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Tag Archive for Tax Defense Lawyer

What Is An IRS Notice Of Intent To Offset?

Venar Ayar- IRS Notice Of Intent To Offset

If you receive an IRS Notice of Intent to Offset, your tax refund is going to be seized and put towards debt you owe to the IRS or another government agency. As part of the Treasury Offset Program (TOP), your tax refund checks are matched against any outstanding debts you owe a federal or state government agency. When you have an outstanding debt, your refund can be seized up to the amount of debt you owe.

Treasury Offset Program Debts

The TOP can be used to offset your refund when you owe any of the following debts:

  • Unpaid child support
  • Federal tax debt
  • State tax debt
  • Federal non-tax debt, such as federal student loans
  • Some unemployment compensation debts

Your debt can generally be sent to TOP once it is 90 days past due. Your debt won’t go to the IRS—it goes to the agency you owe.

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Virtual Currency And The IRS

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Virtual currency refers to any digital currency which is only available in an electronic form and not as a physical form of money. Virtual currencies, like Bitcoin, are created by a process known as “mining,” where an individual, using powerful computers, authenticates transactions in what is known as a “blockchain,” or a ledger of digital transactions.

Virtual currencies may be traded on digital trading platforms, such as the third-party Coinbase, and can be used as a form of online payment, held as an investment, or used in loans to other individuals.

The IRS And Virtual Currencies

According to IRS Notice 2014-21, “the sale or exchange of convertible virtual currency, or the use of convertible virtual currency to pay for goods or services in a real-world economy transaction, has tax consequences that may result in a tax liability.”  This means, per IRS determination, virtual currencies, such as Bitcoin, are treated as property, and subject to tax regulations.

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How To Recover Damages For An IRS Error

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Recovering Damages

You may be able to recover economic damages if an IRS error ends up costing you money. However, the circumstances under which you can recover damages are quite limited.

These situations typically occur when an IRS mistake results in a bank charge. There are three ways this can happen:

  • You have a direct debit installment agreement, and the IRS makes a mistake when processing your payment, such as withdrawing the incorrect amount or making a withdrawal on the wrong date.
  • You send a check to the IRS and they lose or misplace it.
  • The IRS wrongfully levies your bank account.

In these situations, you may seek reimbursement of the associated bank charges using Form 8546, Claim for Reimbursement of Bank Charges.

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Understanding IRS Penalty Abatement And Reasonable Cause

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IRS Penalty Abatement And Reasonable Cause

Being assessed a penalty by the Internal Revenue Service can be an overwhelming situation. Faced with potentially massive penalties a taxpayer’s financial future may seem bleak. Fortunately, there may be relief available. The IRS offers qualified taxpayers something called “penalty abatement.” But, what is and how is it determined? To provide you with some knowledge of the process, here is our guide to understanding   IRS penalty abatement and reasonable cause.

What Is IRS Penalty Abatement?

When the IRS slaps taxpayers with a penalty for failing to file or failing to pay their federal taxes, there are certain steps the penalized party can take to resolve their issues. One of these is penalty abatement. The IRS is willing to consider any sound reason why a taxpayer failed to file a tax return, make a deposit or even pay any past-due taxes. Simply having a lack of funds is inadequate for claiming an abatement. The reasons behind the lack of funds, however, may be considered.   These circumstances are called “reasonable cause” and include:

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How To Handle An IRS Summons

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How To Handle An IRS Summons

Before receiving an official IRS summons, you may receive several other notices, including an Information Document Request. The IRS begins by asking you for the information nicely, and issues the summons when you fail to comply.

The official summons can be used to request documents or require your testimony. Summons can also be issued to third parties requesting information about another taxpayer.

Complying With The Summons

Summons present a difficult issue because you can be charged with contempt (after a court order is issued to enforce the summons) if you don’t comply. However, you also don’t want to hand over any information to the IRS that you don’t absolutely have to.

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When Will The IRS Withdraw A Notice Of Federal Tax Lien?

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What Is The Difference Between A Federal Tax Lien And A Notice Of Federal Tax Lien?

There’s an important distinction between the federal tax lien and the Notice of Federal Tax Lien. The federal tax lien automatically applies to all of your property when you fail to pay taxes after a demand for payment. The Notice of Federal Tax Lien is an official record that gives the public notice of the lien.

The Notice of Federal Lien needs to be filed with state or local authorities, such as the country recorder of deeds. When the IRS removes the notice from public records, it is referred to as a “withdrawal.”

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How Is IRS Interest Calculated?

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How Interest is Determined

When you’re late filing or paying your employment taxes to the IRS, penalties and interest charges will be will be triggered and assessed. Navigating the waters of IRS tax code can be an extremely tricky proposition – thankfully, we have compiled a helpful guide to understanding how the IRS calculates interest. Keep reading to find out more.

Late Filing/Failure to File Penalties

Late filing penalties are assessed on those who tax but did not file on time. These are also known as “Failure to File.” According to IRS regulations, the penalties are assessed and added to your tax bill.  It should be noted that any assessed penalties are in addition to the tax originally due, as well as the interest on the past-due tax. Penalties for late filings are generally 5% of the owed bill for each month, up to five months (or, 25%). If your tax return is over 60 days late, the minimum penalty assessed is the lesser amount of either $100 or 100% of the tax owed.

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How To Stop An IRS Levy Before It Begins

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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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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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Playing Russian Roulette With The IRS: Zwerner Learns The Cost of Hidden Offshore Accounts

Whether you have chosen to hide your account willingly or failed to file an FBAR by mistake, you may not know the full ramifications of your activities or your best course of action now. If you haven’t heard the horror stories yet, you’re about to have a couple to remember. For those who have kept an offshore account secret, there are three options: quiet disclosure, OVDP, or the streamlined offshore procedures. Some may even feel they have a fourth option: keeping the account a secret. The average person may have a hard time deciding what course of action they should take. It may not seem to matter much, but Charles Rettig gives us two frightening examples in his articles, “Jury Determines 150-Percent FBAR Penalty” and “U.S. Seeks FBAR Related Forfeiture of $12 Million!” These stories teach an important lesson, but first, let’s discuss proper offshore account Read more