Archive for Venar Ayar

All You Need To Know About The Tax Evasion Statute

Venar Ayar- Statue On Tax Evasion

As defined within the 26 United States Code section 7201 by the Internal Revenue Code, failure to report taxes accurately, failure to report taxes and failure to pay taxes are all forms of tax evasion. In order to establish a case of tax evasion against you the government is tasked with the duty of proving beyond reasonable doubt that you the taxpayer attempted to evade a tax or the payment of a tax; an additional tax due and owing and that you as the taxpayer acted willfully. If the IRS proves your guilt then the repercussions to you will range from monetary fines to jail time.

Filing taxes can be a cumbersome and complex affair especially when it is done for a self-operated business or over a substantial amount of assets. Even the most innocent of mistakes may be interpreted as tax evasion thus making the line between a law-abiding tax-payer and a tax evader quite thin. Which is why you should know what the tax evasion statute is all about because in a case like this, ignorance can be quite expensive.

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The Federal Payment Levy Program

Venar Ayar- Federal Payment Levy Program
What is the Federal Payment Levy Program (FPLP)?

The Federal Payment Levy Program (FPLP) gives the IRS the right to seize a portion of certain payments you receive from the government. If you are a federal employee, a government contractor, or receiving Social Security benefits, your payments could be offset under the FPLP.

Payments Covered By The FPLP

Any of the following payments can be offset under the FPLP:

  • Federal employee salaries
  • Federal employee retirement annuities
  • Certain Social Security benefits
  • Railroad retirement benefits
  • Military retirement payments
  • Medicare provider and supplier payments
  • Federal payments made to you as a contractor or vendor doing business with the government

Only Social Security retirement and survivors’ benefits are subject to the FPLP, not disability benefits or Supplement Security Income.

How The Levy Works

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How To Prevent An IRS Tax Seizure

Venar Ayar - How To Prevent A Tax Seizure
Preventing An IRS Tax Seizure

If you refuse, ignore or fail to pay your federal income taxes, the Internal Revenue Service has the legal right to seize your property. Property levies are the most severe action taken by the IRS.

In case you are behind on the tax debt, you should understand how tax seizures work and how you can avoid them.

Types Of Property IRS Can Seize

The IRS has the right to seize your real estate and personal property, even if they are not in your physical possession. The IRS may also take your wages, rent from your tenants, payments from your clients, funds in your bank account, and even your retirement funds. In essence, the IRS could take nearly anything you own, which includes your home.

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How IRS Audits Can Become Criminal Investigations

Venar Ayar, IRS Audits
In our day-to-day lives, one usually has to try to find himself (or herself) on the wrong side of Law Enforcement.  That is of course, not counting basic traffic infringements (which are hardly considered criminal).  But in all other respects, it is mostly pretty easy to go about our day and not unwittingly become the target of a criminal investigation.

Unfortunately, that is not the case with the IRS. As if they weren’t terrifying enough when they were just wearing their “civilian” hats, they become infinitely worse when dealing with the IRS Criminal Investigation Division (CID).

From Regular Tax Audit to Criminal Investigation

Shockingly, it is very common for one to be completely unaware that they have become the target of a criminal investigation by the IRS until they come knocking, and catch you with your pants down.

In fact, oftentimes they can be tipped off by the civil agent who conducted your audit if he or she stumbles upon something they deem to be suspicious in nature. They can then alert the CID which in turn triggers the investigation.  In the meantime, however, they are under no obligation to inform you that they have set all this in motion (and probably won’t).  And what’s worse, at this point, they will likely even suspend their audit without even an explanation.  And you’ll be relieved, celebratory even, assuming that the audit is simply over.

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How To Stop An IRS Levy Before It Begins

Venar Ayar, IRS Bank Levy Notice
How The IRS Begins The Seizure Process

In 1942, the U.S. government asked noted director Frank Capra to make a propaganda film that convinced a skeptical American public that waging war against both Japan and Germany was a good idea. Prelude to War: Why We Fight was one of several such movies that Capra made during World War II. The four-plus years he spent with the Army cost him dearly, as he had trouble finding work when he returned to Hollywood. Much like the government had to lay some groundwork before sending troops overseas, the IRS must lay some groundwork before it sends a levy notice.  Continue reading to find out how to stop an IRS levy before it begins.

Key Pre-Levy Considerations

A bank levy is the collection procedure of last resort. Unlike tax liens and some other procedures, levies are not automatic. The IRS only proceeds with them if:

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Common Mistakes Taxpayers Make When Entering Into An IRS Installment Agreement

Venar Ayar, Tax Defense Attorney
If you the IRS back taxes, an installment agreement may be the way to go.  They are easy to set up, easy to get approved for, and if you set them up right – easy to stay compliant with.  However, in spite of all of this, people still make mistakes with their installment agreement that cause them to default and land them back into collections with the IRS.  So we decided to outline some of the most common mistakes people typically make when entering into an IRS installment agreement and ways to avoid them.  Here they are.
1.) Agreeing to Pay More Than They Can Afford

