Beware That Divorce Or Separation May Have An Effect On Your Taxes

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Beware That Divorce Or Separation May Have An Effect On Your Taxes

Taxpayers should be aware of tax law changes related to alimony and separation payments. These payments are made after a divorce or separation. The Tax Cuts and Jobs Act changed the rules around them, which will affect certain taxpayers when they file their 2019 tax returns next year.

Old Law Still Applies To Agreements Executed On Or Before December 31, 2018.

Alimony paid to a spouse or a former spouse under a divorce or separation instrument (including a divorce decree, a separate maintenance decree, or a written separation agreement) may be alimony for federal tax purposes. Alimony is deductible by the payer spouse, and the recipient spouse must include it in income.

Alimony Requirements

A payment is alimony only if all the following requirements are met:

  • The spouses don’t file a joint return with each other;
  • The payment is in cash (including checks or money orders);
  • The payment is to or for a spouse or a former spouse made under a divorce or separation instrument;
  • The divorce or separation instrument doesn’t designate the payment as not alimony;
  • The spouses aren’t members of the same household when the payment is made (This requirement applies only if the spouses are legally separated under a decree of divorce or of separate maintenance.);
  • There’s no liability to make the payment (in cash or property) after the death of the recipient spouse; and
  • The payment isn’t treated as child support or a property settlement.

Alimony doesn’t include:

  • Child support,
  • Noncash property settlements, whether in a lump-sum or installments,
  • Payments that are your spouse’s part of community property income,
  • Payments to keep up the payer’s property,
  • Use of the payer’s property, or
  • Voluntary payments (that is, payments not required by a divorce or separation instrument).

New Law Applies To Agreements Executed On Or After January 1, 2019 And Certain Pre-2019 Agreements modified after 2018.

The new law relates to payments under a divorce or separation agreement. This includes divorce decrees, separate maintenance decrees and written separation agreements.

Beginning January 1, 2019, alimony or separate maintenance payments are not deductible from the income of the payer spouse, or includable in the income of the receiving spouse, if made under a divorce or separation agreement executed after December 31, 2018. 

If an agreement was executed on or before December 31, 2018 and then modified after that date, the new law also applies. The new law applies if the modification does these two things:

    • It changes the terms of the alimony or separate maintenance payments.
    • It specifically says that alimony or separate maintenance payments are not deductible by the payer spouse or includable in the income of the receiving spouse.

Agreements executed on or before December 31, 2018 follow the old law. If an agreement was modified after that date, the agreement still follows the previous law as long as the modifications don’t do what’s described above.

Other Rules That Apply Under Both The Old And New Law

Child support is never deductible and isn’t considered income. Additionally, if a divorce or separation instrument provides for alimony and child support, and the payer spouse pays less than the total required, the payments apply to child support first. Only the remaining amount is considered alimony.

Reporting Alimony

If you paid amounts that are considered alimony, you may deduct from income the amount of alimony you paid whether or not you itemize your deductions. Deduct alimony payments on Form 1040, U.S. Individual Income Tax Return and attach Form 1040 Schedule 1, Additional Income and Adjustments to Income. You must enter the social security number (SSN) or individual taxpayer identification number (ITIN) of the spouse or former spouse receiving the payments or your deduction may be disallowed and you may have to pay a $50 penalty.

If you received amounts that are considered alimony, you must include the amount of alimony you received as income. Report alimony received on Form 1040 Schedule 1 or on Form 1040NR Schedule NEC, U.S. Nonresident Alien Income Tax Return. You must provide your SSN or ITIN to the spouse or former spouse making the payments, otherwise you may have to pay a $50 penalty.

What Should You Do?

If you are involved in a divorce, you need to know where you would stand on taxes whether you are paying or receiving party and avoid any potential tax problems from past or future years. 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 Orange County (Irvine), San Diego County (Carlsbad) 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. And if you are involved in cannabis, check out what a cannabis tax attorney can do for you.

Facts To Know When The IRS Sends A Private Debt Collection Service To Collect On IRS Debt.

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Facts To Know When The IRS Sends A Private Debt Collection Service To Collect On IRS Debt.

