Wednesday, May 31, 2023

IRS' Inflation Reduction Act of 2022 Funding, To Make the Tax System Fair Again, Is Eliminated In Debt Limit Bill!

On January 18, 2023 we posted TIGTA Says That IRS' $80 Billion Funding Boost Spending Plan Is On Track, where we discussed that oAugust 16, 2022 we posted Inflation Reduction Act of 2022 Is Law, where we discussed what's in the Inflation Reduction Act allocates $80 billion to increase enforcement by the IRS and that the Internal Revenue Service is on track to deliver the spending plan for the Inflation Reduction Act's nearly $80 billion funding boost to the Treasury Department by the Feb. 17, 2023 deadline.

On April 6, 2023 we also posted IRS To Audit Wealthy Individuals and Large Corps  & Partnerships With $45.6 Billion Provided by The Inflation Reduction Act where we discussed that the Internal Revenue Service unveiled on April 6, 2023, its Strategic Operating Plan, an ambitious effort to transform the tax agency and the 150-page report to the Secretary of the Treasury outlines the agency’s historic plans to make fundamental changes following funding from last year’s Inflation Reduction Act. 

The plan makes clear that the resources to be deployed over the short and long term will be used to accomplish various objectives including:

  • Adding capacity to unpack the complex filings of high-income taxpayers, large corporations and complex partnerships and
  • Addressing a growing chasm between the number of experienced compliance personnel at the IRS who audit high-income, high-wealth tax filings for compliance (about 2,600 employees) and the roughly 30,000 individuals making more than $10 million a year, 60,000 large corporations and 300,000 large partnerships and S corps.

    The spending plan calls for hiring and onboarding the first groups of compliance specialists to focus on large corporations and partnerships and high-income individuals in the 2023 fiscal year. Under the plan, the agency would start using new compliance tactics for the wealthy and large corporations in the 2025 fiscal year.

    Now All of Those Aspirational Objectives to Guarantee
    Fairness in The Tax System Are ALL GONE
    as a Result of the 
    Debt Limit Bill!

    According to Law360, the $20 billion in IRS funding cuts included in the debt limit deal reached by President Joe Biden and House Speaker Kevin McCarthy would be part of the largest-ever rescission of previously authorized funding, the chair of the House tax panel said Tuesday, May 30, 2023 in urging colleagues to support the bill.

    House Ways and Means Committee Chair Jason Smith, R-Mo., said the agreement to trim roughly $21.4 billion of the $80 billion funding boost the Internal Revenue Service received under the Inflation Reduction Act marks a compromise between Democrats and Republicans. (What compromise? What did the Democrats get in return?) In addition to extending the federal debt limit for about 19 months, he said the deal "downsizes the outrageous pay raise the IRS was given under one-party Democrat rule."

    The Bill Calls For Not Only A Clawback Of $1.4 Billion Of IRS Spending Planned For Fiscal 2023 But Also An Additional
     $10 Billion Reduction In IRS Funding In Each Of Fiscal
    2024 And 2025, According To A White House Source
    And Congressional Republicans.

    Immediately rescinding nearly $1.4 billion in unspent IRS funding for fiscal 2023 would be a significant victory because it would limit the number of agents the IRS could hire, Smith said at the hearing.

    The 99-page bill, unveiled Sunday after weeks of negotiations between congressional leaders and the White House, would extend the $31.4 trillion federal debt ceiling until Jan. 1, 2025. The bill would not make changes to the energy tax incentives passed as part of the Inflation Reduction Act, as in the debt limit bill passed by the House last month.

    Rep. Mike Thompson, D-Calif., said at the hearing that the amount of funding clawed back from the IRS would be significant.

    "While I Have Not Seen A CBO Estimate Yet, I Think It's
    Worth Pointing Out That Rescinding IRS Funding Actually Makes This Bill More Expensive, Not Less Expensive," Thompson Said. "A Well-Funded IRS Is In The Best Interest
    Of Everyone, Especially Working-Class Americans."

