California Tax Law Blog

New Yorkers busted Trying to Move Funds From An Undisclosed Swiss Account – Don’t Make The Same Mistake

New Yorkers busted Trying to Move Funds From An Undisclosed Swiss Account – Don’t Make The Same Mistake

| Apr 23 | OVDI Program, Tax Law Blog | No Comments
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In a recent article, David Voreacos reported that “U.S. prosecutors moved to seize $12.2 million they say was transferred to New York from a secret Swiss account set up by a lawyer who helped Americans hide assets from the Internal Revenue Service.”1 The Swiss and New York accounts “were set up by Swiss attorney Edgar Palzar.”2 Palzar pleaded guilty to tax fraud last year and has been cooperating with U.S. authorities since then.3 According to the complaint, Palzer formed corporations “under the laws of Panama, among other jurisdictions, to conceal, from the IRS and others, the ownership by U.S. taxpayers of accounts established at…Swiss banks and the income generated in those accounts.”4

If you have an undisclosed offshore account, do not try to secretly move your funds back into the U.S. The IRS Criminal Investigations Division (CID) can track movements of cash coming from offshore into the U.S., and if they target you for doing so you will not be eligible to make a 2012 offshore voluntary disclosure and thus will not qualify for amnesty for your past criminal tax actions. Even worse, your clandestine action of moving the cash from the non-disclosed account back into the U.S. will be viewed as an additional “badge of fraud” against you in a very likely subsequent criminal tax prosecution. The IRS uses badges of fraud to help them prove to a jury a taxpayer’s actions were willful rather than negligent and to show that a U.S. citizen intentionally hid taxable income from them and thus committed income tax evasion. Other badges of fraud include:

  1. Unreported foreign income – this could consist of interest, dividends, or capital gains related to investments in the foreign account, earnings in a foreign business or foreign rental property, or unreported taxable foreign income of any kind.
  2. Unfiled FBARS – or TDF 90-22.1
  3. Failure to report the existence of offshore account(s) under schedule B of your personal tax return.

If the IRS finds badges of fraud, they will send the case to the Criminal Investigation Division “CID” for development for criminal prosecution. You do not want your case sent to CID because, historically, the IRS obtains convictions in over 80% of their criminal tax cases it pursues and the criminal and civil consequences are in the foreign account area are purposely extremely severe (even Draconian).

Civil penalties for failure to file your FBAR(s) go from $10,000 per year for mere negligence to up to fifty percent the unreported foreign account balance for every year the account was open.

In addition, failing to file a false return (i.e. failing to check the bock on your Schedule B) is a felony, punishable by a prison sentence up to three years and a fine of $250,000. If you are found guilty of tax evasion, the prison sentence will increase from three to five years.

Thus, your best option is to contact an experienced tax attorney and enter into the 2012 offshore voluntary disclosure program before the IRS gets your name – possibly even from the person who set up your offshore account. The penalties are not as steep as they otherwise would be if the IRS catches onto your criminal action and there is substantially no risk of jail time if the terms of the 2012 OVDI program are strictly complied with.

The Tax Law Offices of David W. Klasing, P.C. can help you make a 2012 offshore voluntary disclosure. For more information, click here.

1 David Voreacos, Bloomberg, U.S. Seeks to Seize $12 Million In Swiss-Linked Tax Case (Apr. 8, 2014), http://www.bloomberg.com/news/2014-04-08/u-s-seeks-to-seize-12-million-in-swiss-linked-tax-case.html
2 Id.
3 Id.
4 U.S. v. Paltzer. Complaint, http://www.justice.gov/usao/nys/pressreleases/April13/PaltzerandBuckIndictmentPR/Paltzer,%20Edgar%20and%20Stefan%20Buck%20Indictment%2013%20Cr%20282.pdf

Credit Swiss to Turn Over Thousands of American Names to the DOJ

Credit Swiss to Turn Over Thousands of American Names to the DOJ

| Apr 22 | OVDI Program, Tax Law Blog | No Comments
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Last week, subpoenas were issued to Swiss bank Credit Suisse Group. The subpoena comes from the New York Department of Financial Services and targets records and documents that are housed in the New York Branch of Credit Suisse. The demand comes after the announcement of an ongoing federal probe into whether Suisse helped Americans hide undeclared assets overseas.

