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Wednesday, May 16, 2018

Tax Fraud – What is tax fraud which the IRS pursues?

Tax Fraud – What are the Types of Tax Fraud the IRS Pursues?

The IRS takes tax fraud very seriously.  If the IRS finds fraudulent activity, generally through an audit, it can mean stiff penalties and even jail time.

Los Angeles IRS Tax FraudReceiving a notice that the IRS is conducting a criminal tax investigation is not something anyone wants to experience. Should such a notification be received, look into hiring a tax fraud lawyer as soon as possible.

What is IRS tax fraud?

Tax fraud involves a conscious decision to falsify tax records and returns. In most cases, the motivation for committing such an act is to avoid paying the rightful amount of taxes due on personal income, business profits, inventories, and other types of financial assets.

Tax evasion is a subset of tax fraud.  Tax evasion usually entails a deliberate act of misrepresentation of taxable income to the IRS (see IRC § 7201).  Both tax fraud and tax evasion are felony charges and they generally have the same level of punishment.

Serious violations of the IRS tax code such as tax fraud may lead to criminal charges. Most of the time though, tax fraud results in civil penalties only.  Criminal charges are reserved for the most severe tax fraud cases, when a taxpayer intentionally evades paying taxes or engages in an illegal act in declaring taxes.

What types of acts constitute tax fraud?

Usually, fraud cases start with an audit of a filed tax return. During the audit investigation, the auditor may find errors that the taxpayer knowingly and willingly committed.  When these errors go on for several years and in large amounts, it is common to find a pattern of willful evasion.

The following are some examples of fraud:

  • understatement of income. For instance, taking a second job, receiving cash on the side and not reporting it.
  • claiming exemptions or deductions that are not legitimate, both personal and business
  • unscrupulous activities by tax return preparers
  • abusive tax schemes to hide income
  • altering tax returns and financial reports in order to reduce taxes owed
  • inadequate records
  • accounting irregularities (i.e., two sets of books, false entries on documents)

See also,  Cases of General Tax Fraud Investigations.

What are the penalties for tax fraud?

There are civil and criminal penalties associated with a finding of tax fraud. Whether it is potentially criminal or civil depends on the severity and intent of the taxpayer to defraud the IRS.

If fraud is found, but not amounting to criminal activity, a taxpayer may be charged with civil tax fraud penalties.  Civil tax fraud can include a penalty of up to 75% of the underpayment of tax attributable to fraud, in addition to the taxes owed (see IRC § 6663 and the IRS Fraud Handbook—Civil Fraud Section).

A criminal conviction can result in jail time and civil penalties for the following (see IRS Fraud jail time and penalties chart):

  • Persons who willfully attempt to evade or defeat any tax imposed (tax evasion). Up to five years in prison or penalties of up to $250,000 for individuals and $500,000 for corporations or both, together with the costs of prosecution.
  • Fraudulent statements or returns. Up to three years in prison or penalties of up to $250,000 for individuals and $500,000 for corporations or both, together with the costs of prosecution.
  • Persons who willfully aid or assist in fraudulent activity. Up to three years in prison or penalties of up to $250,000 for individuals and $500,000 for corporations or both, together with the costs of prosecution.

What do you do when accused of tax fraud?

First and foremost, taxpayers facing a tax fraud criminal investigation should never represent themselves or allow themselves to be represented by non-attorneys or inexperienced attorneys.

If you have been contacted by IRS Criminal Investigations or you suspect you are under investigation for tax fraud, do not speak to anyone, including your CPA.  Any conversation between you and your CPA is not considered to be protected by any type of privilege, and the IRS can compel your CPA to testify against you.  All evidence you provide is admissible in court and can be used to bring criminal penalties against you.

Only speak to a tax fraud attorney.  That way the communication between your attorney and yourself will be privileged and protected by the attorney client privilege.