    The White House on Tuesday urged Congress to send the debt limit bill to Biden's desk, saying that it reflects a bipartisan compromise to avoid the U.S.' first-ever default. aka Biden Caved To Extortion!

    The Biden administration downplayed the rescission of the IRS funding, with a White House source saying Sunday that the IRS would be able to continue to make use of the remaining $60 billion it received under the Inflation Reduction Act over "the next several years." B_ _ _ S_ _ _!


    Have an IRS Tax Problem?





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


    for a FREE Tax HELP Contact us at:
    www.TaxAid.com or www.OVDPLaw.com
    or 
    Toll Free at 888 8TAXAID (888-882-9243) 


    Wednesday, May 24, 2023

    Would You Like Your Philly Cheesesteak With or Without Prison Time

    According to Law360, Federal prosecutors asked a Philadelphia judge to give the father-son duo who owned the iconic Tony Luke's cheesesteak restaurant more than two years in prison each and order them to pay $1.3 million in combined restitution after they pled guilty to defrauding the government through an $8 million tax evasion scheme.

    On May 19, 2023, U.S. District Judge Gerald A. McHugh received the government's sentencing submission for Tony Luke's founder Anthony Lucidonio Sr., 84, and his son, Nicholas Lucidonio, 57, about a year after they pled guilty to the first count of the 24-count indictment that initially charged them in 2020.

    "Defendants' willingness to baldly deny the full scope of their criminal conduct, and defendant Nicholas Lucidonio's brazen willingness to speciously contest his role in the criminal scheme to evade both income and payroll taxes is astounding," the memorandum reads.

    Prosecutors accused the Lucidonios of various crimes related to the business' payroll and income taxes. I

    "Despite committing tax evasion for the better part of two decades, and despite their own accounting records which show skimmed sales approximating $8 million, concealed net profits in the millions, and a tax loss of at least $1.3 million, defendants would have this court believe the harm they caused to the United States Treasury for which they are responsible is just $286,000 over the decade charged in the indictment," the memorandum reads.

    In total, the government determined Tony Luke's failed to pay $486,142 of payroll taxes and $834,900 of income taxes while the Lucidonios argue it was just $286,000 in payroll taxes and $424,535 in income taxes that was lost.

    The memo also says the sentencing guidelines suggest 30-37 months for Nicolas Lucidonio and 37-46 months for Anthony Lucidonio if they accept responsibility for their crimes.


    Tax Court Finds That 3 Yr Statute of Limitations For Assessing Gift Had Lapsed & Dismisses Banker's $8.7M IRS Bill

    According to Law360, a Swiss-born banker who challenged an $8.7 million tax bill stemming from a $6 million gift he made to his mother before he became a U.S. citizen properly disclosed the gift on an amended return, the U.S. Tax Court determined Monday.


    In siding with Ronald Schlapfer, who claimed he didn't owe gift tax because he wasn't planning to live in the U.S. at the time he gave the gift, the court barred the Internal Revenue Service from trying to collect, saying the agency had run out of time.

    The government has three years to collect gift tax from the time a return is filed, as long as the return adequately discloses the gift, the court said. Schlapfer filed his amended gift tax return, along with a protective claim and explanation why he believed he didn't owe gift tax, in 2013 as part of his disclosure package for participation in the IRS' Offshore Voluntary Disclosure Program. Even with a year's worth of extensions, the IRS had run out of time to assess the gift tax by the time it issued the notice of deficiency — which included $4.4 million in gift tax liabilities and $4.3 million in additions to tax — in 2019, the court said.

    While the IRS said Schlapfer did not adequately disclose the gift on his amended return, the court said other documents in Schlapfer's disclosure package, namely the offshore entity statement that explained the source of the gift, could be relied on to prove adequate disclosure under Treasury regulations.

    Schlapfer, who became a U.S. citizen in 2008 and lived in Florida when he challenged the tax bill, worked for Citibank before starting European Marketing Group Inc. in of Panama in 2002, according to the decision. The gift to his mother was a life insurance policy that included his aunt and uncle and was funded partly with EMG stock.

