Miscellaneous Tax Information

Internal Revenue Service’s Office of Professional Responsibility (OPR) Censures Tax Attorney

July 19, 2012 | by Dennis N. Brager

The IRS’ tax lawyer, who failed to disclose multiple conflicts of interest.

While having an attorney-client relationship with the benefit plan’s promoter, the tax attorney wrote several opinions for prospective plan participants. These opinions pertained to a benefit plan’s qualification under Internal Revenue Code section 419A. The tax lawyer later became a co-trustee of the plan, and during his tenure, he represented individual participants before the IRS concerning their tax problems. The plan’s promoter was paying him throughout this time.

The tax attorney, who was not identified, never advised any of his clients of the conflicts and failed to obtain informed consents from any of the parties involved. The conflicts arose when the attorney agreed to represent multiple parties with opposing interests, to become the co-trustee of the plan and to receive compensation from the promoter. His obligations to other parties and his own self-interest limited his ability to represent each of his clients successfully. Because they were unaware of the conflicts, the clients were unable to seek alternative legal counsel.

The attorney has agreed to cooperate in the investigation, recognized his violations and will take additional continuing education ethics classes over the next two years. The IRS’ OPR Director Karen L. Hawkins reminded attorneys that informing clients of conflicts of interest “is not a mere nicety.” She continued, “Taxpayers who pay handsomely for tax advice and representation have a fundamental right to expect competent and diligent representation unfettered by a practitioner’s responsibilities or obligations to someone else, or by the practitioner’s self-interest.”

Those who violate Circular 230 are subject to monetary penalties, censure, suspension and disbarment. Not just tax attorneys, but also enrolled agents, and CPAs are subject to the provisions of Circular 230, and therefore must avoid representing conflicting interests, unless appropriate conflict waivers are obtained.
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Tax Problem Attorney Blog Named to Top 20 Tax Law Blogs List

November 22, 2011 | by Dennis N. Brager

Brager Tax Law Group appreciates all the votes that came in for our Tax Problem Attorney Blog and is proud to announce that Tax Problem Attorney Blog has been named one of the top 20 Tax Law Blogs by LexisNexis.

The voting isn’t over, though. Brager Tax Law Group is asking for your vote once again in the selection of the Top Tax Law Blog of the year. You will need to be registered in order to vote. If you haven’t previously registered, follow this link to create a new registration or use your sign in credentials from your favorite social media site. Registration is free and does not result in sales contacts.

Then follow this link to VOTE and check the box Tax Problem Attorney Blog.

OPR (Office of Professional Responsibility) Disbars a CPA, and an Enrolled Agent under Circular 230 for Failure to File Tax Returns

August 3, 2011 | by Dennis N. Brager

The IRS Office of Professional Responsibility (OPR) alleged that Joseph Kozelsky did not file timely tax returns for 2001 through 2007 and did not timely pay his federal tax liability. As a result of his tax problems he was disbarred from practice before the Internal Revenue Service. Mr. Kozelsky didn’t help himself very much, since he failed to respond to the IRS’s complaint within 30 days. As a result the facts alleged by the IRS were deemed admitted, and the administrative law judge (“ALJ”) issued an order that Mr. Kozelsky engaged in disreputable conduct and should be disbarred.

The IRS publishes rules for professionals practicing before the IRS, and those rules are set forth in Circular 230. We have previously published an article on the procedures involved in an OPR disciplinary matter. Circular 230 includes rules for individuals preparing tax returns, providing tax advice, and representing individuals before the IRS. Failure to timely file tax returns constitutes disreputable conduct under Circular 230 and subjects the offender to sanctions. In the case of Mr. Kozelsky, the IRS proposed disbarment from practice before the IRS and the ALJ presiding over the case agreed and ordered disbarment on November 17, 2010 since Mr. Kozelsky failed to respond to the OPR’s complaint.

If no appeal is filed within 30 days of the ALJ’s default order, the default order becomes final. Since Mr. Kozelsky appealed the ALJ decision to the IRS’s Appellate Authority on December 23, 2010, 6 days after the 30 day deadline, his appeal was not considered, and his disbarment became final.

Enrolled Agents are subject to the same Circular 230 rules as CPAs, and in a separate case, an Enrolled Agent was also disbarred from practice before the IRS. OPR filed a complaint against Susan Tomsha-Miguel alleging her failure to file timely tax returns, she failed to respond within 30 days, and the ALJ presiding over the case entered a default judgment for the IRS. The ALJ determined that the appropriate sanction was disbarment from practice before the IRS. In addition to CPAs and Enrolled Agents, Circular 230 rules and sanctions regarding failure to file tax returns also apply to tax attorneys (see post titled “Attorney Disbarred under Circular 230 Rules for Failure to File Tax Returns”).
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Tax Attorney Blames OCD for Failure to File Business Income Taxes

March 25, 2011 | by Dennis N. Brager

Tax lawyers representing a man accused of failing to file business income tax returns told the judge that obsessive-compulsive disorder was responsible for their client’s tax problems, the Calgary Herald reported.

Business tax debt can sink a business; frequent issues tax attorneys are called to deal with include payroll tax problems and tax audits.

That’s not to say OCD is involved in the majority of the cases. But in this case, the man blames the condition for his inability to file business income tax returns. He faces 60 days in jail and a $10,000 fine if convicted of disobeying a court-issued compliance letter. The company, Harvest Brewing, is accused of not filing returns in 2004 and 2005. His attorney said Ronald Thomsen’s personal taxes are up to date because they are easy to file and the taxes are deducted right from his pay.