You would think that with all the fraudulent calls being made by parties presented themselves as working for the IRS to scam taxpayers out of money, the IRS would crackdown on this problem and tighten its reins. But instead the IRS does the opposite and began a new private collection program of certain overdue federal tax debts selecting four contractors to implement it.

IRS Using Private Collection Agencies For the Collection Of Outstanding Inactive Tax Receivables

The new program, authorized under a federal law enacted by Congress, enables these designated contractors to collect, on the government’s behalf, outstanding inactive tax receivables. Authorized under a federal law enacted by Congress in December 2015, Section 32102 of the Fixing America’s Surface Transportation Act (“FAST Act”) requires the IRS to use private collection agencies for the collection of outstanding inactive tax receivables. As a condition of receiving a contract, these agencies must respect taxpayer rights including, among other things, abiding by the consumer protection provisions of the Fair Debt Collection Practices Act.

This is not the first time that Congress has authorized the IRS to out-source its collection functions and each time the IRS has tried to out-source collections they have failed miserably. After all the IRS is the most powerful debt collector in that without formal court action can quickly file tax liens and levy your accounts and garnish your sources of income without any consideration of how much you need to pay bills or obligations.

So this time the IRS says that the type of taxpayer accounts that will be turned over to private collection are those where taxpayers owe money but the IRS is no longer actively working their accounts. Several factors contribute to the IRS assigning these accounts to private collection agencies, including older, overdue tax accounts or lack of resources preventing the IRS from working the cases. So if the really difficult accounts are being turned over for private collection, what tactics do you think that private collectors may take to secure payment from taxpayers and how are taxpayers supposed to know they are dealing with an authorized contacted agent versus a scam artist?

The IRS says it will do everything it can to help taxpayers avoid confusion and understand their rights and tax responsibilities, particularly in light of continual phone scams where callers impersonate IRS agents and request immediate payment. So the IRS will give each taxpayer and their representative written notice that their account is being transferred to a private collection agency. The IRS will then send a second, separate letter to the taxpayer and their representative confirming this transfer. Private collection agencies will be able to identify themselves as contractors of the IRS collecting taxes.

Employees of these collection agencies must follow the provisions of the Fair Debt Collection Practices Act and must be courteous and respect taxpayer rights. Furthermore, private collection agencies will not ask for payment on a prepaid debit card. Taxpayers will also be informed about electronic payment options for taxpayers on IRS.gov/Pay Your Tax Bill. Private collection agencies will not ask for payment on a prepaid debit, iTunes or gift card. Taxpayers will be informed about electronic payment options for taxpayers on IRS.gov/Pay Your Tax Bill. Payment by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency.

Authorized Private Collection Agencies

The IRS has selected the following contractors to carry out this program:

  • CBE
    P.O. Box 2217
    Waterloo, IA 50704
    1-800-910-5837
  • ConServe
    P.O. Box 307
    Fairport, NY 14450-0307
    1-844-853-4875
  • Performant
    P.O. Box 9045
    Pleasanton CA 94566-9045
    1-844-807-9367
  • Pioneer
    PO Box 500
    Horseheads, NY 14845
    1-800-448-3531

Taxpayer Accounts Not Assigned To Private Collection Agencies

The IRS will not assign accounts to private collection agencies involving taxpayers who are:

  • Deceased
  • Under the age of 18
  • In designated combat zones
  • Victims of tax-related identity theft
  • Currently under examination, litigation, criminal investigation or levy
  • Subject to pending or active offers in compromise
  • Subject to an installment agreement
  • Subject to a right of appeal
  • Classified as innocent spouse cases
  • In presidentially declared disaster areas and requesting relief from collection

Private collection agencies will return accounts to the IRS if taxpayers and their accounts fall into any of these 10 situations after assignment to the private collection agencies. 

Opting Out Of Private Collection Agencies

If you do not wish to work with the assigned private collection agency to settle your overdue tax account, you must submit a request in writing to the private collection agency.

What Should You Do?

