Tax Problem Attorney Blog

What to Do When You Can’t Pay Your Taxes

August 29, 2017 | by Dennis N. Brager

If you have an upcoming tax payment that you can’t pay, or have delinquent tax debt that is continuing to accrue, you may be tempted to delay filing your taxes. You may also want to avoid responding to any IRS notices you receive because you can’t pay off the tax debt listed on the notice. The desire to hide from your tax problems is understandable, but it is actually the worst thing you can do when you are unable to pay your tax liability.

Instead, you should file your taxes on time, respond to all IRS communications, and consider talking to a tax attorney about your options. Taking this proactive approach has several benefits, including the possibility of substantially reducing the amount of penalties and interest you owe and preventing any IRS collection actions.

Do Not Put Off Filing Your Taxes

California Resident Indicted for Hiding Foreign Accounts

August 25, 2017 | by Dennis N. Brager

A Beverly Hills resident has been indicted on several charges for failing to disclose foreign accounts and then allegedly lying to the IRS Criminal Investigation (CI) unit. The charges faced by Teymour Khoubian include the following:

corruptly endeavoring to impede the internal revenue laws
filing false tax returns

The Options for Resolving a Disagreement With Your IRS Examiner

August 24, 2017 | by Dennis N. Brager

After an IRS examiner receives your documentation and makes a decision regarding proposed changes to your return, you have several options. You can sign the letter stating that you agree with the proposed changes, and then decide what payment method you would prefer to use, whether paying in full, applying for an installment agreement, or seeking an Offer in Compromise. If you don’t agree with the proposed changes, you should first try to negotiate further with the IRS examiner.

You may be able to persuade the IRS examiner of their mistake by providing additional documentation. You can also request a telephone conference with the examiner, where you or your tax attorney can explain your arguments.

If neither of these methods are successful, you may request an informal conference with the examiner’s manager. You may instead request that your case is sent to IRS appeals, which has the advantage of being an entirely separate department within the IRS. The appeals officers can evaluate the likelihood that the IRS will win your case if you end up filing a petition in Tax Court, and may decide to settle if it seems probable that you could bring a successful case.

Why Offers in Compromise Get Rejected

August 22, 2017 | by Dennis N. Brager

The Offer in Compromise (OIC) is an excellent program for potentially eliminating tens of thousands of dollars in tax debt, but first, your offer must be accepted by the IRS. Taxpayers may have seen advertisements promising that their tax debt can be settled for pennies on the dollar with an OIC, but not everyone is eligible for an OIC, and those that are eligible must follow the program’s guidelines carefully. For some taxpayers, an OIC will only be accepted after negotiations and possibly appealing an OIC rejection.

Determining Your Collection Potential

The IRS accepts an OIC when it determines that the offer is the most that they can reasonably expect to collect from you based on your financial information. If you receive a rejection letter from an offer specialist, it will often be because the IRS believes that your offer does not represent the most that they can get from you.

How the Franchise Tax Board Collects Delinquent Tax Debt

August 17, 2017 | by Dennis N. Brager

The California Franchise Tax Board (FTB) has many of the same weapons at its disposal as the IRS when collecting delinquent tax debt, and also has the ability to use information received from the IRS to assess additional tax against you. If the IRS audits your tax return, and the audit results in an increase in tax, the FTB will most likely use this information to increase your state income tax as well.

Franchise Tax Board Collection Methods

Some of the methods the FTB can use to collect past due tax bills include:

How to Pursue Settlement with the Board of Equalization

August 15, 2017 | by Dennis N. Brager

If the Board of Equalization (BOE) conducts a sales and use tax audit on your business, you may face a sales tax liability of tens of thousands of dollars or more. To make matters worse, the BOE can share information with the California Franchise Tax Board and the IRS, resulting in more tax assessments, penalties, and interest due to delinquent state and federal income tax debt.

Settlements with BOE Tax Auditors

You (along with your tax attorney) can first attempt to settle your outstanding sales tax debt with the BOE auditor and/or his supervisor. This can occur during an exit conference following an audit. If you are unable to reach a satisfactory settlement, you can ask to meet with the BOE Principal District Auditor to discuss your case.

What Causes an IRS Tax Audit?

August 10, 2017 | by Dennis N. Brager

The IRS has several methods of selecting returns for a tax audit. First, returns are identified that may possibly contain incorrect amounts, causing a review of the return by an auditor. If everything on your return checks out, the auditor can accept your return as submitted. If the auditor suspects that something is amiss, your return can be selected for an examination.

How Returns Are Selected for Audit

The IRS can select your return for an audit if any of the following happens:

What are Foreign Asset Reporting Requirements?

August 8, 2017 | by Dennis N. Brager

Taxpayers with foreign financial accounts may have several different reporting requirements, depending the type of account and the amount of funds in the accounts. The first of these requirements comes from the 1040 tax return, specifically Schedule B.

Schedule B requires the disclosure or any interest or dividends received by the taxpayer, including interest from foreign accounts. Part III specifically asks about foreign accounts, including whether the taxpayer had an interest in signature authority over any foreign financial accounts, and whether the taxpayer has a Foreign Bank Account Report (FBAR) filing requirement or received a distribution from a foreign trust. A failure to answer these questions honestly could result in tax fraud penalties, and possibly lead to other penalties related to a failure to file FBARs.

Foreign Bank Account Reports (FBARs)

How to Appeal a Franchise Tax Board Decision

August 3, 2017 | by Dennis N. Brager

To appeal a decision by the California Franchise Tax Board (FTB), you must first attempt to use all of your administrative remedies within the FTB. After you have exhausted these procedures, you may appeal your decision by submitting the proper forms by the appropriate deadline. These procedures were handled by the Board of Equalization (BOE), but a new bill passed in California has changed some of these procedures, with a new Office of Tax Appeals handling FTB tax appeals beginning January 1, 2018.

How to Submit Your Appeal

There are many different types of FTB notices you have the right to appeal, including:

Repatriating Funds: What to Do if You Have Delinquent FBARs

August 1, 2017 | by Dennis N. Brager

Taxpayers with funds in offshore accounts may wish to repatriate their funds by bringing them back to the U.S. and avoid any future Foreign Bank Account Report (FBAR) compliance issues. While this may prevent any future offshore bank account problems, it does not stop the IRS from discovering any past delinquent FBARs and assessing severe civil and/or criminal penalties.

A transfer of funds from overseas into a domestic account can easily be traced, and may raise suspicion that will cause an investigation into whether the funds have been properly reported on the taxpayer’s return, and whether all necessary FBARs have been filed. An attempt to repatriate funds could also be seen as evidence of willful FBAR non-compliance, if the accounts were not properly reported in previous tax years. Rather than attempting to bring funds back to the U.S. and hoping no one will notice, taxpayers should use one of the delinquent FBAR submission procedures to mitigate the risk of substantial penalties and possible criminal prosecution.

Do You Have Delinquent FBARs?