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Monthly Archives: March 2016

Tax On Late-Filed Forms Not Dischargeable in Bankruptcy!

According to Law360, the Eleventh Circuit said Wednesday that an individual's tax debts were not dischargeable in bankruptcy because his tax returns were filed after the due date and thus do not constitute an honest and reasonable attempt to satisfy the requirements of the tax law.

The appellate court said it joined with the Fourth, Sixth, Seventh and Ninth Circuits in finding that delinquent tax returns fail the fourth prong of the so-called Beard test, which determines if a tax return is valid for purposes of discharging tax debts in bankruptcy.

"Failure to file a timely return, at least without a legitimate excuse or explanation, evinces the lack of a reasonable effort to comply with the law," Judge R. Lanier Anderson said in the court's unpublished opinion.

Have a Tax Problem?
Contact the Tax Lawyers at
Marini & Associates, P.A.
 for a FREE Tax Consultation Contact US at 
or Toll Free at 888-8TaxAid (888 882-9243).


Read more at: Tax Times blog

The IRS Now Has Six Years To Audit Your Taxes!

Beware: IRS Now Has Six Years To Audit Your Taxes, Up From Three preview image

Forbes has an article Beware: IRS Now Has Six Years To Audit Your Taxes, Up From Three which discussed that no one wants to be audited, so knowing how long your tax return can be attacked is important.

The statute of limitations on taxes is a fundamental rule allowing taxpayers to eventually cut off their exposure. It can be pretty satisfying to say to the IRS, “sorry, you’re too late.” But this year, that will be a little harder due to an expansion of the IRS’s power to audit for extra years.

Six years can be a long time. Filing your return early won’t help either.

The time periods can be even longer than six years in some cases. The IRS has no time limit if you never file a return. For unfiled tax returns, criminal violations or fraud, though, the practical limit is usually six years.

Another scary rule is that the IRS can audit forever if you omit certain tax forms. Plus, once an assessment is made, the IRS collection statute is typically 10 years.

In some cases, the IRS can go back 30 years. In Beeler v. Commissioner, the Tax Court held Mr. Beeler responsible for 30 year-old payroll tax penalties. Click Here To Read More...

Have a Tax Problem?
Contact the Tax Lawyers at
Marini & Associates, P.A.
 for a FREE Tax Consultation Contact US at 
or Toll Free at 888-8TaxAid (888 882-9243).


Read more at: Tax Times blog

IRS Revises Offer in Compromise Booklet and Application

The 2016 revision to Offer in Compromise Booklet Form 656-B will is available for download. The booklet contains necessary forms and instructions for submitting an Offer in Compromise. Use of earlier versions may result in a delay in the processing of Offer applications.

An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship. The IRS considers your unique set of facts and circumstances including:

  • Ability to pay;
  • Income;
  • Expenses; and
  • Asset equity.

The IRS generally will approve an offer in compromise when the amount offered represents the most that the IRS can expect to collect within a reasonable period of time. Explore all other payment options before submitting an offer in compromise. The Offer in Compromise program is not for everyone.

The IRS reminds Taxpayers
that if they hire a Tax Professional
to help them file an Offer in Compromise,
Be Sure to Check their Qualifications!

Make sure you are eligible

Before the IRS can consider your offer, you must be current with all filing and payment requirements. You are not eligible if you are in an open bankruptcy proceeding. Use the Offer in Compromise Pre-Qualifier to confirm your eligibility and prepare a preliminary proposal.

the IRS is in the process of making modifications to the Pre-Qualifier Tool application. If you use this tool, please consider making the following adjustments to your displayed results.

  • If you enter an amount on Screen 3 Assets, Line 1 which reads "Total bank Balances," you may reduce this amount by $1000. The result may not be less than zero.
  • If you enter an amount on Screen 3, Vehicle 1, you may reduce this amount by $3450. The result may not be less than zero.
  • If you enter an amount on Screen 3, Vehicle 2, and you are making a joint offer with a spouse or other party, you may also reduce this amount by $3450. The result may not be less than zero.  

Submit your offer

Your completed offer package will include:

  • Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms;
  • Form 656(s) - individual and business tax debt (Corporation/ LLC/ Partnership) must be submitted on separate Form 656;
  • $186 application fee (non-refundable); and
  • Initial payment (non-refundable) for each Form 656.

Select a payment option

Your initial payment will vary based on your offer and the payment option you choose:

  • Lump Sum Cash: Submit an initial payment of 20 percent of the total offer amount with your application. Wait for written acceptance, then pay the remaining balance of the offer in five or fewer payments.
  • Periodic Payment: Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, continue to pay monthly until it is paid in full.

If you meet the Low Income Certification guidelines, you do not have to send the application fee or the initial payment and you will not need to make monthly installments during the evaluation of your offer. See your application package for details.

