Tagtax law

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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Understanding Offshore Disclosure by Vivian Hoard

The Offshore Voluntary Disclosure Program (OVDP) and the Streamlined OVDP procedures are two programs that the IRS maintains to bring taxpayers that have undisclosed foreign accounts into accordance with the tax laws. Instead of multiple compounded penalties for failure to disclose the offshore account, the taxpayer is given one penalty of 27 and a half percent of the biggest outstanding balance of the undisclosed money. Fines in the Streamlined OVDP for U.S. resident taxpayers are five percent of the highest balance. The advantages and stipulations of each program are different. Before choosing which program to apply to, the taxpayer should understand these the differences.

The OVDP Program is targeted to those taxpayers who are unable to fulfill the non-willfulness standard outlined below. On one hand, the penalty is higher. On the other hand, this program promises taxpayers that are welcomed into the program that they will not be prosecuted for any tax crime if they make full disclosure.

Persons choosing the Streamlined Program are required to certify under penalties of perjury that their failure to comply was not willful and they must also provide a detailed explanation for their non-compliance. In accordance with the Streamlined Procedures, the returns are liable to audit and if the IRS decides that the taxpayer’s actions were willful, the IRS is free to pursue criminal penalties or civil penalties in the amount of the 27 and a half percent fine under OVDP.

Determining the meaning of willfulness is crucial in understanding which program to choose. Willfulness necessitates a facts and circumstances inquiry into the taxpayer’s behavior and state of mind. This being said, only the taxpayer in question can truly determine whether or not their non-disclosure was non-willful. Customarily the meaning of willfulness in a criminal tax case meant, “[A] voluntary, intentional violation of a known legal duty,” U.S. v. Pomponio, 429 U.S. 10(1976). This called for more than negligence or thoughtless disregard. U.S. v. Bishop, 412 U.S. 346 (1973). Willfulness was meant that the taxpayer expressly intended to violate the law. Cheek v. U.S., 498 U.S. 192 (1991).

Additionally, as stated in the Internal Revenue Manual (IRM), the meaning of willfulness in the context of offshore compliance is a “voluntary, intentional violation of a known legal duty.” IRM 4.26.16.4.5.3. The IRM stipulates that the person’s knowledge of the reporting requirement and conscious decision not to comply with the requirement demonstrates willfulness without reasonable cause. The taxpayer can show a lack of willfulness by confirming that the failure to report was due to neglect, oversight, mistake, or behavior that is a result of a good faith misunderstanding of the law. The taxpayer may also show a lack of willfulness by demonstrating reasonable cause for the non-compliance. Reasonable cause may be found in situations where the taxpayer had entrusted their affairs with tax professionals or was not able to comply because of personal illness or illnesses in the taxpayer’s family, casualties, natural disasters, or the inability to acquire records. 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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