While I am skeptical that the outcome of this program will be any different than previous collection out-sourcing programs, we see it as an opportunity to provide taxpayers with a chance for a better resolution than what the IRS could offer. The tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), San Francisco Bay Area (including San Jose and Walnut Creek) and elsewhere in California know exactly what to say and how to handle issues with the IRS as well as State Tax Agencies.  Our experience and expertise not only levels the playing field but also puts you in the driver’s seat as we take full control of resolving your tax problems. Also, if you are involved in cannabis, check out what our cannabis tax attorney can do for you.

Owe IRS? Make Sure You Don’t Pay More Than What You Owe

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Did You Receive IRS Notice LT16? What You Need To Do To Prevent An IRS Levy

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Warning: State Department May Deny Passport Renewals And Applications If You Owe The IRS

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Taxpayers who are seriously behind on their taxes to the IRS are putting their passports in jeopardy!

Fixing America’s Surface Transportation Act

Under the Fixing America’s Surface Transportation Act (“FAST Act”), signed into law in December 2015, the IRS is required to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt. See Notice 2018-1. The FAST Act also requires the State Department to deny their passport application or deny renewal of their passport. In some cases, the State Department may revoke their passport.

Which Taxpayers Are Impacted By The FAST Act?

Taxpayers affected by this law are those with a “seriously delinquent tax debt”.  A taxpayer with a “seriously delinquent tax debt” is generally someone who owes the IRS more than $51,000.00 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired or the IRS has issued a levy. The IRS announced that it is implementing this provision in the law staring January 2018.

How Can Taxpayers Avoid Notification To The State Department?

There are several ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. They include the following:

  • Paying the tax debt in full
  • Paying the tax debt timely under an approved installment agreement,
  • Paying the tax debt timely under an accepted offer in compromise,
  • Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice,
  • Having requested or have a pending collection due process appeal with a levy, or
  • Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

Taxpayers Not At Risk For Loosing Passport Privileges.

A passport will not be at risk under this program for any taxpayer: 

  • Who is in bankruptcy,
  • Who is identified by the IRS as a victim of tax-related identity theft,
  • Whose account the IRS has determined is currently not collectible due to hardship,
  • Who is located within a federally declared disaster area,
  • Who has a request pending with the IRS for an installment agreement,
  • Who has a pending offer in compromise with the IRS, or
  • Who has an IRS accepted adjustment that will satisfy the debt in full.

Also for taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the individual’s passport is not subject to denial during this time.

Timeframe And Process To Get IRS Clearance For Passport Renewal Or Application

When a taxpayer applies for a passport (either original issuance or renewal), the State Department, in general, will provide the applicant with 90 days to resolve their tax delinquency with the IRS before denying the application. If a taxpayer needs their passport to travel within those 90 days, the taxpayer must contact the IRS and resolve the matter within 45 days from the date of application so that the IRS has adequate time to notify the State Department.

The remedy for a taxpayer who believes that a certification to the State Department of a tax delinquency is erroneous or that the IRS incorrectly failed to reverse a certification because the tax debt is either fully satisfied or ceases to be a “seriously delinquent tax debt”, is to file an action in Federal District Court. However, taxpayers in this situation may be able to reach resolution within the IRS with the assistance of qualified tax counsel and thus avoid the delay and expense of bringing an action in Federal District Court.

What Should You Do?

If you have outstanding liabilities with the IRS or any State Tax Agency, protect yourself and preserve your right to travel 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 Orange County (Irvine), Walnut Creek and elsewhere in California are highly skilled in handling tax matters and can effectively represent you 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.

Tax Evasion delinquent tax returns IRS tax attorney help with IRS issues

Income Tax Evaders May Still Face Big Fines And Up To Five Years In Jail After Coming Forward

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Tax cheats cost the government real money from the lost revenue and the costs associated with enforcement and collection of unpaid tax liabilities. On the Federal and State levels, enforcement of the tax laws is a priority task to ensure that everyone is paying their fair share. Recently, the South Carolina Department Of Revenue (“SCDOR”) charged 30 employees of the Boeing Company with tax evasion over several years going back to 2011. The employees voluntarily turned themselves in to SCDOR investigators but are still faced with the prospect of hefty penalties and a five-year jail sentence for each charge.