Taxpayers needing assistance in dealing with a potential case of tax fraud and other IRS tax problems should seek the advice of a knowledgeable tax fraud attorney.  The Los Angeles Tax Attorneys at Delia Law have many years of tax fraud experience and will competently represent you before the IRS.  Please call for a no-cost tax attorney consultation for tax resolution at (310) 494-0100. We look forward to helping you.

This blog post is not intended as legal advice and should be considered general information only.

 

Keywords:  Tax Fraud, best tax fraud lawyer, IRS Criminal Investigation, IRS Tax Fraud Attorney, Tax Fraud Lawyer

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Tuesday, April 10, 2018

IRS tax relief help – When to ask for IRS tax relief help?

When to Ask for IRS Tax Relief Help

Dealing with the IRS can be overwhelming.  Many taxpayers get hit with multiple issues with the IRS that they don’t even know where to start.  To compound the problem, the IRS mails many notices, which are a lot of the time terribly confusing.

IRS wage garnishmentMany taxpayers think the problem will just go away.  With the IRS…it never does.  Letting time pass without taking action will only make matters worse.

You need the help from an experienced tax relief attorney when you are faced with the following IRS tax problems:

  • unfiled tax returns
  • tax liens
  • wage garnishments
  • bank levies
  • tax debt, interest or penalties that you cannot pay off
  • payroll tax debt
  • seizure threats of real and personal property
  • tax audits and underreporter issues

Below are some of the most commonly asked questions by taxpayers needing tax relief help:

Can I get IRS help or IRS tax relief?

Yes.  There are many ways for any taxpayer to obtain tax relief.  Depending on your financial situation, there is a program for almost everyone.  Knowing which one you fit in to can be perplexing so hiring an experienced tax relief attorney is your best bet.

The IRS allows qualified taxpayers to settle their tax debt, obtain hardship status when it is not possible to pay anything due to job loss or other life events, or get into a full pay payment plan or reduced payment plan. The IRS also allows abatement of penalties in appropriate situations.

I have unfiled tax returns, should I file?

Absolutely.  Many taxpayers think that if they start filing, it will wake the IRS monster.  It will definitely put you on the IRS radar, but in doing so, you will reduce penalties and will also prevent the IRS from filing their own return for you called a substitute return.

Additionally, the IRS generally already knows that you need to file and has most likely mailed notices informing you of this.  They obtain your information through employers, contractors, mortgage holders or previous documentation.

So, beware.  The longer you go without filing and paying taxes, the more fines you will have to pay.  At a minimum, just file.  At least you will prevent the failure to file penalty.  After filing, then you can look toward resolution with the many options the IRS has to offer.

What if I don’t have the tax documentation to prepare an unfiled return?

As stated above, the IRS most likely already has much of your tax information from employers, contractors, mortgage holders, unless you are self-employed.  That always presents problems when trying to piece together income for an older unfiled return.

It is best to find that information through bank statements.  Just call the IRS to see what information they have and get a wage and income transcript mailed to you for the appropriate year.  You can also get a transcript online at IRS.gov.

What can I do if I can’t pay the IRS what I owe?

IRS tax debt comes about in many different ways such as audit, underreporting of income, or failure to withhold enough over the year.  If it is impossible to pay back the IRS, you may be able to negotiate an Offer in Compromise, settling your IRS tax debt for less than you owe. If the IRS accepts your offer, you can pay the amount agreed upon, and all federal tax liens will be removed (generally after one month of the final settlement payment).

It is highly recommended that you get a tax attorney to help with your offer. An offer in compromise takes much planning, strategy and advanced negotiation skills, not to mention it can take up to six months to a year to get accepted.

If you are not eligible for an offer in compromise, other options include:

  • Currently Not Collectible (CNC) status—due to your financial hardship, the IRS will suspend collection activity against you. This is just a temporary fix, until your financial condition approves. It is a valuable resolution option because it can allow you time to get your finances in order.
  • Payment plan/installment agreement– allows you to pay off your tax debt over time. Usual agreements range from three to seven years. You can elect to pay off the entire amount over time or attempt to negotiate a reduced payoff amount (i.e. partial payment installment agreement). With a PPIA, a full set of financials is required to be submitted to the IRS showing you can only pay a reduced amount.