    SC - IRS Does Not Need To Notify Taxpayers of Bank Doc Summons

    According to Law360, the U.S. Supreme Court affirmed on May18thh 2023 a Sixth Circuit decision approving IRS summonses for the banking records of two law firms and the wife of a man owing $2 million in taxes, rejecting their arguments that they should have been notified of the requests.

    In a unanimous opinion by Chief Justice John Roberts, the court found that:

    The Internal Revenue Service Wasn't Required To Notify
    Firms Abraham & Rose PLC, Jerry R. Abraham PC And
    Hanna Karcho Polselli, The Tax Debtor's Wife, of the
    Him hhimSummonses Seeking Their Banking Records.

    The Sixth Circuit correctly concluded that the IRS could issue the summonses without notification under Internal Revenue Code Section 7609(c)(2)(D)(i), because the IRS was trying to collect the already-assessed taxes of Remo Polselli, according to the opinion. The court rejected arguments from the firms and Hanna Polselli that an exception to the notice requirements applies only when the delinquent taxpayer has a legal interest in the requested records, saying none of the three parts of the statutory exception mention any sort of legal interest test.  

    "None of the three components for excusing notice in [Section] 7609(c)(2)(D)(i) mentions a taxpayer's legal interest in records sought by the IRS, much less requires that a taxpayer maintain such an interest for the exception to apply," the opinion said.

    The dispute stems from an IRS probe into the liabilities of Remo Polselli, whom the agency determined owed $2 million in unpaid taxes. An IRS agent had issued summonses to three banks: Wells Fargo Bank NA, JP Morgan Chase Bank NA and Bank of America NA, seeking records on accounts held by the two law firms as well as Hanna Polselli. 

    But the IRS didn't tell the firms or the spouse of the summonses. Instead, the banks notified them, and Hanna Polselli and the firms subsequently filed petitions in Michigan federal court to quash the summonses, according to the opinion.

    A lower court found that Hanna Polselli and the firms couldn't sue to do away with the summonses because the IRS was trying to collect the taxes assessed against Polselli, and the plain meaning of Section 7609(c)(2)(D)(i) permits the IRS to skip notifying them in such circumstances. That statute specifically exempts from the general notice requirement summonses "issued in aid of the collection of" an assessment made against a different taxpayer.

    In a 2-1 opinion, the Sixth Circuit agreed, saying it's clear the IRS issued the summonses in order to aid the collection of tax and locate Polselli's assets.

    Polselli and the firms have argued that both the language of the statute and the history behind its enactment indicate that the exception is applicable only in limited circumstances, when the delinquent taxpayer has a legal interest in the requested records. The Ninth Circuit embraced such a test in Ip v. United States , according to Polselli and the firms.

    But in the Supreme Court's opinion, Justice Roberts said there's no support in the statute for such a legal interest test, based on "a straightforward reading of the statutory text."

    Moreover, Polselli and the firms have too narrow a reading of the statute's phrase "in aid of," the opinion said. While they've argued that the phrase requires that there be some sort of direct connection between a summons the IRS issues and taxes it collects, the agency can issue summonses that in some way help it locate assets without necessarily enabling the agency to collect taxes, the opinion said.

    "Even if a summons may not itself reveal taxpayer assets that can be collected, it may nonetheless help the IRS find such assets," the opinion said.

    In a separate concurring opinion, Justice Ketanji Brown Jackson said the IRS isn't automatically exempt from the notification requirements for IRS summonses when a tax matter enters the collection phase. The exception to the notice requirements is specifically intended to help the IRS out so notice of a summons doesn't tip off a delinquent taxpayer who might want to hide their assets, Justice Jackson wrote.

    But that exception isn't intended to "devour the rule" requiring notice, she wrote in the concurring opinion, joined by Justice Neil Gorsuch.

    "I believe that both courts and the IRS itself must be ever vigilant when determining when notice is not required," Justice Jackson said. "Doing so properly involves a careful fact-based inquiry that might well vary from case to case, depending on the scope and nature of the information the IRS seeks."


