Monday, January 28, 2019

IRS Reopens & Starts 2019 Tax-Filing Season


The Internal Revenue Service successfully opened the 2019 tax-filing season today January 28, 2019 as the agency started accepting and processing federal tax returns for tax year 2018.

Despite the Major Tax Law Changes Made by the Tax Cuts and Jobs Act, the IRS Was Able to Open this Year’s Tax-Filing Season One Day Earlier than the 2018 Tax-Filing Season.
More than 150 million individual tax returns for the 2018 tax year are expected to be filed, with the vast majority of those coming before the April tax deadline. Through mid-day Monday, the IRS had already received several million tax returns during the busy opening hours.

"I am extremely proud of the entire IRS workforce. The dedicated IRS employees have worked tirelessly to successfully implement the biggest tax law changes in 30 years and launch tax season for the nation," said IRS Commissioner Chuck Rettig. “Although we face various near- and longer-term challenges, our employees are committed to doing everything we can to help taxpayers and get refunds out quickly."

Following the government shutdown, the IRS is working to promptly resume normal operations.

“The IRS will be doing everything it can to have a smooth filing season,” Rettig said. “Taxpayers can minimize errors and speed refunds by using e-file and IRS Free File along with direct deposit.”

The IRS Expects the First Refunds to Go out in the
First Week of February and Many Refunds to Be Paid by
Mid-to Late February like Previous Years.
The IRS reminds taxpayers to check “Where’s My Refund?" for updates. Demand on IRS phones during the early weeks of tax season is traditionally heavy, so taxpayers are encouraged to use IRS.gov to find answers before they call.

April deadline; help for taxpayers through e-file, Free File

The filing deadline to submit 2018 tax returns is Monday, April 15, 2019, for most taxpayers. Because of the Patriots’ Day holiday on April 15 in Maine and Massachusetts and the Emancipation Day holiday on April 16 in the District of Columbia, taxpayers who live in Maine or Massachusetts have until April 17 to file their returns.

 
Most Refunds Sent in Less Than 21 Days;
EITC/ACTC Refunds Starting February 27. 

The IRS Expects to Issue More Than Nine Out Of 10
Refunds in Less Than 21 Days.


The IRS also notes that refunds, by law, cannot be issued before Feb. 15 for tax returns that claim the Earned Income Tax Credit or the Additional Child Tax Credit. This applies to the entire refund — even the portion not associated with the EITC and ACTC. While the IRS will process the EITC and ACTC returns when received, these refunds cannot be issued before Feb. 15. Similar to last year, the IRS expects the earliest EITC/ACTC related refunds to actually be available in taxpayer bank accounts or on debit cards starting on Feb. 27, 2019, if they chose direct deposit and there are no other issues with the tax return.

This law was changed to give the IRS more time to detect and prevent fraud. Even with the EITC and ACTC refunds and the additional security safeguards, the IRS still expects to issue more than nine out of 10 refunds in less than 21 days. However, it’s possible a particular tax return may require additional review and a refund could take longer. Even so, taxpayers and tax return preparers should file when they’re ready. For those who usually file early in the year and are ready to file a complete and accurate return, there is no need to wait to file.

Have a Tax Problem?  
 

 
 
Contact the Tax Lawyers at
Marini & Associates, P.A.
 
 for a FREE Tax Consultation Contact US at
or Toll Free at 888-8TaxAid (888 882-9243).
 
 






Friday, January 25, 2019

IRS' Shutdown Impact on Tax Court Cases

The United States Tax Court’s website (www.ustaxcourt.gov) announced that the Tax Court shut down operations on Friday, December 28, 2018, at 11:59 p.m. and will remain closed until further notice.  The IRS reminds taxpayers and tax professionals the Tax Court website is the best place to get information about a pending case.

There are some important points for taxpayers and tax professionals to keep in mind. These are some questions and answers to help during the current appropriations lapse.

Q: What should I do if a document I mailed or sent to the Tax Court was returned to me?

A: The Tax Court website indicates that mail sent to the court through the U.S.  Postal Service or through designated private delivery services may have been returned undelivered.  If a document you sent to the Tax Court was returned to you, as the Tax Court website indicates, re-mail or re-send the document to the Court with a copy of the envelope or container (with the postmark or proof of mailing date) in which it was first mailed or sent. In addition, please retain the original.