Taxpayers needing assistance in dealing with an offer in compromise and IRS tax problems should seek the advice of a knowledgeable tax attorney.  The Los Angeles Tax Attorneys at Delia Law have many years of tax resolution experience and will competently represent you before the IRS.  Please call for a no-cost tax attorney consultation for tax resolution at (310) 494-0100. We look forward to helping you.

This blog post is not intended as legal advice and should be considered general information only.

 

Keywords:  Tax Relief Help, Help with Tax Relief, Tax Relief Attorney

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Friday, March 9, 2018

IRS Levy – bank account and wages – Call Delia Tax 310-494-0100

IRS Levy – Can the IRS Levy my Bank Accounts and Wages?

The short answer…Absolutely!  It is hard to believe that taxpayers get notice after notice from the IRS demanding payment, but they just don’t believe anything will really happen.  An IRS Levy notice is serious and you should take action immediately with a tax lawyer.

IRS levy final noticeAn IRS levy permits the legal seizure of your property to satisfy a tax debt. It can contact your employer ordering a wage garnishment, take money in your bank or other financial account (bank levy), take your state or federal tax refund and seize and sell your vehicle(s), real estate and other personal property.

When you owe a tax debt to the IRS and you do not pay the amount in full, collection notices generally come in this order, about five weeks apart:

  • CP-14 Balance Due Notice
  • CP-501 Reminder Notice of Balance Due
  • CP-503 Reminder Notice of Balance Due
  • LT16 You have overdue taxes and /or an overdue tax return
  • CP-504 Intent to Levy Notice
  • LT-11, CP-90, CP-1058 Final Notice of Intent to Levy Notice

It’s serious:  Final Notice of Intent to Levy

The one to obviously worry about is the Final Notice.  If you do not receive this letter and the IRS levies your bank account or garnishes your wages, you have recourse against them to stop these collections.  Many times, taxpayers do not open their mail or just plain forget that they received this particular letter.

To ensure that this Final Notice went out (justifying the IRS collection activity), it is important to contact the IRS to get a transcript for the year(s) that you owe tax debt.  This transcript will show, among other things, whether a Final Notice was mailed out and the date.  If this Final Notice was not sent, it is then best to file a Collection Due Process Appeal to stop the levy action.

How do I avoid an IRS levy after I receive a Final Notice

The key is to be proactive and do not ignore these IRS collection notices.

It is probably best to contact a tax attorney when it’s gone this far.  Generally, you can avoid a levy by getting into tax compliance:  filing returns on time and paying your taxes when due.

If you just do not know what to do, immediately call the IRS at the number at the top of the notice.  If you lost the notice, call the IRS at 1-800-829-1040 for individuals and 1-800-829-4933 for businesses.

When you speak with the IRS, see if you can get more time to file if you have unfiled tax returns.  If you need more time and have more returns to do, call and request it.  As long as they see that you are working toward resolving the situation, they will be compromising.  If you get more time and do nothing, they will deny you any more time and will move forward with collections.

Once you have filed all missing tax returns and if you agree that you owe the tax debt assessed, you may stop collection activity with these following tax resolution options:

  • Installment Agreement (IA)
  • Partial Payment Installment Agreement (PPIA)
  • Offer in Compromise (OIC)
  • Currently Not Collectible (CNC)

Taxpayers needing assistance in dealing with an offer in compromise and IRS tax problems should seek the advice of a knowledgeable tax attorney.  The Los Angeles Tax Attorneys at Delia Law have many years of tax resolution experience and will competently represent you before the IRS.  Please call for a no-cost tax attorney consultation for tax resolution at (310) 494-0100. We look forward to helping you.

This blog post is not intended as legal advice and should be considered general information only.

 

Keywords:        IRS levy, IRS bank levy, IRS wage garnishment, IRS Tax debt

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Monday, February 26, 2018

Offer in Compromise qualification- Will I qualify for an offer in compromise?

