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Archive for April, 2009
Thursday, April 30th, 2009
Ask any Tax Court lawyer: 9 out of 10 Tax Court cases begin with an IRS audit of the taxpayer’s income tax return. At what point is the taxpayer first presented with the opportunity to dispute the audit in Tax Court? Usually the IRS begins a tax audit of your tax return for one to three years. Your tax audit lawyer then reviews your receipts and checks and bank statements and makes your document submission to the IRS. The IRS audit then reviews your documents and maybe asks for more documents. Once the tax auditor is satisfied with your documents he or she will issue a Form 4549, Report of Income Tax Changes. You are then given 30 days to agree or to appeal. If you agree, you cannot go to Tax Court. However, if you appeal you have kept the case alive and might decide to go to Tax Court.
Let’s say you’re dissatisfied with what IRS appeals has done. Maybe they have increased your tax substantially and added on huge interest and penalty. Maybe they have denied deductions that your tax lawyer says you’re absolutely entitled to. Whatever, you decide to go to Tax Court. In order to file in Tax Court you need one special document to be issued by the IRS. That document is called the Notice of Deficiency. The NOD gives you 90 days within which to file your case in Tax Court.
Now you are ready and able to file your case in U.S. Tax Court.
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Thursday, April 30th, 2009
Assume that your Tax Court attorney has filed your case in Tax Court. After thirty days have passed since the filing of the case, a party may file a motion called a Motion for Summary Judgment or MSJ. What is a MSJ? It is a pre-trial motion asking the court to decide some or all of the issues in a case without going to trial. Thus, the MSJ can be a very helpful and very decisive tool. The basic rule about the MSJ is that the court will grant (allow) your MSJ only if there are not material facts in dispute. A material fact is a fact which has a bearing on the outcome of the case. A fact is disputed when you say the apple is red and your opponent says no, the apple is green. If you have such a dispute then the court cannot grant the Motion for Summary Judgment or MSJ.
As with MSJ in other courts, the Tax Court judge is required to view the evidence (depositions, interrogatories, requests to admit, etc.) in the light most favorable to the non-moving party. In other words if you say the apple is green and your opponent says the apple was red, if everything else in this argument is balanced equally between you and your opponent, the court in deciding the MSJ must decide the motion in the light most favorable to your opponent. This means the apple is red, as far as the court is concerned in deciding your MSJ, because your opponent–the non-moving party–has said the apple is red.
Always ask your Tax Court lawyer about the advisability of filing a Motion for Summary Judgment once your case is filed. It just might save you a bundle of money and a whole lot of time because your case just might be decided without the burden of a trial.
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Thursday, April 30th, 2009
A Tax Court appeal is not something that comes at the end of a Tax Court case. Instead, it is a form of IRS appeal that comes at the beginning of your Tax Court case. The Tax Court appeal is a curious little animal. You need to understand that at any time during an IRS audit you may write a protest and ask IRS Appeals to consider your objections to the IRS agent’s report and additional tax proposed. But oftentimes your tax lawyer, for various reasons, may decide to let the 30 day time limit run and then file your case in Tax Court. What’s the first thing that happens there? Well, the Tax Court appeal kicks in at this point because the IRS Chief Counsel attorney will refer the case out to Appeals, in an effort to get it settled. Tax Court judges like this practice; it gives both parties another bite of the apple and just might get the case settled.
Interestingly, when a Tax Court case gets referred out to Appeals then only Appeals has the right to settle the case. This right to settle the case exists until the Appeals Officer gives up on the case and refers it back to IRS Chief Counsel for preparation for trial.
Why would most tax lawyers like to see their cases get sidetracked to appeals? For various reasons. One, they can flex a little muscle and let the IRS know the case isn’t a slam-dunk, that there are issues on which it just might lose. Another good reason is that Appeals, like the Tax Court judge, has no interest in the outcome of the case, so a fair resolution and lessening of litigation tensions is always more likely than the lawyers for both sides trying to settle the case among themselves. A third prong to Appeals is that the judge will be much easier to deal with if your lawyer can go before him and tell him that he has participated both in Appeals and in conversations with Chief Counsel for the IRS that he has tried to get the case settled. Tax Court judges have little patience for parties and their representatives who have not been literally struggling to get the case settled.