But when it comes to the business taxes, his client’s medical condition prevents him from dealing with the paperwork. The business taxes were about $45,000 a year in the five years prior to the years in question. However, Canada Revenue Agency does not know how much is now owed because they haven’t received any documentation in years. The business’s accountant has told Thomsen she would have the outstanding taxes filed by May but he has refused to turn over the paperwork.

That refusal is part of the medical condition, according to his tax attorneys.
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Julius Baer Offshore Bank Account Information To Be Released

January 17, 2011 | by Dennis N. Brager

Rudolph Elmer, an ex Julius Baer executive turned over offshore bank account information to WikiLeaks today, according to Bloomberg News. According to the release, data on 2000 offshore bank accounts has been turned over, and WikiLeaks plans on making the data public; although it says it will take at least two weeks to verify the information, and release it.

We can be sure that the IRS will be reviewing that list, and seeing if Americans on it have filed timely Foreign Bank Account Reports (FBAR). Those U.S. persons who have a financial interest, or signatory authority over a foreign bank account are required to file a Foreign Bank Account Report on Form TDF 90-22.1 by June 30th of the following calendar year. Those that haven’t may find themselves the target of criminal tax fraud charges. Even if no criminal tax evasion charges are filed the IRS can impose a civil penalty which can reach 50% of the balance in the offshore account.

There may still be time for holders of Julius Baer offshore accounts to file a voluntary disclosure with the IRS in order to minimize the chances of criminal tax charges, and possible reduce the amount of the civil FBAR penalties.

IRS Tax Problem Tips

December 21, 2010 | by Dennis N. Brager

I found the following tips to eliminate tax problems in an old file. Not sure if a tax lawyer came up with them, but thought I would pass them along.

* Always put staples in the right hand corner. Go ahead and put them down the whole right side. The extractors who remove the mail from the envelopes have to take out any staples in the right side.

* Never arrange paperwork in the correct order, or even facing the right way. Put a few upside down and backwards. That way they have to remove all your staples, rearrange your paperwork and re-staple it (on the left side).

Tax Lady Roni Deutch’s Tax Resolution Company Sued by Attorney General

September 2, 2010 | by Dennis N. Brager

According to a complaint Part 2) filed by the California Attorney General against a well known tax debt problems through tax debt resolution services. Deutch tells clients that once they retain Roni Deutch A P.C., the clients are not legally obligated to continue making installment payments to the IRS.

* Roni Deutch’s tax attorneys each regularly carry caseloads as high as 600 to 700 clients at one time, but during especially busy periods can service as many as 1,200 clients at one time.

* Roni Deutch tell clients that their success rate in resolving clients’ back tax liability with the IRS is as high as 99%. In fact, her success rate is dramatically lower. In a majority of their clients’ cases, Deutch never actually submits a request for offer in compromise service, only 10% successfully receive an tax debt resolution services in a number of ways, including a television and radio advertising campaign. In these advertisements, Roni Deutch gives clients specific and non-representative examples of clients who have purportedly reduced their tax liability by as much as $150,000 by hiring Roni Deutch A P.C. At least some of these representations are false and misleading.

IRS Says it Will Subpoena CPAs

May 21, 2010 | by Dennis N. Brager

A couple of weeks ago I was at the ABA Tax Section Meeting which as I mentioned previously gathered tax lawyers from around the country. Since I spent most of my time at meetings involving FBARs (Foreign Bank Account Report TD F90-22.1), I missed another meeting. It turns out that (according to published reports) Janet Johnson, the Internal Revenue Service deputy division counsel for criminal tax stated that that the IRS Criminal Investigation (CI) unit would subpoena accountants in criminal tax cases. By itself that’s hardly surprising since criminal tax attorneys have known for many years that IRS special agents routinely interview the tax preparer, and the accountant can wind up as the lead witness against his own client.

The part that was surprising was that she stated the government would issue a grand jury subpoena even to a Kovel accountant, i.e. one that was retained by a tax attorney for the purpose of assisting the tax attorney in advising the client.

In an ominous note Johnson stated , “Whether or not that accountant comes to testify can be very serious for the accountant. The grand jury may decide he is part of the problem.”

Taxpayer Advocate Reports Tax Liens as Serious Tax Problem

January 20, 2010 | by Dennis N. Brager

The Internal Revenue’s (IRS ) tax lien filing polices were in the Taxpayer Advocate’s 2009 Report to Congress listed as the second most serious tax problem facing taxpayers today. This is not a big surprise to those tax lawyers who deal with IRS tax collection problems on a regular basis. I often tell clients that the most difficult objective is to try and get the IRS to release a tax lien prior to making full payment of a delinquent tax liability.

The Taxpayer Advocate’s Report details how the IRS files tax liens without regard to whether or not the taxpayer has assets, and despite the fact that in many instances the filing of a tax lien does not protect the IRS, and only exacerbates the taxpayer’s inability to pay. The Report also points out that the Internal Revenue Manual puts obstacles in the path of their employees who decide not to file a tax lien— requiring managerial approval, and documentation of any decision not to file a tax lien.

One would only hope that the IRS tax Collection Division takes serious note of the criticisms by the Taxpayer Advocate, and that it not continue to file tax liens as method of punishing taxpayers; however, the IRS responses to the Report make clear that Congressional action will be necessary for any significant tax lien relief.

IRS Taxpayer Advocate Issues Report

January 9, 2009 | by Dennis N. Brager

Nina Olson, the National Taxpayer Advocate, issued her annual report to Congress in which she lists the 20 most serious tax problems as required by Internal Revenue Code (IRC) § 7803(c)(2)(B)(ii)(III). They are:

1. The Complexity of the Tax Code

2. The IRS Needs to More Fully Consider the Impact of Collection Enforcement Actions on Taxpayers Experiencing Economic Difficulties