Archive for category: IRS Operations & Procedures

Congress has given the IRS potent tools to collect taxes. The IRS can impose liens on a taxpayer’s property and can seize it through levy, all without prior judicial authorization. But for taxpayers who attempt to move or keep their assets offshore to circumvent IRS collections – beware of the writ of ne exeat republica.

The writ of ne exeat republica effectively prevents a person from leaving the Court’s jurisdiction and the IRS has demonstrated that where its efforts to seize a taxpayer’s property to collect his past due taxes, the IRS essentially seized the taxpayer instead.

Predictably, it takes some fairly serious misbehavior to lead a court to bar someone from traveling – and that is what happened to Charles and Kathleen Barrett of Colorado. United States v. Barrett [Case No. 10-CV-02130], 2014 U.S. Dist. LEXIS 10888 (D. Colo. Jan. 29, 2014).

Unknown to the Barretts, the government secured a writ of ne exeat republica just before the Barretts had departed for Ecuador. The government then received a default judgment and an order directing the Barretts to repatriate funds that the IRS believed that the Barretts had wired to Ecuador. Thereafter, the Barretts not knowing that this writ and order were outstanding returned to Colorado to attend their daughter’s wedding.

Take-down At The Airport.

After attending their daughter’s wedding, on the morning of August 8, 2013, Charles and Kathleen Barrett were preparing to leave Colorado for the return trip to Cuenca, Ecuador. Charles was leaving from the Denver airport while Kathleen was flying out of Grand Junction, Colorado, where she had been visiting her mother. Both were heading to Miami where they would meet their sons for the flight back to Ecuador.

After Charles checked in at the airlines counter at the Denver Airport, he went to the gate an hour before his flight was scheduled to board. Just as he settled into his seat in the waiting area he was surrounded by three men, one of whom showed his U.S. marshals badge. “You’re not flying anywhere today,” one of the marshals told him. “The judge wants to see you.”

Charles turned over his passport and airplane ticket and was led out of the airport in handcuffs. Four times, Charles recalls, he asked to call to an attorney to represent him before the judge. Four times he was put off. He informed the marshal that his sons, Nathaniel and Jonathan, were waiting for him at the Miami airport and was told that the marshals would contact them. Despite the drama and rough treatment, Barrett understood why he was being taken away but felt confident the issue could be resolved quickly once he talked to the judge.

You see the Barretts owed the IRS money from 2007 when they received a large refund of $217,615 that they were not entitled to as a result of a tax return filed without their signatures by their tax preparer. When contacted by the IRS about this, they filed a corrected return in 2009, but the Barretts kept the money.

On September 1, 2010, the IRS sued the Barretts in Colorado federal court, and eventually obtained a default judgment against them for $351,197 (which amount included penalties and interest). Subsequently, three separate times thereafter the Barretts tried to vacate the default judgment, and three times they failed.

So far, so what — if the Barretts had simply paid their taxes, this would have been an obscure case for a relatively small amount and probably nobody except the parties concerned would have cared much. But the Barretts decided that they weren’t going to pay, and that’s where it starts getting interesting. Apparently the Barretts decided to move to Ecuador and that they deposited their erroneous refund check first into their domestic bank account, and then moved it to another account, and then wire-transferred funds to an account with a bank in Uruguay. The government believed that the Barretts had spirited the $217,615 out of the country.

IRS Action To Get The Offshore Money Back.

By this time you are probably thinking, “Yeah, and good luck with the IRS collecting any of that money, against a couple living outside the U.S. with bank accounts outside the U.S.”

But, in the off-chance that the Barretts might show up again, on December 2, 2010 the IRS went to a U.S. District Judge, and asked that an order by the cool name of writ of ne exeat republica be issued against the Barretts to keep them from leaving the U.S. (although they were already long gone), requiring them to post a bond for the $351,197, requiring they be detained by the U.S. Marshal Service pending a hearing, requiring that they produce all their books and records of financial assets and accounts, and restricting them from further transferring or alienating their property.

The writ of ne exeat republica is a little known and seldom used judicial tool dating to the 18th century English royal court. Originally intended to restrict travel for political reasons, its occasional use in the U.S. court system, primarily in family and tax law cases, has often come under question. When it has been invoked, it has been strictly as a civil law action.

Of course, this writ was without little immediate effect since the Barretts had vamoosed. The writ was issued without the Barrett’s knowledge, by the court on an ex parte basis, which meant that only the IRS showed up to talk with the Judge, and the Barretts were unrepresented — a disadvantage inherent to fleeing the country.

