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Monthly Archives: February 2017

How To Differentiate Between an IRS Revenue Agent and a Revenue Officer?

February 22, 2017

According to Dennis N. Brager, an IRS revenue agent's job is to conduct tax audits of individuals and businesses as well as trusts and non-profit organizations. Revenue agents generally conduct tax audits of the most complicated tax returns ranging from small “Schedule C” businesses to the largest multi-national corporations. They are also assigned to the IRS’ Offshore Voluntary Compliance Program (OVDP) to determine whether the failure to file a Form TDF 9-22.1, Foreign Bank Account Report (FBAR) will be subject to FBAR penalties.

The minimum requirement for a job as a revenue agent generally includes having a bachelor's degree or higher in accounting from an accredited college or university that included at least 30 semester hours in accounting. These 30 hours may include up to 6 semester hours in any combination of courses in business law, economics, statistical/quantitative methods, computerized accounting or financial systems, financial management or finance.

Internal Revenue Agents are not required to be CPAs although a few are. Revenue Agents determine tax liability through a tax audit which is sometimes referred to as an examination.

Revenue Agents do not collect tax. Instead, that task falls to an IRS revenue officer or R.O.

Revenue Officers are assigned to the most difficult IRS tax debt cases. Those individuals or business who the IRS has been unable to collect from through letters, phone calls and tax levies and garnishments generated by IRS computers.

Revenue Officers are not generally accountants, and they have little training in substantive tax law. Therefore, statements to revenue officers that the tax is not owed don’t generally get very far.

The IRS describes the Revenue Officer’s job as follows:

The work requires analytical skills and judgment to make a range of choices such as: how to advise the taxpayer on liquidating tax liabilities; whether to seize and sell; whether to accept a part-payment agreement; whether to recommend 100-percent penalty assessment (aka trust fund recovery penalty); whether to accept an Offer in Compromise, partial lien discharge, or subordination, or whether to initiate suit recommendations. 

Within certain parameters, Revenue Officers are given a huge amount of discretion in determining whether to accept or reject a proposed installment payment agreement or other resolution of a tax debt. Therefore, it is imperative that your tax attorney or other tax professional be skilled at advocating your position within existing IRS guidelines if your tax debt is to have any chance of favorable outcome. 

Revenue Officers are not generally accountants and they have little training in substantive tax law. Therefore, statements to Revenue Officers that the tax is not owed generally don't get very far; indeed it feels like these protestations fall on deaf ears. If your case has progressed to a Revenue Officer and you believe that you don't owe the tax, then you will need to get your case back to an IRS Revenue Agent. There are generally two ways of doing this. One way is to file an Offer in Compromise (OIC) based upon "doubt as to liability." The OIC doubt as to liability should not be confused with the more common type of Offer in Compromise-- the Offer in Compromise based upon doubt as to collectibility. 

While the OIC based upon doubt as to collectibility requires that you prove to the satisfaction of the IRS that it will be unable to collect the tax debt within a reasonable amount of time, the OIC based upon doubt as to liability has no such limitation. Also unlike an OIC based upon doubt as to collectibility, the OIC based upon doubt as to liability doesn't require the payment of a 20 percent deposit. The OIC based upon doubt as to liability is submitted on a special form -- IRS Form 656-L. It requires that you provide an explanation of why you believe that the amount of tax you are being billed for is incorrect. You should also include an explanation of why you believe the IRS would have significant litigation risks if it went to trial. 

An alternative to submitting an OIC based upon doubt as to liability is to submit a request for audit reconsideration. The audit reconsideration process is outlined in IRS Publication 3598. According to IRS Publication 3598, if you are already making payments on an installment agreement, you must continue to make those payments while your request for audit reconsideration is pending. IN the experience of our tax litigation attorneys, it is not unusual for it to take several years before an audit reconsideration request is resolved. Depending upon the circumstances, you could be in a situation where the IRS owes you a refund by the time your case is complete. However, one pitfall is that there is a statute of limitations (generally two years from the date of payment, or three years from the date the tax return was filed) to file a claim for refund. Therefore, you will need to carefully monitor the situation and may need to file a claim for refund to preserve your rights. 

 Have a Tax Problem? 
 
 

Let US Help!

 

 

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

US Border Tax Runs Into Obstacles

February 22, 2017

On February 10, 2017 we posted Border Tariff or Border Adjustment Tax or US VAT? where we discussed that there's a lot of talk these days about borders and taxes in Washington. U.S. President Donald Trump wants to hit firms that outsource with a simple tariff on imports. Republicans in Congress have pitched a more complex idea, a border adjustment, built into a corporate-tax overhaul.

Trump indicated that as president he would respond to these allegedly "unfair trade practices" by imposing retaliatory tariffs on goods and services coming into the U.S. from any country that imposed an import VAT on American businesses exporting goods or services to their country. More than 160 countries have a VAT, and all of them impose an import VAT. Trump is, essentially, promising a global trade war. He vows to set U.S. tariffs at a rate that would force governments and businesses to take notice.

Now according to taxproTODAY Republican lawmakers say they need answers before they can support a plan to overhaul U.S. business taxes, especially in light of arguments from retailers and other companies that the changes would hurt consumers. But a new report suggests solid information may be hard to come by.

There’s been little real-world analysis on how quickly the U.S. dollar would adjust under a so-called border-adjusted tax to prevent consumers from getting stuck with higher prices, according to a paper released Wednesday by the conservative-leaning Tax Foundation. Even so, the Washington policy group supports the proposal from Republican House leaders that would tax U.S. companies’ imports and exempt their exports.

“Surprisingly, there has been little empirical work done on the matter,” Kyle Pomerleau, director of federal projects at the Tax Foundation, said in the report. “The literature suggests that exchange rates would adjust, but it could take time for that to translate through prices. This stickiness could have short-run impacts on consumers and different industries.”

A centerpiece of the House GOP tax plan is a proposed levy on businesses’ domestic income and their imports, while exempting their exports, a feature known as “border adjustment.” The tax would be assessed at a 20 percent rate, replacing the current 35 percent corporate income tax.

Making the tax border-adjusted apply to imports and not exports, is estimated to generate more than $1 trillion in federal revenue over a decade, according to Tax Foundation estimates. That revenue contribution could make it crucial to keeping any tax legislation deficit-neutral, a prerequisite for passing a tax bill through the Senate without Democratic votes.

‘Real Questions’

Republicans in both chambers have said they need more information on how the border-tax measure would work and who it would affect before they can endorse it. Senator Orrin Hatch, chairman of the tax-writing Finance Committee, has said “at least a handful” of senators have serious reservations about the border tax, and he personally still has questions about the proposal.

Many other countries use value-added taxes, which include border adjustments. But there are key differences between VATs and the House GOP measure and that means other countries provide little guidance for U.S. policymakers, according to many trade experts. That’s mainly because the House plan’s border-adjusted tax would include deductions for domestic labor costs and functionally replace the U.S. corporate income tax.

The tax proposal’s supporters, including House Speaker Paul Ryan and House Ways and Means Committee Chairman Kevin Brady, argue that macroeconomic factors would lead to a stronger dollar reducing the cost of imports and increasing the cost of exports evening out any effects on consumers over time.

WTO Rules

The border-adjusted tax could also face challenges from the World Trade Organization. A key issue involves WTO rules for border adjustments they’re permitted for consumption-based taxes, like VATs, but not income taxes. Ryan and Brady say their plan, which would be the first of its kind globally, moves U.S. corporate taxes closer to a consumption base.

Have a Tax Problem? 
 
 

Let US Help!

 

 

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

Special Relief

February 21, 2017

Hardship Status

 

In limited situations, some clients may be unable to make any payments towards their delinquent state or federal tax bills. Furthermore, due to procedural or other circumstances, some clients might not qualify to take advantage of the offer in compromise program or the bankruptcy laws.

In such situations we negotiate a temporary "hardship status" on behalf of our clients. In these situations the government backs off until the client is able to get back on their feet.

Innocent Spouse Tax Relief

A husband and wife are generally liable jointly and individually for the entire tax on a joint return. The question then becomes whether the innocent spouse, who merely signed a joint return, should be held liable for errors on the return caused by the actions of the other spouse. The question becomes even more critical if the couple has divorced and the government is attempting to collect form the income of the innocent spouse.