The subpoena covers expense reports, computer hard drives, emails, travel documents and other types of materials. The New York Department of Financial Services is the state’s highest financial regulatory body. They initially began investigating Credit Suisse after the Senate Permanent Subcommittee on Investigations released its’ report on the way that Swiss banks aided U.S. citizens set up and maintain accounts that kept undeclared assets hidden from U.S. officials. New York officials were concerned that banks like Credit Suisse helped New Yorker’s avoid state income tax, but quickly became interested in determining whether their citizens were also dodging federal tax.

Earlier this year, the bank set aside around $1 billion in anticipation of costs relating to investigations by agencies from the United States. In February, Credit Suisse reached a settlement with the Securities and Exchange Commission for just over $220 million. Though, that settlement was unrelated to tax evasion and Credit Suisse placed the blame on a group of rogue bankers.

What does this mean for you? The actions of Credit Suisse are demonstrative of a common strategy which is sweeping across Swiss banks and financial institutions beyond: to rat out its’ American account holders in order to save themselves. Here, Credit Suisse’s actions seem to be consistent with that sentiment. Credit Suisse has not only settled and caved with U.S. authorities in the past, they have preemptively set out settlement money that it will undoubtedly hand over to the Department of Justice as either penalties and fines ordered by a court or as part of a deferred-prosecution agreement where the government would pay a large sum of money and avoid any criminal indictments. Either way, if you have an account with Credit Suisse, or any other foreign bank, your information is not safe. It is only a matter of time until your account information is turned over by a bank trying to stop the bleeding and working hard to keep their own out of prison.

It’s not too late to make your situation better. It’s in your best interest to disclose your undeclared offshore assets before the government comes and finds you. The Offshore Voluntary Disclosure Initiative can keep you out of prison and at home with your family. But keep in mind, the terms of the 2012 OVDI program may change very soon to make an offshore voluntary disclosure more expensive and the amnesty from criminal prosecution will not be on the table for ever. Contact the Tax Law Offices of David W. Klasing today so we can bring you in voluntarily to make a disclosure to the criminal investigation division of the IRS before the criminal investigation of the IRS opens an investigation into your offshore assets and accounts at which point we will not be able get you amnesty for your past potentially criminal actions.

Have Overseas Assets? Get a U.S. Tax Attorney or Potentially Pay the Price

Have Overseas Assets? Get a U.S. Tax Attorney or Potentially Pay the Price

| Apr 21 | OVDI Program, Tax Law Blog | No Comments
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It is not uncommon for several types of professions to come out of the woodwork to take your money in exchange for services when you are in potential tax trouble. C.P.A.’s, enrolled agents and foreign attorneys would be more than happy to take your case once your overseas assets are have been or are close to being discovered. Not reporting your overseas income was a mistake, but not hiring a U.S. tax attorney who is well versed in tax issues may be an even bigger mistake.

Recently, the government has been cracking down on monies that are being held in overseas accounts by increasing their criminal action filing against citizens. Further, foreign banks have been handing over to the U.S., names and other personal information of American citizens who have bank accounts funded with undeclared monies. These foreign banks will sometimes recommend that those who are being reported to contact the counsel of the bank for assistance with the investigation. But because the bank also uses the same attorneys, an obvious conflict of interest exists and should certainly be avoided.

It is probably fair to say that the average American, if approached by an enrolled agent, C.P.A. or foreign attorney offering tax assistance with offshore disclosure issues would not think that utilizing the services of one of these professions could be detrimental to their case. And though it is true that not every person who uses one of the professionals mentioned above will end up in federal prison, you may want to consider the following:

  • Not disclosing funds that are maintained in an overseas account or are part of a tax evasion scheme is a felony in the United States.
  • A felony tax evasion charge could certainly result in time spent in a federal correctional facility.
  • Most C.P.A.’s, enrolled agents and foreign attorneys are not trained in the criminal aspect of the IRS investigation and may not have the experience or knowledge to effectively negotiate with the IRS or Department of Justice.

Hiring a U.S.-based tax attorney ensures that you will have an advocate that understands the tax laws of the United States and that will have experience with the intense nature of the criminal investigations conducting by the IRS and the Department of Justice. They will be able to negotiate on your behalf and ensure that your legal rights are protected. If you are not yet being investigated but have overseas assets that are undeclared, a U.S.-based tax attorney will be able to consult with you and ensure that your situation is a good fit for the Offshore Voluntary Disclosure Initiative.

David W. Klasing is not only a C.P.A but is an experienced tax attorney who has dealt with the IRS and Department of Justice in representing clients who are being investigated for both civil and criminal violations of the law. Don’t settle with just anyone when your freedom is on the line. Contact the Tax Law Offices of David W. Klasing today.