More cases are settled in Tax Court appeals than cases going to trial. It is always preferable to reach a settlement with the IRS if possible, because trials are expensive and outcomes are never guaranteed. When you settle you know the outcome and you have the certainty that knowing brings.
Posted in Audit Appeal, Tax Audit Appeals, Tax Court | Comments Off
Thursday, April 30th, 2009
At the end of the audit the IRS will typically send you what’s called a Notice of Deficiency or Statutory Notice. This is a notice from the IRS that gives you 90 days in which to file your case in Tax Court, or do nothing, or agree to the additional tax the IRS says you owe and sign a Form 4089, “Notice of Deficiency Waiver.” If you sign the waiver you will soon find that you have consented to the assessment (finalizing) of the amount of tax due and you will soon be contacted by IRS collections.
A Tax Court lawyer should be contacted and your case discussed if you decide to go the Tax Court route. Although the Tax Court is designed so that taxpayers can represent themselves in Tax Court, it is usually a good idea to at least discuss the case with a Tax Court lawyer before proceeding on your own. The tax lawyer will tell you that you have 90 days in which to file your Tax Court case, and that the 90th day, the deadline for filing in Tax Court, is printed somewhere on your Notice of Deficiency. Your tax lawyer will also tell you that if you miss the 90 day deadline there’s nothing anyone can do about that to help you. If you miss it you give up the right, period.
Another option besides going to court once you have the Notice of Deficiency is to do nothing. In other words you can decide not to sign the Notice of Deficiency Waiver (which would have meant you agree to the tax bill) and you can decide not to file your case in Tax Court. So what happens if you go this route?
Typically at the end of the 90 day period for filing in Tax Court the IRS will assess (finalize) the tax due–which means they enter the amount on their books as a final amount. At this point the case proceeds to IRS collections and you will have the chance to either pay in full, pay in full within 90 days, agree to installment payments, or file an Offer In Compromise. An Offer In Compromise is an offer that you make to the IRS to settle your tax bill for less than the amount owed. You can read more about the OIC on our website.
Posted in Offer In Compromise, Tax Court | Comments Off
Wednesday, April 29th, 2009
After receiving an audit notice from the IRS many people aren’t sure what to do next. The IRS can threaten taxpayers with wage garnishments and excessive penalties following an unsuccessful audit, and most people know that. Many people cannot even believe their current predicament as they respond to the initial letters and phone calls from the IRS. A lot of these people really just do not know what course of action to take, so too often they do nothing, either ignoring the threatening letters or destroying them without opening them. After the government starts to garnish their wages they realize that they needed some type of IRS audit representation. The amount that the IRS can take from your check is enormous (85%). There is no way that you will be able to keep your house and your car with your wages so drastically decreased. You need to select a reputable tax attorney to represent you and your case.
You need to find the best IRS audit representation that is available before you lose your home and your car. You should make an appointment right away. Your lawyer can reassure you that there are steps that can be taken to stop the garnishment. You can either apply to pay the government in installments or ask them for an offer in compromise which would basically reduce the amount of money that you actually owed them and you will have the opportunity to pay off the debt in one lump sum. Once either of these proceedings are approved by the IRS the garnishments will stop.
The first thing that a tax attorney can do is to sit down and figure out what the exact amount of money is that you owe the IRS. A lot of people have no idea how the IRS even came up with the figure that they claim that you owe but many people just figure that there is nothing more that they can do about it. Your attorney will arrive at a more realistic figure after taking into account all of the information that you supply them with. They typically find that you owe a significantly lower amount than the IRS has claimed. Finding experienced IRS tax representation is as easy as calling us. Don’t delay, call now.
Tags: california sales and use tax, IRS Audit Representation, sales tax audits
Posted in IRS Audit Representation | Comments Off
Sunday, April 26th, 2009
There are a number of ways that you can make it through an audit irs and not end up owing the government anything. The most important decision that you can make is to contact a tax attorney immediately after you first receive notice of the audit. An attorney will inform you of your rights and provide you with guidance on how to protect yourself. The right attorney will have years of dealing with the IRS and defending clients that have been audited. They understand the audit process and can provide you with peace of mind while they competently handle your case.