The Federal Court Weighs In.

So when Charles was taken into the courtroom on August 8, 2013, he stood before U.S. District Magistrate Judge Boyd Boland who issued the writ of ne exeat republica, ordering the Barretts to turn over their passports and preventing them from leaving the country. Judge Boland read Charles his rights and told him he was not allowed to speak.

An attorney for the IRS asked Judge Boland to put Barrett in jail or post bond of $253,000. The judge responded that the writ did not authorize jailing, only the confiscation of passports and other travel documents. The IRS attorney persisted, claiming the Barretts were flight risks, and the judge finally relented. Charles was fingerprinted and booked into federal jail. However, no charges were filed.

Meanwhile, 200 miles west of Denver in Grand Junction, Kathleen was experiencing the same treatment that Charles was in Denver. She too, was booked into a local jail. It was two days before Charles and other family members knew where she was.

In Miami, not knowing what had happened to their parents, Nathaniel and Jonathan boarded an American Airlines flight to Quito. The U.S. Marshals had not bothered to inform them that their parents had been detained. Assuming that there was a scheduling problem and that the family would be reunited in Ecuador, they remained on the flight.

Kathleen and Charles saw each other for the first time in five days on Tuesday August 13^th, at a hearing in the federal courthouse in Denver. Their attorney immediately demanded that the handcuffs and leg irons be removed. This is a civil not a criminal case, he argued and Judge Boland agreed. The marshals, however, refused to obey the judge’s order based on instructions from their superiors. Charles and Kathleen sat through the hearing literally in chains.

On October 11, 2013, the Barretts appeared for a hearing before a U.S. Magistrate Judge. At this time, the IRS identified the assets they believed the Barretts had control of that were available to pay their debt — about $20,000 in cash in various accounts, some real estate in Ecuador, a bunch of minority stock interests in a nutritional food company apparently doing business in Central America, various small assets such as coins and jewelry, a truck and a horse.

Mrs. Barrett claimed that most of the assets were either worthless or not accessible, and at any rate their total value was not much more than $48,000. Of course, these are just the assets that the IRS was able to identify.

As with nearly all the debtors in similar cases involving offshore assets, the Barretts’ biggest failure was their own credibility. Specifically:

1. The Barretts had obtained a large tax refund through fraud. While they tried to claim that a “maverick accountant” signed their names to the return, when shown their signatures on their returns they claimed that the government forged their signatures. Nonetheless, the Barretts kept the fraudulently-obtained refund.
2. The Barretts had not voluntarily paid anything to their creditor, and had “loaned” $20,000 to their son just to keep it out of their creditor’s hands.
3. While basically claiming poverty, the Mr. Barrett had his credit cards paid from an undisclosed account in the U.S., and had wired to another of his sons from $1,500 to $3,000 per month over a 2 to 3 year period.
4. There was evidence that the Barretts had wire-transferred money between various accounts, and eventually withdrew $48,720 by a cashier’s check, when a wire-transfer failed.
5. The Barretts had refused to provide bank account or wire-transfer information for their various accounts.
6. Mrs. Barrett sold shares in a company that was not disclosed to the U.S. Magistrate Judge for $40,000 while at the same time claiming that her sole income was the $430 she received from Social Security. Some of this money was used to pay the Barrett’s legal fees.

After reviewing the available evidence and applying a multifactor test that considered the merits of the governments underlying tax claim, the relative harm to each party and the public interest to be served by the writ, the district court concluded that the writ should stay in place. Ultimately, the court concluded that the Barretts had to stay put until they paid the balance of their tax debt (which after applying prior payments and credits now only amounted to $16,000) and provided satisfactory evidence that their Ecuadorian property truly was unmarketable.

So don’t think that if you flee the country to dodge your debts or avoid reporting your undisclosed foreign bank accounts you will not have any problems when you come back. A U.S. Marshal or your local friendly sheriff will be waiting for you.

Protect yourself.

If you are in danger of wage garnishments or bank levies or having a tax lien placed against your property, stand up to the IRS and your State Tax Agency by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego, San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

An e-mail claiming to come from the IRS claims:

“Our records indicate that you are a Non-resident, and that you are exempted from the United States of America Tax reporting and withholding on interest paid to you on your account and other financial benefits. To protect your exemption from tax on your account and other financial benefits, you need to re-certify your exempt status to enable us confirm your records with us. Therefore, you are required to authenticate the following by completing form W-8BEN attached and return same to us as soon as possible with a valid copy of government issued Identification (e.g., International Passport) through the email at the bottom of the form.”