Think That Your Asset Manager Has Your Back? Think Again.

Think That Your Asset Manager Has Your Back? Think Again.

| Apr 18 | Criminal Tax Representation, Tax Law Blog | No Comments
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Federal authorities have taken another step in attempting to show the American people that they will use any and all laws of the United States to punish those who try to evade federal income taxes through overseas banking schemes. On April 15th, the United States filed a forfeiture action in New York targeting over $12 million that they allege was transferred into the U.S. from a overseas bank account and that the funds were proceeds of a complex tax evasion scheme spread across several nations.

According to the filing in the federal court in Manhattan, the Swiss account that the money was transferred from was set up by Swiss attorney Edgar Paltzer. If you have been following our blog, you will remember that Edger Paltzer recently pleaded guilty to federal charges in New York relating to his role in the construction of tax evasion schemes. As Edgar Paltzer has agreed to cooperate with federal officials, this is at least the second action that has been commenced with his help. In February, tax evasion charges were filed against another former client of Paltzer.

According to Paltzer and the filing, the funds in question were stored in two bank accounts at an unnamed bank in Switzerland. The plan also included the shifting of funds between the Swiss bank accounts and sham entities in the British Virgin Islands, Lichtenstein and Panama. Portions of the funds that are not involved in the proceedings were used to purchase property in the Bahamas.

The power to initiate forfeiture proceedings lies within mail and wire fraud laws of the United States. Because money is usually wired from one account to another in the course of tax evasion schemes, the activity can be considered violate of such wire fraud laws and trigger the government’s ability to seize the funds.

It has not been commonplace for the Justice Department to attempt to seize funds involved in tax evasion cases. Generally, the government will initiate forfeiture proceedings when the crime committed in connection with the funds is especially egregious. Though, this may be an attempt at a show-of-force by the feds to further impress on the American people that tax evasion through overseas schemes will not be tolerated.

If you have assets that are overseas that have not been reported to the IRS or are involved in a plan to avoid U.S. taxes through entities set up outside of the country, we strongly urge you to contact us for an evaluation of your situation. If you believe that your foreign bank, asset manager or any other person is going to have your best interests in mind when the feds come knocking, you should remember the taxpayers affected by Edgar Paltzer’s agreement with the government to cooperate.

You can take the first step to make your situation better. The Offshore Voluntary Disclosure Initiative can help you avoid criminal penalties including federal prison time. But time is of the essence, the terms of the voluntary program are changing and the deal being offered by the federal government won’t be on the table for much longer. Don’t wait to become another Department of Justice press release, contact our office now for an evaluation of your situation.

Small Business Owners Arrested For Tax Evasion

Small Business Owners Arrested For Tax Evasion

| Apr 08 | Criminal Tax Representation, Tax Law Blog | No Comments
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A couple from Somers Point, New Jersey was arrested last week and charged with federal tax evasion among other charges relating to the financial activity of their pizza shop on the Ocean City Boardwalk.

The U.S. Attorney’s Office said in a release that IRS Criminal Investigation agents arrested Charles and Mary Bangle at their home on April 3rd. Charges ranged from tax evasion, conspiracy and for making false statements to the IRS during the course of their investigation.

The Bangle’s own and operate five Manco and Manco pizza shops throughout New Jersey. They are a strictly cash-based business and the IRS estimates that they earn about 4.5 million dollars per year. It is also alleged that the Bangle’s underreported the earnings of the business to the tune of $981,000. The U.S. Attorney’s Office asserts that the husband and wife team would take portions of the cash earnings of the pizza shops and deposit them into their personal account. The Indictment also indicates that the Bangle’s used the cash from the business to pay for personal expenses. The arrest came as a shock to Charles Bangle’s attorney. He said that his client had been cooperating the IRS for the past two years.

The lesson that the Bangle’s are learning the hard way is that even if you are cooperating with the IRS, you aren’t immune from arrest. Whether you own a business or not, if you find out that you are being audited or being investigated by the Criminal Investigation Division of the IRS, you should contact an experienced tax attorney who can help make sure that you don’t end up behind bars.

If you own a business, no matter the size, we can work with you to stay compliant to ensure that you are not getting yourself into a position that would warrant a full criminal investigation like the Bangle’s did. The wise do not wait to get caught up in a mess with the IRS before they seek help. But if you find yourself in a bad situation with the government regarding your taxes, all hope is not lost.

Whether you are being audited by the IRS, are facing a full blown of criminal investigation or are somewhere in between, we can help you every step of the way. Don’t assume that because you are nice with the government, that they will do the same in return. A criminal investigation is very different from an audit. The government is building a criminal case against you and their goal will always be to put you in a federal prison. Don’t let them get the best of you. Contact our offices today.

Luxembourg Signs Model 1 FATCA Agreement – Do You Think You Can Get Away With Moving Your Money Before FATCA Kicks In to avoid detection?

Luxembourg Signs Model 1 FATCA Agreement – Do You Think You Can Get Away With Moving Your Money Before FATCA Kicks In to avoid detection?

| Apr 07 | FBAR Compliance and Disclosure, Tax Law Blog | No Comments
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Luxembourg, a wealthy country in the European Union with a population of slightly under 550,000, has had a reputation as a tax haven for decades. The Tax Justice Network even ranked Luxembourg the country with the second highest financial security.1 However, tax havens such as Luxembourg are no longer quite so secretive due to the worldwide movement for financial transparency.

Congress created the necessary leverage to persuade financially secretive countries to increase their financial transparency with the United States when it enacted the Foreign Account Tax Compliance Act (FATCA). The purpose of FATCA is to expose U.S. taxpayers guilty of tax evasion and who failed to file Report of Foreign Bank and Financial Accounts (FBAR) forms for their offshore financial accounts. FATCA requires foreign financial institutions to report to the IRS all accounts in excess of $50,000 that belong to U.S. citizens and green card holders, regardless of whether they live in the U.S. or abroad. Any financial institutions that do not comply with FATCA will incur a 30% gross withholding tax on all financial transactions. U.S. taxpayers are required to file an FBAR form (TDF 90-22.1) for every offshore financial account with a balance of $10,000 or more at any time during the calendar year.

In 2013, after several years of resistance, Prime Minister Jean-Claude Juncker finally stated that Luxembourg would join the movement toward financial transparency.2 These words turned into action last week when Luxembourg signed a Model 1 FATCA agreement with the United States.3

So, what does this mean to those of you with financial account(s) in Luxembourg?

The only course of action you can take right now to limit your civil liability and avoid serving jail time is to make a voluntary disclosure. Click here for reasons why you should not do nothing, file the correct FBARs prospectively, or make a quiet disclosure. In short, these options will not protect you from a serving jail time or civil penalties.

However, the worst course of action you could take would be to attempt to physically move your funds out of Luxembourg by stuffing cash into a suitcase or strapping it to your person. Not only will customs U.S. customs confiscate your funds from you, the IRS will consider the act of moving your money an additional badge of fraud if they pursue a criminal case against you. Additionally moving your offshore funds from a bank under criminal investigation to an offshore bank not under criminal investigation could be viewed as an additional badge of fraud as well especially where you are a dual national and make the subsequent deposit under your foreign passport.

Willfully failing to file an FBAR may subject you to three to five year jail sentence per violation. In addition, the most severe civil penalty, 31 USC 5321(a)(5), charges willful violators of the FBAR statute 50% of the balance of the undisclosed account for each year of willful non-compliance. Thus if you have had a foreign account for a multiple of years, you may end up owing several times the balance of your undisclosed foreign account in penalties.

Example:

Assume you have an undisclosed foreign account, with a balance of $1,000,000 in it. Under the FBAR statute, the IRS can charge you $500,000 per year on this account for the willful nondisclosure. If you have held this account for the past six years, the IRS could conceivably charge you a total penalty of $3,000,000 ($500,000 x 6 years).

The most troubling part of analyzing a client’s exposure to civil and criminal penalties related to a foreign account under FACTA is that the IRS has yet to report the number of years they will look back under FACTA reporting. Many experienced tax attorneys, myself included, believe the IRS typically looks back 8 years such that an account transferred as far back as 2006 could potential still show up under FACTA reporting via information sharing agreements between the U.S. and foreign jurisdictions that have signed one such as Luxemburg.

 We can help you make a voluntary disclosure under the 2011 Offshore Voluntary Disclosure Initiative (OVDI) before it’s too late. Our competitive advantage is that we are a law firm with all of the functionality of a certified public accounting firm in the tax arena and thus we are a one stop shop for making offshore voluntary disclosures. We have over five years and over 100 voluntary disclosure scenarios under our belt and have a national reputation for excellence in this practice area.

Time is running low before FACTA kicks in in July of 2014. You will no longer be eligible for the 2012 OVDI program once the IRS audits or criminally investigates you which is very likely to occur if a foreign bank reports an undisclosed account to the IRS under FACTA. For more information about the Tax Law Offices of David W. Klasing, P.C., click here.

1 Tax Justice Network, Financial Secrecy Index – 2013 Results, http://www.financialsecrecyindex.com/introduction/fsi-2013-results

2 Andrew Higgins, New York Times, Europe Pushes to Shed Stigma of a Tax Haven (May 22, 2013), http://www.nytimes.com/2013/05/23/world/europe/europe-pushes-to-shed-stigma-of-tax-haven-with-end-to-bank-secrecy.html?pagewanted=all&_r=0

3 TMF Group, Mondaq, Luxembourg: Luxembourg US Intergovernmental FATCA Agreement Signed (April 4, 2014), http://www.mondaq.com/x/304486/tax+authorities/Luxembourg+US+Intergovermental+FATCA+Agreement+Signed

Ohio Man Charged with Tax Fraud, Other Crimes for Defrauding Employer

Ohio Man Charged with Tax Fraud, Other Crimes for Defrauding Employer

| Mar 31 | Criminal Tax Representation, Tax Law Blog | No Comments
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A resident of Solon, Ohio was charged with 15 counts of crimes relating to tax and mail fraud, among others for his role in defrauding his employer. John Miller, a 25-year employee of the Parker Hannifin Corporation is accused of orchestrating an elaborate scheme to steal over $1 million dollars from his company and if convicted, could face serious time in a federal prison.

The Federal Bureau of Investigation, who spearheaded the investigation against Mr. Miller, says that in his capacity at Parker Hannifin, John Miller was able to structure agreements with outside contractors that were doing work for Parker Hannifin to funnel money into his own pocket. Mr. Miller achieved this by approaching various individuals, including his neighbor, and offering a contract for services provided to Parker Hannifin by companies that were either set up for the purposes of this scheme or ones that already were in existence.

Once services were being provided, Miller had invoices submitted to Parker Hannifin that were far in excess of work that was actually done by the outside companies that were granted contracts. Miller submitted invoices on behalf of his own wife and child representing that they were subcontractors of his neighbors company that was established for the purposes of this scheme.

Miller’s neighbor, Nancy Seaman, would receive the payments made by Parker Hannifin and subsequently pay them to Miller in cash less a 30 percent cut for her cooperation in the scheme. Seaman was aware of the plan to defraud Miller’s employer and recently plead guilty in Federal District Court to conspiring with Miller. She is currently awaiting sentencing.

Not only is Mr. Miller being charged with the theft of money from his employer, he is also being charged with tax fraud for not including the money that he stole on his tax return. Miller faces years in a federal prison if he is found guilty of the crimes of which he is accused.

If you find yourself in a bind with the Criminal Investigations Division of the IRS or the Department of Justice relating to violating criminal tax laws, including but certainly not limited to tax evasion or tax fraud, do not hesitate to contact the Tax Law Offices of David W. Klasing.

U.S. Government Evidences Global Regulation of Banks

U.S. Government Evidences Global Regulation of Banks

| Mar 31 | OVDI Program, Tax Law Blog | No Comments
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Last week, the United States Federal Reserve showed the world that they have the power to not only regulate banks inside the U.S., but nearly any bank that does business with Americans domestically, even if the banks are headquartered on another continent. The power that the Fed is wielding should be of concern to U.S. taxpayers who have monies at any bank overseas.

The Federal Reserve will occasionally put U.S. banks through a “stress test” to determine if it would be able to survive a severe economic collapse. The Fed sets standards and evaluates whether the subject of the test would be able to meet or exceed those standards by reviewing the bank’s capital plan. The plans that are reviewed should show that the bank has enough capital assets to survive a major downturn in the economy.

Although two U.S.-based banks were identified by the Fed as needing to revise their capital plan, three foreign banks were also included in the findings of the governmental agency. The foreign institutions were HSBC, which is based in London, Banco Santander and Royal Bank of Scotland Group, based in Spain and Scotland, respectively. The actions by the Fed with regard to the foreign entities only affect the U.S. entities of the foreign banks and prevent payments of dividends that exceed last year’s levels until their capital plan is revised and is found satisfactory by the U.S. government.

Though this news may not be immediately alarming to taxpayers living the United States, upon closer examination of the situation, it can be observed that the government has been able to successfully regulate banks that are controlled in countries that are thousands of miles away from the United States. Even European regulators have become concerned with the regulation muscle that the U.S. is trying to flex. They believe that the regulating bodies in Europe and beyond should be responsible for regulating their banks and subsidiaries.