My case was calendared for trial.  What does the Tax Court’s closure mean for my pending case? 

The Tax Court canceled trial sessions for January 28, 2019 (El Paso, TX; Los Angeles, CA; New York, NY; Philadelphia, PA; San Diego, CA; and Lubbock, TX), February 4, 2019 (Hartford, CT; Houston, TX; San Francisco, CA; Seattle, WA; St. Paul, MN; Washington, DC; and Winston-Salem, NC) and February 11, 2019 (Detroit, MI; Los Angeles, CA; New York, NY; San Diego, CA; and Mobile, AL). The Tax Court will inform taxpayers who had cases on the canceled trial sessions of their new trial dates.

The Tax Court’s website indicates that it will make a decision about the February 25, 2019 trial sessions (Atlanta, GA; Chicago, IL; Dallas, TX; Los Angeles, CA; and Philadelphia, PA) on or before February 7, 2019.  Taxpayers with cases that are scheduled for trial sessions that have not been canceled or that have not yet been scheduled for trial should expect their cases to proceed in the normal course until further notice.

If my case was on a canceled trial session, when will I have an opportunity to resolve my case with Appeals or Chief Counsel after the government reopens? 

After the IRS and Chief Counsel reopen, we will make our best efforts to expeditiously resolve ases. 


Where can I get more information about my Tax Court case? 

If someone is representing you in your case, you should contact your representative. In addition, the Tax Court’s website is the best place for updates.  The IRS Chief Counsel and Appeals personnel assigned to your case may be furloughed and will not be available to answer your questions until the government reopens.  In addition, The American Bar Association (ABA) is conducting a webinar on January 28, 2019, and you can get more information from the ABA Tax Section website (www.americanbar.org/groups/taxation). Taxpayers seeking assistance from Low Income Taxpayer Clinics (LITCs) can find a list of LITCs on the Tax Court’s website (www.ustaxcourt.gov/clinics/clinics.pdf).

During the shutdown, does interest continue to accrue on the tax that I am disputing in my pending Tax Court case? 

Yes. To avoid additional interest on the tax that you are disputing in your pending Tax Court case, you can stop the running of interest by making a payment to the IRS.  Go to www.irs.gov/payments for payment options available to you.  The IRS is continuing to process payments during the shutdown.

What should I do if I received a bill for the tax liability that is the subject of my Tax Court case? 

If you receive a collection notice for the tax that is in dispute in your Tax Court case, it may be because the IRS has not received your petition and has made a premature assessment.  When the government reopens, the IRS attorney assigned to your case will determine if a premature assessment was made and request that the IRS abate the premature assessment.

Have a Tax Problem?  
 

 
 
Contact the Tax Lawyers at
Marini & Associates, P.A.
 
 for a FREE Tax Consultation Contact US at
or Toll Free at 888-8TaxAid (888 882-9243).
 
 





 

Thursday, January 24, 2019

IRS Employees Claiming Hardship Exemptions During Shutdown

Last week, the Treasury Department released a revised contingency plan for the government shutdown under which more than 46,000 of the approximately 70,000 IRS employees would be required to return to work to process tax refunds and get ready for tax filing season, but the majority of them would be unpaid, as the IRS plans to start tax season on Jan. 28 even if the shutdown continues. 
 
The shutdown is now in its 33rd day, and hundreds of thousands of federal government employees are expected to miss their second biweekly paychecks this Friday.
 
The National Treasury Employees Union issued a statement on January 22, 2019, about how many IRS employees are able to use a provision in their union contract known as a “hardship exemption” that allows them to stay at home when they don’t have money to pay for transportation to work or for child care.
“After a Month with No Pay, Real Hardship Does Exist for
IRS Employees Including Not Having the Money Needed
to Get Back and Forth to Work or to Pay for the
Child Care Necessary to Return To Work Right Now,”
said NTEU National President Tony Reardon. 
 
“Emergencies can occur at any time so the hardship exemption can be requested during a lapse in appropriations when an employee is suddenly unable to return to work. That is why the exemption exists. The longer employees go without pay, more face financial hardships.”
 
Have a Tax Problem?  
 


