Tax Law Blog | IRS Tax Attorneys

New Connecticut tax laws set to go in effect tomorrow bring new fees and tax increases in Connecticut. Changes include:

• Cigarette tax jumps from $2 to $3 a pack
• Most bottles of water will cost a nickel more because of an expanded bottle and can redemption law
• Hundreds of state licenses and fees, ranging from a pet shop license to the cost of filing small claims cases in superior court, will be higher.
• Fee that allows people to feed garbage to pigs is increasing from $5 to $15 a year
• The license to manufacture cheese in Connecticut jumps from $50 to $100
• Liquor permits for a bowling alley are increasing from $2,000 to $2,250
• A youth camp license climbs from $650 to $815 a year.

The increases were included in the two-year, $37.6 billion budget approved by the Democratic controlled General Assembly following a lengthy impasse with Republican Gov. M. Jodi Rell.

It’s the first major expansion of the water bottle tax in Connecticut in nearly 30 years. According to the Department of Environmental Protection, approximately 500 million containers are sold each year in the state. Based on the number of uncollected beer and soda cans and bottles, the state expects it will collect about $17 million in unclaimed water bottle deposits.

Other new laws include:

• Pet owners will be allowed to create legal trusts that ensure after their death that their pets are taken care of financially.
• New law broadens the definition of identity theft, increasing the penalties for criminal impersonation and creating the crime of unlawful possession of personal access devices, such as PIN numbers.
• Drivers will be required to slow down when approaching a stopped emergency vehicle and, if possible, move over one lane to provide space between the motorist and the emergency vehicle.
• Any 16- or 17-year-old seeking a driver’s license must pass the Department of Motor Vehicle’s 25-question “final exam” before receiving a license.

House Speaker Kirk Adams said Friday he fully expects legislation to come forward in the next session that will address Arizona’s Private School Tuition Tax Credits.House Speaker Kirk Adams said Friday he fully expects legislation to come forward in the next session that will address Arizona’s Private School Tuition Tax Credits.

Last week, Adams, R-Mesa, announced the creation of the official House task force to examine the tax credit law. The committee is made up of Republicans and Democrats from the Ways and Means committee. Rep. Rick Murphy, R-Glendale, is chairman.

Arizona law allows individual taxpayers to receive a state tax credit of up to $1,000 a year for a donation to a school tuition organization (STO), a 501(c)3 charity under federal tax law. STOs then give scholarships to students attending private schools or to students with special needs attending preschool programs.

Source

A conservative public policy group said Wednesday that Maine’s new tax law is unconstitutional and that it’s prepared to file a lawsuit to overturn it.

People moving into or out of the state, as well as out-of-staters who work in Maine, could end up paying thousands of dollars more in income taxes than full-time residents under the tax code overhaul passed by state lawmakers this year, said Tarren Bragdon, chief executive of the Maine Heritage Policy Center. Some 55,000 families would pay the higher taxes if the law goes into effect as scheduled Jan. 1, he said.

“This (tax) is not just mean. It’s wrong,” Bragdon said at a news conference. “And guess what? It’s unconstitutional.”

It will be interesting to see how this turns out. In my opinion the group is right on target. Read this full story on Boston.com.

Those who have used offshore bank accounts in order to evade taxes are receiving more time to do so under a one-time extension of an IRS leniency program. The official announcement is set for today.

The program was initially expiring on Wednesday will allegedly continue until Oct. 15 according to USA today.

The IRS approved the continuation in response to requests from lawyers and tax preparers who told the agency they have been overwhelmed with late-filing applicants, the officials said. The IRS has had to reassign employees to handle an application surge since the program began in March.

Offshore account owners approved for the program by the IRS generally avoid criminal prosecution and pay:

• Back taxes and interest for a minimum of six years.

• A 25% delinquency penalty for each year in which tax returns weren’t filed, or a 20% accuracy penalty for years in which returns were filed but offshore income was omitted.

• A penalty equal to 20% of the highest aggregate value at any point during the last six years for all previously secret accounts.

Ordinarily, the IRS could impose penalties of at least 50% for all years in which an account wasn’t disclosed. In some cases, that could exceed the value of the offshore holdings.

If you are thinking of applying yourself, I urge you to contact a Tax lawyer to talk about your specific circumstances. Try browsing the tax lawyer directory.

With confusion gambling laws in many states, North Dakota may have the most confusing of all the gambling tax laws across the country. They may be changing.

The goal of changing the laws is to make it easier on charitable organizations when it comes time to pay gambling taxes. Gaming Dinision Director Keith Lauer thinks he has the solution and it comes in the form of one tax rate.

“North Dakota certainly needs an overhaul of their taxing system when it comes to their gambling revenue,” said CGW Business analyst Grant Davis, “These organizzations have no idea whether they are paying the right amount of taxes because of all the hoops they have to jump through just to arrive at a figure.”

The current system calls for charitable organizations in North Dakota to pay both excise taxes and a graduated tax on pull tab gambling tickets. Bingo tickets are also taxed in the same fashion.

North Dakota lawmakers could figure out what the percentages are that are being paid currently, and then come up with one base tax rate.

I think the idea is interesting. I would like to see the affect, if any, this has on the numbers

If you owe debt to the IRS and cannot pay in full a payment plan or IRS installment agreement may be negotiated. While this may be a good option for you to avoid wage garnishment, tax levies, etc., generally the faster you pay off the debt the less fees and penalties you will be subjected to. Interest on these plans is usually 8% to 10% per year. If you owe $25,000 or less, you should be able to get an installment plan  for 60 months, no questions asked. If you owe more than $25,000, you will have to negotiate with the IRS to get an installment plan.

Negotiating an Installment Agreement With the IRS

If you do Owe more than $25,000 the negotiating will begin with an IRS collector analyzing your Collection Information Statement on Form 433-A. This form will be used to determine the amount you are eligible to pay. When you fill out the form you should never agree to pay more than you can afford just to get your plan approved. When negotiating, you should offer to pay the amount of your income minus your necessary living expenses. If the IRS approves an installment agreement, it may take several months to notify you, but it is a good idea to send a first payment ( and 2nd and 3rd and so on) until the IRS notifies you of its decision. If your offer was refused, the payments will still go to your unsettled tax debt.

If the IRS did refuse your offer, it is probably because they don’t consider all of your living expenses necessary. Not that you should give up everything, but try and be a little flexible here. Also, if the information you provided on form 433-A was inaccurate or you failed on a different installment agreement you may also be refused your payment plan. If your first offer was rejected, for whatever reason, you may continue to negotiate. The amount you offer is up to you, but be realistic. If you get the installment plan approved there are a few things that can have it revoked such as:

• You fail to file your tax returns
• You miss a payment (if you do miss a payment you should notify the IRS ASAP)
• It is discovered that your installment agreement was filed under false pretenses

IRS Fees Associated With IRS Agreement Plans

The user fee for new installment agreements is $105 and $52 for agreements where payments are deducted directly from your bank account. Taxpayers with income at or below established levels, can apply for a reduced fee of $43. Information about requesting the reduced user fee will be included in installment agreement acceptance letter sent to individuals.

There is also a user fee of $45 for reinstating defaulted agreements or restructuring existing agreements. If you already have an approved installment agreement from a previous tax debt and your financial situation has changed, we may be able to modify or restructure your installment agreement to include additional amounts owed into one agreement.

Professional Help With IRS Payment Plans

If you don’t feel comfortable negotiating a debt payment plan with the IRS or aren’t’ sure if it is the best option for you you should contact a tax lawyer who has experience dealing with IRS. A lawyer with this experience can be helpful in the regard of knowing exactly what steps you should take because of your individual situation. They may be able to help you avoid a great deal of hassle and may help avoid additional fines and interest, or even such penalties that you may not be obligated to serve in the first place.

Connecticut residents will no longer have to flee to Florida to avoid the Connecticut estate tax because of a new law enacted Sept. 8 (House Bill 6802).

Beginning with deaths occurring on or after Jan. 1, 2010, estates (and gifts) of as much as $3.5 million will be exempt from Connecticut estate (and gift) tax. That moves the threshold for taxable estates (and gifts) up from the current $2 million level.

Importantly, the new law will lift the Connecticut “cliff” where a single U.S. dollar bill counts as $101,700 in Connecticut.

The cliff, which will die on Jan. 1, 2010, is an unfair happenstance for estates a smidge over $2 million. Right now, an estate of $2 million pays no Connecticut estate taxes. But, an estate of $2,000,001 — just a dollar more — pays Connecticut $101,700.

These are two very important estate tax changes. And there is one more. The new legislation also reduces rates by 25 percent beginning in 2010.

“These changes are a step in the right direction,” says state Rep. Livvy Floren, R-149th Dist.

Under current law, an estate (or gift) of $3.5 million pays a Connecticut estate tax of $190,800, according to the state Office of Fiscal Analysis. Under the new law, for deaths occurring after the end of 2009, the tax will be zero, and there will be no cliff — that is, the tax for estates above $3.5 million will be taxed only on the amounts above $3.5 million. The tax rate is 7.2 percent for estates of $3.5 million to $3.6 million, down from 9.6 percent.

Full Story.

Filing your taxes jointly can provide many benefits as you probably know, but sometimes it can create problems.  Innocent spouse tax relief can fix problems your spouse or ex spouse created with your taxes.

When you are married and file a joint return together it means that both individuals are jointly and individually responsible for the taxes that are owed, end of story. If the IRS says a joint return was filed that there was a deficiency in tax, the IRS is authorized to go after each spouse individually. The IRS will send a notice to both spouses jointly at the last known address. When the IRS does this, it does not know that the spouses may be former spouses and are now living apart and preparing separate returns. Sometimes the spouse receiving this notice is completely innocent of the items the IRS is pointing out. If the spouse who caused the tax penalties makes themselves inaccessible for the collection process (which is not out of the ordinary) the IRS will after the “innocent spouse”. This is where innocent spouse tax relief needs to come into play.

There are 3 types of innocent tax spouse relief which are:

1. Classic” Innocent Spouse Relief Requirements

Classic type of relief available for an understatement of tax while filing a joint return. You must prove you had no knowledge of the penalties in question.

2.Relief by Separation of Liability Requirements

Under this form of relief the understatement of tax is allocated between you and your spouse or former spouse

3.Equitable Relief Requirements

Relief is available for an understatement of tax as well as an underpayment of tax. This type of relief is used if someone does not qualify for the first two types of relief but it would be unfair to hold them liable for the tax amount owed.

If you think you may be a candidate for innocent spouse tax relief, contact a tax attorney for a free consultation.

This is an excerpt from the Innocent Spouse Tax Relief Website. If you want to learn all about innocent spouse tax relief you should go there or read the IRS’ PDF.

An small case ( S case) IRS tax audit is never a fun thing to face, but they do happen to individuals and small businesses. When faced with the burden of a tax audit you may want to contest it. Here are some guidelines.

Tax Court’s Small Case Division can hear disputes involving as much as $50,000 of tax and penalties excluding interest. The limit applies per tax year, therefore if the IRS assesses tax for more than one year, it is multiplied. The IRS examines three years of your past tax returns and assesses $40,000 of tax and penalties on each. You can contest your full $120,000 tax bill, plus interest that the IRS has added, which may be many thousands of dollars more, as a Small Case (S case). If the tax disputed for a year exceeds the $50,000 limit, you can concede the excess to get under the limit.

The majority of all audit disputes involving individuals and small businesses can qualify as S cases.

In an S case no tax attorneys are needed, but they can be used and cost is $60 for the filing fee.

Some have suggested that judges are often more sympathetic toward taxpayers who represent themselves in S cases than those who are represented by IRS tax audit lawyers in formal cases. However, if you lose, you can’t appeal to a higher court.

If you don’t feel comfortable contesting an IRS tax audit on your own consider hiring an IRS tax audit attorney.

What is IRS Wage Garnishment?

IRS wage garnishment occurs when you owe taxes and the IRS is no longer willing to wait to collect them. The IRS will deduct the taxes you owe from your paycheck, usually between 30 and 70 percent.

First, the IRS is going to send you a notice of past due taxes and a demand that you pay them with 10 to 30 days. If you fail to pay the taxes, you should contact the IRS to arrange a payment plan. If don’t contact the IRS or pay the taxes, the IRS will send a “Final Notice” of intent to levy and a notice of your right to a hearing on the issue. Thirty days after this notice, the IRS will move forward with the wage garnishment.

Employers have no choice but to comply with IRS salary garnishment notices. Your payroll department cannot help you with this problem and can’t offer any relief. Unfortunately, when the IRS takes your wages, they like to take most of the money, leaving you little to survive on. If you don’t hire a wage garnishment professional to take the proper steps to stop wage garnishment, your employer must continue to garnish your wages until your debt is paid in full.

Professionals dealing with IRS garnishment can get you back in compliance with the requirement to file your back tax returns and negotiate a release of your wages from levy. Even if you have broken previous IRS payment plans a reduction of the garnishment percentage can be negotiated.

In addition to wage garnishment, the IRS can:

• Levy your bank account
• Ruin your credit
• Seize your house
• Keep all future tax returns until your tax bill is paid
• Put you in jail

Provided below are some of the grounds in which a tax professional can help you appeal a wage garnishment :
1.    All taxes owed have been paid prior to the IRS sending the notice of levy.

2.    If the IRS has assessed the tax and sent the notice of levy when the taxpayer was in bankruptcy, the wage garnishment is subject to an automatic stay during bankruptcy proceedings.

3.    A procedural error on the part of the IRS was made during the assessment.

4.    The statute of limitations (i.e. the time for the IRS to collect the tax) expired prior to the IRS sending the notice of levy.

5.    No opportunity was afforded the taxpayer to dispute the assessed liability.

6.    The taxpayer makes a request to discuss collection options.

7.    An innocent spousal relief claim is made by the taxpayer.

While, by all means, you can negotiate the wage garnisment on your own, it’s probably not the best idea. Everything you say can be used against you and the IRS agents are very good at interrogating taxpayers. With the help of an IRS wage garnishment lawyer, you are guaranteed the best results.