gives you the IRS view of what to do if you receive a letter from the IRS. Read this over and do not panic. If you need assistance with the IRS, please contact me at 703 506 1600. I handle audits, examinations and litigation of IRS matters
Eight Things to Know If You Receive an IRS Notice
the Internal Revenue Service sends millions of letters and notices to taxpayers
for a variety of reasons. Here are eight things to know about IRS notices – just
in case one shows up in your mailbox.
Don’t panic. Many of these letters can be dealt with simply and painlessly.
There are a number of reasons why the IRS might send you a notice. Notices may request payment of taxes, notify you of changes to your account, or request additional information. The notice you receive normally covers a very specific issue about your account or tax return.
Each letter and notice offers specific instructions on what you are asked to do to satisfy the inquiry.
If you receive a correction notice, you should review the correspondence and compare it with the information on your return. If you agree with the correction to your account, then usually no reply is necessary unless a payment is due or the notice directs otherwise. If you do not agree with the correction the IRS made, it is important that you respond as requested. You should send a written explanation of why you disagree and include any documents and information you want the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.
Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the correspondence available when you call to help us respond to your inquiry. It’s important that you keep copies of any correspondence with your records.
For more information about IRS notices and bills, see Publication 594, The IRS Collection Process. Information about penalties and interest is available in Publication 17, Your Federal Income Tax (For Individuals). Both publications are available at the IRS website, www.irs.gov.
Thursday, March 31st, 2011
On March 22, 2011 I gave a lecture for the Fairfax Bar Association (Fairfax Bar) Tax and Family Law Section at the Fairfax County Courthouse on key issues of Divorce Taxation that supplied Continuing Legal Education Credit for all Virginia attorneys present. The event was very well attended. My presentation on divorce taxes, which may seem boring to some, was spiced up with unusual tax court opinions, anecdotes and humorous comments. I did not include a lot of Internal Revenue Code citations, though they did form the basis for my talk. Rather my goal was to explain a complex tax area in a clear, understandable manner.
The attendees left with a fresher, more accurate perspective of how to handle the realities of the divorce process in light of the client’s best tax interest. Topics included: filing status, alimony, child support, retirement benefits, the distribution of property, and other tax topics to include in a property settlement agreement such as household employer taxes, the kiddie tax, child tax exemptions and child tax credits.
Tomorrow I will upload the power point for the tax talk I gave, as well as the written foundation for the talk for your benefit. I am happy to discuss your particular divorce tax situation with you. Feel free to contact me by email, by telephone, or by mail. Please see the contact page on my website for the details.
Lowrance Law LLC
703 506 1600
Disclaimer: No legal opinion here.
Thursday, May 21st, 2009
The IRS is planning more employment tax audits and examinations over the next three years. A national research project is underway right now and the IRS has announced that it will conduct detailed employment tax examinations of certain taxpayers. The selection process for taxpayers has begun and the program will last for three years.
The IRS estimates there will be over 3000 examinations and audits. Although the IRS may look at any line on an employment tax return during the examination, it will primarily focus on the following issues: (1) worker classification (employee vs. independent contractor), (2) fringe benefits, (3) officer’s compensation, and (4) reimbursed expenses.
Often the IRS will receive Form SS 8 from a worker who wants a determination of whether he/she is an independent contractor or employee. The IRS will collect information from the worker and from the company involved. The IRS will either conduct a compliance check, make a determination based on the information collected or conduct a detailed employment tax examinations. If the IRS determines the worker is and was an employee, there are serious tax implications for the employer. It could be costly for the employer in terms of back taxes.
There are several ways to challenge the IRS’ decision about whether the worker is an independent contractor or an employee. It is best to consult a tax professional if you have been contacted about an employment tax matter.
