Tagtax attorney

Blowing the Whistle can be more Lucrative than Winning the Lottery

Businesswoman holding financial reward for whistle blower claim to the IRSBlowing the whistle on a tax-payer that has failed to pay taxes that they owe could be a cause for huge financial gain. Due to the large number of budget cuts within the IRS, the number of audits that the IRS can conduct has been greatly reduced. As a result of this, the Internal Revenue Service is depending more and more on informant claims.

The Bipartisan Budget Act of 2018 has expanded the definition for whistleblower informant awards. question. If the credible information from the informant is used in any way to collect taxes, penalties, interest or other quantities, the IRS may pay an award. The IRS has the ability to pay a substantial award of varying degrees depending on the amount of unpaid taxes in question. If the unpaid tax amount exceeds $2 million, and some other stipulations are met, the IRS will pay a percent of the amount acquired from the tax-payer or business in question. According to Internal Revenue Code 7623, there is technically no limit on how much the IRS can award to an informant if there information proves beneficial. Generally speaking though, the IRS will pay 15 to 30 percent of the amount collected.

There are some other qualifications that must be met: if the case concerns an individual, his or her gross income per year has to be greater than $200,000. There is a second award program for whistleblowers reporting on disputes of less than $2 million dollars and or cases of individual taxpayers with annual gross incomes of less than $200,000. The award for these cases is, of course, smaller, with a greatest possible award being 15 percent of the funds collected, up to $10 million.

At the end of the day, if you help the IRS out in this way by simply telling the truth about what you know, the odds of winning the reward are way higher than the odds of winning the lottery. Read more…

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Innocent Spouse Relief for Spousal Abuse Victims

Female victim of financial abuse by spouse crying

Taxpayers have the right to request relief from any liability that may be shown on a joint tax return. This what is defined by the IRS as innocent spouse relief. Years ago, the IRS would not usually grant innocent spouse relief based on domestic abuse unless the abuse included documented physical violence. However, in the last few years, the IRS made changes to its Revenue Procedures to recognize and explain that domestic abuse is not only defined as involving psychological, sexual, emotional abuse but that it frequently presents itself in the form of control over the victim’s finances.

Many times, in domestic abuse situations, the spouse who makes the most money utilizes that asset to further trap the victim. In this case, the abuser frequently sets limits on the victim’s access to money. The absence of financial resources is a common reason that domestic abuse survivors do not attempt to divorce or separate from a violent spouse.

The IRS has confirmed that it would consider the role that abuse plays when evaluating the historical factors for deciding innocent spouse relief. Additionally, the Internal Revenue Service reminds individuals of some of their rights that are relevant to such cases:

  • Taxpayers have the right to file a separate tax return even if they are still married and have not filed for divorce from their spouse.
  • Before signing a joint tax return, taxpayers have the right to review the entire return.
  • Taxpayers have the right to review supporting documents for a return that is filed jointly.
  • A spouse has the right to refuse to sign a joint return.
  • Taxpayers may also request more time to file their return.
  • Independent legal advice from a lawyer of their choosing is also recommended and well within the rights of all taxpayers. Read more….

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Credit Suisse and Declaration of Offshore Funds by Vivian Hoard

The IRS is cracking down on individuals with offshore accounts who have continued to withhold the declaration of the offshore funds. This is evidenced by the jury’s verdict in the case of Carl R. Zwerner on May 28, 2014. The IRS is not exclusively focusing on Swiss accounts. They are interested in information about the accounts of US Citizens and residents in financial institutions around the globe. So far more than 60 countries have complied and provided information. IRS investigations are underway in previously protected countries like Isle of Mann, Israel, Lichtenstein, and Singapore.

In Zwerner’s case, the jury established that the taxpayer consciously failed to file the Report of Foreign Bank and Financial Accounts forms for three out of the four years charged. Additionally, the Jury found that Mr. Zwerner was not fit for the IRS’s 2009 Offshore Voluntary Disclosure Program and its limited penalty structure. In this case, the IRS is seeking penalties of 50 percent of the account for all of the involved years. Even though the Judge will ultimately decide the penalties, the taxpayer’s exposure is in excess of 100 percent of the undisclosed account.

Previous to Zwerner’s case, the IRS has restricted penalty requests to one year or 50 percent of the account. However, it can be expected that FBAR penalties in excess of 100 percent will become standard. As the identities of Credit Suisse customers become known to the IRS, we expect IRS audits and projected penalties to increase rapidly.

In conclusion, it should be noted that Mr. Zwerner may have been able to benefit from the Offshore Voluntary Disclosure program if he had he taken more timely action. Therefore, it is still possible for all taxpayers with undisclosed foreign accounts to act rapidly before their names are disclosed to the IRS. Read more…

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Tax Collection Reminder by Vivian Hoard

Calendar showing tax day circled in red | Vivian Hoard | Tax Attorney| Atlanta, GAIt is in the best interest of the individual who owes taxes to the federal government to enroll in some type of installment agreement to pay those taxes.

Generally speaking, the IRS can requisition an assessed tax for 10 years from the date of assessment. Individuals are only expected to pay what they can afford in correspondence with published collection financial standards.

In some instances, those standards can be negotiated depending on the individual’s situation. The IRS is able to accept an installment agreement to pay the entire liability. However, the IRS can also accept an installment agreement from the individual to pay a part of the liability with the balance expiring at the end of the collection statute of limitations.

Unfortunately, the IRS is able to reduce the deficiency to a judgment against the individual if the individual fails to pursue any sort of resolution for their back taxes. Additionally, the IRS is able to increase the 10-year period on collection by way of 26 U.SC. Section 6502(a). The extension stands until the judgment is fulfilled or becomes unenforceable under state law. This was true in the recent case of a Kentucky taxpayer (See U.S. v Thomas Nugent, No. 5:16-cv-00380, U.S.D.C. for the Eastern District of Kentucky, January 12, 2018).

In order to be authorized for an installment agreement, a taxpayer needs to be “current.” It is imperative that they have filed all tax returns that are due, and paid taxes for the most recent period by way of employer withholdings or estimated tax payments. Read more…

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Conservation Easements: Tax Shelters or Lifesavers by Vivian Hoard

Blue heron standing in coastal marsh | Georgia | Vivian Hoard | Tax AttorneyBased on the advice of Nick Murray in his fifth edition of “Simple Wealth, Inevitable Wealth”, investment decisions should be based on more than taxes. This may be especially true when thinking about conservation easements.

If done correctly, a conservation easement is a very good and legal way of protecting land, water, air, and nature. Often times, these easements are the reason we have beautiful open spaces that we enjoy. Despite this, particular types of conservation easements are subject to accusation for being ‘inappropriate tax shelters’. Consequently, conservation easements can be tricky, even with all their environmental benefits.

The restriction on the property that a conservation easement provides lasts forever. In most cases that restriction prevents the owner from developing the entire parcel, or some part of it. As a reward for conserving the land, the owner receives a charitable tax deduction. This is, however, only awarded in the case that the restriction is for a charitable purpose, such as protecting a natural habitat, providing a public open space, or a public recreation space.

There are many administrative requirements for compliance with 26 U.S.C. §170. However, the two most common reasons invalidating an easement are the absence of conservation purpose and exaggeration of value. For this reason, it is incredibly important that the taxpayer is very careful in his/her selection of both environmentalist and appraiser for the easement. Read more…

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