The SCDOR Investigation
According to the news release from the SCDOR, the Boeing employees filed W-4 forms claiming exemption from South Carolina’s state income taxes. Apparently, during tax years 2011 to 2014, the workers claimed state tax exemptions although they did not qualify under South Carolina’s individual income tax guidelines. During the years in question, these Boeing workers also failed to file their state tax returns.

It is important to note that the workers received notices from SCDOR encouraging them to comply with the tax laws prior to issuance of arrest warrants. These Boeing employees were given several opportunities to rectify their tax problems but failed to do so. The tax liabilities ranged from $4,000 to about $20,000 based on collective incomes exceeding $4 million. Boeing issued a statement saying that the company was aware of the employees’ tax issues and were proceeding with their own investigation. Aside from their tax troubles, these employees may face disciplinary action from their employer.

Understanding State Income Tax Regulations
The State of South Carolina collects income taxes from residents earning an income in the state. Residents who earn incomes outside South Carolina would pay state taxes to the second state. If that state does not collect income taxes, the taxpayer must pay state taxes to South Carolina as their residential state. Nonresidents who earn income from South Carolina employers must pay taxes to this state. The state does not use a separate withholding exemption certificate from the Federal Form W-4. Exemptions and deductions that are allowed on the federal form are accepted for the state tax returns. In general, employees who received a full refund of taxes withheld in the previous year and who anticipate no tax liabilities in the current year may claim exemption from state taxes.

Enforcement of state taxes varies depending on the prevailing tax code although the state Department of Revenue is charged with enforcement. The process and penalties may vary, so it is important to consult a tax professional when you are faced with any State as well as Federal tax liabilities.

What Constitutes Tax Fraud?
Tax fraud is the deliberate intent to avoid paying taxes through whatever means despite the taxpayer being fully aware that taxes are lawfully due.Tax fraud may trigger penalties under the definitions of Title 26 in the Internal Revenue Code.
Specifically, Title 26 U.S.C. Section 7201 states that tax evasion is a felony that carries a penalty of imprisonment for at most five years or a $250,000 fine for each charge for every individual or a combination of fine and imprisonment along with reimbursement of court costs.

Tax evasion is an example of tax fraud. Tax evasion refers to all deliberate acts where taxpayers misrepresent their taxable income on their tax returns. This would include actions such as inflating expenses for larger deductions, strategically under-reporting taxable income or failing to file tax returns in a mistaken attempt to avoid paying taxes.

The Truth about Dealing with the IRS and State Tax Agencies
There could be any number of reasons why individuals choose to forego filing their tax returns. In the case of the Boeing employees, it is difficult to say what, if anything, made them believe that they could get away with non-filing and non-payment of state taxes for an extended period. It is safe to say that their end-game was not prison, but it appears to be heading in that direction. Looking at the amount of tax liabilities that each individual owed the SCDOR, it would have been much more sensible to comply with state tax laws. The tax dues were miniscule compared to the criminal penalties should they be prosecuted for tax evasion.

The existing tax code is based on the premise that taxpayers are willing and able to honor their tax obligations as upstanding citizens. As such, the IRS and the State revenue offices have programs in place to encourage taxpayers to voluntarily come forward to resolve their non-compliant status instead of waiting for tax agency notices or letters. Voluntary disclosure by taxpayers may count in their favor when the revenue investigator decides if the case merits criminal prosecution. The IRS also allows payment plans and in some cases, reduction of tax liabilities for low-income taxpayers.

Redemption for Non-filers
Tax laws may be rigid, but the IRS and State Tax Agencies do not exist to go after taxpayers who make simple and unintentional mistakes on their tax returns. However, blatant fraud that includes non-compliance with tax filing regulations over several years and ignoring tax agency notices will trigger an investigation and prosecution if for fraud charges. The tax agencies do not need to prove how much you actually owe in taxes to charge you with tax fraud and possibly secure a felony conviction.

If for any reason you failed to file tax returns or you need to amend any of your returns from the last six years, it is best to consult a tax professional to make sure that you are making the right steps. When you work with a tax attorney or a tax expert, you may not have to deal directly with the IRS or State Tax Agency. Your tax representative takes charge of requesting tax transcripts from previous years if you don’t have them anymore. If you owe taxes and are unable to make full payment at the time your returns are filed, your tax representative can negotiate a viable payment plan.