    Available IRS Payment Plans - Part II

    On May 9, 2023 we posted Available IRS Payment Plans - Part I, where we discussed that for the 2019 filing season, the IRS projects that more taxpayers than ever will file and owe and that many will be able to pay, but a lot of them will need to make other arrangements because they can’t pay their full tax bills to the IRS. We also discussed that the IRS has three simplified payment plans:

    • Guaranteed Installment Agreements (GIA): 36-month payment terms for balances of $10,000 or less.
    • Streamlined Installment Agreements (SLIA): 72-month payment terms for balances of $50,000 or less.
    • Streamlined Processing for Balances Between $50,000-$100,000: 84-month payment terms for balances between $50,000 and $100,000.
    Here we would like to discuss a few other tips related to these simple agreements:

    1. Avoid a tax lien – pay down the balance to get into a SLIA. Here’s the best plan for taxpayers who owe more than $50,000: Get an extension to pay of up to 120 days, get funds to pay the balance down to under $50,000, and obtain a SLIA. Doing so will avoid the filing of a tax lien.

    2. For SLIA, it’s the “assessed” balance – not the total amount owed. The $50,000 SLIA threshold is based on the taxpayer’s assessed balance – not the total amount they owe. The assessed balance includes tax, assessed penalties and interest, and all other assessments for each tax year. It doesn’t include accrued penalties and interest after the original assessment. For example, if a taxpayer’s original assessment is under $50,000 for an older tax year, he may accrue additional penalties and interest that puts the total balance over $50,000. In this situation, they would still qualify for a SLIA based on the original assessed balance. Taxpayers can also designate payments to reduce their “assessed balance only” to help them qualify for a SLIA.

    3. Apply and pay automatically to reduce fees. The IRS increases installment agreement setup fees if taxpayers pay by check. Reduce the setup fee by agreeing to automatic direct debit payments. Automatic payments also avoid a monthly reminder letter from the IRS about the payment due.

    4. Pay by direct debit or payroll deduction to avoid default. IRS installment agreements have a high default rate. To avoid a default, taxpayers must make their monthly payments. The best way to avoid missing a payment is to have the payment automatically deducted from the taxpayer’s financial accounts.

    5. Don’t owe again. The second most common cause of defaulted installment agreements is filing future tax returns with unpaid balances. Taxpayers need to change their withholding and/or make estimated tax payments to avoid owing taxes that they can’t pay in the future.

    6. Taxpayers can miss one payment a year. Most IRS payment plans allow taxpayers to miss one payment per year and not default. It’s best for the taxpayer to notify the IRS in advance if they can’t make a payment.

    7. If the taxpayer’s financial situation worsens, get an ability-to-pay plan. Taxpayers can always renegotiate their payment plans if their financial circumstances change. For example, if a taxpayer loses their job, they may not be able to pay the IRS. In these cases, the taxpayer can contact the IRS and provide documentation on their ability to pay. This may mean a lower payment or even payment deferral (called currently not collectible status). Be careful here: If the taxpayer owes more than $10,000 and can’t pay within 72 months, the IRS is likely to file a tax lien.

    8. Remember to ask for penalty abatement at the end of the plan. One important action to take at the end of a payment plan is to request abatement of the failure to pay penalty. Taxpayers should consider using first-time abatement or reasonable cause abatement if they qualify.

    Each year, more than 3 million taxpayers get into a payment plan with the IRS. With tax reform, we can expect that more taxpayers will need a payment plan in 2019. Taxpayers who owe less than $100,000 should first look at 36-, 72-, or 84-month payment plans with the IRS. Many will also benefit from the help of a qualified tax professional to find the best option.

    Need Help with an Installment Payment Plan?
     