This appears to be an identity theft scheme to obtain recipients’ personal and financial information so the scammers can clean out their victims’ financial accounts. In reality, a request for a Form W-8BEN, W-8 or W-9 would be made directly by your bank not the IRS.

Why Banks Need Your Social Security Number.

A social security number (SSN) is a nine-digit number issued by the Social Security Administration to all U.S. citizens, permanent residents and temporary working residents. The purpose of a social security number is to track individuals for taxation purposes. Federal law requires private businesses to collect an SSN when the Internal Revenue Service requires notification of the transaction. Banks and other financial institutions require individuals to provide an SSN when engaging in financial transactions.

Banks are required by federal law to participate in a Customer Identification Program for the opening of new accounts. Individuals opening up a checking account, savings account or renting a safe deposit box are required to provide the bank with a valid name, date of birth, current mailing address, and a social security number. Banks are required to verify the accuracy of the information by also requesting proof of identification in the form of a driver license, passport or by contacting a credit reporting agency that would have information on file based on the SSN. Banks are also required to obtain a SSN on existing accounts and where there is no SSN, the banks are required to withhold tax at the source (that means your bank account) and remit your money to the IRS. Banks check the SSN against government terror lists, to limit terrorist financing and fight against money laundering.

How The Scam Works.

Using a technique calculated to get almost anyone’s attention, the e-mail notifies the recipient that he or she to protect their exemption from tax on interest paid to you on your account and other financial benefits you must complete a tax form with their identifying information (such as Form W-8BEN) and email it back along with a copy of a government-issued ID.

Unusual for a scam e-mail, it may contain a salutation in the body addressed to the specific recipient by name. These scam e-mails are sent using the same technique used by spammers, in which hundreds of thousands of messages are sent to potential victims based on Internet address. Because of the volume, the typical scam e-mail is not personalized.

Beware this e-mail is a phony. The IRS does not send unsolicited, tax-account related e-mails to taxpayers. Also, any domain name in sender’s email or reply email address contained in the email are not legitimate as the domain name for IRS is “irs.gov”.

So What Should You Do?

If you get an email from someone claiming to be from the IRS and asking for your identification, here’s what you should do:

Report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484.

And if you do owe taxes and you have not already resolved this with the IRS or you have not disclosed your foreign accounts as required by the IRS, then that is where we come in. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego, San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

Alaska’s economy is dominated by the oil, natural gas, and fishing industries, resources which it has in abundance. Tourism is also a significant part of the economy and that is where you can find some classic Alaska bars but for some time now these bars have been under pressure to stay in business and to do so have created tax problems and gained the attention of the IRS.

So what makes a classic Alaska bar?

A classic Alaska bar is a magical mixture — a touch of danger and a place where characters gather, featuring a strong relationship between bartender and patrons. More than fun, a classic Alaska bar is educational in a perverse sort of way. Past customers bring them up in conversation. People outside Alaska know of them.

What makes some bars unique is what used to be there before the bar existed – perhaps an old outpost or bootlegging operation or brothel.

Some of these classic Alaskan bars are set up as a dark and dank watering hole with sawdust on the floors and dollar bills and a bra or two nailed to wooden walls. While others may be more conventional. But the one thing that the classic Alaskan bars have in common is the atmosphere of the bar reflects the personality of its owner.

But as those owners get older and retire or pass away, a new crop of entrepreneurs are taking their shot at preserving legendary watering holes. One of those places is Louie’s Bar in the Southeast Juneau community of Douglas.

Louie’s Bar rose out of the ashes of the Great Douglas Fire of 1937, which incinerated downtown Douglas. Although the bar was not called Louie’s until 1974 when it was then inherited by a man named Louie Pusich.

But in 2013 Louie’s doors were closed – not because the owner died or retired. Instead it was closed by the Internal Revenue Service for nonpayment of taxes amounting to $1 million.

The Shutdown.

That’s right, P P’s Douglas Inn, formerly known as Louie’s Bar, was closed down and seized by the Internal Revenue Service for not paying federal taxes over the last fourteen years. The doors were locked, stools upturned on tables and lights dimmed just before the 2013 Independence Day holiday. Owner Patrick M. Peterson admitted that he did not pay federal taxes and knew that a shut down had to be coming.

Mr. Peterson was asked, how could he have racked up over $1 million in Federal taxes? He replied that “Paperwork is not my big suit. I just couldn’t keep up with it. Up until 1999, I had a good bookkeeper that was taking care of it for me. So, I had everything caught up with”. He then added that “staring with 1999, he did have others working on his bookkeeping and taxes but nobody came through with what I needed”.