Understand the process

While your offer is being evaluated:

  • Your non-refundable payments and fees will be applied to the tax liability (you may designate payments to a specific tax year and tax debt);
  • A Notice of Federal Tax Lien may be filed;
  • Other collection activities are suspended;
  • The legal assessment and collection period is extended;
  • Make all required payments associated with your offer;
  • You are not required to make payments on an existing installment agreement; and
  • Your offer is automatically accepted if the IRS does not make a determination within two years of the IRS receipt date.
If your offer is accepted If your offer is rejected
  • You must meet all the Offer Terms listed in Section 8 of Form 656, including filing all required tax returns and making all payments;
  • Any refunds due within the calendar year in which your offer is accepted will be applied to your tax debt;
  • Federal tax liens are not released until your offer terms are satisfied; and
  • Certain offer information is available for public review at designated IRS offices.


  • You may appeal a rejection within 30 days using Request for Appeal of Offer in Compromise, Form 13711 (PDF).

Have a Tax Problem?

 Want to Know if you Qualify for an Offer?

Contact the Tax Lawyers at
Marini & Associates, P.A.
 for a FREE Tax Consultation Contact US at 
or Toll Free at 888-8TaxAid (888 882-9243).


Read more at: Tax Times blog

Surrendering Green Card Not Expatriation For Tax Purposes?

A German citizen who expatriated to Germany in 2010 was found to owe taxes on stock installment sale payments, after he formally abandoned his lawful permanent resident status for immigration purposes. (Topsnik v. Commissioner, 146 T.C. No. 1 (2016))

In 2010, he received installment payments from his 2004 sale of his stock in Gourmet Foods Inc. a business he started in the 1980s. Topsnik argued that his date of expatriation was Dec. 31, 2009 and that he did not owe taxes in 2010, but the court found that the actual date of his expatriation was Nov. 20, 2010, the day he gave up his green card.

“We find that petitioner was not a ‘resident’ of Germany in 2010 as defined by article 4, paragraph 1, of the U.S.-Germany tax treaty,” Judge Kathleen Kerrigan said in the court’s opinion. “Accordingly, petitioner’s monthly installment payments were taxable by the United States.”

Topsnik had argued that he was a German resident in 2010 because he owned a hotel there and had access to one of its rooms, but he presented no proof of ownership, the court said.

The German Competent Authority also had no record that Topsnik had a registered residence or habitual abode in Germany that year. Furthermore, he was registered as a nonresident for tax purposes in Germany in 2010, so he cannot claim to be a German resident under the U.S.-Germany tax treaty, the court said, granting summary judgment to the Internal Revenue Service.

The taxpayer also did not file a Form 8854 when he surrendered his green card and he had not fully complied with required filings for the preceding five years. Such failure to certify effectively makes him a covered expatriate (Code Section 877(a)(2)(C), which is part of the definition of a covered expatriate under Code Section 877A(g)(1)). So it appears that failing to certify was enough to be a covered expatriate.

This case also demonstrates that the deemed sale of assets rule of Code Section 877A, which applies to expatriates, triggers the deferred gain on an installment sale obligation held by the expatriate under Code Section 453B; with the deemed selling of the price of the obligation being its face amount.
This decision triggered an information letter from the Office of the Chief Counsel on the taxation of green card holders. The court decision went against the taxpayer when the court held that a resident alien who is lawfully present in the US can not just informally abandon their residency. The information letter covers the tax rules applicable to green card holders including first-year residency, no lapse residence rules, dual residency, application of tax treaties, terminating residency and expatriation.
You are a “Covered Expatriate” if you are a Long-Term Resident, as defined in IRC 7701(b)(6),and you cease to be a lawful permanent resident because:
  1. The individual’s status of having been lawfully accorded the privilege of residing permanently in the United States as an immigrant in accordance with immigration laws has been revoked or has been administratively or judicially determined to have been abandoned, or 
  2. The individual:
(1) Commences to be treated as a resident of a foreign country under the provisions of a tax treaty between the United States and the foreign country,
(2) Does not waive the benefits of the treaty applicable to residents of the foreign country, and(3) Notifies the IRS of such treatment on Forms 8833 and 8854.

Form 8854, Initial and Annual Expatriation Information Statement and its Instructions have been revised to permit individuals to meet the new notification and information reporting requirements. 

The revised Form 8854 and its instructions also address how individuals should certify (in accordance with the new law) that they have met their federal tax obligations for the five preceding taxable years and what constitutes notification to the Department of State or the Department of Homeland Security.

"Should I Stay or Should I Go?"
Need Advise on Expatriation ... 

Contact the Tax Lawyers of 
Marini& Associates, P.A.   

For a FREE Tax Consultation at: 

www.TaxAid.us or www.TaxLaw.ms or
Toll Free at 888-8TaxAid ((888) 882-9243)

Read more at: Tax Times blog

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