Offshore Voluntary Disclosure Tax Relief

offshore voluntary disclosureOn June 18, 2013, the IRS announced major changes to the voluntary offshore disclosure program (“OVDP”).  OVDP had been criticized by the Taxpayer Advocate and tax attorneys as being too draconian on its participants who failed to disclose their foreign accounts, but were not willful evading their foreign tax obligations.

The 2012 OVDP Terms

Simply stated, the 2012 OVDP deal offered no criminal exposure if you got to the government before it found out about you in exchange for the following:

  1. You paid a 27.5 percent penalty on the undisclosed offshore accounts with the highest aggregate account balance on the period covered by OVDP (8 years);
  2. You filed all delinquent FBAR(s) for the period covered by OVDP (8 years); and
  3. You filed all original and amended tax returns for the period covered by OVDP (8 years)
  4. You paid all back taxes, interest, and a 20% penalty on the taxes owed (the accuracy related penalty)

The 2012 OVDP offered reduced penalty calculations of 12.5% and 5% of the highest aggregate balance, but these reduced OVDP penalties were based on precise requirements.  If you did not satisfy the requirements, OVDP tax agents did not have the discretion to negotiate.  If you did not like the program, you could opt out of OVDP.

Continue Reading...

Hiring Private Collection Agencies to Recover Back Taxes

Congress may authorize the hiring of private collection agencies to collect back taxes.  Congress added a proposal in the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act of 2014 which would authorize the IRS to contract with private collection agencies to recover back taxes.  Congress believes that it can recover $2.4 billion in unpaid federal tax debt over the next 10 years through the use of private collection agencies.  Currently, the NJ Division of Taxation utilizes a private collection agency.

privatizing-tax-collectionThis is not the first time that Congress outsourced private tax collectors.  The IRS utilized private tax collectors in 1996 and 2004. Both times the IRS stopped using private tax collectors because they were deemed inefficient in the collection of back taxes.  The IRS Oversight Board (Oversight Board), a nine-member independent body charged to oversee the IRS operations, agrees.  The Oversight Board believes private collection firms are not as effective as IRS personnel in charge of collection (Revenue Officers and the Automated Collections Unit).

The IRS is missing out on billions of dollars by not collecting taxes within the time frame permitted by Congress.  Generally speaking, the IRS has 10 years to collect a back tax or reduce the tax debt to a judgment.  Currently, many cases are sitting in the queue waiting to be assigned.  If the cases are not assigned, within the 10 year statute, then the tax debt is forgiven.  I have witnessed the IRS missing out on hundreds of thousands of dollars in back taxes.  For example, last week, I noticed that the IRS missed assessing a trust fund recovery penalty. If the taxpayer’s business does not pay the FICA portion of payroll taxes, then the IRS can pierce through the business and assess the payroll tax owed against an individual.

Continue Reading...

Todd S. Unger, Esq., Named to Inaugural Best Attorneys in Business List

In recognition for attorney Todd S. Unger’s superior practice, South Jersey Biz recently dubbed him a top attorney in the region.  

MOUNT LAUREL, N.J. (May 30, 2014) — South Jersey Biz, a regional monthly business-to-business (B2B) publication for Southern New Jersey, has named Todd S. Unger, Esq., LLC to its first-ever Best Attorneys in Business List.

This inaugural list is designed to highlight the names of top attorneys to serve readers looking for help navigating complex legal issues. By choosing an attorney from the list, New Jersey residents can know they’re choosing an attorney backed by the region’s premier B2B periodical.

For the Best Attorneys list, South Jersey Biz received hundreds of submissions, which it narrowed down to 30 categories and just over 100 attorneys, in practice areas ranging from commercial litigation to workers’ comp.

Continue Reading...

Unfiled Tax Returns and Bankruptcy Discharge

Besides criminal tax exposure, penalties, and interest, the US District Court, Northern District of California gave another reason to file unfiled tax returns. The Court held that a taxpayer’s late filed return was not a return for bankruptcy law purposes and thus non-dischargeable.

unfiled tax returnsIn 2001, a taxpayer failed to file his income tax return.  The IRS utilized third party information to prepare the taxpayer’s 2001 tax return.  An IRS prepared return is known as a Substitute for Return (SFR). On March 27, 2006, the IRS mailed the taxpayer a statutory notice of deficiency for the 2001 tax year proposing back taxes of $70,662. 

Continue Reading...

Failure to File Tax Returns and Pay Taxes does not preclude IRS Bonuses

failure-to-pay-irs-bonusesThe Treasury Inspector General for Tax Administration (TIGTA), Reference Number 2014-10-007, discovered that tax compliance is irrelevant when the government issues performance based awards to IRS employees. Therefore, employees who fail to pay their taxes or fail to file their tax returns can receive bonuses.

TIGTA conducted its tax audit in an effort to reduce spending on award programs. According to TIGTA, the IRS Restructuring and Reform Act of 1998 compels the removal of IRS employees who are found to have intentionally committed misconduct, including the willful failure to pay and file taxes.

Providing awards to employees with conduct issues is not mentioned in the 1998 Restructuring and Reform Act; however, TIGTA found paying IRS employees bonuses with delinquent tax accounts is contradictory to the spirit of the Act.