Federal tax records showed that Peterson and his company Peterson Pacific Holdings owed nearly $1 million in back taxes. Three-quarters of that amount was in the form of unpaid quarterly employer taxes from early 1999 to the end of 2012. The rest is what the IRS calls a Trust Fund Recovery Penalty, or an attempt to recoup employees’ withholding, Medicare and Social Security taxes that the employer did not pass on to the federal government.

This is all evidenced by eleven federal tax liens totaling $997,188.16 that were filed against Peterson and his company between July 2011 and June 2013. They were for unpaid federal employer taxes during most of the reporting periods from First Quarter of 1999 to the Fourth Quarter of 2012.

Now, most business owners in this situation would look to reach a resolution with the IRS and avoid collection action or even worse – a business shutdown. But not Peterson. Instead he signed a quit claim deed for the Bar’s property to a Carol Collier of Riverview, Florida in exchange for $1.00 on May 20, 2013. This was at the same time when the City and Borough of Juneau (“CBJ”) property assessments showed the land valued at $67,900 and the structure valued at $174,100 for a combined total of $242,000. But don’t think that this transfer thwarted IRS collection action. You see when the IRS files a Federal Tax Lien, such lien follows any subsequent transfer of the property until the lien is paid in full or otherwise satisfied.

What is most unusual about Peterson’s case is that his business’ tax problems go back to 1999 – that’s about 15 years! How could the IRS have let this drag on for that long? Perhaps being in a remote location in the rugged State of Alaska made the growing Federal tax liabilities of Peterson’s business a low priority of IRS.

But the continued non-payment of such taxes is common, especially among struggling businesses. Owners of struggling businesses in financial trouble and having cash flow issues are saying “OK, if I don’t pay my suppliers, they’re not going to give me any inventory. If I don’t have any inventory, (then) I’m out of business. Just one quarter or one month and I’ll do better, and the IRS isn’t going to shut me down”. Unfortunately, when this practice continues over successive quarters, many businesses are unable to turn this around. The IRS calls this “pyramiding”.

The IRS is usually in contact with the taxpayer with almost-immediate notices and the assignment of a Revenue Officer to prevent such a huge pyramiding problem. But the eventual measures that were taken in Peterson’s case were an extraordinary step that the IRS had no choice to pursue. You see, Peterson did not owe just the IRS but also the City and Borough of Juneau (CBJ) for sales tax, CBJ for property taxes and the State of Alaska for unemployment insurance contributions.

So the IRS had no choice – it had to stop the bleeding and shut down Peterson’s business. A public auction would be later held and the proceeds applied to the back tax liability of Peterson’s business.

The Reopening.

Abigail Trucano and her parents, James and Arbe Williams were unhappy that the landmark bar was forcibly closed by the IRS because of unpaid back taxes amounting to $1 million. Family members were regulars, as were many in the Southeast community of Douglas. “We thought this bar was so important to Douglas,” says Trucano. “I used to come in here all the time.”

So when the IRS auctioned the bar, the Williams’ snatched it up for $145,000 and invested heavily in its renovation. Their daughter, a co-owner, took charge of operations. Trucano had worked six years as a bartender at Juneau’s downtown tourist destination, Red Dog Saloon, dealing with swarms of cruise ship tourists.

The family contacted Louie Pusich, the former founder, obtaining his permission for the use of his name. The 76-year-old attended the grand opening in July 2014 which was reopened as Louie’s Douglas Inn.

Excited for its return, a handful of Douglas residents waited on the steps of the newly renovated Louie’s Douglas Inn a few minutes before the doors would open at 3:00 p.m. on a Tuesday. A celebratory drink was in order, certainly, but the real reason was to reunite with friends, including the new owners of the bar.

The eponymous Louie Pusich walked down the hill from his home with his wife, Doreen, to the bar he once owned. He ordered a Bud Light, which he jokingly referred to as a “Butt Light.” Looking out for his health, the 76-year-old doesn’t drink much these days.

The look of the bar has changed considerably since the renovation, with a more open layout, exposed brick, new fixtures and more. While the bar has received a makeover, there’s a lot that will remain unchanged about Louie’s Douglas Inn — it’s still the “living room of Douglas.” And not it has another great story behind it – that it was raised from the 2013 wrath of the IRS.

