Tag Archives: federal tax

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

REASONABLE CAUSE AND GOOD FAITH – IRS Penalties Can Be Abated, Forgiven or Waived

By Coleman Jackson, Attorney & Certified Public Accountant
June 21, 2018

IRS Penalties Can Be Abated, Forgiven or Waived

The Internal Revenue Code is full of various kinds of penalties that the Internal Revenue Service is authorized to assess and collect from errant, indifferent, negligent, ambivalent, and indecisive or otherwise noncompliant taxpayers who fail to collect or pay their tax bill or attempt to evade the federal tax laws.  Six IRS penalties that seem to be common in recent years are as follows:

Code Sec. 6672 Penalties:  penalties assessed when taxpayers fail to timely collect, turn over withholding taxes or avoid timely payment of tax obligations;

Code Sec. 6701 Penalties:  penalties assessed against tax return preparers, such as enrolled agents, certified public accountants or others working in the tax return preparation services industry who aids and abet taxpayers in filing false or fraudulent tax returns;

Code Sec. 6676 Penalties:  penalties assessed against taxpayers and others who file tax refund claims or take tax credits without basis in reality, truth or facts.  Unsubstantiated deductions and credits on a tax return commonly give rise to Code Sec. 6676 penalties.   Filing a tax return with the IRS with a false refund request constitutes a false statement under the penalty of perjury.

IRS Penalties

Code Sec. 6697-6699 Penalties:  penalties for failure to file various types of tax returns that should be filed.  Such as failure to file a Form 1040, Form 1120, Form 1120S or Form 1165 can all be the basis for the IRS to assess a failure to file penalty.  Pass through entities, such as, partnerships and s-corporations must still file entity tax returns even though federal taxes are paid at the individual ownership level rather than the entity level.

Code Sec. 6712 Penalties:  penalties assessed against taxpayers who fail to disclose treaty based tax positions.  Immigrants, expatriates and foreigners are especially susceptible to incurring faulty tax treaty position penalties unless they hire well qualified tax consultants in preparation of their annual tax returns.

Code Sec 6662 Penalties:  penalties assessed against taxpayers who fail to report income from foreign sources, such as, foreign bank accounts, foreign businesses, and foreign asset holdings can incur very severe penalties.  U.S. citizens, resident aliens and certain nonresident aliens must report worldwide income from all sources including foreign bank accounts, foreign businesses, foreign trusts and other foreign assets.  Moreover, taxpayers with foreign holdings whose aggregate value exceeds $10,000 at any point during the calendar year must file Form 114, Report of Foreign Bank and Financial Accounts (FBAR) electronically with the Financial Crimes Network (FinCen’s BSA E-Filing System).  Failure to report the existence of offshore holdings is subject to civil and criminal penalties.  It is anticipated that this set of penalties and potential criminal prosecution will be on the rise in the near future because the IRS has announced that it will end the 2014 Voluntary Disclosure Program on September 28, 2018.

REASONABLE CAUSE AND GOOD FAITH

Another special set of tax rules have long been in force to forgive tax penalties due to reasonable cause and good faith.  The reasonable cause relief is set out in Code Sec. 6664.  The IRS will not impose accuracy related penalties upon a showing by the taxpayer that there was reasonable cause for the tax position and that they acted in good faith with respect to the tax position or act in question.  The reasonable cause defense under Code Sec. 6664 turns on all the facts and circumstances.  That simply means that the IRS and Courts try to determine ‘why’ the taxpayer failed to comply with the federal tax laws.  A taxpayer’s substantial knowledge of federal tax law is a significant factor that the IRS and Courts consider in determining whether a taxpayer acted in good faith and reasonable.  Immigrants or those recently immigrating to the U.S. often lack the sophistication and knowledge of U.S. tax laws.  U.S. tax laws complexity often confounds well educated Americans as well.  Taxpayers reliance on tax return preparers’ suggestions, recommendations and guidance also have been found by many Courts to meet the taxpayers burden to show that they acted reasonable and with good faith.  Taxpayers exercising ordinary business care and diligence sometimes likewise are found by the IRS and Courts as acting in good faith and reasonably.  These various examples simply show that the IRS can abate, forgive or waive federal tax penalties in a very broad spectrum of situations.  Taxpayers confronted with IRS tax penalty situations must act reasonable and be prudent in exploring with their tax attorney the potential that the penalties can be abated, forgiven or waived.  Even fraud penalties can be waived under certain circumstances and criminal charges may likewise be averted.

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