Don’t wait for the IRS or State Tax Agency to contact you if you have not been filing your tax returns or need to amend information submitted in previous returns. For your peace of mind, consult a tax professional who can guide you through the process to ensure a positive outcome and avoid prosecution.

How The IRS Can Make Your Business A Statistic

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The Collection Division of the IRS composes of Revenue Officers whose job is to collect outstanding IRS liabilities from taxpayers as quick as possible. These Revenue Officers have access to intelligence collected by other divisions of the IRS and they will scope out your financial moves, and garnish your wages and other sources of income, and seize houses, cars and bank accounts.

The most common sort of collection case involves a small business that has fallen behind in payment of withholding taxes. A Revenue Officer’s inventory is brimming with cases like these. Revenue Officers are told to go out and use a firm enforcement image in collecting the outstanding IRS liabilities and also be mindful of statistics compiled by the IRS to measure the Revenue Officer’s effectiveness. The IRS will maintain statistics on seizures of property, levies conducted and case status including the shut-down of a business. So when a business continues to ignore the IRS or the business is not paying its liabilities as quick as the Revenue Officer would like to see, that Revenue Officer will now change his stance from collecting the tax to making the business a statistic by shutting it down.

Feuer Trucking Company Shut Down

If you think I’m exaggerating, listen to this true story of how the Feuer Trucking Company of Yonkers, New York, was closed by IRS agents. Two and a half years ago prior, Feuer’s owner admitted to his employees that the company was hauling more red ink than anything else. Feuer was two million dollars in debt – and half a million of that was owed in back taxes to the IRS. The taxes plus the heavy interest payments marked Feuer for bankruptcy.

To save their jobs, many of the employees got together and offered the owner $25,000 for the company. The owner accepted. Feuer Trucking began repaying its debts both to its creditors and to the IRS, negotiating installment payments of $3,000 a week to pay off back taxes while it continued to pay current taxes. But because of the high interest rates and penalties the IRS was charging on the old taxes – 26% – the IRS debt was growing faster than Feuer could pay it off. It passed $800,000.

Just before Christmas the IRS struck. Revenue Officer Donald Raftery seized the $60,000 in Feuer’s bank account, and notified Feuer’s customers to pay their bills not to Feuer, but directly to the IRS. He also demanded a down payment of $400,000 on back taxes. Feuer didn’t have it. So the next day a squad of IRS officers backed up by a small army of U.S. marshals, swooped down on Feuer. Pay up the $851,000 in back taxes, the officers barked, or we will seize and sell everything. Of course, Feuer still didn’t have the money, so the IRS Revenue Officer tagged everything in the office for seizure – including desks, computers and file cabinets.

Feuer’s office manager confronted Revenue Officer Raftery. “Mr. Raftery, do you recall in July that I told you what we were worth? I spelled it all out to you in black and white on paper?” Raftery agreed that he knew that Feuer, which leases its trucks and building, had less than 10% of the $851,000 in assets.” The office manager then inquired, ‘Why did you take this action?”. But the office manager did not get a response back from the Revenue Officer who just shrugged his shoulders.

The IRS eventually returned Feuer’s computers and desks, but kept the $60,000 it had seized from the bank account. Even more devastating to Feuer, the IRS did not return its Interstate Commerce Commission license to operate. Without a license, the trucks couldn’t legally go anywhere. Feuer was out of business. The IRS had shut down a company that was paying current taxes and paying its employees. Fifty workers were added to the unemployment dole.

No matter how you add it up, you would think that the government is losing by closing the company down.

You would think that this headline report on the blind-siding of Feuer was a shocking expose of an IRS action that turned fifty taxpayers into welfare cases. But the Feuer case is not a story in which an IRS agent has careened out of control or the bureaucracy has mistakenly made a seizure that is not cost-effective for the government. In fact, the IRS never makes calculations of whether closing down a firm will add or subtract from the Treasury’s balance.