Offer in Compromise qualification – Will I Qualify for an Offer in Compromise?

If you are contemplating settling your tax debt with the IRS, it is definitely a good time to look into it.  However, not everyone will qualify despite what the barrage of TV ads say from these unethical tax relief companies.  They will take anyone as a client so beware and know the offer in compromise qualification the IRS uses!

Many taxpayers come to the conclusion that they will qualify based upon having nothing left over at the end of each month.  But, that’s not how the IRS sees it.  It really depends upon what you are spending that leaves you with no money.

IRS collection financial standards

To figure out whether you qualify for an offer in compromise (“OIC”), the IRS goes by their Collection Financial Standards to assess your financial condition.  If you go over their standards for certain expenses, they will generally disallow the amount over the standard.

For example, the national food and clothing standard for a family of two is $1,132.  They will only allow this amount, instead of the $1,500 of what you really spend.  This dis allowance unfortunately will show the IRS that you can pay them more than you actually can.  This in turn raises the settlement offer of your OIC or may disqualify you altogether.

Below are IRS links to the Collection Financial Standards to assist you in whether you qualify for an offer in compromise:

IRS considerations of your offer in compromise qualification

The IRS will consider expenses over the allowable amount depending upon the facts and circumstances of a taxpayer’s situation.  A good example is that of child care expenses.  If this is the case, documentation of proof of this expense (receipts, check copies) must be provided.

It is important to understand that when doing an offer in compromise, the IRS really sticks to the standards.  Unfortunately, the standards are generally not enough to live on for most families and is certainly not the real world.  For example, families have kids in college, these college-aged kids are living at home, but the IRS does not see college expenses or the expense of that extra kid at home as allowable.  This seems oppressive and downright unfair to most.

Basically, the IRS is looking to exclude taxpayers with excessive lifestyles when determining whether an offer in compromise should be accepted or not.  The IRS offer in compromise program is a very viable option for the right taxpayer(s) and it does work.  You just have to position yourself properly and know the IRS guidelines.

Lastly, be aware that all taxpayers must be in compliance and have full documentation for an offer in compromise to even be considered.  Refer to this OIC article for a summary checklist.

Taxpayers needing assistance in dealing with an offer in compromise and IRS tax problems should seek the advice of a knowledgeable tax attorney.  The Los Angeles Tax Attorneys at Delia Law have many years of tax resolution experience and will competently represent you before the IRS.  Please call for a no-cost tax attorney consultation for tax resolution at (310) 494-0100. We look forward to helping you.

This blog post is not intended as legal advice and should be considered general information only.

 

Keywords:  Offer in Compromise, IRS problems, IRS Collection Financial Standards

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Friday, January 26, 2018

Tax Debt Relief – 3 Dangers of Using a Tax Relief Company

Tax Debt Relief – 3 Dangers of Using a Tax Relief Company

You’ve heard them advertising all over the TV and radio.  IRS Tax debt relief companies claiming that they can help you resolve your debt for next to nothing.  But don’t be fooled!

IRS tax debt reliefMost tax  debt relief or tax resolution companies are not even run by professionals.  Their goal is to make money off of you and run, leaving you with an even worse tax problem than when you first started.

Be aware of the following 3 dangers when dealing with a tax settlement firm:

  1. Outlandish and hidden fees

It is all too common that huge fees well over $4,000 are charged by a tax relief company, where the client doesn’t even have full access to a tax attorney as commonly promised.  Clients are treated poorly, rarely get timely responses and fall prey to additional fees that were hidden in their original contract.

To make matters worse, tax relief company representatives rarely know what they are doing and certainly don’t know how to deal with IRS representatives or tax law.  Due to the tax debt relief company’s inexperience, taxpayers that have hired tax relief companies have longer resolution times (and many times, no resolution), thus incurring more fees.

Don’t get locked in to their schemes and avoid them at all costs.