Lowrance Law LLC
703 506 1600
Thursday, May 7th, 2009
Here are a couple of the FAQs the IRS published yesterday on its web site regarding offshore accounts:
1. Why did the IRS issue internal guidance regarding offshore activities now?
The IRS has had a voluntary disclosure practice in its Criminal Manual for many years. Once IRS Criminal Investigation has determined preliminary acceptance into the voluntary disclosure program, the case is referred to the civil side of IRS for examination and resolution of taxes and penalties. Recent IRS enforcement efforts in the offshore area have led to an increased number of voluntary disclosures. Additional taxpayers are considering making voluntary disclosures but are reportedly reluctant to come forward because of uncertainty about the amount of their liability for potentially onerous civil penalties. In order to resolve these cases in an organized, coordinated manner and to make exposure to civil penalties more predictable, the IRS has decided to centralize the civil processing of offshore voluntary disclosures and to offer a uniform penalty structure for taxpayers who voluntarily come forward. These steps were taken to ensure thattaxpayers are treated consistently and predictably.
3. Why should I make a voluntary disclosure?
Taxpayers with undisclosed foreign accounts or entities should make a voluntary disclosure because it enables them to become compliant, avoid substantial civil penalties and generally eliminate the risk of criminal prosecution. Making a voluntary disclosure also provides the opportunity to calculate, with a reasonable degree of certainty, the total cost of resolving all offshore tax issues. Taxpayers who do not submit a voluntary disclosure run the risk of detection by the IRS and the imposition of substantial penalties, including the fraud penalty and foreign information return penalties, and an increased risk of criminal prosecution.
Remember the IRS deadline for this voluntary disclosure deal is September 23, 2009.
Thursday, May 7th, 2009
Yesterday, May 6, 2009, the IRS posted on its website FAQs on more details of the settlement offer for unreported offshore income. The FAQs discuss the recently announced program for voluntary disclosure to the IRS of offshore bank accounts. The official Voluntary Disclosure can be found Click Here.
Those meeting the terms of the disclosure program will have to pay back-taxes and interest for six years, and pay either an accuracy or delinquency penalty on all six years. They will also pay a penalty of 20% of the amount in the foreign bank accounts in the year with the highest aggregate account or asset value, but will avoid criminal prosecution. The FAQs provide examples of what it would cost to take the settlement offer, spell out the potential civil and criminal penalties for those that don’t take the offer, and address the consequences of attempted “quiet disclosure” (i.e., filing amended returns). See FAQs Click Here.
If you have an unreported offshore bank account, it is important to consider the Voluntary Disclosure program. Coming forward and disclosing your information may save you a lot of money in penalties and, more importantly, may avoid criminal prosecution. In my practice, we offer legal expertise in this area along with accounting expertise. A former IRS International Revenue Agent works exclusively for me on my client’s cases. We analyze your entire situation including foreign transactions, amended returns, reporting requirements and meeting and negotiating with the IRS.
As always, my practice is client focused.
Lowrance Law LLC
703 506 1600
No Legal Opinion Here
Friday, March 13th, 2009
Switzerland, Austria and Luxembourg agreed to share secret banking information in cases of tax evasion on Friday. Basically, these havens are agreeing to the OECD standards on financial information sharing. Of course, this is not an open season on the bank and financial information. These countries will consider various requests from other countries for banking information on a case by case basis.
The IRS has information sharing agreements with many tax havens, or as they like to call themselves–offshore financial centers. None of the countries, however, automatically turn over bank or financial upon a request from the IRS. There is a lot more to the process and procedure. Using various laws and procedures, the person or business subject of the request can delay or stop the requests. When I was a trial attorney for the Office of Chief Counsel, IRS, International Division I was involved in many local countries court proceeding challenging the IRS request. Some challenges are successful.
Anyway, read the NY Times story on the recent Swiss agreement:
The Swiss government bowed to pressure on Friday and agreed to conform to international standards on exchanging information in suspected cases of tax evasion, but it maintained that its principle of banking secrecy was in tact.
Two other countries, Austria and Luxembourg, announced steps to fend off a global crackdown on tax evasion by offering concessions before a meeting of leaders from the Group of 20 nations in London at the start of next month.
Read the whole story Click Here NYT
In another story, the Cayman Islands “Leader of Government Business,” Kirk Tibbets, announced that he and others from the Caymans met with US Congress to brief new members about the Cayman’s laws, positions and cooperation in sharing information under various agreements:
Part of the press release said: “[Purpose] to brief new members of key House and Senate committees about the quality of Cayman’s regulatory and international cooperation regimes, with specific reference to our longstanding and effective arrangements with the United States, and to glean any available intelligence on the US position in relation to the April G20 Summit.