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. If you are in danger of wage garnishments or bank levies or having a tax lien placed against your property, stand up to the IRS and your State Tax Agency by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego, San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

With just weeks remaining before the new tax season opens, Congress walloped the IRS with $341 million in budget cuts. That’s in addition to earlier slashes to the IRS budget of more than $1 billion since 2010, resulting in nearly 13,000 employee layoffs.

Is that a wise choice or an act of spite toward an unpopular agency?

Congress touted that the cuts are much needed but to others it looks like something else – revenge. You see many in Congress are still fuming about this year’s earlier tax-exempt organization scandal and those missing Lerner emails. There are other members of Congress that are angry about reports of wasteful spending. And still there are other members of Congress that see this as a great opportunity to keep IRS from properly implementing pieces of the Affordable Care Act – yes, the same Act that Congress pushed through a few years ago, tasking the IRS with related administrative responsibilities.

Rep. Peter Roskam (R-IL), the newly elected Chair of the Oversight Subcommittee of the House Ways and Means Committee, minced no words about the agency’s budget, referring to the IRS as a “rogue operation” earlier this year. He said about the IRS and cuts to the budget, at the time “This is an effort to get this agency under control. They have not faithfully executed the law. They have not faithfully used the resources that they have been entrusted with, and we in the House are determined to get this right and to rein them in.”

So if Representative Roskam is right, the IRS by getting less funding will have no choice to run its operations more efficiently

Will the IRS cuts paralyze the agency and allow taxpayers to slip through the system?

Now if you are still thinking that this latest move by Congress will paralyze the IRS, let’s put the amount of cuts in perspective.

Since fiscal year 2010, Congress has cut IRS funding by almost $1.2 billion, or 10%, forcing the agency to severely reduce its full-time, permanent workforce by 13,000 employees. This occurred even as the country added approximately 7 million new taxpayers. 

But let’s go back to 1995 – that’s almost 20 years ago. In 1995, the IRS had 114,064 workers to administer tax laws and process 205 million tax returns. By the end of 2013, staffing had fallen to 83,613 to administer a more complicated tax code and process 242 million tax returns and other forms. When I run these numbers I get 26% fewer IRS employees processing 20% more tax returns. Contrary to what Representative Roskam thinks, these statistics show the IRS doing an extraordinary job keep up with the functions it is charged with.

Additionally, the IRS may be one of the smarter investments for Congress. Treasury Secretary Jack Lew said last year that the IRS yields $6 in collections for every $1 it receives for tax enforcement. The agency is already working with a smaller budget than it had five years ago — $11.3 billion in 2014 compared to $11.5 billion in 2009.

So what’s another $341 million cut in funding?

The IRS still has $10.95 billion to work with in 2015. This will bring the agency’s budget below the sequester level and below the level that was in place in fiscal year 2008. This funding level was still sufficient even then for the IRS to perform its core duties, including taxpayer services and the proper collection of funds. Taxpayers back in 2008 were still being audited, investigated, prosecuted, and levied. Back in 2008 the IRS was also starting its major initiative to pursue taxpayers with undisclosed foreign bank accounts.  2015 should be no different.  But don’t get me wrong, the IRS will still need to streamline and make better use of its budget as it now has less.

So how can the IRS do more for less?

Remember, the IRS is already yielding $6 in collections for every $1 it receives for tax enforcement. I know a lot of business people who would not mind having that rate of return. Therefore, cuts in tax enforcement should be minimal.

1. More tax returns being electronically filed and electronically processed. About 150 million returns were filed in 2014 of which more than 96% were electronically filed. The IRS issued more than 61.6 million refunds for approximately $179.8 billion. The average dollar refund is about $3,000, and the IRS has directly deposited more than 52.7 million refunds to taxpayers thus far, a 0.7% increase over the same period last year.

2. Increase access to tax information through the internet. Each tax filing season the IRS provides services to taxpayers to help them fulfill their tax obligations and by meeting taxpayers’ increasing demand for self-service and electronic service options, the IRS can deliver tax information without tying up human resources. Much of this has been accomplished through the IRS’ website. As a result of these and other improvements to the IRS website and because there were no significant tax law changes enacted in 2013, the volume of phone calls to the IRS’ toll-free lines has decreased.

3. Going Paperless. The IRS generated $60 million in annual printing and postage savings by eliminating the printing and mailing of selected tax packages and publications, and by transitioning to paperless employee pay statements.

