Tax Law Blog | IRS Tax Attorneys

From the IRS:

A levy is a legal seizure of your property to satisfy a tax debt. Levies are different from liens. A lien is a claim used as security for the tax debt, while a levy actually takes the property to satisfy the tax debt.

If you do not pay your taxes (or make arrangements to settle your debt), the IRS may seize and sell any type of real or personal property that you own or have an interest in. For instance,

• We could seize and sell property that you hold (such as your car, boat, or house), or
• We could levy property that is yours but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions).

We usually levy only after these three requirements are met:

• We assessed the tax and sent you a Notice and Demand for Payment;
• You neglected or refused to pay the tax; and
• We sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. We may give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested. Please note: if we levy your state tax refund, you may receive a Notice of Levy on Your State Tax Refund, Notice of Your Right to Hearing after the levy.

You may ask an IRS manager to review your case, or you may request a Collection Due Process hearing with the Office of Appeals by filing a request for a Collection Due Process hearing with the IRS office listed on your notice. You must file your request within 30 days of the date on your notice. Some of the issues you may discuss include:

• You paid all you owed before we sent the levy notice,
• We assessed the tax and sent the levy notice when you were in bankruptcy, and subject to the automatic stay during bankruptcy,
• We made a procedural error in an assessment,
• The time to collect the tax (called the statute of limitations) expired before we sent the levy notice,
• You did not have an opportunity to dispute the assessed liability,
• You wish to discuss the collection options, or
• You wish to make a spousal defense.

At the conclusion of your hearing, the Office of Appeals will issue a determination. You will have 30 days after the determination date to bring a suit to contest the determination. Refer to Publication 1660, Collection Appeal Rights (PDF), for more information. If your property is levied or seized, contact the employee who took the action. You also may ask the manager to review your case. If the matter is still unresolved, the manager can explain your rights to appeal to the Office of Appeals.

Levying your wages, federal payments, state refunds, or your bank account.

If we levy your wages, salary, or federal payments, the levy will end when:

• The levy is released,
• You pay your tax debt, or
• The time expires for legally collecting the tax.

If we levy your bank account, your bank must hold funds you have on deposit, up to the amount you owe, for 21 days. This holding period allows time to resolve any issues about account ownership. After 21 days, the bank must send the money plus interest, if it applies, to the IRS. To discuss your case, call the IRS employee whose name is shown on the Notice of Levy.

Filing a claim for reimbursement when we made a mistake in levying your bank account

If you paid bank charges because of a mistake we made when we levied your account, you may be entitled to a reimbursement. You will have 30 days to appeal the determination to the Tax Court. Use Form 8546, Claim for Reimbursement of Bank Charges Incurred Due to Erroneous Service Levy or Misplaced Payment Check (PDF).

Texas Tax Lawyer Kenneth L. Sheppard, Jr. represents clients throughout Dallas, Houston, San Antonio, the state of Texas, and across the United States.

Tax Attorney Kenneth Sheppard assists individuals as well as businesses in resolving federal tax issues.  If you need prior year tax returns prepared, I can help you.  If you want to settle your IRS debt as soon as possible, I can help you.  He further helps his tax clients implement plans to avoid future IRS problems.

If you need help with an IRS tax issue, call Texas Tax Attorney Kenneth Sheppard toll free at 1-877-505-9455 for a free consultation.

Two tax provisions in the health-care bill voted on by the House Ways and Means Committee earlier this summer have gained significant attention. One would impose a surtax on high-income earners. The other would force individuals (or their employers) who do not have approved health-insurance plans to pay a tax penalty. But there are other “revenue provisions” in the bill that also deserve a close look.

One would change the law to mandate that the Internal Revenue Service slap penalties on honest but errant taxpayers.

Under current law, taxpayers who lose an argument with the IRS can generally avoid penalties by showing they tried in good faith to comply with the tax law. In a broad range of circumstances, the health-care bill would change the law to impose strict liability penalties for income-tax underpayments, meaning that taxpayers will no longer have the luxury of making an honest mistake. The ability of even the IRS to waive penalties in sympathetic cases would be sharply curtailed.

The proposed changes in penalty rules have largely escaped notice because they are buried in a part of the bill that purports to deal with abusive tax shelters. They are barely mentioned in the Ways and Means Committee summary. Their inclusion in the bill underscores the need to read it closely. If anyone had doubts about the value of loading the text of the bill into a wheelbarrow and bringing it to the beach this August, the proposed changes to tax penalties should dispel them.

Recent experience shows that Congress needs to be careful about imposing no-fault penalties. In 2004, Congress adopted very large automatic penalties for failures of taxpayers to attach a tax-shelter reporting form to their tax returns. While penalties make sense where a taxpayer deliberately fails to file a return, the approach here was too unforgiving.

The normal ability of the IRS to waive penalties was taken away. Predictably, the result was some taxpayers getting hit with penalties they didn’t deserve.