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

      
    for a FREE Tax HELP Contact Us at:
    or Toll Free at 888-8TaxAid (888) 882-9243 





    Sources:

    accountingTODAY

    IRS.gov
     

    Wednesday, May 10, 2023

    IRS Dirty Dozen List Targets 3 Schemes With International Elements


    The IRS' 2023 Dirty Dozen List targets 3 schemes with International Elements: 

     1 .Offshore Accounts & Digital Assets

    International tax compliance remains a high priority for the IRS. The IRS continues to scrutinize taxpayers attempting to hide assets in offshore accounts and accounts holding digital assets, such as cryptocurrency. The IRS reminds U.S. persons that they are taxable on their worldwide income, unless they can establish there is a statutory or treaty exemption.

    The IRS continues to identify individuals who attempt to conceal income in offshore banks, brokerage accounts, digital asset accounts and nominee entities. The IRS scrutinizes structured transactions, private annuities, employee leasing schemes, foreign trusts, the use of nominee ownership and other arrangements used to conceal taxable income, beneficial owners and assets. To complement its enforcement investigations, the IRS requires individuals holding foreign assets and third parties to report to the IRS on foreign assets, foreign accounts, foreign entities and digital assets. Reporting requirements carry penalties for failure to file.

    Asset protection professionals and unscrupulous promoters continue to lure U.S. persons into placing their assets in offshore accounts and structures, saying they are out of reach of the IRS. Similarly, unscrupulous promoters recommend digital assets as being untraceable and undiscoverable by the IRS. These assertions are not true. The IRS can identify and track anonymous transactions of foreign financial accounts as well as digital assets.

    Many of these schemes are promoted and advertised online, but all these schemes have one thing in common - they promise tax savings that are too good to be true and will likely cause legal harm to taxpayers.

    2. Maltese Individual Retirement Arrangements Misusing Treaty

    These arrangements involve U.S. citizens or residents who attempt to avoid U.S. tax by contributing to foreign individual retirement arrangements in Malta (or potentially other host countries). The participants in these transactions typically lack any local connection to the host country, and unlike U.S. law for individual retirement arrangements, the host country’s laws allow for contributions in a form other than cash and do not limit the amount of c
    ontributions by reference to employment or self-employment activities. By improperly asserting the foreign arrangement as a “pension fund” for U.S. tax treaty purposes, the U.S. taxpayer misconstrues the relevant treaty provisions and improperly claims an exemption from U.S. income tax on gains and earnings in, and distributions from, the foreign individual retirement arrangement.

    3. Puerto Rican and Other Foreign Captive Insurance

    In these transactions, U.S. business owners of closely held entities participate in a purported insurance arrangement with a Puerto Rican or other foreign corporation in which the U.S. business owner has a financial interest. The U.S. business owner (or a related entity) claims a deduction for amounts paid as premiums for “insurance coverage” provided by a fronting carrier, which reinsures the “coverage” with the Puerto Rican or other foreign corporation. Despite being labeled as insurance, these arrangements lack many of the attributes of legitimate insurance. Like the micro-captives described above, the characteristics of the purported insurance arrangements typically will include one or more of the following: implausible risks covered (or duplicative coverage of risks already covered by commercial insurance), excessive premiums indicative of non-arm’s length pricing and a lack of business purpose for entering the arrangement.

    Where appropriate, the IRS will challenge the purported tax benefits from these types of transactions and impose penalties. The IRS Criminal Investigation Division is always on the lookout for promoters and participants of these types of schemes. Taxpayers should think twice before including questionable arrangements like this on their tax returns. After all, taxpayers are legally responsible for what's on their return, not a promoter making promises and charging high fees. Taxpayers can help stop these arrangements by relying on reputable tax professionals they know and trust.

    The IRS warns anyone thinking about using one of these schemes – or similar ones – that the agency continues to improve investigation and enforcement in these areas by utilizing new and evolving data analytic tools and enhanced document matching.

    Whether anchored offshore or in the U.S., abusive transactions and schemes remain a high priority for the IRS. 

    The IRS Office Of Chief Counsel Continues To Hire
    Additional Attorneys To Help The Agency Combat Abusive Arrangements, Including Syndicated Conservation Easements, Micro-Captive Transactions And Others.

