Choosing the Best IRS Payment Plan for Your Tax Debt Two of the most common payment options for delinquent tax debts are installment agreements and offers in compromise. Let’s discuss theses options below, along with the key considerations for choosing which route might be best in a taxpayer’s particular case. If you owe the IRS, and are considerin...
Understanding the IRS Collection Statute Expiration Date (CSED) and Your Rights The Collection Statute Expiration Date, often referred to as the “CSED”, is the maximum time period the IRS will look back to collect unpaid taxes. Similar to a statute of limitation, where anything beyond that date is off-limits, the CSED is 10 years from the date the ...
How Innocent Spouse Relief Can Protect You from Tax Liability When filing a joint tax return, married taxpayers are often privy to certain tax benefits. Generally, married taxpayers take advantage of a higher standard deduction and a lower tax rate when filing their taxes together. However, as a result of a joint filing, both taxpayers are equally ...
Understanding IRS Debt and Community Property Laws in Texas Are you engaged to someone with significant IRS debt? Learn how community property laws in Texas might affect your earnings and property, and explore options to protect your financial interests. When Your Fiancé/Fiancée Owes Money to the IRS. Assume that A is engaged to marry B. They live ...
IRS Ends Automatic Penalties for Late Form 3520 Filings The IRS recently implemented an important change affecting taxpayers required to report foreign gifts, inheritances, and certain foreign trust transactions using Form 3520. Previously, when taxpayers filed Form 3520 late, the IRS automatically assessed penalties even when a reasonable cause ex...
Written by Jack Naranjo Understanding IRS Penalties for Late or Unfiled Foreign Asset Reports At the urging of the Taxpayer Advocate Service and practitioners, the IRS has ended its practice of automatically assessing penalties at the time of filing for late-filed Forms 3520 to report foreign gifts and inheritances. Also, by the end of the year, th...
Overview The purpose of the Streamlined Foreign Offshore Procedures (“SFOP”) is to bring foreign or non-U.S. resident taxpayers into compliance for reporting foreign financial assets. In other words, SFOP provides taxpayers, who comply with the eligibility criteria outlined below, with amnesty from penalties such as failure-to-file and failure-to-p...
Purpose of Form Form 5471 is used to satisfy the reporting requirements of Internal Revenue Code (“IRC”) §§ 6038 (information reporting with respect to certain foreign corporations and partnerships) and 6046 (returns as to organization or reorganization of foreign corporations and as to acquisitions of their stock). Likewise, Form 5471 is used to r...
The Risks of Fraudulent Employee Retention Credit Claims A wise man once said, “Fool me once, shame on you; fool me twice, shame on me.” Whoever this so-called wise man was, he had never encountered the IRS. If he had, the corrected quote would be something like this: “Fool the IRS once, go straight to jail.” When it comes to trying to defraud the ...
Overview Over the past decade, the IRS has ramped up enforcement on foreign asset reporting. Failure to do so can lead United States taxpayers down a dark road of hefty civil penalties and even potential criminal exposure. Though we have already discussed at length the FBAR and Form 8938, this article will take a deeper dive into one of the most co...
“Tax Fraud” Defined and How the IRS Proves It In continuing with the Tax Crimes series, we began by examining introducing you to the criminal tax investigation process and how referrals to the Internal Revenue Service’s (“IRS”) Criminal Investigation Division (“CID”) begin. Now, we will dive into the IRS’s definition of fraud, the “badges” of fraud...
How the Criminal Tax Investigation Starts and When You Should Worry In case you did not know, you can go to jail for cheating on your taxes. Although the odds of being convicted of a tax crime are extremely low, the IRS does conduct a number of criminal investigations each year in an effort to directly influence the American public’s confidence and...
Civil Penalties and Interest Explained Have you ever forgotten to file your tax return on time? What about missing the payment deadline if you owed taxes? Did you wonder why the “taxes owed” amount was not the entire amount you had to pay the IRS? This article, along with subsequent articles, will explain why. Congress has enacted a number of civil...
Overview Have you ever wondered what needs to be declared on a U.S. tax return if you own foreign assets? Depending on the type of foreign asset, you may be required to file a Foreign Bank and Financial Accounts Report (for more on that, refer to the article: Reporting My Foreign Bank and Financial Accounts) or even Form 8938. Beginning in 2011, th...
What is the Trust Fund Recovery Penalty? Under Internal Revenue Code (“IRC” or the “Code”) § 6672, any person required to collect and pay over any tax imposed by the Code who fails to collect such tax or pay over such tax will be liable for a penalty equal to the total amount of the tax not collected or paid over. Several persons may be held jointl...
Overview In community property states, each spouse is generally attributed one half of the community income. Unless a joint return is filed, this results in each spouse being liable for tax on their attributed portion of the community income. This article will explore what happens when community property is not properly allocated between married in...
Navigating the Complexities of Cryptocurrency Taxation and Regulation in the US The rise of cryptocurrencies, led by the ever-popular Bitcoin, has caught the attention of investors worldwide. As virtual currencies continue to appreciate significantly, individuals and businesses are eager to capitalize on the potential financial gains. However, the ...
Overview Depending on the amount of taxes, penalties, and interest owed to the IRS, you may be considering an Offer in Compromise (“OIC”). However, to pay “pennies on the dollar,” the Internal Revenue Service (“IRS”) will not accept an OIC unless the amount offered is equal to or greater than your Reasonable Collection Potential (“RCP”). What is Re...
Understanding IRS Levies and Your Rights Tax levies are scary and are extremely debilitating for all taxpayers. Levies involve the actual seizure of property to satisfy a tax debt. Under Internal Revenue Code (“IRC”) 6331(a), the IRS has the right to seize and sell “all property and rights to property.” This means real or personal property and tang...
How to Avoid Unfair Tax Liability in Community Property States In Texas and eight other states, community property laws govern the interests of spouses in property and income acquired or earned during their marriage. In general, community property laws affect how a couple will figure their income on their federal income tax returns if they are marr...