 
 
Contact the Tax Lawyers at
Marini & Associates, P.A.
 
 for a FREE Tax Consultation Contact US at
or Toll Free at 888-8TaxAid (888 882-9243).
 
 
 

 

Wednesday, January 23, 2019

Taxpayers With Tax Problems Should Take Advantage of the IRS Shutdown!

My colleague Steven Klitzner is advising Taxpayers who owe money, are being audited, or who have not filed their returns and who may be breathing a sigh of relief, during this IRS government shutdown; Wrong strategy! They need to take advantage of the situation.

We have been advising our clients to get their ducks in a row, get their paperwork finished, get their offers prepared and/or request for installment payment plans prepared; so that when the IRS reopens they will be ready to submit their request to an overwhelmed IRS.
 
Now is the time to get ahead of the IRS without the threat of them taking bank accounts or wages or closing businesses. 

* If you owe, get your financial documentation together. 
* If you are being audited, get your proof of income and expenses. 
* If you have unfiled returns, get them filed and get your current taxes paid.
 

When the IRS goes back to work, they will be overwhelmed. The employees will be bitter and frustrated. They will want to make deals to clear their inventory. By being proactive and ready, taxpayers can help themselves by helping the IRS resolve cases.
 
Have a Tax Problem?  
 

Contact the Tax Lawyers at
Marini & Associates, P.A.
 

 for a FREE Tax Consultation Contact US at
or Toll Free at 888-8TaxAid (888 882-9243).
 
 
 
 


 



 

Legality of IRS’ Furloughed Workers Recall Now Questioned by Senator

According to Law360, a U.S. Senate Finance Committee member on January 22, 2019 questioned the legality of the Internal Revenue Service plan to recall 46,000 furloughed workers next week, which the agency would execute if the partial federal government shutdown remains in effect.

Sen. Mark Warner, D-Va., the ranking member of the committee’s taxation and IRS oversight subcommittee, asked IRS Commissioner Chuck Rettig what circumstances led to his decision to recall furloughed workers, which is a departure from previous policy. The IRS
announced Jan. 15 that if the shutdown, which began Dec. 22, remained in effect, more than 46,000 workers will be recalled from furlough on Jan. 28 to begin the tax filing season.

“It is unclear that these activities could be described as ‘emergencies involving the safety of human life or the protection of property’ that would allow for excepted employees to perform these duties while Congress has not appropriated funding for your agency,” Warner’s letter said.

The IRS said in its updated contingency plan that 46,052 employees, more than 57 percent of its workforce, would be classified as "excepted," a sizable increase from the 9,492 employees classified as such under a previous plan. The workers would be recalled to start the tax season and begin processing refunds.

A vast majority of IRS employees currently remain on furlough during the government shutdown, which began amid a stalemate between President Donald Trump and congressional Democrats over funding for a wall along the country's Mexico border.

 
The Antideficiency Act States That Only Certain Classifications of Federal Workers, Namely Those Whose Service Involves Emergencies Affecting Human Life or the Protection of Property, Can Volunteer Their Time.

In a separate letter, Warner questioned U.S. Treasury Secretary Steven Mnuchin about why some employees were recalled to process paperwork that would allow banks to provide home loans.

Democratic lawmakers have previously raised concerns over whether nonexcepted federal employees can be recalled from furlough during a shutdown without receiving pay, after Rettig announced on Jan. 7 that a significant portion of the IRS' workforce would be recalled to begin the filing season.


Is this any way to run a government?
Have a Tax Problem?  
 


 
 
Contact the Tax Lawyers at
Marini & Associates, P.A.
 
 for a FREE Tax Consultation Contact US at
or Toll Free at 888-8TaxAid (888 882-9243).
 
 
 

Tuesday, January 22, 2019

The IRS Computer is Continuing to Generate Notices of Levy During This Government Shutdown

For your information, the IRS computer is continuing to generate Notices of Levy, during this  IR/Government shutdown.

It's been my experience that just about every IRS fax number is not functioning, during this government shutdown and you will receive a busy signal when these IRS fax numbers are dialed. So trying to contact anyone at the IRS, by fax, is literally impossible. You can still leave phone messages, but that's not very legally proficient. 

We would advise all practitioners who receive a Notice of Levy, during this government shutdown, to file a CDP hearing request, on Form 12153, within 30 days of the date of the CP 504 Notice or Letter L1058 and send this request to the IRS via certified mail with return receipt requested. 
 