    The IRS also created the Office of Fraud Enforcement (OFE) and Office of Promoter Investigations (OPI) to coordinate service-wide enforcement activities against taxpayers committing tax fraud and promoters marketing and selling abusive tax avoidance transactions and schemes to effectuate tax evasion.

    Have One of These IRS Tax Problems?



    Like Your Freedom?


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

    for a FREE Tax HELP Contact us at:
    www.TaxAid.com or www.OVDPLaw.com
    or 
    Toll Free at 888 8TAXAID (888-882-9243) 



    Tuesday, May 9, 2023

    Available IRS Payment Plans – Part I

    a close-up of a newspaperFor the 2023 filing season, the IRS projects that some taxpayers will file and owe. Many will be able to pay, but a lot of them will need to make other arrangements because they can’t pay their full tax bills to the IRS.

    When taxpayers can’t pay their tax bills, they have a number of options, including payment plans, to pay off their Joe andoutstanding taxes and accrued penalties and interest. Of the 16 million taxpayers who owe back taxes, 97 percent of them qualify to use a payment plan that’s fairly easy to set up and would likely give them the best payment terms.
    The IRS has three simplified payment plans:

    • Guaranteed Installment Agreements (GIA):36-month payment terms for balances of $10,000 or less.
    • Streamlined Installment Agreements (SLIA):72-month payment terms for balances of $50,000 or less.
    • Streamlined Processing for Balances Between $50,000-$100,000:84-month payment terms for balances between $50,000 and $100,000.

    Advantages of 36-, 72-, and 84-month agreements
    These are the three most common IRS payment plans. They’re all easy to obtain from the IRS, because they:

    • Require minimal, if any, financial disclosure to the IRS;
    • Don’t require an IRS manager to approve the payment terms;
    • Don’t require taxpayers to liquidate assets to pay the IRS; and,
    • Can be set up in one phone call or interaction with the IRS.

    The GIA (36 months) and SLIA (72 months) can be completed online using the Online Payment Agreement tool at IRS.gov. The GIA and SLIA are also attractive to taxpayers who don’t want a public record of their tax debt, because these agreements don’t require the IRS to file a public notice of federal tax lien. Taxpayers who owe between $25,000 and $50,000 must agree to pay by automated direct debit or payroll deductions to avoid a tax lien.

    The “Streamlined Processing” 84-month payment plan works a little differently. The IRS started the 84-month plan as a pilot program in 2016 to make it easier for taxpayers who owe between $50,000 and $100,000 to get into a payment plan with the IRS. Taxpayers can avoid filing their financial information with the IRS if they agree to pay their tax bill by direct debit or payroll deductions. If they don’t agree to these automated payments, the IRS requires taxpayers to provide a Collection Information Statement (IRS Form 433-A or 433-F). Even with streamlined processing, the 84-month plan has one catch: The IRS will file a federal tax lien.

    The pilot program for the 84-month plan is still in effect today. The IRS hasn’t completed its study on whether the 84-month plan is an effective collection option. One thing is clear about the program: It likely provides better payment terms and relieves burden for taxpayers.

    The rules
    GIAs are for taxpayers who owe the IRS $10,000 or less. As the name suggests, the payment plan is “guaranteed” if the taxpayer meets all conditions of the GIA:

    • It’s for individual income taxes only;
    • Total balances owed, including penalties and interest, must be $10,000 or less
    • The taxpayer must pay within 36 months;
    • All required tax returns have been filed; and,
    • The taxpayer has not entered into an installment agreement in the previous five years.

    SLIAs can be used by individual taxpayers who meet these conditions:

    • It’s for income taxes and other assessments, including unpaid trust fund penalty assessments;
    • The total assessedbalance is $50,000 or less (not including accruals of penalties and interest after the original assessment of tax, penalties, and interest);
    • The taxpayer must pay within 72 months; and,
    • All required tax returns have been filed.

