Tax Problem Attorney Blog

How Many Years Does a Tax Audit Cover?

March 30, 2017 | by Dennis N. Brager

The IRS generally will look at returns filed during the last three years during a tax audit. The Assessment Statute Expiration Date (ASED) places a limit for the time period the IRS has to make a tax assessment. The ASED is three years from the day the return was filed, but there are a number of exceptions to this three-year limit.

How Failing to File Affects a Tax Audit

If you do not file a tax return, the IRS has an unlimited amount of time to assess the tax. The IRS usually does not look back more than six years, but they can if they choose to. Once you file a delinquent return, the three-year ASED begins to run.

Can the California Franchise Tax Board Levy My Bank Account?

March 29, 2017 | by Dennis N. Brager

The California Franchise Tax Board (FTB) has the authority to collect your delinquent tax balance via a bank levy under California Revenue and Taxation Code Sections 18817 and 18670. The FTB has the authority to take 100 percent of the balance owed directly out of your bank account. They can also garnish your wages and file tax liens against your property when collecting unpaid tax liabilities.

FTB Procedure for Filing a Bank Levy

The FTB will first mail you a notice informing you that you owe California income tax. The notice will explain your rights and the deadline to contact the FTB before they will begin collecting.

How To Apply for Currently Not Collectible Status

March 28, 2017 | by Dennis N. Brager

If you are unable to pay your tax debt, you can request that the IRS report your account as currently not collectible (CNC). This will temporarily delay all collection activities by the IRS.

Applying For Currently Not Collectible Status

The most common reason the IRS determines that an account is currently not collectible is due to economic hardship. You will often be required to submit a Collection Information Statement when applying for CNC status. This statement lists all of your assets, income, and expenses. The IRS will not take your word for it if you claim you have a financial hardship; they will make their own determination based on your financial information.

Do I Qualify for First Time Tax Penalty Abatement?

March 27, 2017 | by Dennis N. Brager

Many taxpayers are unaware that they may be eligible for relief from tax penalties under the IRS First Time Penalty Abatement policy. The penalty abatement is available for penalties due to a failure to file, failure to pay taxes, or a failure to deposit taxes.

Requirements for First Time Penalty Abatement

To qualify for First Time Penalty Abatement, you must meet the following requirements:

What is the Exit Tax Charged to Expatriates?

March 24, 2017 | by Dennis N. Brager

Some taxpayers may be attracted to the idea of expatriating in order to reduce their tax liability, but the “exit tax” that must be paid upon renunciation of citizenship can complicate those plans. This exit tax, also known as the expatriation tax, treats the taxpayer as though he or she has sold all assets at fair market value the day before expatriation. Obviously, this could result in an enormous tax bill for some taxpayers.

Covered Expatriates Under the Exit Tax

Only “covered expatriates” are subject to this tax. Three categories of taxpayers could be considered “covered expatriates”.

Can the IRS Levy My Bank Account?

March 23, 2017 | by Dennis N. Brager

The IRS can legally levy your bank account and other assets to satisfy a tax debt. When the IRS sends a tax levy to your bank, the levy attaches to all the funds in your account at the time. Your bank is required to give your money to the IRS once a 21 day period elapses.

IRS Actions Before Issuing a Levy

The IRS will not levy your bank account until its given you several notices of your obligation to pay your tax debt. First, the IRS must make a tax assessment against you and send you a Notice and Demand for Payment.

Streamlined Filing Procedures for Taxpayers Living Outside the United States

March 22, 2017 | by Dennis N. Brager

The IRS streamlined filing compliance procedures allow eligible taxpayers to avoid potentially disastrous penalties and resolve their offshore bank account problems. Taxpayers who have failed to file Foreign Bank Account Reports (FBARs) and report their income from foreign financial accounts on their tax returns can face penalties of up to $10,000 per violation for non-willful violations, and penalties of up to $250,000 and five years in prison for violations that are deemed willful; not to mention civil penalties of over $100,000 per violation, at a minimum.

The streamlined procedures can help taxpayers correct their past mistakes and avoid these penalties. There are different procedures, and different penalties for taxpayers that reside in the U.S. and taxpayers that live outside the U.S., but both types of taxpayers are eligible for this program.

Most importantly, these procedures are only available to taxpayers whose failure to file FBARs was non-willful. This means the conduct must have been due to negligence, inadvertence, mistake, or a good faith misunderstanding of the law. Taxpayers who have willfully failed to file FBARs may be eligible for the Offshore Voluntary Disclosure Program, which has some of the same benefits, but also involves much higher penalties.

What to Do If You Are Accused of Tax Fraud

March 21, 2017 | by Dennis N. Brager

Tax fraud is a crime that involves intentional wrongdoing when failing to comply with a tax law. If you simply make a mistake when filing your taxes, the IRS may charge you with civil penalties, but they will not pursue any criminal charges. If, however, the IRS believes that you intentionally failed to meet your obligations as a taxpayer, you could face criminal penalties and jail time.

Tax fraud can result in up to 5 years and prison and a $500,000 fine. The IRS does not commonly pursue criminal charges, so if they have singled you out for a criminal tax violation, you should immediately consult with a tax attorney.

What to Do If You Are Accused of Tax Fraud

How to Fight Tax Fraud Penalties

March 20, 2017 | by Dennis N. Brager

Tax fraud occurs when an individual’s conduct goes beyond negligence and becomes intentional or willful wrongdoing. It has been described as an intentional violation of a known legal duty.

If you want to fight tax fraud penalties, you will have to convince the IRS that they have insufficient evidence to prove that your acts were willful. You may be able to fight the charges against you, or negotiate the amount of penalties owed, but you must consult with a criminal tax attorney before saying anything to the IRS.

Badges of Tax Fraud

Do I Qualify For Innocent Spouse Relief?

March 16, 2017 | by Dennis N. Brager

There are three different types of innocent spouse relief. The IRS offers these defenses to taxpayers who want relief from the joint and several liability that is imposed on married taxpayers who file joint returns.

Traditional Innocent Spouse Relief

To qualify for traditional innocent spouse relief, you must meet all of the following conditions: