Author Archives: Coleman Jackson

Podcast – Did Your Families ITINs Expire In 2019? | LEGAL THOUGHTS

Published July 14, 2020

Did Your Families ITINs Expire In 2019

Legal Thoughts is a podcast presentation by Coleman Jackson, P.C., a law firm based in Dallas, Texas serving individuals, businesses and agencies from around the world in taxation, litigation and immigration legal matters.

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Mayra Torres, the Public Relations Associate of Coleman Jackson, P.C.

The topic of discussion is “Potentially Over 2 Million ITINs Expired at the End of 2019:  Did your families ITINs expire in 2019.”  You can listen to this podcast here:

You can also listen to this episode and subscribe to Coleman Jackson, P.C.’s Legal Thoughts podcast on Apple Podcast, Google Podcast, Spotify, Cashbox or where ever you may listen to your podcast.

TRANSCRIPT:

ATTORNEY:  Coleman Jackson
Legal Thoughts
COLEMAN JACKSON, ATTORNEY & COUNSELOR AT LAW

ATTORNEY:  Coleman Jackson

Welcome to Tax Thoughts

  • My name is Coleman Jackson and I am an attorney at Coleman Jackson, P.C., a taxation, litigation and immigration law firm based in Dallas, Texas.
  • Our topic for today is: “Potentially Over 2 Million ITINs Expired at the End of 2019: Did your families ITINs expire in 2019.”
  • On this “Legal Thoughts” podcast our public relations associate, Mayra Torres will be asking the questions and I will be responding to her questions on this important tax topic: “Potentially Over 2 Million ITINs Expired at the End of 2019: Did your families ITINs expire?”

Interviewer:  Mayra Torres, Public Relations Associate

Question 1:

What is an ITIN and who uses an ITIN?

Attorney Answers Question 1:

  1. Individual Taxpayer Identification Numbers or ITINs are used by people who have federal tax filing or federal tax payment obligations under U.S. federal tax law who are not eligible for a Social Security number.
  2. ITINs are used by many Texans who are not authorized to work in the United States because they do not have work authorizations issued by the Department of Homeland Security; therefore, these workers cannot obtain a Social Security number from the Social Security Administration. I point out that an ITIN cannot be used for work authorization purposes; it is solely to be used for tax compliance purposes.
  3. Many undocumented individuals who live and work in the United States use ITINs which are issued by the United States Treasury for tax purposes. Whole families quite often use ITINs to fulfill their tax obligations and many undocumented children also use ITIN’s so that their parents can take the child tax credit, earned income credit and other benefits offered to taxpayers in the Internal Revenue Code.

Interviewer:  Mayra, Public Relations Associate

Question No. 2

  • Oh, I see; thanks for giving me a full answer to my questions.
  • I have a few more questions…: Are ITINs like a Social Security Number; I mean Social Security Numbers issued by the Social Security Administration are assigned to a person for life, right?  How about the ITIN issued by the U.S. Department of Treasury?  Is an ITIN issued to a person for life too?

Attorney Answers Question No. 2

  • Those are extremely good questions, Mayra.
  • A Social Security Number issued to a person by the Social Security Administration is issued to them for life. That means a person receives only one social security number that they use their entire lives.  Most social security numbers are assigned when U.S. citizens are children.  They keep that number for life.
  • No, the ITIN is not issued for the life of the recipient. The U.S. Congress passed a law called “Protecting Americans from Tax Hikes Act of 2015 (PATH Act) which became law on December 18, 2015.
  • The PATH Act modified U.S. Tax law, 26 U.S.C. Section 6109 as it pertains to ITINs in two major ways:
  • Number 1: ITINs that have not been used on a tax return for 3 tax periods expire.  For example, ITINs not used on a tax return in 2014, 2015, or 2016 expired December 31, 2017.  ITINs not used on a tax return for 2015, 2016 or 2017 expired December 31, 2018.  And ITINs not used on a tax return for 2016, 2017, and 2018 expired on December 31, 2019.
  • WARNING: Filing delinquent tax returns are extremely problematic because household ITINs expire by 3 years of none use automatically.  This is a major development regarding ITINs since the PATH Act became law in the United States.
  • Now, let me discuss the second major change to tax law by enactment of the PATH Act:
  • The PATH Act of 2015 authorized the Internal Revenue Service to develop and implement an annual rolling middle digit expiration schedule for all ITINs in circulation.
  • Under this rolling middle digit expiration schedule, the IRS makes an annual announcement listing the middle digits of ITINs which will expire end of that calendar year. This list of expiring ITINs is usually posted on IRS.gov and possibly in financial newspapers.
  • Since publishing the list of expiring ITINs over the years since the PATH Act, the IRS has announced that the following middle digit ITINs would expire if not properly renewed by the holder of the ITIN:
  • All ITINs with middle digits of 70, 71, 72 or 80 expired on December 31, 2017 if not properly renewed.
  • All ITINs with middle digits of 73, 74, 75, 76, 77, 81, or 82 expired on December 31, 2018.
  • All ITINs with middle digits of 83, 84, 85, 86 or 87 expired on December 31, 2019.
  • Let me just say that the IRS announced on October 10, 2019 that these ITINs can be renewed if the holder files a Form W-7 with the proper paperwork. Moreover, the IRS also said that ITINs with middle digits of 70 through 82 that expired in 2016, 2017 and 2018 can also be renewed if the proper paperwork is filed.  So people should understand that they can renew an expired ITIN.

Interviewer:  Mayra, Public Relations Associate

Question 3:

Wow that is a lot!  It’s good to know that ITIN users can renew their expiring and expired ITINs.  So how are ITINs renewed?  I mean what does an ITIN user have to do to renew their ITIN?

Attorney Answers Question No. 3 

  • Those are good questions, Mayra.
  • The ITIN holder should have received an IRS Notice CP-48 alerting them to the fact that their ITIN was about to expire. This notice would have given them detailed instructions as to how to renew their ITIN.  This Notice however could have been sent to the address where they lived at the time they originally applied for their ITIN.
  • If they did not receive the notice and instructions, they can still renew their ITIN by filing IRS Form W-7 and complying with all the instructions listed in the W-7 Instructions.
  • I might add that ITIN users should check all of the ITINs used by the members of their household and renew all the ITINs in the household even though only one or two of them have expired. The renewal can be filed for all ITINs in a household; and what I mean about household, is mom, dad and minor children who all use ITINs because they are not eligible for social security numbers.

Interviewer:  Mayra, Public Relations Associate

Question No. 4:

  • This has been informative. One last question Attorney:
  • What can happen if an ITIN expires and is not timely renewed?

Attorney Answers Question No. 4:

  • Bad things are all but certain to happen:
  • Tax Refunds could very likely to be delayed
  • The family could be denied the child tax credit with all the potential year-after-year tax difficulties that could arise from falsely claiming the child tax credit
  • The earned income credit could be denied with all the potential long term implications from falsely claiming the earned income credit
  • Accuracy Penalties and interest could be assessed by the IRS for filing inaccurate tax returns.
  • To summarize: A taxpayers failing to renew an ITIN could lead to all kinds of difficulties with the Internal Revenue Service’s Exam Unit and Collections division. Taxpayers who use these ITINs must remain vigilant annually and check to see whether any of the ITINs used in their households are set to expire either because of expiration under the 3 year of none use rule or expiration under the IRS rolling middle digit expiration schedule.

Attorney’s Concluding Remarks:

This is the end of Legal Thoughts for now!

  • Thanks for giving us the opportunity to inform you about expiration of ITINs: It’s time to check Your ITINs because they might be expired or expiring soon.  If you want to see or hear more taxation, litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C.  Subscribe on Apple Podcast, Google Podcast, Spotify or wherever you listen to your podcast.  Stay tune!  We are here in Dallas, Texas and want to inform, educate and encourage our communities on topics dealing with taxation, litigation and immigration.  Until next time, take care.

IMMIGRATION PROTECTIONS FOR CRIME AND ABUSE VICTIMS

By Coleman Jackson, Attorney & Counselor
June 23, 2020

IMMIGRATION PROTECTIONS FOR CRIME AND ABUSE VICTIMS

Under U.S. law an immigrant who is the victim of crime and abuse could be eligible to become a lawful permanent resident (get a green card) if they or themselves or child or parent are a victim of a crime or extreme cruelty under certain circumstances.  The particulars of the circumstances are the determinants as to whether the immigrant victim should pursue green card status through:

  1. the United States federal law (Title IV, Sections 40001-40703 l Violent Crime and Law Enforcement Act, as amended | VAWA Status
  2.  the Immigration & Nationalization Act Section 101(a)(15)(U) visas or
  3.  the Immigration & Nationalization Act Section 1101(a)(15)(T) visas.

CRIME AND ABUSE VICTIMS

In a civilized society, unchecked violence against anyone cannot be tolerated for it violates the social compact between peoples.  Injustice is violence; its abuse and it goes against truth and all notions of decency and order. Injustice cannot be tolerated for without justice peace is impossible to achieve.

Immigrants like all peoples have fundamental human rights given to them by their creator.  For a long time now, United States federal law has set forth protections for immigrants in (1) VAWA status, (2) U visa and (3) T visa.  Some of the most significant comparisons and differences between VAWA status, U Visa and T Visa are as follows:

Differences and Comparisons Between Three Types of Protections for Immigrant Crime and Abuse Victims

 

  VAWA STATUS U VISA T VISA
WHO Applies to Immigrant spouses, children, parents abused by their U.S. Citizen spouses, parents or children or Green Card Holders Applies to Immigrant crime victims Applies to Immigrant human trafficking victims
WHAT Battered spouses, children and parents who have endured substantial physical, emotional and psychological abuse at the hands of a U.S. citizen or Lawful Permanent Resident. Victims of abduction, abusive sexual contact, hostage, blackmail, domestic violence, extortion, murder, incest, involuntary servitude, rape, prostitution, sexual assault, stalking, trafficking, witness tampering, perjury and other specifically listed crimes perpetrated inside the United States by any perpetrator. Victims who tricked, deceived, hoodwinked, coerced, recruited, transported, harbored, housed in the U.S. for the purpose of violence& abuse, sexual exploitation, pornography, forced labor, debt slavery, involuntary servitude, or like evil acts.
WHEN AND WHERE MUST THE ABUSE OR CRIME OCCUR During a bona fide marriage or within specified familial relationships with U.S. citizen or LPR While immigrant victim is In the United States and is victim of specified crimes by any perpetrator. While victim is inside or outside of the United States and is a victim of a crime by any person bringing or receiving the trafficking victim in U.S.
       
HOW TO APPLY FOR THE IMMIGRATION BENEFIT File I-360 Application with USCIS if inside the U.S. File I-918 Application with USCIS if inside the U.S. File I-914 Application with USCIS if inside the U.S.
       
DO THE IMMIGRANT NEED TO HELP LAW ENFORCEMENT Does not have to help law enforcement and does not need law enforcement Application Certifications Must help law enforcement and must get law enforcement to help complete Application Certifications Does not have to help law enforcement and does not need law enforcement Application Certifications

 

IMMIGRATION PROTECTIONS FOR CRIME AND ABUSE VICTIMS

These are some highlights of the differences and comparisons of these three options available for immigrants; who unfortunately, find themselves abused or otherwise victimized.  They simply need to know that they don’t have to suffer injustice in any form in silence and all alone.  There are laws designed to protect immigrant abuse and crime victims.  And there are many social agencies available for abuse victims throughout the nation.  Don’t let anyone ever take away your humanity.  You have been created with hope and dignity and a purpose.

 

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

Foreign Agricultural H-2A Visa Workers on American Farms During Covid-19 National Emergency

By:  Coleman Jackson, Attorney & Certified Public Accountant
May 14, 2020

Foreign Agricultural H-2A Visa Workers

The H-2A nonimmigrant visa classification has been around for a very long time.  See Immigration and Nationality Act (INA) 101(a)(15)(ii)(a), 8 U.S.C. 1101.  The H-2A foreign agricultural workers visa; known as H-2A is more in the public eye right now due to the media’s focus on the rise of Covid-19 cases in meat packing plants, on farms and in rural America potentially resulting in food supply chain disruptions.  The concern of the coronavirus’ disruption of the food supply is very real and it is of grave concern to the well being of farmers’ bringing their goods to market and to their fellow citizens ability to feed their families.  In a nutshell, the foreign agricultural workers program known as the H-2A Visa permits agricultural employers to fill shortages in the available work force by following certain procedures to lawfully bring foreigners to the United States temporarily to perform temporary or seasonal agricultural work.  The Department of Homeland Security defers to the U.S. Department of Labor with respect to defining what work falls into the categories of temporary and seasonal agricultural work.  Historically, the Department of Labor has defined “agricultural labor” as such duties as hauling and delivery on the farm, harvesting, cultivating and planting seed.  Foreign workers on H-2A Visas has historically also worked as sheep herders, goat tenders, cattle raisers, poultry farmers and in other occupations typically in rural areas of America where various kinds of animals are raised for market.  The point is that agricultural workers are not limited to farms performing task around a farm; foreign workers on H-2A Visas work on plantations, ranches, nurseries, meat packing plants, greenhouses, orchards, and as truck drivers and delivery drivers on these or other similar locations.  The Immigration and Nationality Act (INA) has defined the term temporary agricultural work as no more than 12 months or employment of a seasonal nature tied to a certain time of the year, event or pattern.

 

Foreign Agricultural H-2A Visa Workers

There was-and-still-is a very regimented step-by-step process that  agricultural employers must follow to bring foreign farm laborers to work on their farms, ranches, meat packing plants or similar locations; which begins with a petition filed with their state workforce commission; then they go to the DOL for labor certification that there is a lack of available domestic workers to perform the intended project; once the employer receives the DOL Labor Certification they file a request with the Department of Homeland Security; and upon approval, the foreign worker petitions the Consulate’s Office in their country to obtain the H2-A Visa to come to America and work on a specific  temporary or seasonally project for less than 12 months.  The H-2A visa is valid for 3 years.

 

Foreign Agricultural H-2A Visa Workers

This process has been relaxed and modified somewhat. Covid-19 has created the necessity to impose travel restrictions, stay at home orders and caused lots-and-lots of tremendous pain, loss and suffering throughout the country.  In response to anticipated disruptions and uncertainties in the U.S. food supply and the ongoing impact of the Covid-19 epidemic in rural America; the Department of Homeland Security and U.S. Citizenship and Immigration Services (USCIS) published temporary amended regulations regarding temporary and seasonal agricultural workers and their U.S. employers in the H-2A nonimmigrant agricultural workers classification.  These final regulations are published in 85 FR 21739 and is effective from April 20, 2020 through August 18, 2020.The following are the major amendments to the normal process that historically were used by domestic farmers to bring foreign nonimmigrant workers to work temporarily on their farms, ranches, meat packing plants and other similar locations under the H-2A Agricultural Workers program:

  • The H-2A regulations were temporarily amended to permit all H-2A employers to allow nonimmigrants who currently hold a valid H-2A visa status to start working upon the receipt of the employer’s new H-2A petition, but not earlier than the start date of employment listed on their H-2A petition.
  • The H-2A regulations were temporarily amended to permit all H-2A workers to immediately work for any new H-2A employer, but not earlier than the start date of employment listed on the H-2A petition filed during the Covid-19 National Emergency.
  • The H-2A regulations were temporarily amended to create a temporary exception to 8 CFR 24.2 to allow nonimmigrants to extend their H-2A period of stay beyond the three-year limitations without first requiring that the immigrant leave the United States and remain outside of the United States for an uninterrupted period of three months. It is important that an H-2A petition for an extension of stay with a new employer must have been filed with USCIS on or after March 1, 2020 and remain pending as of April 20, 2020.
  • H-4 nonimmigrants who are the spouses and children of an H-2A agricultural worker visa holders are beneficiaries of these same amendments noted in one through three above. H-4 visa holders’ admission and limitations of stay are dependent on the validity of the H-2A visa holders’ status and they must be otherwise admissible.

Moreover, as a practical matter, certain in-person interview requirements at the Consulate Offices have been eased during this Covid-19 National Emergency to facilitate foreign workers traveling into the United States.  H-2A workers fall under the ‘essential worker’ category of critical worker and probably are exempt from the stay-at-home, travel restrictions and other measures imposed by local, state and federal governmental agencies during this Covid-19 National Emergency.

 

Foreign Agricultural H-2A Visa Workers

Foreign agricultural workers on H-2A visas are subject to the United States federal tax laws but they are exempt from withholding of U.S. federal income taxes, social security taxes and Medicare taxes on compensation paid to them for services performed in connection to their H-2A agricultural worker visa status.  If they receive more than $600 in compensation, the foreign nonimmigrant worker must receive a Form W-2 from their employer which exempts social security and Medicare taxes.  Typically, the worker files Form 1040-NR and the employer must report the wages of its agricultural nonimmigrant workers on Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees and file all other appropriate tax returns with local, state and federal taxing authorities.   Most of the modified filing, payment and reporting deadlines announced by the U.S. Treasury and Internal Revenue Service during this Covid-19 National Emergency applies to H-2A agricultural workers and their employers.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

Some Things About Contracts While Sheltering from the Unknown Virus like Covid-19

By:  Coleman Jackson, Attorney & Counselor
April 29, 2020

Some Things About Contracts While Sheltering from the Unknown Virus like Covid-19

What is a Contract?  A contract is an enforceable promise under the law.  That means that if you agree to do something for consideration and the other party either performs or changes their position in any material way, the law will compel you to do what you promised to do or demand that you pay the performing party compensation of some kind.  Usually the compensation is going to tailor the party’s expectations at the time they agreed to do such-and-such.  In a nutshell, that is what the term contract means.

 

What about when Covid-19 says go home, stay there and I will let you know when you can come out again?

What about when Covid-19 says go home, stay there and I will let you know when you can come out again?  Contracts are based on expectations; or put another way, a contract is a bargained for outcome.  Sometimes parties insert a clause into their contracts that is called a ‘force majeure’ cause.  Don’t get lost in the foreign language… force majeure is French.  First thing you really need to know is that force majeure clauses in contracts are enforceable in Texas.  Texas will make the parties to contracts perform in accordance to what the force majeure clause says.  That is simply in keeping with the fundamental contract law in Texas; which is, consenting parties can pretty much agree to do or not do any lawful thing in the State of Texas.  So be careful about what you agree to do or not do in Texas.  What about enforcement of force majeure clauses in Texas:  first they are enforceable contract provisions; your contract must contain language that a court can construe as a force majeure event excusing your performance of your obligations under the contract.  Parties to contracts in Texas can define or describe situations, occurrences, or events that constitute a force majeure event and typically they are defined as some event or series of events that make it impossible to perform under the contract or impractical to perform under the contract.  But a mere difficulty in performance would not likely be reason for a party to fail to perform under the contract.  Parties to contracts in Texas must make all reasonable efforts to perform responsibly under their contracts.  What constitutes reasonable efforts depends upon the nature of the contract because the scope of a force majeure clause in a contract depends upon the benefit of the bargain the parties negotiated within the four corners of their contract.  Courts in Texas do not like to take the liberty of contract away from responsible contracting parties afforded to them by the Texas and United States Constitution.  So, it follows that if the parties did not bargain for force majeure, it is highly unlikely that Texas Courts will recognize an event or series of events out of its own clothe that would excuse or release parties of contracts without the possibility of paying damages.  In a nutshell, force majeure is a lawful bargained for excuse to not perform under the contract.

 

breach of contract

An unexcused failure to perform pursuant to the agreed upon bargain is called a breach of contract when a party’s failure to deliver what’s promised is material to the expectations of the parties from the start.  In a nutshell, breach of contract damages could be a reasonable option or perhaps even the only option for a party if it becomes impossible or impractical to perform obligations of contracts entered into before the Covid-19 Pandemic sent the global economy to the dog pound.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

 

Federal Tax Developments Related to Covid-19

By: Coleman Jackson, Attorney & Certified Public Accountant
March 30, 2020

As you can imagine, things are changing and developing fast and furious during this Covid-19 Pandemic. Developments in taxes are no exception! Our law firm desires to keep our clients and others informed with regards to certain tax developments that might impact their businesses. In keeping with that desire, note some of the most significant recent federal tax developments:

  1. Tax Day now July 15, 2020: The U.S. Treasury and Internal Revenue Service automatically extended from April 15, 2020 to July 15, 2020 the federal income tax filing due date. The IRS gives affected taxpayers until the last day of the Extension Period to file tax returns or make tax payments, including estimated tax payments, that have either an original or extended due date falling within the Period. The IRS will waive any interest and late filing and payment penalties related to these late tax returns.
  2. Small and midsize employers can begin taking advantage of two refundable payroll tax credits designed to immediately and fully reimburse them, dollar of dollar, for the cost of providing Coronavirus-related leave to their employees.
  3. The CARES Act of 2020 enacted in response to Covid-19 provides employers with an employee retention credit in the amount of 50% of their wages impacted by closure due to Covid-19. Further the Act which became law on March 27, 2020 extends the due date for paying employer payroll taxes. Taxpayers must carefully review the law and properly compute the amount of payroll taxes that can be deferred; because it is not 100% deferral of all payroll taxes. Note: The Small Business Administration has announced that they are taking applications for disaster relief from small businesses with respect to loans up to two million dollars for monies borrowed to make payroll and pay rent during this Covid-19 Crisis. The application process and details regarding what businesses qualify and the procedures for applying can be found on the Small Business Administration website. The SBA has announced that they have relaxed some of their processing and documentation requirements to expedite the processing of these emergency loans to small businesses impacted by Covid-19. It appears that these SBA emergency loans could be converted to grants under certain condition(s). The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected Covid-19 taxpayers who need them to apply for benefits or to file amended tax returns claiming casualty losses. Watch our blogs as more changes may be forth coming in the area of employer relief due to Covid-19 closures. But for now, this appears to be the game plan regarding employers.
  4. “Existing Installment Agreements –For taxpayers under an existing Installment Agreement, payments due between April 1 and July 15, 2020 are suspended. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Deposit Installment Agreement, may suspend payments during this period if they prefer. Furthermore, the IRS will not default any Installment Agreements during this period. By law, interest will continue to accrue on any unpaid balances.” Source: IR-2020-59, March 25, 2020.
  5. The CARES Act eliminates the 10% early withdrawal penalty for Covid-19 related distributions from retirement accounts and make other rule changes regarding retirement account contributions.
  6. The Act relaxes certain corporate and individual charitable contributions rules and provides for an above the line deduction up to $300 for charitable contributions.
  7. Texas has been declared a Presidential Disaster Area related to Covid-19, so more specific rules and provisions could be developed by the IRS related to individuals and businesses with business operations in Texas or impacted by this particular Presidential Disaster Area Declaration.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader. You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

Thinking About Taxes

By:  Coleman Jackson, Attorney & Certified Public Accountant
March 07, 2020

Thinking About Taxes

Thinking about spending that money withheld from employees’ wages to take a tour of the world, pay other business expenses or house payments?  Don’t do it before reading Internal Revenue Code Section 7702!   Hear those alarm bells ringing!  Anyone required to collect, account for, and turn over to the United States Treasury and willfully fails to carry out this duty are subject to severe civil penalties and upon being found guilty of the felony of failing to collect, account for, and turn over can be fined up to $10,000 and spend up to five years in federal prison.  Payroll tax fraud is a serious crime that is commonly investigated by the IRS Criminal Investigation (CI) Division.  This unit of the IRS investigates all kinds of violations of the Internal Revenue Code.  CI along with the Financial Crimes Network investigates FBAR violations (these are U.S. persons with foreign bank accounts and other foreign assets who fail to timely and accurately disclose these holding on Form 114), money laundering (these are individuals or entities engaged in some kind of unlawful activity and endeavoring to get dirty money into the normal banking system) and other financial crimes.

 

Thinking about not filing that required income tax, gift tax or other federal tax return or providing fraudulent information the IRS?  Don’t do it before reading Internal Revenue Code Sections 7207 and 7203Hear those whistles blowing!  Anyone who intentionally gives false documents, which includes returns and any other written representation to the Internal Revenue Service and any of its employees knowing that its materially false or fraudulent is subject to civil fines and upon being found guilty of the felony of giving the Service false returns or other documents can be fined up to $10,000 (if individual) and up to $50,000 (if corporation), and spend up to one year in federal prison.  Multiples applies in that cumulative false statements, returns and documents can generate multiplication of the civil fines and additional years to the duration of the prison term.

 

Thinking about paying fewer taxes than is lawfully owed by engaging in creative accounting, leaving that or this item off the return while adding and dreaming about things that never happened? Don’t do it before reading Internal Revenue Code Section 7201Hear those gongs clanging! Anyone who intentionally attempts to evade or defeat any tax imposed under the Internal Revenue Code is subject to civil penalties up to $100,000 (if individual) and up to $500,000 (if corporation), and spend up to five years in federal prison upon conviction.

 

Thinking about taxes?  Stay away from the tumbling … lie.


This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432     

How Do You Get Rid of an IRS Tax Lien?

By:  Coleman Jackson, Attorney, Certified Public Accountant
January 29, 2020

How Do You Get Rid of an IRS Tax Lien

When the Internal Revenue Service sends you a tax bill and you do not pay it, a federal tax lien is created by operation of law whether the IRS files the lien in the public property records in your state or not.  A tax lien is merely an enforceable claim that attaches to your property and right to property.  If the IRS files the lien in the public property records, they must under the law inform you of this action.  This is done by a Notice of Federal Tax Lien.

 

IRS levy property

A federal tax lien does not authorize the IRS is take your property.  For this, the IRS must levy your property.  A levy is a lawful process by which the taxing authority can take your property or right to property without the necessity to obtain a court order. Don’t get confused between a lien (notice of tax debt) and a levy (taking of your property).  Taxpayers have a right to appeal both actions in the Office of Appeals and possibly to the U.S. Tax Court if their challenge is timely.For now, the question in this blog is how do you get rid of an IRS tax lien?

 

Taxpayers can get rid of an IRS tax lien

Taxpayers can get rid of an IRS tax lien!  If the tax debt has paid in full, the taxpayer can get rid of the tax lien by seeking a release of the lien.  This is typically an automatic process; but if it’s not, request a release of the lien.  Taxpayers can seek exemption of certain property from the lien.  This is typically done to facilitate the sale or financing of real property or business property with an attached federal tax lien.  Taxpayers can post a bond and ask that the lien be released.  Taxpayers can get rid of a tax lien by filing a challenge in the Office of Appeals as to procedural issues since the IRS must comply with exacting legal rules with respect to filing federal tax liens.  Perfecting an IRS tax lien like any lien is a matter of state law which varies from state to state.   In Texas property law varies from county to county.  This simply means that the IRS must comply with each counties law when filing liens in the county property records.  There are 254 counties in Texas.  In addition to any procedural issues,taxpayers can also get rid of a federal lien by challenging it on substantive legal grounds.  Finally, taxpayers can get rid of an IRS tax lien if the ten-year collections statute has expired unless the collection statute has been extended or suspended by bankruptcy proceedings or for other reasons.  The release of the tax lien is automatic on the expiry of the ten-year collection statute.  This is merely a summary of how to get rid of a tax lien; in law, there are a lot of twist and turns depending upon all the facts and circumstances.