Last June, the Small Business Council of America sent some compelling tales of woe to Congress, including one in which a 72-year-old owner of a coin operated car wash set up retirement plans for his seven employees and got socked for his good deed with a $900,000 penalty for not reporting the plans properly. The company and its owner are now headed for bankruptcy. In another case, a penalty of $100,000 each was imposed on the six minor children of an owner of a small business in Utah for not filing the right tax forms.

In response, some members of Congress sent a letter to the IRS asking it to suspend collecting the penalties in similar cases while Congress debated what to do.

However, Congress should not be surprised by these stories. The IRS was only enforcing the law exactly as Congress wrote it.

In another example of bad lawmaking, in 2007, Congress stuck into a supplemental appropriations bill a major change in the way penalties are computed for people in the business of preparing tax returns. Congress acted without consulting with the IRS. The IRS chief counsel at the time, Donald Korb, said publicly that the service had been “blindsided” by the change.

The change created a conflict of interest for tax professionals. It subjected them to a higher penalty standard than their clients, which encouraged them to give tax advice that protected the tax preparer more than the taxpayer. The IRS and tax professionals tore their hair out trying to sort through the mess until 2008, when Congress changed the law again.

There are lessons here for Congress. Don’t take away the ability of the IRS to waive penalties. Also, don’t tinker with penalties without thinking through the effect on the overall penalty regime.

Source

The Internal Revenue Service’s investigations into alleged tax violations by two Minnesota-based churches, Living Word Christian Center (LWCC) and Warroad Community Church, have been thwarted by internal procedural problems.

These cases highlight the special tax-exempt status churches receive by law, but they also underscore problems at the IRS. In effect, the IRS has been unsuccessful in investigating allegations of tax violations by churches because years of conflicting congressional action have made it impossible for the IRS to follow its own rules.

And while the IRS has undertaken the potentially months-long process to reform its broken system, the religious right is seeking to exploit it by encouraging churches to flout the law and endorse candidates from the pulpit next month.

More: IRS Loopholes Gets Minnesota Churches Off Tax-Violation Hook

Use Our IRS Investigation Service

Many people who come to Sheppard Law Offices with a tax problem have had that particular problem for a number of years. They may not remember the initial cause of their tax dispute, so even if they would want to challenge the IRS, they don’t know where to begin.

You can get to the bottom of your tax problem with the IRS Investigation Service offered by Sheppard Law Offices. For a FLAT FIXED FEE, our federal tax law firm will request and review the master report of the IRS, including account transcripts and will prepare a comprehensive report for you detailing:

• The initial cause of the IRS problem, or what the IRS perceives to be the problem
• The extent of the tax liability the IRS believes you owe, including fines, fees, and penalties
• The best options for resolving your tax matter, including whether you qualify for an offer in compromise, the likelihood of negotiating an installment agreement, or the possible eligibility for currently non-collectible status (CNS)

Armed with this information, you can choose to work with Tax Attorney Ken Sheppard, and his tax professional team, as your representative in an IRS Tax Audit, for preparation and filing of delinquent tax returns, and/or in any appeal that may be forthcoming.

When you face IRS tax problems, you must take immediate action. The longer you wait to act, the more difficult it will be to resolve your situation. At Sheppard Law Offices, our IRS tax law firm is prepared to begin TODAY to help you find peace of mind and a resolution to your tax concerns.

Contact our tax law office for a FREE one-half (1/2) hour initial consultation.

Excerpt from: Informant in UBS Tax Evasion Case Sentenced to 40 Months in Prison

If not for banker Bradley Birkenfeld, “a massive tax fraud scheme” by Switzerland’s UBS bank to hide the assets of wealthy Americans from U.S. tax collectors would never have been uncovered, prosecutors told a Fort Lauderdale, Fla., federal judge.

Birkenfeld’s attorney said his client is responsible for revamping international banking laws to make it easier to prosecute people who squirrel away money in foreign tax havens.

But it’s Birkenfeld who is going to prison.

Not the California real estate mogul who hid $200 million with Birkenfeld’s help. And not his boss, who remains a fugitive from U.S. justice in Switzerland.

U.S. District Court Judge William Zloch sentenced the former UBS banker Friday to three years and four months in prison for failing to disclose his UBS client list when he went to the Justice Department in June 2007 with details of widespread tax evasion coordinated by high-level UBS bankers. Prosecutors asked for a 2 1/2-year sentence, and the defense sought probation.

“Without Mr. Birkenfield walking through the door of the U.S. Department of Justice in summer of 2007, I doubt this massive fraud scheme would have been discovered by the United States government,” Assistant U.S. Attorney Kevin M. Downing, a tax division prosecutor in Washington, told Zloch.

A little-publicized ruling in a recent case involving the Internal Revenue Service is causing lawyers for big companies some sleepless nights the WSJ reports.