    Taxpayers can set a GIA or SLIA by:

    • Using the online payment agreement tool at IRS.gov;
    • Filing Form 9465 with the IRS; or,
    • Contacting the IRS by phone

    Terms may be shorter for old tax debt

    Taxpayers should be aware that they may not get the full length of time to pay their outstanding tax balances if their debt is old. For each of these simple payment plan options, the IRS will limit the terms if the collection statute of limitations (generally 10 years from the date that tax is assessed) is shorter than the prescribed payment terms.

    For example, if a taxpayer’s collection statute expires in 24 months, any GIA, SLIA, or 84-month plan will be limited to 24 months. Taxpayers who can’t afford these payments may have to consider a payment plan based on their ability to pay.

    Ability-to-pay installment agreements require taxpayers to file a Collection Information Statement and prove their average monthly income and necessary living expenses. In addition, the IRS often asks taxpayers to liquidate or borrow against their assets to pay their outstanding tax bill in ability-to-pay agreements.

    Fees apply
    There is a setup fee for all IRS installment agreements. The fees range from $225 for installment agreements set up by phone and paid by check, to $31 for agreements set up online and paid by automatic direct debit. Taxpayers who meet low-income thresholds can get the fee waived.

    Tips for all three agreements
    The GIA, SLIA, and 84-month payment plans are usually the best way to set up a payment plan with the IRS. They’re usually quick and easy to set up and likely provide taxpayers with better payment terms than most other options.

    Taxpayers who can’t pay according to the GIA and SLIA terms face tax liens if they owe more than $10,000. Taxpayers also need to request the GIA or SLIA before the IRS files a tax lien. After the lien is filed, taxpayers must pay their full balance to get the lien released, or pay down the balance to $25,000 to start lien-withdrawal proceedings.

    Here are a few other tips related to these simple agreements:

    1. Avoid a tax lien – pay down the balance to get into a SLIA. Here’s the best plan for taxpayers who owe more than $50,000: Get an extension to pay of up to 120 days, get funds to pay the balance down to under $50,000, and obtain a SLIA. Doing so will avoid the filing of a tax lien.
    2. For SLIA, it’s the “assessed” balance – not the total amount owed. The $50,000 SLIA threshold is based on the taxpayer’s assessed balance– not the total amount they owe. The assessed balance includes tax, assessed penalties and interest, and all other assessments for each tax year. It doesn’t include accrued penalties and interest after the original assessment. For example, if a taxpayer’s original assessment is under $50,000 for an older tax year, he may accrue additional penalties and interest that puts the total balance over $50,000. In this situation, they would still qualify for a SLIA based on the original assessed balance. Taxpayers can also designate payments to reduce their “assessed balance only” to help them qualify for a SLIA.
    3. Apply and pay automatically to reduce fees.The IRS increases installment agreement setup fees if taxpayers pay by check. Reduce the setup fee by agreeing to automatic direct debit payments. Automatic payments also avoid a monthly reminder letter from the IRS about the payment due.
    4. Pay by direct debit or payroll deduction to avoid default. IRS installment agreements have a high default rate. To avoid a default, taxpayers must make their monthly payments. The best way to avoid missing a payment is to have the payment automatically deducted from the taxpayer’s financial accounts.
    5. Don’t owe again.The second most common cause of defaulted installment agreements is filing future tax returns with unpaid balances. Taxpayers need to change their withholding and/or make estimated tax payments to avoid owing taxes that they can’t pay in the future.
    6. Taxpayers can miss one payment a year. Most IRS payment plans allow taxpayers to miss one payment per year and not default. It’s best for the taxpayer to notify the IRS in advance if they can’t make a payment.
    7. If the taxpayer’s financial situation worsens, get an ability-to-pay plan. Taxpayers can always renegotiate their payment plans if their financial circumstances change. For example, if a taxpayer loses their job, they may not be able to pay the IRS. In these cases, the taxpayer can contact the IRS and provide documentation on their ability to pay. This may mean a lower payment or even payment deferral (called currently not collectible status). Be careful here: If the taxpayer owes more than $10,000 and can’t pay within 72 months, the IRS is likely to file a tax lien.
    8. Remember to ask for penalty abatement at the end of the plan. One important action to take at the end of a payment plan is to request abatement of the failure to pay penalty. Taxpayers should consider using first-time abatement or reasonable cause abatement if they qualify.