It has generally been taking between 90 – 120 days to have a CDP hearing. If the government reopens and you don't need this CDP hearing, then just revoke the request.  

Please note that the statue of limitations will be extended, during the time your client’s CDP hearing request is pending. 
 
Have a Tax Problem?  
 


 
   Contact the Tax Lawyers at
Marini & Associates, P.A. 
 for a FREE Tax Consultation Contact US at
or Toll Free at 888-8TaxAid (888 882-9243).
 
 



 

 
 



 
 

 

IRS Clarifies "Willfulness" Under FBAR Rules

In Program Manager Technical Advice 2018-013, the IRS has set out the definition of "willfulness," and the standard of proof for establishing willfulness, for purposes of the penalty for willful violation of the requirements of the Report of Foreign Bank and Financial Accounts (FBAR). 
Under 31 USC 5314(a) and 31 C.F.R. 1010.350, every U.S. person that has a financial interest in, or signature or other authority over, a financial account in a foreign country must report the account to IRS annually on an FBAR. 

The penalty for violating the FBAR requirement is set forth in 31 USC 5321(a)(5). The maximum amount of the penalty depends on whether the violation was non-willful or willful.  
  • The maximum penalty amount for a nonwillful violation of the FBAR requirements is $10,000. (31 USC 5321(a)(5)(B)(i))
  • The maximum penalty amount for a willful violation is the greater of $100,000 or 50% of the balance in the account at the time of the violation. (31 USC 5321(a)(5)(C), 31 USC 5321(a)(5)(D))
    The Statute and the Regs. Do Not Define Willfulness! 
The IRS has concluded that the standard for willfulness under 31 USC 5321(a)(5)(C) is the civil willfulness standard and that it includes not only knowing violations of the FBAR requirements, but willful blindness to, as well as reckless violations of, the FBAR requirements. THE 2nd Circuit Court of Appeals' recently agreedwith this conclusion in its opinion in Bedrosian v. U.S., 3rd Cir., Case No. 17-3525, December 21, 2018 .  
 
IRS noted that the Supreme Court has made a delineation between the term willful for criminal purposes versus willful for civil purposes. It noted that in Safeco Ins. Co. of America. v. Burr, (S Ct 2007) 551 U.S. 47, a criminal case, the Supreme Court interpreted the term “willful” or “willfully” narrowly, limiting liability to "knowing violations." The Safeco court also noted that where “willfulness” is a statutory condition of civil liability, the Supreme Court has generally interpreted “willfulness” to not only include knowing violations of a standard, but reckless ones as well.  
And the district court in Bedrosian, (DC PA 2017) 120 AFTR 2d 2017-5832, noted that every federal court to have considered the willfulness standard for civil FBAR violations has concluded that the civil standard applies and that the standard includes “willful blindness” and “recklessness.”
 
IRS said that "willful blindness  is established when an individual takes deliberate actions to avoid confirming a high probability of wrongdoing and when he can almost be said to have actually known the critical facts.” The government can show willful blindness by evidence that the taxpayer made a conscious effort to avoid learning about reporting requirements.
 
And, it said, citing Vespe, (CA 3 1989) 63 AFTR 2d 89-837, that the recklessness standard is met “if the taxpayer: 
  1. Clearly ought to have known that,
  2. There was a grave risk that withholding taxes were not being paid and if
  3. He was in a position to find out for certain very easily.” 

IRS also said that the courts are uniform with regard to the standard of proof for civil FBAR penalties; the government bears the burden of proving liability for the civil FBAR penalty by a preponderance of the evidence.
 
As the court in Bohanec, (DC CA 2016) 118 AFTR 2d 2016-6757, noted, the Supreme Court has held that a heightened, clear and convincing burden of proof applies in civil matters “where particularly important individual interests or rights are at stake.” Important individual interests or rights include parental rights, involuntary commitment, and deportation.
 
However, the preponderance of the evidence standard applies where “even severe civil sanctions that do not implicate such interests” are contemplated. The court in Bohanec held that civil FBAR penalties do not rise to the level of “particularly important individual interests or rights,” and accordingly, the preponderance of the evidence standard applies.
 