The best protection an attorney can offer you during an audit irs is that they will deal directly with the IRS for you. You will not have to answer their questions or submit yourself to any unnecessary interviews without the protection of your attorney. A number of people are audited each year because they fit certain criterion that serve as a red flag for the government. Many of these audits are simply the government’s way of checking up on these individuals. For instance, people that earn over $100,000 dollars a year are twice as likely to be audited as those that make under that amount. Those that are self-employed and that claim home office deductions are also more likely to be audited. Even though they may have filed legitimate tax returns, the government may single out these individuals because of their likeliness to file less-than-perfect returns. Your attorney can help you gather the information that you need to get the IRS off of your back.
For most people that are audited, once they can provide the IRS with substantial evidence supporting their earnings and deductions, the audit will be over. An attorney will attend the audit irs meeting on your behalf if it is necessary. That way you will not have to worry about providing the IRS with too much information or giving off the wrong impression. Your lawyer can handle all questions with his or her acquired expertise.
An experienced tax attorney is your best defense against the IRS in an audit. They will have many years of experience in dealing with the IRS and knowledge of tax laws that most attorney doe not have. They can offer you the ultimate protection and make sure that you are treated fairly during the process. Hiring an attorney will significantly reduce the amount of stress that you will be faced with during an audit.
Tags: audit irs, IRS Audit Representation, sales tax audits
Posted in Tax Audit Protection | Comments Off
Saturday, April 25th, 2009
Generally, there are three types of IRS offer in compromise:
- cash offers
- short-term deferred payment offers
- deferred payment offers (which have 3 payment options).
You should know that the amount of the offer considered acceptable for each type is different. But in all three cases the amount of the offer must include the “Quick Sale Value” of your assets (which turns out to be 80% of fair market value). Thus if your house is worth $100K and it is paid for, then you must offer the IRS 80% or $80K to settle your tax bill of $200K. In addition, in all three types of offers in compromise you must also offer the total amount the IRS could collect from your available income.
It’s the “available income” part of the offer in compromise that gets tricky. The whole idea is that you start with your income, subtract your monthly expenses, and then pay the IRS what’s left over for a certain number of months. As soon as you look at the offer in compromise form, however, you realize that expenses for housing and transportation are not calculated at what you actually pay. Instead, housing and transportation are based on “allowable standards” for specific geographic areas with in the U.S.
Here’s the bottom line rule: In the case of a cash offer, the offer amount must be equal to the quick sale value of assets (80% rule) plus an amount equal to 48 months of your income minus expenses. A short-term deferred payment includes the quick sale value plus 60 months of income minus expenses, payable not sooner than 90 days and not more than two years from acceptance of the offer. Last, a deferred payment requires that the offer amount includes the quick sale value (80%) plus the number of months left on the collection statute times income minus expenses.
Only a qualified offer in compromise tax lawyer should be utilized when submitting an offer in compromise. There are a great many fraudulent companies submitting “offers” whose main focus seems to be getting your money and moving on to the next victim. Always use a lawyer, that’s your takeaway.
Posted in IRS Collections, Offer In Compromise | Comments Off
Saturday, April 25th, 2009
Receiving a letter from the IRS Automatic Collection System (ACS), is what prompts many who owe IRS back taxes to look into the Offer In Compromise program. According to the name, the ACS is, in fact, automatic insofar as generating increasingly aggressive collection letters. But it is also peopled by a group of IRS employees who are excellent and skilled collectors for the Service. ACS is the key source of wage levies and bank levies, which usually get used by the IRS when you fail to respond to an earlier collection notice.
What is the IRS after when it sends out a collection notice? The most obvious answer is one word: Money. It wants money. The problem is, not everyone is sitting back with a pile of cash to send the IRS just because it is owed. And that’s the stuff collections are made of.
