Forms Filed With the Streamlined Offshore Voluntary Disclosure Program

For many individuals, the Streamlined Offshore Voluntary Disclosure Program provided welcome relief in comparison to the “initial” Offshore Voluntary Disclosure Program.  Many taxpayers with foreign accounts and assets contact wonder what forms and documents must be filed to apply for the Streamlined Offshore Voluntary Disclosure Program.  In general, taxpayer’s must file the necessary FBARs, amend the necessary 1040s (1040X) and Form 14654.  Further, based upon the facts and circumstances, other forms may not be prepared and filed.  You should always discuss your requirements with your tax attorney and/or other tax advisors.  The video below has been prepared to provide additional information regarding the forms filed with the streamlined program.  You can contact The McGuire Law Firm to discuss your issues directly with a tax attorney.

Amending an Offer in Compromise

When an offer in compromise is submitted to the IRS, the IRS may agree that the taxpayer is an offer candidate, but not agree with the original offer in compromise amount.  Thus, can the initial offer in compromise be amended?  Yes, the offer can be amended to reflect a different amount and terms.

This issue is discussed in the video below by John McGuire, a tax attorney at The McGuire Law Firm.

You can contact The McGuire Law Firm to speak with a tax attorney.

Non-Willful Conduct Under Streamlined Offshore Voluntary Disclosure Program

Non-willful conduct is required under the Streamlined Offshore Voluntary Disclosure Program (Streamlined OVDP).  If the failure to report foreign bank accounts and/or foreign financial assets was non-willful, you may be subject to a lower penalty base.  The key question is, what constitutes non-willful actions by a taxpayer?  Generally, the IRS would consider non-willful to mean the conduct or failure to properly report was due to a mistake, negligence or based upon a good faith misunderstanding of the law.  Perhaps an understandable lack of knowledge may lead to non-willful conduct.

The video below also provides a short explanation of non-willful conduct, which of course is based upon the facts and circumstances of each case.  Please remember to consult with your tax attorney directly if you have questions relating to FATCA, FBAR filings and/or other foreign tax compliance issues.

You can contact The McGuire Law Firm to speak with a tax attorney regarding your issues.

Your Right To Notice and a Hearing Before the IRS

As taxpayer you have the right to notice and a hearing prior to the IRS enforcing collection of any tax due.  After the IRS has issued a series a notices, the IRS must issue a Final Notice of Intent to Levy and allow you 30 days to request a hearing, which is generally referred to as a Collection Due Process Hearing.  During this hearing you can provide information and a proposal to prevent enforcement action such as an installment agreement or an offer in compromise.  This is the due process afforded to you and can be very beneficial in resolving an issues with the Internal Revenue Service.  The video below has been prepared by a tax attorney to provide additional information regarding your right to a hearing.

If you have any questions or are experiencing problems with the IRS, you can speak with a tax attorney by contacting The McGuire Law Firm.  The McGuire Law Firm has offices in Denver, Golden, Broomfield and DTC where you can meet with a tax attorney.

Who Can Represent Me Before the IRS?

If you are under audit by the IRS, have received a notice of deficiency or the IRS is attempting to collect past due taxes, you can receive representation.  The video below has been prepared by a tax attorney at The McGuire Law Firm to provide information regarding who can represent you before the Internal Revenue Service.

John McGuire is a tax attorney in Denver, Colorado at The McGuire Law Firm.  John’s practice focuses primarily on issues before the IRS, tax planning & analysis and advising individual and business clients on the tax implications of certain transactions such as the purchase or sale of a business.

When is a Collection Due Process Hearing Available?

A taxpayer has the right to a collection due process hearing with the Internal Revenue Service Appeals Office under certain circumstances.  This hearing can be very beneficial to a taxpayer in terms of preventing enforcement action such as a bank levy or wage garnishment and by a means to establish or propose an agreement with the IRS such as an installment agreement or offer in compromise.

The video below has been prepared to provide information as to when a taxpayer may be able to request a collection due process hearing.  If you are experiencing any issues with the IRS, you can speak with a tax attorney, by contacting The McGuire Law Firm.   As a tax attorney John McGuire has assisted many individual and business taxpayers before the IRS, including via collection due process hearings with the IRS Appeals Office.

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IRS Appeal Rights

What are my rights as a taxpayer?  What appeal rights do I have regarding IRS actions or decisions?  These are common questions a taxpayer may have when a tax liability is owed to the IRS and the taxpayer is in the collection process with the IRS.  The information below has been provided for general information purposes.  If you owe taxes to the IRS and/or the IRS is attempting to collect the tax liability, it is highly recommend you speak with a tax attorney regarding a resolution to the matter.