This is a mistake, as tax pros, that we see often. I am not sure if it’s people’s natural fear of the IRS or maybe they’re overeager to pay off their tax debt but for whatever reason, when setting up their installment agreements, people tend to agree to pay way more (per month) than they can afford.  As someone who deals with the IRS on a daily basis, I can tell you that if you are afraid of the IRS and think that you need to agree to pay more or otherwise they may hound you, you need to take that fear and that belief and throw it in the garbage where it belongs.  At the end of the day, when you are dealing with the IRS, you are really just dealing with other humans.  They aren’t robots without feelings.  They are not out to get you.  And they understand that people make mistakes.  They want to help (as long as you haven’t done anything illegal of course).  And if you go to them and explain “yes, I know I made a mistake but I would like to rectify that,” they will do everything in their power to help you.  That includes setting up a payment plan that works for you.  So before you make that call, sit down and take a look at your monthly expenses and income and really do the math and think about a reasonable amount you can afford to pay them each month and still afford to get by.  If you can’t afford to pay them anything, then you probably qualify for Currently Not Collectible (CNC) status and you should look into that instead of an installment agreement.  At the end of the day, the IRS will just be happy that you have taken steps to remedy the situation – however much you decide to pay each month.

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IRS Jeopardy Levies: The Silent Killers

How Can a Jeopardy Levy Place You In Jeopardy?

As we have discussed in some previous posts, IRS levies are usually attention-getting tools as opposed to collection tools. The Service almost always cancels bank and other levies if the taxpayer enters into a repayment or other plan. But if the IRS suspects that it will have no other opportunity to collect the tax due, it may use a no-notice levy and immediately seize the taxpayer’s assets. The taxpayer will have no idea that anything is amiss until the waiter quietly says that “there is a problem with your debit card.”

Your Rights in a Jeopardy Levy Case

Typically, the IRS must provide a 30-day notice before it levies the taxpayer’s available assets. Furthermore, it must thoroughly document the need for this levy. Usually, there must be sufficient evidence that the taxpayer has been completely uncooperative. But according to Internal Revenue Manual 5.113, in some cases, the Service may pursue a no-notice levy after only a cursory assessment, if it has a reasonable basis to believe that a levy is the only way it can collect the tax debt. The underlying statute does not set the reasonableness standard, so courts usually rely on a separate provision that authorizes a no-notice levy if there is evidence of:

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How IRS Payment Plans Work

IRS Payment Plan

When it comes to setting up an IRS payment plan, there are a few options to choose from. In general, the type of arrangement you can obtain depends on the amount of taxes that you owe and how quickly you are able to pay. Let’s take a look at the different kinds of tax payment plans that are available through the IRS.

Individual Installment Agreement

This payment plan applies to individuals who owe $50,000 or less in income tax, interest, and penalties (combined). With an installment agreement, you can make regular monthly payments over time. Payments can be made through Direct Debit (from your bank account), check or money order, credit card (online or by phone), EFTPS (Electronic Federal Tax Payment System), payroll deduction (from your employer), or an Online Payment Agreement (OPA). When you set up an installment agreement, make sure you will be able to make the monthly payments without defaulting. Defaulting on your loan can not only hurt your credit, but it can also lead to your installment agreement being invalidated.

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Key IRS Cash Business Audit Techniques

Venar Ayar, IRS Audits
Methods for Reconstructing Cash Income In Tax Audit

After the Service has targeted a cash business for audit, laid a foundation, examined applicable records, and interviewed the taxpayer, the nitty gritty begins. The auditor will indirectly reconstruct business income if the records are inadequate, inconsistent with the interview answers, or otherwise suspect.

In general, IRS audit methods can include indirect income reconstruction if there is a reasonable indication of potential unreported income. That’s a pretty low standard, so auditors frequently employ this tactic. Cash businesses are especially at risk. The IRS essentially presumes that marijuana dispensaries and other such businesses underreport their income.

Direct Income Reconstruction

Purchase history often reveals accurate sales data. For example, if a car dealer purchased 100 smog certificates from the state or federal government, the dealer most likely sold 100 cars. Or, if a video game store purchased fifty Call Of Duty WWII games and has none remaining in its inventory, the shop most likely sold all fifty copies. Normally, auditors give owners a chance to explain any discrepancies before they do the math themselves.

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Reasons The IRS May Audit You

Venar Ayar, Reasons IRS Audits You

Contrary to popular belief, there is nothing inherently threatening or sinister about an IRS audit. During the audit, the agency will simply double-check your numbers to ensure that there are no discrepancies in your tax returns. Therefore, if you are truthful and conscientious, you do not have to worry.

At times audits are completely random; however, the IRS usually selects taxpayers on the basis of suspicious or unscrupulous activity. As a rule of thumb, it is better to avoid subterfuge. If you are worried about being audited by the IRS this tax season, the following are some red flags that may land you in the hot seat.

Errors and Omissions

It is true that mistakes often happen in life. That being said, when you are filing your tax return, you must play close attention to all details, and be meticulous. It is likely that if you make simple mathematical errors, they will be noticed by the agency, which can lead to your tax return being audited.

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