My colleagues and I covered, between us, 30 meetings over two days. The people we met were receptive to what we had to say and appeared to have no particular ‘anti-Cayman’ - or even ‘anti- offshore’ - agenda. That is not to say that there are not those members of Congress who do, but they do not appear to reflect the majority sentiment. What came through most forcefully was that the policy environment in Washington is very fluid at the moment, and most of people’s energies and attentions are, understandably, taken up with the US economy, budget and financial system.”
Read the whole press release: Click Here
No legal opinion here
Tuesday, January 13th, 2009
IRS issued new Publication 554 entitled “Tax Guide for Seniors.” Click Here for Pub. 554
Believe it or not, IRS has a great website, IRS Website, and many publications about tax are there for download. Just below is a quoted portion from Publication 554. There are selected topics of particular interest to older taxpayers. In addition, there are several ways that Seniors can get help preparing there income tax returns. For example, see AARP Tax Taxaide, for example. For help, the IRS says:”
Return preparation assistance: The IRS wants to make it easier for you to file your federal tax return. You may find it helpful to visit a Volunteer Income Tax Assistance (VITA), Tax Counseling for the Elderly (TCE), or American Association of Retired Persons (AARP) Tax-Aide site near you.
Volunteer Income Tax Assistance and Tax Counseling for the Elderly.
These programs provide free help for low-income taxpayers and taxpayers age 60 or older to fill in and file their returns. For the VITA/TCE site nearest you, contact your local IRS office.
For the location of an AARP Tax-Aide site in your community, call 1-888-227-7669. When asked, be ready to press in or speak your 5-digit ZIP code. Or, you can visit their website on the Internet at www.aarp.org/taxaide.
From Publication 554:
“The purpose of this publication is to provide a general overview of selected topics that are of interest to older taxpayers. The publication will help you determine if you need to file a return and, if so, what items to report on your return. Each topic is discussed only briefly, so you will find references to other free IRS publications that provide more detail on these topics if you need it.
While most federal income tax laws apply equally to all taxpayers, regardless of age, there are some provisions that give special treatment to older taxpayers. The following are some examples.
Higher gross income threshold for filing: You must be age 65 or older at the end of the year to get this benefit. You are considered 65 on the day before your 65th birthday. Therefore, you are considered 65 at the end of the year if your 65th birthday is on or before January 1 of the following year.
Higher standard deduction: If you do not itemize deductions, you are entitled to a higher standard deduction if you are age 65 or older at the end of the year. You are considered 65 at the end of the year if your 65th birthday is on or before January 1 of the following year.
Credit for the elderly or the disabled: If you qualify, you may benefit from the credit for the elderly or the disabled. To determine if you qualify and how to figure this credit, see Credit for the Elderly or the Disabled.
PS: No legal advice here; see your own attorney or accountant for tax advice.
Sunday, January 11th, 2009
According to the NYT, the Swiss Bank UBS, the world’s largest wealth manager, is going to return about $18 billion dollars to more than 19,000 account holders most of whom are US citizens. The US citizens holding the accounts, according to the IRS and Justice Department, have evaded at least $300 million a year in taxes, and that does not count penalties and interest.
In its article, “What to Do if UBS is Outing Your Secret Account,” NYT lists possible strategies to take in dealing with the IRS – see also NYT artcle about UBS’ plan to disclose accounts. If you have held such an account, your best choice to try and avoid criminal prosecution is to voluntarily disclosure your situation to the IRS. You may not be prosecuted, the choice is up to the Justice Department and the IRS, but you will have to report all your accounts and income and pay taxes, penalties and interest. Of course, paying money is better than sitting in a prison cell.
When I worked as an attorney in the Office of Chief Counsel, IRS, I specialized in criminal and civil tax matters involving offshore tax havens and hidden money. We had to decide how to investigate cases, get the money back and determine civil or criminal steps to take. We often collected millions of dollars in unpaid taxes, penalties and interest.
If you have the offshore account that has not been reported, do not wait for the IRS to knock on your door.