  1. Unprofessional, inexperienced and dishonest advice from TAX DEBT RELIEF companies.

Unfortunately, many tax relief company representatives give bad advice.  For example, they consistently lie about taxpayers qualifying for an offer in compromise or settlement of their tax debt.  Also, the way they advertise makes it seem that most taxpayers will qualify when many will not.  This is misleading and causes many vulnerable taxpayers to wrongly believe that they can help them.

Tax relief companies often get a taxpayer’s name from tax lien lists, which are of public county record.  They then harass and use scare tactics such as telling you that if you don’t hire them immediately, you will go to jail or be charged with tax evasion/fraud or that the IRS will take everything they own.   They often manipulate and bully to make the sale. If you start to feel this type of pressure, back away and find someone that is more honest and professional.

These dishonest and deceitful sales practices are common place when dealing with tax relief companies.  Do not be a victim and take your money elsewhere….to a professional tax attorney that can be held accountable.

  1. High employee turnover often going out of business

Tax settlement firms are notorious for having high employee turnover.  The reason is pretty obvious.  Their sales people know how to sell, but know next to nothing about tax law and resolving tax problems.  They are continually replaced and the client-taxpayer suffers.

Due to poor credibility that starts to build up and horrible customer service, tax resolution companies go out of business pretty quickly.  When quantity, not quality is the focus, the result is catastrophic on a business.  Also, it is pretty tough to compete against tax attorneys and tax law firms who are the real tax attorneys best suited to resolve people’s IRS tax problems.

Taxpayers needing assistance in dealing with IRS tax problems should seek the advice of a knowledgeable tax attorney.  The Los Angeles Tax Attorneys at Delia Law have many years of tax resolution experience and will competently represent you before the IRS.  Please call for a no-cost tax attorney consultation for tax resolution at (310) 494-0100. We look forward to helping you.

This IRS tax relief blog post is not intended as legal advice and should be considered general information only.

 

Keywords:  Tax Relief Companies, Tax Resolution Companies, Tax Settlement Firm, IRS tax problems, tax debt

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Wednesday, January 3, 2018

IRS Tax Problems – Get Help Now -Don’t Wait

IRS Fresh Start Program –  get help now with your tax problems.

IRS Fresh start program los angelesIf you have tax debt and are having a hard time paying off your back taxes, take advantage of the IRS Fresh Start Program.  This program makes it easier for taxpayers to negotiate with the IRS and get out of IRS debt.  It is unknown for how long it will last, so it is a good idea to start the process of resolving your tax debt.

The three main changes to IRS tax laws introduced by the IRS Fresh Start Program include:

  1. Higher thresholds for tax Liens and ability to withdraw tax liens

The IRS agreed to stop issuing tax liens to anyone with under $10,000 in back taxes.  Also, you can now request (through form 12277 Application for Withdrawal) that your tax lien be removed if you fit into one of two scenarios:   (1) you paid your tax lien in full or (2) you enter into a direct debit installment agreement.  See more about Tax Lien Withdrawal requirements on the IRS website.

  1. Expanded access to streamlined installment agreements

Before the IRS Fresh Start Program initiative, the IRS would not allow you to qualify for the installment payment program until you provided detailed financial statements.  With these financials, you would have to show the IRS that you could not afford to pay them in full or that you needed a payment plan.  Now, individual taxpayers who owe up to $50,000 can pay through monthly direct debit payments for up to 72 months (six years) without submitting a financial statement.

There is also a new test program that was extended allowing individual taxpayers owing an assessed balance between $50,001 and $100,000.  The payment terms are over 84 months with financials not required if a direct debit or payroll deduction is put in place.  If not put in place, then a financial statement is required.  See Forms 433F and 433A.

If you owe more than $100,000 or need more than 72 or 84 months to pay off your tax debt, financial statements are required.

  1. Expansion of the Offer in Compromise Program

This IRS Fresh Start program allows you to negotiate your debt with the IRS and offer a settlement amount of less than you actually owe.  The Fresh Start changes make it easier to qualify for an IRS Offer in Compromise giving the IRS additional flexibility in the way they determine whether a taxpayer is qualified.