The Revenue Officers of the IRS Collection Division are among the most powerful people in government. Ten days after demanding payment the IRS can seize a taxpayer’s house, car, land, or business for subsequent sale at public auction. They can serve a levy on a third party, such as a bank, an employer, or anyone who owes the taxpayer money. If they suspect you might skip town without paying they can seize right away. All of this can be done without a court order. And if they so desire they can file a Notice of Federal Tax Lien at the local courthouse, which freezes a taxpayer’s title to property and puts the IRS at the head of the line of creditors.

It is highly unlikely that Revenue Officer Donald Raftery when he shut down Feuer Trucking Company got in hot water with his bosses. They probably toasted him with champagne. Besides generating all that good publicity for the IRS, Raftery racked up some marvelous statistics. He seized a bank account, tagged property, shut a business down, and closed the case. I guarantee that the Feuer case had been a thorn in the side of the local IRS office. Group managers hate over-age cases like the Feuer case. They have to regularly file reports on why they continue to carry them in their inventory and send those reports up the chain of command. This makes the chain of command very angry because an over-age case is not a nice clean statistic they can file to show what a good job they are doing – and what’s worse is an over-age case implies that the network has gone soft. So the word goes out to close cases and build statistics.

The IRS is a law unto itself.

Everything the IRS did to Feuer is legal and the shutting down of Feuer Trucking Company was completely consistent with IRS policy. This report was not a mortal blow against the IRS by unveiling its tactics against Feuer Trucking. Instead, you should think of the report as free publicity for the IRS, opportunely placed just after the week most folks got their W-2’s in the mail and started to look their 1040’s over. The message is this: The IRS is a law unto itself. Watch out!

Not every taxpayer is treated equally by the IRS. Each group manager is allowed incredible latitude in interpreting the collection manual, a freedom that gives rise to cavalier and arbitrary methods of enforcement. The IRS looks like an unbeatable army, with intelligence divisions scoping out your financial moves, cracking troops of auditors probing your returns for weaknesses, and a corps of revenue officers winning the property battle by seizing houses, cars, and bank accounts. It should be no surprise that some of the best Revenue Officers have spent time in military service.

The IRS Revenue Officer typically shows up to a taxpayer’s home or place of business when the taxpayer is in debt to the IRS. This Revenue Officer will also make a personal visit to a taxpayer’s home or place of business in tax cases where a taxpayer owes the IRS employment taxes. The IRS Agent who comes to a taxpayer’s home or place of business is not making the personal visit to take a taxpayer satisfaction survey. The sole purpose is to collect money for the IRS. Regardless of how civil and pleasant the Revenue Officer initially appears to be – remember they are not there to be your friend – they want your money.

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

Protect yourself. If you have outstanding liabilities with the IRS or any State Tax Agency, stand up to them 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.

Is Social Security Taxable?

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A classic case of the government giveth and the government taketh away.

One of the most common web-search phrases entered is this: “Is social security taxable”? The answer: It all depends on your income and filing status. If you file taxes as an individual and your combined income — that’s your adjusted gross income plus one half of your annual Social Security benefit — is less than $25,000, you won’t pay federal income taxes on your benefits.

But once you get past that $25,000 mark, that’s when you start seeing taxes. People who earn between $25,000 and $34,000 could have up to half of their benefits taxed, and people who earn more than $34,000 could see up to 85% of their benefits taxed.

Things are slightly different if you’re married. Married couples with a combined income of less than $32,000 won’t see their benefits taxed at all.

What If You Owe The IRS?

The Federal Payment Levy Program (“FPLP”) allows the IRS to levy 15% of your Social Security benefit payments to pay your delinquent tax debt. Mind you that the gross amount of the benefits is still considered as potentially taxable by the IRS.

Before your Social Security benefits are included in the FPLP, the IRS will send you a Final Notice Of Intent To Levy. This notice is only issued once and provides valuable appeals rights. You have 30 days from the date of this notice to make arrangements to pay your tax debt before the IRS will begin deducting 15% from your monthly benefit.

Keep in mind that the IRS is not just limited to levying social security benefits but can levy other sources of income, issue bank levies and file tax liens. Remember the IRS wants to collect its money as quick as possible.

The Final Notice of Intent to Levy and Notice of Your Right to A Hearing is your last warning before the IRS starts levy action. The IRS will give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested. You do not want to ignore this notice.