 

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

Federal Taxation and Cutting Horses:  It’s Not Just About The Horses

By:  Coleman Jackson, Attorney, Certified Public Accountant
December 16, 2019

Federal Taxation and Cutting Horses: It’s Not Just About The Horses

Recently I came across a United States Tax Court memorandum decision dated November 25, 2019 involving a South Dakota farmer with a cutting horse and seed business.  The issues in the case that struck me were (1) whether the taxpayer’s cutting horse activity was an activity “not engaged in for profit” within the meaning of Section 183 of the Internal Revenue Code, and (2) whether the taxpayer should be required to pay the accuracy-related penalties under Section 6662(a) of the Internal Revenue Code.  The case was Lowell G. Den Besten, Petitioner v. Commissioner of Internal Revenue, Respondent, T.C. Memo 2019-154 (November 25, 2019).  Note that Tax Court Memo decisions cannot be used as precedent by other taxpayers.  So this blogs aim is to pull general observations from the Besten case because federal taxation and cutting horses is not just about the horses.

 

The significant thing for other individuals and businesses who find themselves tangled in a spirited horse race with the IRS is not whether they are in the cutting horse business or whether or not they are in the seed business

The taxpayer won on two of the three issues argued before the U.S. Tax Court.  The significant thing for other individuals and businesses who find themselves tangled in a spirited horse race with the IRS is not whether they are in the cutting horse business or whether or not they are in the seed business.  The significant points of this case are (a) the IRS holds a presumptive correctness in all tax deficiency matters, and (2) the taxpayer always bears the burden to prove that; more likely than not, they are entitled to the deductions claimed on their tax returns.  That means that the taxpayer must always maintain and produce credible substantiation of all items recorded on their tax returns.  This has been operative tax law governing IRS deficiency cases ever since the United States Supreme Court ruled on these two points in a pair of federal tax cases known as Welch v Helvering, 290 U.S. 111, 115 (1933) and New Colonial Ice Co., v. Helvering, 292 U.S. 435, 440 (1934).   Guy Tressillain Helvering, a Democrat from Kansas was the Commissioner of the Internal Revenue of the Bureau of Internal Revenue from 1933 to 1943.  This is the legacy agency of the Internal Revenue Service.  Today, typically tax cases are styled “Taxpayer v. Comm’r”.  Anyway, locks on doors are preparatory.  Folks put locks on their doors to prepare for when the thief comes.  The same way, taxpayer’s must collect, summarize, and maintain substantiation for all deductions claimed on their tax returns in the event the IRS examiner visits.  In the 2019 Besten case, we see the U.S. Tax Court applying the rules established in the 1930s.  In tax law and in law in general, predictability matters; there is little benefit of surprise, duplicity and uncertainty in law.  Taxpayers can prepare and comply with the law if they know the applicable law because federal tax law is not just about the horses.

 

Internal Revenue Code Section 6662 permits the IRS to assess a 20% accuracy penalty on tax deficiencies

Internal Revenue Code Section 6662 permits the IRS to assess a 20% accuracy penalty on tax deficiencies.  The accuracy-related penalties can be imposed by the IRS when tax deficiencies are due to the taxpayer’s negligence, recklessness or willful violations of the federal tax laws. In the Besten case, the taxpayer avoided paying the accuracy-related penalty because he was able to adequately convince the U.S. Tax Court that he acted reasonably and acted in good faith by relying on the professional advice of his tax professional.  This is often a viable defense for the taxpayer who can meet the burden that they (a) relied on the advice of their tax professional, (b) their tax professional was competent and experienced, and (c) they gave their tax professional accurate and complete information and documentation regarding the tax issue. So this particular reasonable cause defense (reliance of the tax professional’s advice and guidance), like the other reasonable cause defenses that might be applicable, depends on all the facts and circumstances because federal taxation and cutting horses is not just about the horses.  Reasonable cause defenses are not automatic relief; but like cutting horses, every reasonable defense should be explored when confronting additional taxes, penalties and interest, because cutting cost is another way of saving money.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

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