Many IRS collection actions can be appealed to the IRS Appeals Office.  The appeals office is a separate office from IRS collections and is supposed to make independent decisions apart from IRS collections.  You can review Revenue Procedure 2012-18, which provides more in depth information regarding the IRS appeals’ office independence from collection.

The appeals office follows two main procedures regarding appeal action.  These two procedures would be Collection Due Process (often referred to as CDP) and Collection Appeals Program (CAP).

A Collection Due Process Hearing would be available under the following circumstances:

  • The IRS Filed a Notice of Federal Tax Lien
  • The IRS Issued a Final Notice of Intent to Levy
  • The IRS Issued Notice of Jeopardy Levy
  • The IRS Issued a Notice of Levy on Your State Tax Refund
  • Post Levy you request a hearing

A Collection Appeals Program would be available under the following circumstances:

  • Before or after the IRS files a Notice of Federal Tax Lien
  • Before or after the IRS levies or seizes your property
  • Upon the termination or proposed termination of an installment agreement
  • Upon the rejection of an installment agreement
  • Upon the modification or proposed modification of an installment agreement

A Collection Appeals Program (CAP Appeal) will generally result in a quicker appeals decision and as stated above is available for somewhat of a broader set of circumstances.  However, one should not that you cannot go to court after the CAP Appeal if you disagree with the CAP decision.

Can I represent myself?  This is a common question, and yes, just like in any court matter you can represent yourself, but you may want to consider speaking with a tax attorney if you are not experienced in IRS procedure and tax law. You can also be represented by a family member, or if you are business, a full time employee can represent the business or partners and/or officers of a business can represent the business.

The above article has been prepared by John McGuire of The McGuire Law Firm.  Mr. McGuire’s practice focuses primarily in taxation, including the representation of both individual and business taxpayers before the IRS.

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Embezzlement or Fraud Involved With 941 Taxes

Embezzlement or theft may be a more frequent issue faced by small and medium sized businesses than many people think.  Often office managers or employees will improperly take money or assets from a business.  Although, perhaps not as common as an employee misappropriating monies or assets, I have seen professionals, such as the businesses CPA embezzle or steal money, which when done is typically a much higher dollar amount and more damaging to the company.  One means by which I have witnessed a CPA or professional embezzle monies from a business is through the employment tax (941 tax) process whereby federal tax deposits are paid to the IRS on a weekly or monthly basis.  Below I have provided examples of this embezzlement or fraud scheme, which hopefully can prevent some business owners from falling victim.

One situation whereby I have witnessed a CPA or office manager involved with theft or embezzlement from a company was when the CPA or office manager was preparing the 941 employment tax returns and in charge of making the federal tax deposits.  The scheme was conducted under the following facts & circumstances.  The corporation would run payroll and net payroll checks would be paid to all employees and officers.  A payroll report was provided to the corporation stating gross payroll, net payroll and the total employment tax liabilities.  The correct amount(s) were withdrawn from the corporation’s bank account to pay the tax deposits, but the deposits were not paid to the federal government or state agencies.  The deposits went to another account, usually an account under the control of the third party responsible for the embezzlement or fraud.

Thus, when looking at the bank statements, payroll records and 941 tax returns, everything would appear ok.  The net payroll was paid to employees and the appropriate amount was being withdrawn for tax deposits.  The internal books of the business would be in line.  When preparing the 941 returns, the correct return was provided to the necessary parties or officers for review and signature, but then a zero ($0) 941 was filed or no 941 was ever filed at all.  The business owners can be personally responsible for the trust fund portion of the 941 tax!

You may be asking yourself, how does the IRS catch on, or why did the IRS not catch on?  The IRS will catch on, because in all likelihood the business must issue correct W-2s to employees so employees can file their individual returns.  Eventually, the IRS will see that the W-2s are not matching up with the 941s and the federal ta deposits, but this could easily occur 12-24 months after the fact and thus the fraud could have been ongoing for 24-36 months.  Furthermore, if the individual responsible for the fraud also receives the IRS notices and is responsible for IRS contacts, knowledge to the business owners could be further delayed.

As a business owner, what can you?

  • Making the actual federal tax deposits yourself is the safest manner to prevent this fraud or embezzlement
  • If you do not make the deposits, make sure you obtain receipts of the deposits paid through eftps.gov and check these deposits against the bank withdrawals and applicable documents
  • Make sure the 941s are accurate based upon payroll and ensure they are filed. If filed and a balance is due, you would receive a notice within 15-60 days.
  • Make sure you are receiving all IRS and tax notices.

If you or your business have been the victim of theft or fraud through a similar 941 scheme, please feel free to contact The McGuire Law Firm to discuss your options with the IRS.

