Archive for the ‘IRS’ Category
Wednesday, October 7th, 2009
The IRS is reminding everyone that there are special, limited deductions for state and local sales and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles. The deduction is available on new vehicles purchased from Feb. 17, 2009, through Dec. 31, 2009. In states that don’t have a sales tax, the law provides a deduction for other taxes or fees paid. This deduction is available whether or not a taxpayer itemizes deductions on Schedule A.
The deduction is limited to the taxes and fees paid on up to $49,500 of the purchase price of an eligible vehicle. The deduction is reduced for joint filers with modified adjusted gross incomes (MAGI) between $250,000 and $260,000 and other taxpayers with MAGI between $125,000 and $135,000. Taxpayers with higher incomes do not qualify. See IRS information at IRS Announcement
Check the IRS Video on You Tube at http://tinyurl.com/ydg9q69
Bill Lowrance
Lowrance Law LLC
No legal opinion here
Tags: Tax, tax deductions, tax news
Posted in IRS, income tax, tax deductions, tax news | No Comments »
Monday, September 21st, 2009
WASHINGTON ─ The Internal Revenue Service today announced a one-time extension of the deadline for special voluntary disclosures by taxpayers with unreported income from hidden offshore accounts. These taxpayers now have until Oct. 15, 2009. See http://tinyurl.com/mv9oub and NY Times http://tinyurl.com/nleozr
Under special provisions issued in March, taxpayers with these hidden accounts originally had until Sept. 23, 2009 to come forward. Those taxpayers who do not voluntarily disclose their hidden accounts by the new deadline face much harsher civil penalties, where applicable, and possible criminal prosecution.
IRS officials decided to extend this deadline after receiving repeated requests from tax practitioners and attorneys around the country following an influx of taxpayer requests. By extending the deadline for a short period of time, the IRS is providing relief for those taxpayers who had intended to come forward prior to the deadline, but faced logistical and administrative challenges in meeting it. The extension will allow tax preparers and attorneys the necessary time to interview and advise their backlog of taxpayers with these hidden accounts, and prepare the necessary paperwork to qualify for the special penalty provisions.
The IRS also announced that there will be no further extensions.
No legal opinion here.
Bill Lowrance
Tags: foreign bank accounts, Offshore Accounts, secret bank accounts, Swiss Accounts, tax evasion, tax havens
Posted in IRS, Offshore Accounts, Tax Attorney, Tax Crime, Tax Litigation, income tax | No Comments »
Monday, June 22nd, 2009
The U.S. Treasury Department announced on June 19 (see Treasury Press Releases) that Switzerland will agree to more exchange of financial information for tax enforcement purposes. Treasury Secretary Timothy Geithner said the new accord “will increase our ability to enforce our tax laws and will help bring an end to an era of offshore accounts and investments being used for tax evasion.”
Officials said the protocol would revise the existing US-Switzerland income tax treaty to allow for the exchange of information for income tax purposes “to the full extent permitted by Article 26 of the Organization for Economic Co-operation and Development (OECD) Model Income Tax Convention.”
Article 26 of the OECD Model Income Tax Convention is the “exchange of information” clause that most countries use as their “exchange of information” paragraph in International Tax Treaties. The change in the US–Swiss Tax Treaty means that the Switzerland definition of “tax fraud” will not control the information that may be given to the US authorities under the US - Swiss Tax Treaty. In the past, Switzerland would not give information to the US under a tax treaty request unless the information led to “tax fraud” as defined by the Swiss law. “Tax fraud” under Swiss law is very narrow and does not meet the US standard of “tax evasion” that most US tax treaty requests encompass.
Article 26 of the OECD Model Income Tax Convention states:
“The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Convention.”
Now, the question will become, after the US - Swiss change, what if “foreseeably relevant” in the Switzerland’s opinion. This may be a whole new area for litigation in Switzerland and the US for the collection of financial information from Switzerland.
Hey, no tax opinon here.
Bill Lowrance
Tags: foreign bank accounts, income tax, IRS, Offshore Accounts, secret bank accounts, Swiss Accounts, Switzerland, tax crimes, tax evasion
Posted in IRS, Offshore Accounts, Tax Crime, Tax Problems, income tax, tax news | No Comments »
Monday, May 18th, 2009
Okay. Get ready. The IRS is gearing up and has announced jobs for hundreds of critical jobs nationwide. Most of these jobs are for internal revenue agent positions (look for series number 0512). At least 30 hours of college-level accounting coursework is required for revenue agent jobs.
What does this mean? IRS will hire revenue agents to conduct audits and examinations. There will be more tax enforcement. It takes about a year for the IRS to hire and train a revenue agent before the agents start with tax audits. The future?
