Category Archives:IRS

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.

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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).
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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.

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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.

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“Real Housewife” Pleads Guilty to Fraud in New Jersey

taxKnown for their roles in the reality television show The Real Housewives of New Jersey, Teresa and Giuseppe “Joe” Giudice could be facing even more drama after pleading guilty on March 4 to federal charges of committing a long-running financial fraud. The charges include conspiracy to commit mail and wire fraud as well as three types of bankruptcy fraud. Mr. Giudice also pleaded guilty to failing to file a tax return in 2004, admitting to not having filed taxes on income of approximately $1 million over four years, between 2004 and 2008. 

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Tax Preparer Convicted of IRS Fraud

Be Careful in the 2013 Tax Season…

dA recent criminal conviction serves as a reminder that you must be careful when hiring a tax return preparer to prepare your 2013 tax return.

Verlean Hollins, a Chicago tax preparer plead guilty to aiding and assisting in the preparation of 3,200 false federal income tax returns.  Hollins admitted that during the 2009 through 2011 tax season, she filed 3,193 income tax returns in which she falsely claimed the eligibility of higher education tax credits for her clients.

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Can the IRS Take my Home?

houseYes, but §6334 requires the IRS to obtain a U.S. District Court judge’s approval in writing before the seizure of a “principal residence.”

The definition of “principal residence,” as defined by IRC 121 and the regulations thereunder, is the critical inquiry in determining whether or not judicial approval is necessary in seizing a taxpayer’s home. IRC 1.121-1(b) provides a facts-and-circumstances analysis for determining whether the taxpayer’s property is considered their principal residence. The regulations state that a houseboat, a house trailer, or the house or apartment that the taxpayer is entitled to occupy as a tenant-stockholder in a cooperative housing corporation may be a principal residence. Personal property that is not considered a fixture under local law is not the taxpayer’s “principal residence.” 

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Manny Pacquiao vs. the IRS

pac

While Manny Pacquiao has won the boxing world championship in eight distinct classes, his fight with the Philippine and United States tax men is sure to be his most challenging yet. The Philippine Bureau of Internal Revenue (BIR) has slapped Pacquiao with a $50 million tax bill; at the same time, the IRS claims that Pacquiao owes $18 million in back taxes and placed a lien on his U.S.-based assets.

Filing a Notice of Federal Tax Lien is the IRS’s protocol when a taxpayer owes the IRS more than $10,000.00 (raised from $5,000.00 as part of the IRS Fresh Start Initiative). An IRS tax lien is a claim against a taxpayer’s property for the payment of back taxes including any interest, penalties, and costs thereon. The purpose of filing a lien is to protect the Government’s interest in a taxpayer’s property against the claims of other creditors. Therefore, despite his wealth and boxing prowess, I would not lend Pac-Man any money at this time.

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