4. Reducing Office Space. In an effort to promote more efficient use of the Federal government’s real estate assets and generate savings, in 2012, the IRS announced a sweeping office space and rent reduction initiative that over two years is projected to close 43 smaller IRS offices and consolidate space in many larger facilities. These measures will reduce annual rent costs by more than $40 million and reduce total IRS office space by more than 1.3 million square feet by the end of 2014.

When you add the savings for going paperless and reducing office space, this results in the IRS spending $300 million a year less. Remember the latest cut is $341 million. Maybe Congress has this right?

 
5. IRS Working With Other Federal Agencies. For example, the IRS criminal and civil enforcement organizations work with the U.S. Department of Justice Tax Division to shut down abusive tax schemes as quickly as possible in an effort to protect taxpayers from potential additional financial harm. Parallel civil and criminal investigations are an effective and aggressive IRS approach that halts these schemes quickly and permanently.  A civil injunction against the promoter stops the scheme and prevents additional ‘clients’ from investing.  In addition, the Criminal Investigation Division shares abusive tax scheme investor lists with the civil operating divisions to ensure investor tax returns are considered for examination (audit). Also, the Department of Justice, Department of Treasury and Homeland Security entered into a joint effort to enforce the “National Money Laundering Strategy” to continue the nation’s efforts to dismantle corrupt money laundering schemes.

6. IRS Working With Foreign Financial/Tax Agencies. International tax compliance is a top priority of the IRS. The IRS is vigorously pursuing tax cheats around the world, no matter how remote or secret the location. The IRS Criminal Investigation Division (“CID”) is working to develop new ways to share information and foster cooperation among other U.S. government agencies and foreign government counterparts. To enhance its international efforts CID has expanded its overseas presence by assigning attachés to key foreign embassies and consulates. Attachés establish strong ties with foreign government and law enforcement partners working with them to gather and share information about possible financial crimes. CID also actively participates in a number of international financial task force groups to investigate significant areas of noncompliance and criminal activity. These groups include INTERPOL, the Terrorist Finance Working Group (TFWG), the Financial Action Task Force (FATF), and the Organization for Economic Co-operation and Development (OECD).

Don’t Take The Chance And Lose Everything You Have Worked For.

Protect yourself. If you are in danger of wage garnishments or bank levies or having a tax lien placed against your property, stand up to the IRS and your State Tax Agency by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego, San Francisco and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems to allow you to have a fresh start.

I must say that the overwhelming majority of taxpayers file returns and make tax payments timely and accurately. As such taxpayers have a right to expect fair and efficient tax administration from the IRS, including verification that taxes are correctly reported and paid with enforcement actions against those who fail to comply voluntarily.

Four Ways That Returns Are Selected for Examination

1. Potential participants in abusive tax avoidance transactions — Some returns are selected based on information obtained by the IRS through efforts to identify promoters and participants of abusive tax avoidance transactions. Examples include information received from “John Doe” summonses issued to foreign and domestic banks, credit card companies, businesses and participant lists from promoters ordered by the courts to be turned over to the IRS.

2. Computer Scoring — Some returns are selected for examination on the basis of computer scoring.  Computer programs give each return numeric “scores”. The Discriminant Function System (DIF) score rates the potential for change, based on past IRS experience with similar returns. The Unreported Income DIF (UIDIF) score rates the return for the potential of unreported income. IRS personnel screen the highest-scoring returns, selecting some for audit and identifying the items on these returns that are most likely to need review.

3. Information Matching — Some returns are examined because payer reports, such as Forms W-2 from employers or Form 1099 interest statements from banks, do not match the income reported on the tax return.

4. Related Examinations — Returns may be selected for audit when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for examination.

How Does One Find Out If The IRS Does Select Your Tax Return For Examination?

This is where one must be careful because there are scammers out there who are calling people saying they are the IRS and threatening them with arrest and deportation unless they pay right away. If you are selected for an audit by the IRS, the initial contact will always be in the form of a letter sent by the assigned agent under official IRS letterhead.

Look for the following in the IRS Notice:

First, it will give you the contact information of the agent and what IRS office the agent reports to.

Second, it will tell you how the examination is to be conducted – this can be by mail, or through an in-person interview and review of the taxpayer’s records at the agent’s office or outside the agent’s office such as the taxpayer’s business.

Third, it will tell you which years are being audited and what records will be needed. Taxpayers may act on their own behalf or have a tax professional represent or accompany them. 

And that is where we come in. We highly recommend that you do not go into the IRS on your own. Protect yourself from excessive fines and possible jail time. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Diego, San Francisco and elsewhere in California defend you from the IRS.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems and minimize the chance of any criminal investigation or imposition of civil penalties.