For anyone struggling with large levels of IRS back taxes debt, it is highly advisable to hire a tax attorney to help you deal with your outstanding debt.  It is becoming increasingly difficult to negotiate with the IRS, even with the IRS Fresh Start Program.

Taxpayers needing assistance in dealing with IRS tax problems should seek the advice of a knowledgeable tax attorney.  The Los Angeles Tax Attorneys at Delia Law have many years of tax resolution experience and will competently represent you before the IRS.  Please call for a no-cost tax attorney consultation for tax resolution at (310) 494-0100. We look forward to helping you.

This blog post is not intended as legal advice and should be considered general information only.

 

Keywords:  IRS problems, IRS Fresh Start Program, tax lien withdrawal, back taxes, IRS debt, offer in compromise

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Monday, October 23, 2017

IRS Collection Notices: What do they mean?

IRS Collection Notices: What do they mean?

When an IRS letter or IRS collection notice arrives, many people are unsure what it means and what to do to respond. IRS letters all look the same, and can be intimidating because of what is at stake.

IRS tax noticesIf a person has tax debt due to the IRS, and does nothing about it, then eventually the person’s account will go into IRS collections.The collection process may take some time, up to several months. Each collection notice usually comes five weeks apart.

Different types of IRS Collection letters – What are the different types of IRS Tax Collection letters?

CP14 This notice is for when a person has a balance due

CP501 First reminder notice for the overdue balance due

CP503 2nd notice to remind a person of their balance due

CP504 Final Notice of Intent to Levy. This is when the IRS gets really serious. This notice says if the amount is not paid in full after this 3rd and final notice, then the IRS will levy the person’s state income tax refund.

CP90 This notice represents the IRS intent to seize assets and gives notification of the person’s right to a hearing. Retirement benefits, real estate, salaries, automobiles, bank accounts etc can be included in the levy

CP91/CP298 This notice represents the IRS intent to seize 15% of social security benefits to pay the unpaid balance that is due.

CP297 This notice represents the IRS intent to seize assets and is sent to the subjects business. The IRS will levy assets if no action is taken.

LT11/LT1058 This letter is the Final Notice of Intent to Levy and Notice of Your Right to Hearing. This indicates that the IRS has made numerous attempts to collect the balance. If no further action is taken within 30 days, the IRS has the right to levy or seize assets. The IRS may also place a Federal tax lien on your property.

The most important and serious IRS collection letters

CP90/297 Final Notice of Intent to Levy and Notice of Your Rights to a Hearing

CP91/298 Final Notice Before Levy on Social Security Benefits

These two notices are the only notices that allow the IRS to start proceedings in order to seize your assets, vehicles, bank accounts, real estate and business assets. The other notices can be important and urgent, but they are not threatening any action. Only these final notices gives the IRS these legal rights to start the proceedings.

When a person receives a Final Notice, he/she must realize that it provides important legal rights. These rights include the ability to file an appeal to have a hearing to settle the case and take the results to a U.S. Tax Court if it is not acceptable. The IRS collection action is halted while the appeal is pending, provided it is filed within 30 days from the issuance of the notice.

Actions to take when a person receives an IRS collection letter

Taxpayers are generally extremely anxious when they receive these types of IRS notices. The best thing to do is to stay calm, read the letter and check if it is a Final Notice. Taxpayer assets are in danger if it is a Final Notice.

If a person agrees with the balance due, look to the tax resolution with a payment plan, currently not collectible status or offer in compromise. This decision must be made quickly as active collections are taking place. The best way to get tax help is from a tax attorney who will work to get a resolution that is most favorable to you and your financial situation.

If you do not agree with the balance due, submit the required information to validate your claim.

Remember, when you submit any information to the IRS, to always keep copies for your records.  Please call for a no-cost tax attorney consultation for a tax resolution.  We look forward to helping you.  This blog post is not intended as legal advice and should be considered general information only

Keywords:  IRS collection notices, IRS Collection Problems, IRS Collections, IRS Final Notice, IRS levies and property seizures, IRS Seizures

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