When you receive one of these automated notices it is best to respond truthfully and fully to the IRS, as quickly as possible. The ACS operates as a big collection agency and has powers of levy that go far beyond the powers that ordinary collectors like credit card companies might have. Why? Because the IRS doesn’t have to go before a judge to get authority to grab your wages or property. Ordinary collectors have to ask for judicial permission, but not so the IRS. The IRS can just pounce and before you know it you’re paying 85% of your take-home pay to the IRS wage levy. That’s a huge amount, something you should be willing to work very hard to avoid. One way to avoid a wage levy is to file an Offer In Compromise. The IRS Offer In Compromise is made for people who just don’t have the money to pay. Call our tax lawyers and ask about this program today.
Posted in IRS Collections, Offer In Compromise | Comments Off
Saturday, April 25th, 2009
The Internal Revenue Code (IRC) at Sec. 6501(c(4) permits the IRS and the taxpayer to agree to extend the statute of limitations on assessment. Both parties must sign such an agreement. Is this wise, after all extending the SOL gives the IRS additional time to investigate the taxpayer. So whether to grant an extension or not becomes a matter of great importance. As the IRS audit attorney representing the taxpayer in a federal tax audit, always consult with your client at this time and discuss the alternatives. You must explain to your client the difference between the IRS requesting a Form 872 extending the statute to a specific date or the Form 872-A which is an open-ended extension of the SOL until a predetermined event occurs or the taxpayer terminates the extension by sending Form 872-T.
When should the taxpayer extend? Here are some ground rules. Extend when:
- Your client has good records but needs time to organize them
- Your client has nothing to hide and is trying to demonstrate full cooperation
- Your client wants to appeal to Appeals Branch without having a Notice of Deficiency time limit running
Your client should not extend when:
- The IRS is failing to focus on one or more key issues
- There is unreported income that further analysis will uncover
- Your client wishes to pay the tax and close out that tax year
- There is a degree of fraud that only grows stronger with more investigation.
If your client won’t extend, what can the IRS do about it? For one, it can conclude the audit as quickly as possible. It can also immediately issue the statutory notice (Notice of Deficiency/90 day letter).
Is there authority for restricting the extension? Yes, the IRS manual contemplates the parties having the ability to restrict consents given on Form 872 to specific issues.
Here’s your takeaway: Always assume the SOL is an issue and carefully calculate it to make sure the IRS even has the right to continue with an audit.
Posted in IRS Audit Representation, Tax Audit Protection | Comments Off
Thursday, April 23rd, 2009
After receiving the audit letter from the IRS, most people are in a complete state of alarm. They do not know where to turn for help. The government has the authority to claim that you owe them a specific amount of money in back taxes whether you agree or not. They also have the ability to seize your assets and wages. Unfortunately for many people there is no possible way for them to pay off the debt. This leaves many in a total state of shock and disbelief. The first logical course of action for them to take is to call their accountant to ask for tax audit help.
Your accountant will most likely ramble off a list of things that you could do in response to the audit and explain that there is a fee for his services if he is enlisted to provide you with tax audit help. Most people can not believe that their accountant who has been doing their taxes for years can be this unsympathetic towards their predicament. People have lost their homes to the IRS. After finding that their accountant can not provide them with the help that they need, these people decide to look for tax audit help elsewhere. A highly skilled professional is required to handle the case that has a mastery of tax law and years of experience in dealing with the IRS.
The next logical next step would be to contact a lawyer that specializes in tax laws. You need to find someone who is knowledgeable, ethical, and experienced in providing the audit assistance that you desperately need. By doing some research on the subject matter you will see that the only way to protect your home, wages, and other assets is to aggressively defend your tax audit. Tax audit defense is the specialty of a certain number of tax lawyers like John Ellsworth.
You need to contact an attorney who has decades of experience in dealing with cases such as this. He or she can completely understand and listen to all of your concerns. They can also provide you with reassurance that aggressively defending your tax audit will most often mean you do not have to worry about wage garnishments or having your assets seized. You should take the time to call us for a consultation so that you can work together with us to come up with a solution that will save you from the overwhelming debt and placate the IRS.
Tags: audit irs, IRS Audit Representation, tax audit help
Posted in IRS Audit Representation | Comments Off
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