Category Archives:IRS

IRS Seizes Small Business Owner’s Accounts

irs seizes accountsThrough a practice known as civil forfeiture, the IRS can seize property that it believes is tied to a crime even if no criminal charges are filed.  The problem is that the IRS has been abusing its power by seizing bank accounts where there is no indication of a crime committed.

The New York Times reported that the IRS has been seizing bank accounts of small business owners and individuals who deposit cash transactions in less than $10,000 increments.  The Bank Secrecy Act requires a bank to report to the government when an individual or business deposits more than $10,000 in cash.  The Act was designed to catch drug traffickers, racketeers, and terrorists by tracking their cash.  The Act was not designed to catch people and businesses who are not trying to break the law.

Structuring, also known as Smurfing, is a crime whereby a person intentionally tries to avoid the banks reporting of income by depositing the cash in increments smaller than $10,000.  The problem is there could be legitimate reasons for businesses and individuals to deposit less than $10,000 increments.  Unfortunately, the IRS has seized peoples bank accounts who are innocent.  Owners are then left to either try to prove their innocence to win back funds, or lose the money that’s been taken.

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Real Housewives of New Jersey Star Joe Giudice Sentenced To Over 3 Years In Prison

joe giudice tax fraudReality television star Giuseppe “Joe” Giudice, 43, of The Real Housewives of New Jersey was sentenced to 3 years and 5 months in prison on Thursday, October 2, according to NorthJersey.com. The verdict comes after Giudice and his wife Teresa, 42, pleaded guilty in March to federal fraud charges involving bankruptcy fraud, wire fraud, conspiracy to commit mail fraud and failure to pay taxes. Teresa was sentenced to 15 months in prison and two years probation compared to Joe’s 41 months, but each were ordered to pay $414,588 in restitution in addition to their jail sentences.

“Both Giudices pleaded guilty to conspiracy to commit mail and wire fraud and three types of bankruptcy fraud,” the article said. “Joe also pleaded guilty to failing to file a tax return for 2004, though he acknowledged that he didn’t file taxes on income of approximately $1 million from 2004 to 2008.”

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Be Careful of IRS Impersonation Phone Scam - Do Not Become a Victim

IRS Phone ScamOver the past few months, I have been receiving calls from clients and prospects regarding an IRS phone scam.  The callers have informed me that they received a call from someone at the IRS threatening to throw them in jail, revoke their driver’s license, or seize all of their belongings if they do not pay over a sum of money.  The Treasury Inspector General for Taxpayer Administration (TIGTA) is aware of this scam and has issued a warning to taxpayers.

The callers claim to be from the Internal Revenue Service tell intended victims they owe back taxes and must pay by wire transfer or a pre-paid debit card.  Dealing with the IRS on a day to day basis, I can tell you this is not how the IRS contacts people who owe money.  Generally, the IRS will notify people with a series of letters, not by phone, regarding unpaid taxes.  The IRS will never ask for payment by wire transfer or a pre-paid debit card.

TIGTA advised that if you receive a threatening call from someone claiming to be from the IRS, then hang up the phone and call the IRS directly at (800) 829-1040.  A list of IRS contact numbers is on the following website: http://www.irs.gov/uac/Telephone-Assistance.  When you speak to the IRS, inform them of the phone call and ask if your account is in good standing.

If you have been a victim of this scam, then you should, at a minimum, complete the following steps:

  1. File a local police report
  2. Go to the IRS Treasury Inspector website  (http://www.treasury.gov/tigta/contact_report_scam.shtml)Complete the form and retain a copy of the pin number;
  3. Contact the Federal Trade Commission (use their “FTC Complaint Assistant” at FTC.gov. and add “IRS Telephone Scam” to the comments of your complaint in the “Other” Section. (https://www.ftccomplaintassistant.gov/#crnt&panel1-1) ;
  4. Contact the FBI
  5. Contact the Attorney General’s Office in the state you reside.

If you have been a victim of the IRS impersonation scam, IRS identity theft, or another tax scam, then contact the Law Offices of Todd S. Unger, Esq. for help.

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The IRS May Issue Notice of Levy While Installment Offer Pending

In a recent US Tax Court decision, Renald Eichler v. IRS (“Eichler”), Docket Number 725-12L,  the Tax Court affirmed that IRC 6331(k)(2) does not preclude the IRS from issuing the Final Notice of Intent to Levy after the taxpayer submitted an installment agreement request.  The Tax Court further held that the IRS did not abuse its discretion under the Internal Revenue Manual, an IRS employee handbook, when it decided to sustain the Final Notice of Intent to Levy.

The Taxpayer’s Partial Payment Proposal to Resolve a Payroll Tax Matter Did Not Stop the IRS Threat to Levy

In Eichler, the IRS utilized IRC 6672 to assess the Trust Fund Recovery Penalty (TFRP).  The TFRP is a weapon the IRS uses to collect delinquent payroll taxes from responsible and willful individuals who do not remit an employee’s wages (income tax, social security, and Medicare taxes).  The IRS found that the taxpayer was a responsible and willful party and assessed $189,374 in back payroll taxes.

The taxpayer proposed a partial payment installment agreement (“PPIA”) of $350 per month to resolve the delinquent payroll taxes.  A PPIA is a proposal to pay less than what is owed through a payment plan.  If the IRS approves the partial pay installment agreement, it will monitor the taxpayer’s ability to pay throughout the 10 year collection statute.  Generally speaking, the IRS has 10 years to collect back taxes unless it seeks a judgment which can extend the statute based on a time prescribed by state law.

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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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