Last week, in a widely anticipated ruling, a federal appeals court in Boston said the IRS could gain access to documents created by a defense-contracting firm to determine whether the company’s calculation of its tax liabilities would pass muster during a possible IRS audit. The decision in U.S. v. Textron Inc. reversed a January ruling by a smaller panel of judges on the same court.

Full Story.

IRS Tax Audit Help

With prompt, effective tax help from IRS Tax Law Attorney Kenneth L. Sheppard, Jr. and his tax professional staff, your tax issues can be resolved and you can regain peace of mind.  Contact Sheppard Law Offices today to begin the process.  We can assist you in resolving any IRS tax problem through negotiations in an IRS Tax Audit, appeals, or tax court proceedings.

From the IRS:

The Internal Revenue Service and the Department of Justice today announced the successful negotiation of an agreement that will result in the IRS receiving an unprecedented amount of information on United States holders of accounts at the Swiss bank UBS.

As a result of this agreement, the IRS will receive substantially all of the accounts that it was interested in when it initiated the John Doe summons against UBS.

Under the agreement, the IRS will submit a treaty request to the Swiss government describing the accounts for which it is requesting information. The Swiss government will then direct UBS to initiate procedures to turn over information on thousands of accounts to the IRS. The IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts.

Also, the agreement retains the U.S. Government’s right, if the results are significantly lower than expected and other measures fail, to seek appropriate judicial remedies, including resuming actions to enforce the John Doe summons.

The agreement involves a number of simultaneous legal actions:

• The judicial enforcement of the John Doe summons will be dismissed. While this enforcement motion will be withdrawn, the underlying summons remains in effect.
• Upon receiving the treaty request, the Swiss government will direct UBS to notify account holders that their information is included in the IRS treaty request. It is expected that these notices will be sent on a rolling basis with some being sent over the coming weeks and others over the coming months. Receipt of this notice will not by itself preclude the account holder from coming into the IRS under the Voluntary Disclosure Program.

In addition, the Swiss Government has agreed to review and process additional requests for information for other banks regarding their account holders to the extent that such a request is based on a pattern of facts and circumstances equivalent to those of the UBS case.

Information provided to the IRS through this process will be thoroughly examined for all potential civil and criminal tax violations. The IRS will assess any additional tax, interest and a number of applicable penalties. This includes the penalty for the willful failure to file an FBAR. This penalty can be up to 50 percent of the value of the account for each year an FBAR was not filed.

The IRS will also recommend criminal prosecution in those cases where the facts warrant such an action. To date, the IRS and the Department of Justice have successfully prosecuted four United States customers of UBS whose information was provided to the IRS by UBS as part of the Deferred Prosecution Agreement.
Individuals whose information is obtained by the IRS through this process will, by longstanding policy, not be eligible for the voluntary disclosure program.

More than 150 UBS AG clients in the U.S. are under investigation for concealing income and assets offshore at the bank, a prosecutor said in a court filing.

The scope of the investigation was disclosed today in a memo recommending that former UBS banker Bradley Birkenfeld serve 30 months in prison for conspiring to help wealthy Americans evade taxes. Birkenfeld, who faces as long as five years, will be sentenced Aug. 21 in Fort Lauderdale, Florida.

Birkenfeld, 44, pleaded guilty in June 2008 to conspiracy, saying he helped U.S. clients evade taxes through Zurich-based UBS. He seeks leniency for helping a worldwide tax-fraud probe. UBS agreed Feb. 18 to pay $780 million to avoid prosecution for helping wealthy Americans evade taxes. The bank gave account data on 250 clients to the U.S. Internal Revenue Service.

“Ultimately, based upon information obtained from UBS as part of the deferred-prosecution agreement, the United States is criminally investigating more than 150 Americans across the country who are believed to have concealed income and assets at UBS, in violation of United States law,” acting U.S. Attorney Jeffrey Sloman said in the filing.

Three UBS clients pleaded guilty since the agreement to filing false tax returns, and a fourth was charged last week with failing to file a tax report for an offshore account.

Source

Mayor of Philadelphia said he would lay off 12 city workers, delay a class of police cadets and cut back hours at the 3-1-1 non-emergency call center to deal with a $20 million budget shortfall.

Nutter said the cuts, which take effect at the end of the month, are due to a delay in getting state approval to increase the local sales tax by 1 cent on the dollar for five years and to make changes in how the city’s pension fund is replenished.

The city was counting on getting $10 million per month in sales-tax revenue. But those funds now have been lost for August and September, prompting yesterday’s $20 million in cuts.

“Ten million dollars a month is real money,” Nutter said at a City Hall news conference. “That’s the real cost of delays in Harrisburg.”

Nutter plans to delay a police-academy class of more than 100 cadets due to start in the fall. He also is eliminating six full-time positions in the Mayor’s Office [two of the six positions are filled] and laying off six employees in the city’s 3-1-1 call center and four employees in the Finance Department. Layoff notices were issued Friday.
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