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.

IRS Strikes Out Darryl Strawberry For Outstanding Tax Debt

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IRS to auction Darryl Strawberry’s deferred Mets salary. A minimum bid of $550,000 has been set for the January 20, 2014 auction which will offer a deferred compensation agreement that was part of Strawberry’s 1985-90 contract with the Mets.

Darryl Strawberry, the former MLB All-Star, New York Mets and New York Yankees star who has faced tax problems owes over $550,000 when totaling California state and IRS back taxes. Strawberry was well known as a home-run hitter with a large presence in the batters box.

Strawberry is well known for leading the Mets to a World Series win in 1986 and the Yankees to championships in 1996, 1998 and 1999. But when it came to the IRS – it was three strikes and he’s out!

In 1995, The New York Times reported that Strawberry owed over $100,000 in back income taxes (for underreported income of $411,250 between 1986 and 1990), and just recently The Detroit News reported that he owes over $550,000 in back taxes. The breakdown according to The Detroit News is as follows: He owes over $259,000 to the State of California (as a tax lien was filed in April), over $250,000 to the IRS (IRS tax lien filed in December 2008).

In November 2004, after being served with an IRS levy,  the New York Mets began sending the IRS almost all of the $8,892 in monthly deferred compensation Strawberry is owed under the Uniform Player’s Contract, to cover both his back taxes and current income tax withholding.

But this was still not enough for the IRS – you see one way or the other, the IRS seems likely to get all its money.

The Internal Revenue Service is now auctioning the deferred compensation agreement that was part of Darryl Strawberry’s 1985-90 contract with the New York Mets to satisfy taxes owed by the former All-Star outfielder to satisfy IRS tax liens for 1989, 1990, 2003 and 2004.

The IRS said the agreement is worth about $1,279,000. The minimum bid is $550,000 in the auction which is scheduled for January 20, 2014 at the IRS office in Fairview Heights, Illinois. But if you are looking to bid, include a payment of 20% of the minimum and be prepared to pay the remainder within 60 days of the bid’s acceptance.

When Would The IRS Or State Tax Agency File A Tax Lien?

The IRS or a State Tax Agency will file a lien when the agency feels there is a chance that collection is in peril. It does not just grab your assets. Filing of a tax lien is normally dictated by the dollar amount. For IRS under the IRS’s Fresh Start program, the lien threshold was increased from $5,000 to $10,000.

The Notice of Federal or State Tax Lien is filed in the public records office of each county where you own property and thus attaches to any property you own. If you sell the property, proceeds will be used to satisfy the lien. Any person or company pulling a credit report on you will see the tax lien. This will damage your borrowing ability, making it difficult to refinance your home, get an auto loan, credit card, or business loan. Also, if you are looking to refinance your loan, the lien would have to be satisfied at closing in order for the lender in the new loan to retain a senior creditor’s position.

Alternatively, a new lender should be willing to make the new loan where the IRS and State Tax Agency agrees to subordinate its lien. A taxpayer can request that the IRS and State Tax Agency subordinate their liens to the new lender. In the process, even though the tax lien would be older than the new loan, the IRS and State Tax Agency agree to stand behind the new lender should the loan be defaulted and the new lender now seeks to foreclose on the property.

Federal Tax Liens Do Not Necessarily Have To Remain In Place While You Are Under A Payment Plan.

It is true that certain taxpayers who enter into payment plans with the IRS can get tax liens withdrawn even before the liability is paid in full. You must enter into a Direct Debit installment agreement and also meet the following to request that the Federal Tax Lien be withdrawn:

  1. The current amount you owe must be $50,000 or less;
  2. If you owe more than $50,000, you may pay down the balance to $50,000 prior to requesting the lien withdrawal to be eligible;
  3. Your Direct Debit Installment Agreement must full pay the amount you owe within 60 months or before the Collection Statute expires, whichever is earlier;
  4. You must be in full compliance with other filing and payment requirements;
  5. You must have made three consecutive direct debit payments;
  6. You cannot have previously received a lien withdrawal for the same taxes unless the withdrawal was for an improper filing of the lien; and
  7. You cannot have defaulted on your current, or any previous, direct debit installment agreement.