For tax liabilities arising prior to July 22, 1998, an "innocent spouse" could be relieved of the tax liability only if certain specific innocent spouse requirements were met. Effective for any tax liability arising on or after July 22, 1998, and for any tax liability that remains unpaid, the IRS applies a less strict set of requirements to obtain innocent spouse tax relief. These standards make it easier to qualify for innocent spouseIRS relief and to prevent abuse of the innocent spouse. To obtain innocent spouse tax relief, one must now elect the form of relief being sough within two years of the IRS beginning the collection of the tax deficiency or assessment. The types of innocent spouse tax relief available to the electing spouse are: Innocent Spouse IRS Relief, Separation of Liability and Equitable Tax Relief

Any innocent spouse determination by the IRS is reviewable in tax court. Notice of the election for innocent spouse tax relief must be given to the non-electing spouse who may participate in any hearings on the relief requested.

Election 1 - Innocent Spouse IRS Relief

To qualify for the innocent spouse tax relief election, the taxpayer must meet all the following requirements:

Filed joint return which has an understatement of tax due to erroneous items
Establish that the at the time of signing the tax return the taxpayer did not know, or have any reason to know, there was an understatement of tax
Taking into account all the factors and circumstances it would be unfair to hold the innocent spouse liable.
In determining whether to grant innocent spouse tax relief, a key element of the IRS will be whether the electing spouse received any substantial benefits or later was divorced, separated from or was deserted by the other spouse.

Election 2 - Separation of Liability

The innocent spouse may elect to obtain relief by separation of liability. To qualify, an individual must have:

Filed a joint return, and either
Be no longer married to, or be legally separated from, the spouse with whom the joint return was filed or
Must not have been a member of the same household with the spouse for a 12-month period ending on the date of the filing of the request for innocent spouse tax relief
Election 3- Equitable Tax Relief

If the taxpayer fails to qualify for either of the first two types of innocent spouse tax relief, one may still obtain innocent spouse relief from the tax liability, interest and IRS penalties by electing equitable IRS relief. To obtain this type of innocent spouse relief, the taxpayer must show that, under all facts and circumstances it would be unfair to be held liable for the understatementof underpayment of the taxes. Under the equitable relief provision, the innocent spouse can get relief from tax liabilities caused by underpayment of tax.

Click here to request Special Relief!

US Taxpayers & Their Advisors Doing Jail Time for Failing to Declare Offshore Bank Accounts!

February 13, 2017

On October 29, 2014 we posted More US Taxpayers & Their Advisors Face Jail Time for Failing to Declare Offshore Bank Accounts! where we discussed that the IRS hunt for offshore income and accounts continues unabated well beyond UBS. In fact, it’s intensifying and for those who don’t come forward before they are found, being found can be awfully painful. See list of UBS criminal convictions, so far.

Now according to Bloomberg A former client of Credit Suisse Group AG who pleaded guilty to hiding $200 million from U.S. tax authorities is at the center of a struggle between the Justice Department, which wants to send a stern message by sending tax cheats to prison, and U.S. judges, who have opted for leniency in past cases.

Dan Horsky, a retired business professor from Rochester, New York, pleaded guilty Nov. 4 to using secret Swiss bank accounts to hide assets and income from the Internal Revenue Service and New York tax authorities. Prosecutors urged a judge to send him to prison for 20 months. Horsky’s lawyers said he deserves probation because he helped with a criminal investigation of the bank and will pay at least $124 million in penalties.

U.S. District Judge T.S. Ellis III is set to impose a sentence on Friday in federal court in Alexandria, Virginia. Dozens of wealthy U.S. tax defendants who used offshore accounts have avoided prison or received terms far below those recommended by advisory guidelines, as judges have consistently ruled against Justice Department prosecutors.

Are You One of the > 7 MM Americans
with Unreported Foreign Bank Income?
Contact the Tax Lawyers at 
Marini & Associates, P.A.  

 
for a FREE Tax Consultation
at: www.TaxAid.com or www.OVDPLaw.com or
Toll Free at 888-8TaxAid (888) 882-9243 
 

Read more at: Tax Times blog

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