    Each year, more than 3 million taxpayers get into a payment plan with the IRS. With tax reform, we can expect that more taxpayers will need a payment plan in 2019. Taxpayers who owe less than $100,000 should first look at 36-, 72-, or 84-month payment plans with the IRS. Many will also benefit from the help of a qualified tax professional to find the best option.

    Need Help with an Installment Payment Plan?

    pen

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

    for a FREE Tax HELP Contact Us at:
    www.TaxAid.com or www.OVDPLaw.com
    or Toll Free at 888-8TaxAid (888) 882-9243

     

    Monday, May 8, 2023

    Breaking News - IRS To Send 5-8 Million CP14 Collection Notices Dating Back to 2020!

    On February 2, 2021, we posted LB&I Extends The Suspension of IDR Enforcement Through June 30, 2021, where we discussed that 
    In a memo LB&I-04-1220-0021 (12/9/2020), the IRS's Large Business & International division (LB&I) has said it is extending the suspension of information document request (IDR) enforcement procedures as a result of COVID.

    On Friday, May 5, IRS Deputy Commissioner for Collection and Operations Support Darren Guillot announced at an American Bar Association tax conference panel in Washington, D.C.,

    That The Pause On Certain Collection Notices
    Will Stop This Month Following The Termination
    Of The COVID-19 Emergency Declaration.

    CP14 Notices inform taxpayers of outstanding balances of unpaid taxes, including the amount owed and a scannable QR code that directs to an IRS landing page for payments. 

    Guillot estimated by the "end of May,"

    Approximately 5-8 Million CP14 Notices Will Be Sent To Taxpayers After A Suspension Dating Back
    to 2020 at The Onset Of The Pandemic.


    Have an IRS Tax Problem?



    Haven't Received a CP14 Notice Yet?

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

    for a FREE Tax HELP Contact us at:
    www.TaxAid.com or www.OVDPLaw.com
    or 
    Toll Free at 888 8TAXAID (888-882-9243) 


    Tuesday, May 2, 2023

    SC Not Hear IRC § 965 Transition Tax Challenge

    According to Law360, an American expatriate who runs an Israeli law firm will not get a chance to challenge regulations implementing the transition tax for overseas profits after the U.S. Supreme Court in Monte Silver Ltd. v. Internal Revenue Service et al., case number 22-907, on May 1, 2023 declined to hear the case

    The top court's refusal to hear the case ends the challenge by Monte Silver, who had argued the Internal Revenue Service failed to undertake the required analysis of the regulations under the Regulatory Flexibility Act. Silver sued the government in 2019 over the regulations governing the one-time mandatory transition tax on overseas income, a provision of the 2017 Tax Cuts and Jobs Act. Companies had eight years to pay the deemed tax on foreign income.

    Silver had claimed that he and his firm would incur compliance costs as a result of the rules each time the firm distributed a dividend to him, the firm's sole shareholder. He also had argued the rules shouldn't be enforced until the IRS analyzed their impact on small businesses, as required by the RFA.

    In December, The D.C. Circuit uled That Silver Lacked Standing To Challenge The Regulations Under Article III Of The U.S. Constitution Because He Hadn't Been Injured By Them.

    The injuries he claimed could be tied to other tax laws and rules, the appeals court found.

    The court ruled Silver did not show that granting the requested relief would redress a past injury because he had already borne the costs of compliance in determining his liability and he didn't owe any tax. The court also found that Silver had failed to show imminent future injury, another way to satisfy Article III standing.

    The U.S. District Court for the District of Columbia dismissed Silver's claim in 2021, finding that Silver failed to show his burden to comply with the new regulations would change if the government granted the relief he requested.

    Silver also did not present facts showing that he would be harmed in the future by the regulations, the district court ruled. He alleged that he could end up paying costs to comply with the regulations but did not present actual facts showing that he would suffer an imminent injury, the opinion said.

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