An existing installment agreement not structured as a Direct Debit Installment Agreement can be converted so that you can now qualify for this relief for lien withdrawal. Bear in mind that if you default on your Direct Debit Installment Agreement after the lien is withdrawn, a new notice of lien may be filed and collection efforts may resume.

Don’t Let The IRS Strike You Out And You 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.

Whether They Are Old Taxes Or New Taxes, The IRS Is Still Looking To Collect From Sharpton.

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The Rev. Al Sharpton lately has come into prominence as an imposing figure as men in power lined up to exclaim their admiration for him. Mayor Bill de Blasio and Gov. Andrew M. Cuomo hailed him as a civil rights icon. President Obama sent an aide to read a message commending Mr. Sharpton’s “dedication to the righteous cause of perfecting our union”.

But despite this rise in power Mr. Sharpton has apparently sidestepped the inevitable obligations to pay taxes as public records show more than $4.5 million in current state and federal tax liens against him and his for-profit businesses.

During a news conference at the headquarters of his National Action Network in Harlem, in November 2014, Mr. Sharpton sought to refute the assertion by an article in the New York Times that there were $4.5 million in state and federal tax liens outstanding against him and the for-profit businesses he controls. He said that the liens had been paid down, although he declined to say by how much, and that he was “current on all taxes” he was obligated to pay under settlement agreements with tax authorities.

“We’re talking about old taxes,” he said, adding: “We’re not talking about anything new. So all of this, as if I’m not paying taxes while I’m doing whatever I’m doing, it reads all right, but it just is not true.”

State and federal tax records show, however, that the liens against Mr. Sharpton and his businesses remain active, meaning they have not been completely paid off. But that could change soon, thanks to the more than $1 million raised at his birthday party last month.

When would the IRS or State Tax Agency file a Tax Lien?

The IRS or a State Tax Agency will file a lien when the agency feels there is a chance that collection is in peril. It does not just grab your assets. Filing of a tax lien is normally dictated by the dollar amount. For IRS under the IRS’s Fresh Start program, the lien threshold was increased from $5,000 to $10,000.

The Notice of Federal or State Tax Lien is filed in the public records office of each county where you own property and thus attaches to any property you own. If you sell the property, proceeds will be used to satisfy the lien. Any person or company pulling a credit report on you will see the tax lien. This will damage your borrowing ability, making it difficult to refinance your home, get an auto loan, credit card, or business loan. Also, if you are looking to refinance your loan, the lien would have to be satisfied at closing in order for the lender in the new loan to retain a senior creditor’s position.

Alternatively, a new lender should be willing to make the new loan where the IRS and State Tax Agency agrees to subordinate its lien. A taxpayer can request that the IRS and State Tax Agency subordinate their liens to the new lender. In the process, even though the tax lien would be older than the new loan, the IRS and State Tax Agency agree to stand behind the new lender should the loan be defaulted and the new lender now seeks to foreclose on the property.

Federal Tax Liens Do not Necessarily Have To Remain In Place While You Are Under A Payment Plan.

It is true that certain taxpayers who enter into payment plans with the IRS can get tax liens withdrawn even before the liability is paid in full. You must enter into a Direct Debit installment agreement and also meet the following to request that the Federal Tax Lien be withdrawn:

  1. The current amount you owe must be $50,000 or less;
  2. If you owe more than $50,000, you may pay down the balance to $50,000 prior to requesting the lien withdrawal to be eligible;
  3. Your Direct Debit Installment Agreement must full pay the amount you owe within 60 months or before the Collection Statute expires, whichever is earlier;
  4. You must be in full compliance with other filing and payment requirements;
  5. You must have made three consecutive direct debit payments;
  6. You cannot have previously received a lien withdrawal for the same taxes unless the withdrawal was for an improper filing of the lien; and
  7. You cannot have defaulted on your current, or any previous, direct debit installment agreement.

An existing installment agreement not structured as a Direct Debit Installment Agreement can be converted so that you can now qualify for this relief for lien withdrawal. Bear in mind that if you default on your Direct Debit Installment Agreement after the lien is withdrawn, a new notice of lien may be filed and collection efforts may resume.

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.