If you are a taxpayer and have assets in overseas accounts that you have not disclosed to the IRS, it seems that it is only a matter of time until the government of the United States finds a way to regulate the bank that holds your money. And with regulation comes discovery of account information. We have seen very recently that even banks without ties to the United States are caving to the pressures put on them by the Department of Justice. If you think that your secret is safe overseas, it may be time to start thinking again.

The Offshore Voluntary Disclosure Program gives taxpayers a way out when they feel like there is none. If you are worried about spending time in federal prison because of your failure to report overseas assets, contact us today. There is no need for you to lose any more sleep or helplessly worrying about being put behind bars. To speak confidentially with an experienced tax attorney regarding the OVDI Program and voluntary offshore disclosure, call the Tax Law Offices of David W. Klasing at (800) 861-1295.

 

Will your estate be subject to estate taxes?

Will your estate be subject to estate taxes?

| Mar 27 | Tax Law Blog, Wills and Trusts | No Comments
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Date: 02/09/12

Topic: Wills and Trusts

“Nothing is certain,” it’s said, other than “death and taxes.” While that may be so, it’s less clear how the near future will treat the nature of the taxes upon one’s death. The so-called “death tax” is the tax that must be paid by a decedent’s estate for privilege of passing the property he held at death on to one’s heirs. More exactly, as 26 USC 2033 reads:

“The value of the gross estate shall include the value of all property to the extent of the interest therein of the decedent at the time of his death.”

In very general terms, if a decedent owned it at death, it’s part of his or her gross estate. Absent an exclusion amount, it will currently be taxed at 35%.

Thankfully, most taxpayers have an estate that is smaller than the “exclusion amount” — the amount that is excluded from being taxed on death. Presently, that amount is 5.12 million, as adjusted for inflation. This means that one dying with assets valued at less than that are not required to pay estate tax.

However, unless Congress agrees to change the existing law within the next year, the exclusion amount will drop from 5.12 million to 1 million. Consequently, many more Americans could be become subject to an estate tax liability. For those in southern California, where the fair market value of one’s home starts at around $400K and rapidly moves upwards, half or more of their exclusion amount will be used up just trying to pass the house to the kids.

The current uncertainty in the estate tax arena surrounds Congress’ perceived unpredictability. It’s not known whether it will extend the 5 million exclusion amount, decrease it or, as some recent candidates have mentioned, repeal the entire estate tax. This is a class warfare issue and many republicans and democrats have polar opposite views in this area.

There are a multitude of lawful strategies for avoiding or minimizing estate taxes, however, and that’s something our office may be able to help with.

 

Proposed Guidelines to Ease Restrictions on Innocent Spouse Relief

Proposed Guidelines to Ease Restrictions on Innocent Spouse Relief

| Mar 27 | Innocent Spouse Relief, Tax Law Blog | No Comments
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The Internal Revenue Service released proposed guidelines which would officially give spouses filing for equitable innocent spouse relief more time to do so.

Currently, innocent spouse protection is available to spouses who filed a joint-return during the tax year in question. Innocent spouse relief may be appropriate if one spouse, who is typically “in charge” of the family’s finances, omits income or overstates deductions on the tax return filed jointly between the two spouses. The innocent spouse must show that they did not know or have any reason to question the validity of the tax return.

Sections 6015(a)-(c) of the Internal Revenue Code provide requirements which must be met in order to be granted innocent spouse relief. Among other requirements, in order to be statutorily granted relief, a innocent spouse must request such relief within 2 years of the first collection activity by the IRS.

If a taxpayer does not meet one of the requirements of the statutory relief, they can request equitable relief under Section 6015(f). Until recently, the IRS took the position that because the statute of limitations for statutory relief was 2 years, a taxpayer requesting equitable relief must file within the same time-frame.

Under REG-132251-11, innocent spouses would have the full ten-year collection period to file for equitable relief. This shift in procedure at the IRS further demonstrates a more accommodating stance for innocent spouses.

GET HELP WITH YOUR CLAIM FOR INNOCENT SPOUSE RELIEF

The law and regulations concerning innocent spouse relief can be complex and difficult to decipher. Seek experienced representation in order to avoid being left on the hook for your spouse’s tax liabilities. At the Tax Law Offices of David W. Klasing, we have the knowledge and experience to best represent your interests before the IRS.

To learn more about the various types of innocent spouse protection and the requirements that must be met in order to qualify, please contact us today.

 

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