IRS noted that Chief Counsel Advice 200603026 suggested that the clear and convincing standard should apply, but subsequent cases have not sustained that position.

Have Undeclared Income from an Offshore Bank Account?
 
 
Been Assessed a 50% Willful FBAR Penalty?
 
 
Contact the Tax Lawyers at 
Marini& Associates, P.A. 
 
 
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-9243
 
 

Monday, January 21, 2019

Another Anti-Taxpayer FBAR "Willfulness" Decision

On January 7, 2019 we posted 1st Taxpayer Victory in a "Willful" FBAR Penalty Case Overturned at Appeals where we discussed that on May 1, 2018 we posted  1st Taxpayer Victory in a "Willful" FBAR Penalty Case Appealed! and now a recent
2nd Circuit Court of Appeals opinion weighed in on
two uncertainties regarding willfulness in context of FBAR violations. 
 
First, the Court held that the definition of willfulness is not particular to FBAR violations but should involve the definition applied in other civil contexts. Particularly, the Court said: 

In assessing the inquiry performed by the District Court, we first consider its holding that the proper standard for willfulness is “the one used in other civil contexts, that is, a defendant has willfully violated [31 U.S.C. §5314] when he either knowingly or recklessly fails to file [a]FBAR.” (Op. at 7.)
 
We agree. Though “willfulness” may have many meanings, general consensus among courts is that, in the civil context, the term “often denotes that which is intentional, or knowing, or voluntary, as distinguished from accidental, and that it is employed to characterize conduct marked by careless disregard whether or not one has the right so to act.” Wehr v. Burroughs Corp., 619 F.2d 276, 281 (3d Cir. 1980) (quoting United States v. Illinois Central R.R., 303 U.S. 239, 242–43 (1938)) (internal quotation marksomitted).  

In particular, where “willfulness” is an element of civil liability, “we have generally taken it to cover not only knowing violations of a standard, but reckless ones as well.” Fuges v. Sw. Fin. Servs., Ltd., 707 F.3d 241, 248 (3d Cir. 2012) (quoting Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 57 (2007)). We thus join our District Court colleague in holding that the usual civil standard of willfulness applies for civil penalties under the FBAR statute. 

Second, the Court held that knowledge of the filing requirement is not a necessary element - recklessness (i.e., reckless disregard) is enough. Here, the Court said: 

This holds true as well for recklessness in the context of a civil FBAR penalty. That is, a person commits a reckless violation of the FBAR statute by engaging in conduct that violates “an objective standard: action entailing ‘an unjustifiably high risk of harm that is either known or so obvious that it should be known.’” Safeco, 551 U.S. at 68 (quoting Farmer v. Brennan, 511 U.S. 825, 836 (1994)). This holding is in line with other courts that have addressed civil FBAR penalties, see, e.g., United States v. Williams, 489 F.App’x 655, 658 (4th Cir. 2012), as well as our prior cases addressing civil penalties assessed by the IRS under the tax laws, see, e.g., United States v. Carrigan, 31 F.3d 130, 134 (3d Cir. 1994). 

The Court then gave a definition for recklessness with respect to IRS filings, providing that: 

[A] person “recklessly” fails to comply with an IRS filing requirement when he or she
 
“(1) clearly ought to have known that
  (2)there was a grave risk that [the filing requirement was not being met] and if
  (3) he [or she] was in a position to find out for certain very easily.” 
 
Id. (quoting United States v. Vespe, 868 F.2d 1328, 1335 (3d Cir. 1989) (internal quotation omitted)).” 

Bedrosian v. U.S., 3rd Cir., Case No. 17-3525, December 21, 2018
 
"The [district] court thus leaves the impression it did not consider whether Bedrosian's conduct satisfies the objective recklessness standard articulated
in similar contexts."
 
Noting that it could not "defer to a determination we are not sure the district court made based on our view of the correct legal standard," it thus remanded to the district court to render a new judgment on the issue of willfulness.
Have Undeclared Income from an Offshore Bank Account?
 
 
Been Assessed a 50% Willful FBAR Penalty?
 
 
Contact the Tax Lawyers at 
Marini& Associates, P.A. 
 
 
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-9243
 
 
 
Sources
 
The Tax Times
 
CHARLES (CHUCK) RUBIN