I hope this finds you well and enjoying the fall season.
Can I help you with anything? Maybe:
- Help with tax problems that you have or that friends or family have. I value referrals.
- Financial planning including paying for school. I wrote an article that outlines the problems and some of the solutions to out-of-control school costs. See Tax Relief Blog “Paying for School” on my website.
- General legal review. My practice continues to be focused on unfiled tax returns, collection problems, and audits. When you have problems outside these areas, you want to use me as a sounding board to think through the problems and perhaps shop for specialized talent.
Please call if I can help.
YEAR-END TAX PLANNING
Here are some thoughts on things you may be able to do between now and year end to reduce your 2017 tax bill.
If you itemize deductions, payment of ad valorem tax bills, state estimated taxes, and charitable contributions prior to 12/31 will give you a deduction in 2017.
IRA contributions made before the due date of the return (without extensions) will be deductible.
If you are in a business with cash basis accounting, payments of expenses before year end will reduce taxable income.
I have just reviewed the New York University tax controversy course material for 2016 and the highlights are:
BANK SECRECY
The biggest news for the last several years is that IRS has busted the Swiss banks. Swiss bank secrecy law and similar law in other tax haven jurisdictions have long been used by U.S. taxpayers to evade U.S. taxes by hiding money offshore in secret accounts and in entities that conceal true ownership. The Swiss banks, faced with an aggressive IRS pursuit of civil and criminal sanctions, have started cooperating with IRS by entering into deferred adjudication agreements, paying substantial fines, and turning over the names and account information of their customers. The IRS has voluntary disclosure programs designed to negotiate financial settlements with taxpayers.
The pattern established with the Swiss banks is spreading to other tax haven jurisdictions.
FOREIGN ACCOUNTS
If a US citizen or resident has foreign accounts with an aggregate balance of over $10,000 at any time during the year, the existence of the account needs to be reported on tax returns and a separate Foreign Bank Account Report (FBAR) needs to be filed with the Treasury department each year. Penalties for non compliance are severe. Absent a compelling need to maintain such accounts, it often makes sense to close them and move the money onshore to eliminate compliance problems.
INFORMANTS
The use of informants for hire will play an increasingly large role in tax enforcement. In years past the IRS treated informants harshly: it turned on them and the informants often wound up with greater problems than the targets. Under congressional pressure a Whistleblower Office has been established at IRS and a cottage industry is being developed among people who turn in tax cheats for a percentage of the recovery.
Practical next steps
- Note the date on this article. It describes the rules as they stood then, and tax procedure changes.
- Start from the notice you actually received: the number in the top right corner and the date printed on it decide what is still open to you.
- Pull your account transcripts before deciding anything. They show what the IRS believes about your account, which is not always what the letters say.
- If a deadline is running or the amount is significant, have someone read the file before you respond.
Official sources for current verification
- IRS Topic No. 201 — The Collection Process
- IRS Publication 594 — The IRS Collection Process
- IRS Topic No. 202 — Tax Payment Options
- IRS — IRS Audits
- Taxpayer Advocate Service — Audits in Person
- IRS — Accuracy-Related Penalty
Important notice
This material provides general information, not legal or tax advice. Tax outcomes depend on the facts, procedural history, applicable law, and current agency guidance. Reading this page does not create an attorney-client relationship.