TIGTA recommended the non-payment of performance and discretionary awards for IRS personnel who fail to file or pay their taxes If you did not file taxes last year or owe back taxes to the IRS or state taxing authorities, then the Law Offices of Todd S. Unger, Esq. can help.

The failure to file pay your taxes can result in significant penalties and criminal exposure.  Therefore, there is no time to delay.  The Law Offices of Todd S. Unger, Esq. can implement and execute a tax strategy to become compliant.  By filling out the attached contact form or calling the number below, you can speak directly with Todd S. Unger, Esq. himself.   Email or call Todd S. Unger today (877) 544-4743.

Continue Reading...

NJ Sales and Use Tax Relief for Tattooing and Cosmetic Makeup Services in Reconstructive Breast Surgery

toddThe New Jersey Assembly Budget Committee approved a bill, A-4526, that provides a sales tax exemption for permanent cosmetic make-up services provided in conjunction with reconstructive breast surgery.  The new law, known as “Jen’s Law” became effective on January 17, 2014. The law was named after Jennifer Dubrow Weiss of Vorhees, NJ who had a double mastectomy upon discovery of genes that lead to a high risk of cancer.

Under the old New Jersey tax law, procedures for permanent cosmetic make-up to create the appearance of a pre-mastectomy breast were subject to sales tax.  Many insurance companies had excluded sales tax from coverage for cosmetic services which caused large out of pocket costs for the insured.

Assembly woman Caroline Casagrande, who sponsored the bill, expressed the following in a press release:

“Women who are at a high risk for getting breast cancer often take preventative measures to reduce that risk. A mastectomy is an extremely traumatic event for a woman,” “In addition to the physical pain, the psychological effects are often devastating. Reconstructive surgery is often an important step in the healing process. Requiring women to pay out of pocket sales tax for ensuing cosmetic services is an additional burden they should not have to bear.”  She further stated that “During the final stages of breast reconstruction surgery, women often decide to use tattoos to create the appearance of a pre-mastectomy breast.”

On March 21, 2014, the NJ Division of Taxation issued a reminder that sellers of tattooing, permanent body art, or permanent cosmetic make-up application services should not charge a sales tax in connection with reconstructive breast surgery if the customer provides a doctor’s prescription to the seller. 

If you have been assessed with a sales tax on or after January 17, 2014, you should apply for a tax refund from either the service provider or the Division of Taxation.  New Jersey tax law requires that you file your claim for a refund on the Form A-3730 within four years from the date the sales tax was paid.

Continue Reading...

Tax Preparer Barred from Preparing Returns

The Department of Justice has announced that Keisha Stewart, a Plantation, FL tax preparer, has been barred from preparing federal tax returns for others.  On March 20, 2014, a federal court in Ft. Lauderdale entered a final judgment of permanent injunction.

The complaint alleged that Stewart and her company Professional Tax Services prepared false income tax returns that inflated income or included fictitious income to qualify customers for earned income tax credits.  The complaint further alleged that Stewart falsely claimed education and home and energy credits, head of household status, dependents, and child and additional child tax credits on her clients’ behalf to reduce their tax liabilities.  

Continue Reading...

2014 Interest Rates on IRS Overpayments and Underpayments and Negotiating Tax Interest

If you cannot pay your taxes, then by law the IRS must charge interest on the underpayment of tax.  The IRS computes its interest rate on the federal short-term rate and adjusts the rate every quarter.  The IRS interest rates are compounded daily.

Recently, the IRS has announced that the interest rates on overpayments and underpayments of tax for the 2014 second quarter will remain unchanged. The IRS has announced the following rates:

  • - 3 percent for overpayments, in cases other than corporations;
  • - 2 percent for overpayments in the case of a corporation (except 0.5 percent for the portion of a corporate overpayment exceeding $10,000); and
  • - 3 percent for underpayments (except 5 percent for large corporate underpayments).
Continue Reading...

The IRS is Reporting Millions in Unclaimed Tax Refunds Time to File Those Unfiled Tax Returns

When the 2014 tax season ends, you may lose your tax refund.  Often times, I receive calls from prospects claiming that the IRS is keeping their “return.”  The correct terminology when speaking IRS parlance is that they’re keeping your “refund”.

There could be numerous causes of why the IRS is keeping your money or disbursing it elsewhere.  You may be in arrears of your child support obligations or owe back taxes, but the biggest reason for the IRS keeping your refund is because you’re too late.

Generally, a refund claim must be filed within three years from the due date of the return plus extensions or two years from the time the tax was paid either voluntarily or by garnishment or levy.  The exception to this general rule is if you’re “financially disabled” defined as unable to manage your financial affairs due to a serious medical impairment.  The above refund statute is approaching its limitation period for the 2010 tax year.

The IRS reported that it owes more than $760 million in unclaimed 2010 tax refunds.  If you have not filed a tax return in years, you should immediately file the 2010 tax year no later than April 15, 2014 or October 15, 2014, the latter date if you filed an extension.

Contact Us

Todd S. Unger, Esq. is a tax attorney focusing on assisting taxpayers who have not filed in years or are experiencing a tax dispute with the IRS.  If you haven’t filed your 2010 tax return, there is no time to delay.  Don’t lose your 2010 tax refund; Call or Contact Todd S. Unger today (877) 544-4743.

Continue Reading...