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IRS Audit Tip On Mileage Deduction

If you take mileage as a deduction on your income tax return, the IRS audit tip below may help you.  Many individuals will claim mileage as a non-reimbursed employee expense on Form 2106, or if self-employed, on a Schedule C, or the deduction may even be stated on another business income tax return.  Most individuals know that to substantiate the mileage deduction they need to keep a mileage log stating where they drove, the total mileage and other information such as the business purpose for the travel.  What many individuals may not be aware of is that the IRS may also request them to verify the total mileage driven on their vehicle with third party records.  This issue is discussed below in greater detail.

Recently, I was involved with an individual income tax audit with a client over multiple periods of 1040 Schedule C (self-employed) filings.  The individual drove a decent amount in their business and had taken the mileage deduction on multiple vehicles that were used for business purposes.  The individual had maintained mileage logs for each vehicle and properly claimed the deduction on their schedule C.  During the audit, the IRS examiner requested that the individual obtain maintenance records to substantiate the total miles driven in each vehicle during the year.  This request was not to produce a mileage log of business miles driven, but records from oil changes and other maintenance records to show and verify the total number of miles, personal, business and commuting, over the course of the year.  For example, the examiner wanted to see the report from Grease Monkey stating the total mileage on the vehicle and be able to track and substantiate the mileage driven to see if the business miles claimed appeared reasonable and within the total mileage driven on the vehicle.

After the above incident, it is apparent the IRS is not only requiring a mileage log, but some form of 3rd party document to verify that the miles claimed are in line with the actual miles driven.  This being said, in addition to maintaining a mileage log, it is apparent that taxpayers taking the mileage deduction would be best served by maintaining all reports and maintenance records to verify their mileage.  Remember this the next time you take your car to the shop for an oil change or any repair!  It is probably best to even make a copy of the maintenance records and maintain the document with your mileage log and other tax related documents.  Tell your mechanic to keep the receipt clean!

John McGuire is a tax attorney and business attorney at The McGuire Law Firm.  Mr. McGuire’s practice focuses on tax issues before the IRS, tax planning, business transactions and tax implications to his individual and business clients.

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Can The IRS Refile a Tax Lien?

Can the Internal Revenue Service refile a Notice of Federal Tax Lien?  This is a very important question if in fact the IRS has filed a tax lien on you or your business.  The answer, of which, greater detail is provided below, is yes, the IRS can refile a tax lien.  The article below has been prepared by John McGuire, a tax attorney in Denver, Colorado at The McGuire Law Firm.  Please remember to always discuss your tax issues and related questions with your tax attorney or tax advisor.

Some background and overview will assist in answering the question above and general procedures followed by the Internal Revenue Service.  A statutory lien arises when a taxpayer does not pay a tax debt after demand has been made.  If no notice of federal tax lien is filed, the duration of a statutory lien will depend only upon the collection statute.  When the Notice of Federal Tax Lien is file, the statutory lien is impacted by such lien notice.  A statutory lien is always extinguished when the collection statute expires, but a statutory lien can also be released through self-releasing lien language on the Notice of Federal Tax Lien.  The self-releasing lien language may apply even if the collection statute was extended, or perhaps suspended.

The main policy behind a self-releasing lien is to ensure the government’s compliance with certain laws.  Under Internal Revenue Code Section 6325, the IRS must issue a lien released within thirty days of the liability becoming legally unenforceable or the liability being paid.  The trigger for a self-releasing lien will coincide with the initial collection statute expiration date, which helps to ensure that the IRS property releases the tax lien within the period of time mandated by law.

When it is determined there is a need to continue the statutory lien and the Notice of Federal Tax Lien, Form 668Y is used to notify creditors (and the public) that the statutory lien and Notice of Federal Tax Lien remain in full force.  It is very important to note that the refiling of a tax lien can only occur while the tax liability can be collected upon, meaning the collection statute has not expired or the collection statute has been extended or suspended.  The IRS does not have to refile the lien though, even if the collection statute is open. Generally, the IRS will only refile the liens when there is a need to preserve the attachment of the statutory lien to certain assets and maintain priority lien position amongst other creditors.  When the lien notice is refiled Internal Revenue Code Section 6323(g) the IRS’ lien position is preserved.

All this being said, what is the refiling period?  The time the IRS has to refile a notice of Federal Tax Lien has a beginning and end date.  The refiling period is a 12 month period.  This one year period the IRS has to refile the tax lien is the one year period ending 30 days after the ten-year period following the assessment of the tax for which the lien was filed.  For example, if the tax was assessed on April 15, 2010, the refiling period would be April 16, 2019 through April 15, 2020. In short, the IRS has until 30 days after the collection statute expiration date to refile the lien.

The above article was prepared by John McGuire of The McGuire Law Firm.  As a tax attorney and business attorney, Johns practice focuses primarily on tax issues before the IRS, tax related opinions & advice and business transactions.

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