Read it all at Here
Bill Lowrance
Tags: IRS, Tax Attorney, Tax Authorities, tax crimes, Tax Problems, taxes
Posted in IRS, IRS Audits, Tax Attorney, Tax Crime, Tax Liens, Tax Litigation, income tax, tax news | No Comments »
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.
Tags: cirme, foreign bank accounts, income tax, IRS, Offshore, Offshore Accounts, secret bank accounts, Swiss Accounts, Tax Attorney, Tax Crime, tax havens, Tax Problems
Posted in Attorney, Controversy, IRS, IRS Audits, Offshore Accounts, Tax Attorney, Tax Crime, Tax Litigation, Tax Problems, income tax, tax news | No Comments »
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.
Bill Lowrance
Lowrance Law LLC
703 506 1600
No Legal Opinion Here
Tags: cirme, foreign bank accounts, Offshore, Offshore Accounts, secret bank accounts, Swiss Accounts, Switzerland, Tax Authorities, tax crimes, tax evasion, tax havens
Posted in Attorney, Controversy, IRS, IRS Audits, Offshore Accounts, Tax Attorney, Tax Crime, Tax Litigation, Tax Problems | No Comments »
Tuesday, March 31st, 2009
Hey, this is great. Get some help in buying a new car. IRS announces:
The Internal Revenue Service announced today, IRS Announcement, that taxpayers who buy a new passenger vehicle this year may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns next year.
“For those thinking about buying a new car this year, this deduction may give them a little more drive to make their purchase this year,” said IRS Commissioner Doug Shulman. “This deduction enables taxpayers to buy now and get cash back later on their tax returns.”
The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
IRS also alerted taxpayers that the vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010, to qualify for the deduction.
The special deduction is available regardless of whether a taxpayer itemizes deductions on their return. The IRS reminded taxpayers the deduction may not be taken on 2008 tax returns.
Super buys
Bill Lowrance
No legal opinion here.
Tags: cars, IRS, tax news
Posted in IRS, income tax, tax news | No Comments »
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
Bill Lowrance
No legal opinion here
Tags: foreign bank accounts, Office of Chief Counsel IRS, Offshore, Offshore Accounts, secret bank accounts, Swiss Accounts, Switzerland, tax havens, tax information exchange agreements, tax treaties
Posted in Attorney, IRS, Offshore Accounts, Tax Crime, Tax Problems | No Comments »
Wednesday, February 11th, 2009
If someone works for you, are they an employee or independent contractor? For an employee, you must withhold the usual taxes–social security, federal and state withholding, medicare and unemployment. The employee pays part of the withholding and you pay additional amounts. For an independent contractor, you pay a flat amount. No taxes, social security or other amounts are withheld. A small business paying employees pays a salary and also additional social security, medicare and unemployment taxes. It costs the small business more money to have employees working than to have independent contractors working.
So, as a business owner you decide to classify all your workers as independent contractors so that you do not have to withhold taxes, social security, medicare and unemployment taxes. Smart thinking, right? Well, maybe not so smart. The IRS has started an agency wide employment tax program that addresses worker classification and other employment tax issues, meaning you can look for more IRS enforcement in the future relating to worker classification.
The Treasury Inspector General for Tax Administration (TIGTA), TIGTA, recently reported that misclassification of employees as independent contractors affects millions of workers and contributes to ever increasing the tax gap. When an employee is misclassified, tax revenues are not reported or paid and the burden of uncollected taxes shifts to other taxpayers. Read Full Report Here
The IRS’ most recent estimate of the tax gap is approximately $345 billion. The employment tax portion of this figure due to under reporting is estimated to be about $54 billion with an estimated $1.6 billion being attributable to worker misclassification. However, the $1.6 billion estimate is based on Tax Year 1984 data. The IRS conducted a preliminary analysis of Fiscal Year 2006 operational and program data and found that under reporting attributable to misclassified workers is likely to be markedly higher than the $1.6 billion.
All this means is that the IRS sees significant losses in tax collection and will be instituting worker classification programs in the near future.
In my next post, I will tell you how the IRS decides if your worker is an employee or an independent contractor.
Bill Lowrance
McLean, VA
This post is not legal advice nor is it tax advice.
Tags: Employees, employment tax, Independent contractors, IRS, small businenss, Tax
Posted in Controversy, Employee, IRS, IRS Audits, Independent Contractor, Tax Problems, income tax | No Comments »
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.
Bill Lowrance
PS: No legal advice here; see your own attorney or accountant for tax advice.
Tags: file tax return, income tax, senior taxpayers, tax assistance
Posted in Attorney, IRS, Tax Attorney, income tax | No Comments »
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