Monthly Archives: December 2020

On October 29, 2019 we ORIGINALLY posted The IRS is Now Criminally Prosecuting Employers For Failure To Pay Withheld Payroll Taxes! where we discussed that the IRS is stepping up criminally prosecuting business owners for failing to turn over withheld payroll taxes.

Then on October 12, 2020 we posted The IRS Criminally Prosecutes Yet Another Employer For Failure To Pay Withheld Payroll Taxes!, on June 4, 2020  we posted Another Employer Gets Criminally Prosecuting For Failure To Pay Withheld Payroll Taxes!, on June 29, 2020 we posted More Employers Gets Criminally Prosecuting For Failure To Pay Withheld Payroll Taxes!, on October 28, 2020 we posted IRS CONTINUES to Criminally Prosecutes Employers For Failure To Pay Withheld Payroll Taxes - As Promised! and now according to DoJ, George Gilmore, a partner at an Ocean County, New Jersey, law firm, was sentenced today to one year and one day in prison for his conviction on two counts of failing to pay over payroll taxes withheld from employees to the IRS and one count of making false statements on a bank loan application submitted to Ocean First Bank N.A. 

On April 17, 2019, Gilmore, 70, of Toms River, New Jersey, was acquitted of two counts of filing false tax returns for calendar years 2013 and 2014; the jury could not reach a unanimous verdict on one count of income tax evasion for calendar years 2013, 2014, and 2015. The verdicts were returned following a trial that began April 1, 2019, before U.S. District Judge Anne E. Thompson, who imposed the sentence today in Trenton federal court. 

According to documents filed in this case and the evidence at trial, Gilmore worked as an equity partner and shareholder at Gilmore & Monahan P.A., a law firm in Toms River, where he exercised primary control over the firm’s financial affairs. Because he exercised significant control over the law firm’s financial affairs, Gilmore was responsible for withholding payroll taxes from the gross salary and wages of the law firm’s employees to cover individual income, Social Security and Medicare tax obligations. For the tax quarters ending March 31, 2016, and June 30, 2016, the law firm withheld tax payments from its employees’ checks, but Gilmore failed to pay over in full the payroll taxes due to the IRS. 

Gilmore also submitted a loan application to Ocean First Bank containing false statements. On Nov. 21, 2014, Gilmore reviewed, signed, and submitted to Ocean First Bank a Uniform Residential Loan Application (URLA) to obtain refinancing of a mortgage loan for $1.5 million with a “cash out” provision that provided Gilmore would obtain cash from the loan. On Jan. 22, 2015, Gilmore submitted another URLA updating the initial application. Gilmore failed to disclose his outstanding 2013 tax liabilities and personal loans that he had obtained from others on the URLAs. Gilmore received $572,000 from the cash out portion of the loan. 

In addition to the prison term, Judge Thompson sentenced Gilmore to three years of supervised release. 

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 For the 2020 filing season, the IRS projects that more taxpayers than ever will file and owe. Many will be able to pay – but a lot of them will need to make other arrangements because they can’t pay their full tax bills to the IRS. 

When taxpayers can’t pay their tax bills, they have a number of options, including payment plans, to pay off their outstanding taxes and accrued penalties and interest. Of the 16 million taxpayers who owe back taxes, 97 percent of them qualify to use a payment plan that’s fairly easy to set up and would likely give them the best payment terms.
The IRS has three simplified payment plans:

• Guaranteed Installment Agreements (GIA): 36-month payment terms for balances of $10,000 or less.
• Streamlined Installment Agreements (SLIA): 72-month payment terms for balances of $50,000 or less.
• Streamlined Processing for Balances Between $50,000-$100,000: 84-month payment terms for balances between $50,000 and $100,000.

Advantages of 36-, 72-, and 84-month agreements
These are the three most common IRS payment plans. They’re all easy to obtain from the IRS, because they:

• Require minimal, if any, financial disclosure to the IRS;
• Don’t require an IRS manager to approve the payment terms;
• Don’t require taxpayers to liquidate assets to pay the IRS; and,
• Can be set up in one phone call or interaction with the IRS.

The GIA (36 months) and SLIA (72 months) can be completed online using the Online Payment Agreement tool at IRS.gov. The GIA and SLIA are also attractive to taxpayers who don’t want a public record of their tax debt, because these agreements don’t require the IRS to file a public notice of federal tax lien. Taxpayers who owe between $25,000 and $50,000 must agree to pay by automated direct debit or payroll deductions to avoid a tax lien.

The “Streamlined Processing” 84-month payment plan works a little differently. The IRS started the 84-month plan as a pilot program in 2016 to make it easier for taxpayers who owe between $50,000 and $100,000 to get into a payment plan with the IRS. Taxpayers can avoid filing their financial information with the IRS if they agree to pay their tax bill by direct debit or payroll deductions. If they don’t agree to these automated payments, the IRS requires taxpayers to provide a Collection Information Statement (IRS Form 433-A or 433-F). Even with streamlined processing, the 84-month plan has one catch: The IRS will file a federal tax lien. 

The pilot program for the 84-month plan is still in effect today. The IRS hasn’t completed its study on whether the 84-month plan is an effective collection option. One thing is clear about the program: It likely provides better payment terms and relieves burden for taxpayers.

The rules
GIAs are for taxpayers who owe the IRS $10,000 or less. As the name suggests, the payment plan is “guaranteed” if the taxpayer meets all conditions of the GIA:

• It’s for individual income taxes only;
• Total balances owed, including penalties and interest, must be $10,000 or less
• The taxpayer must pay within 36 months;
• All required tax returns have been filed; and,
• The taxpayer has not entered into an installment agreement in the previous five years.

SLIAs can be used by individual taxpayers who meet these conditions:

• It’s for income taxes and other assessments, including unpaid trust fund penalty assessments;
• The total assessed balance is $50,000 or less (not including accruals of penalties and interest after the original assessment of tax, penalties, and interest);
• The taxpayer must pay within 72 months; and,
• All required tax returns have been filed.

Taxpayers can set a GIA or SLIA by:

• Using the online payment agreement tool at IRS.gov;
• Filing Form 9465 with the IRS; or,
• Contacting the IRS by phone

Terms may be shorter for old tax debt

Taxpayers should be aware that they may not get the full length of time to pay their outstanding tax balances if their debt is old. For each of these simple payment plan options, the IRS will limit the terms if the collection statute of limitations (generally 10 years from the date that tax is assessed) is shorter than the prescribed payment terms. 

For example, if a taxpayer’s collection statute expires in 24 months, any GIA, SLIA, or 84-month plan will be limited to 24 months. Taxpayers who can’t afford these payments may have to consider a payment plan based on their ability to pay. 

Ability-to-pay installment agreements require taxpayers to file a Collection Information Statement and prove their average monthly income and necessary living expenses. In addition, the IRS often asks taxpayers to liquidate or borrow against their assets to pay their outstanding tax bill in ability-to-pay agreements.

Fees apply
There is a setup fee for all IRS installment agreements. The fees range from $225 for installment agreements set up by phone and paid by check, to $31 for agreements set up online and paid by automatic direct debit. Taxpayers who meet low-income thresholds can get the fee waived.

Tips for all three agreements
The GIA, SLIA, and 84-month payment plans are usually the best way to set up a payment plan with the IRS. They’re usually quick and easy to set up and likely provide taxpayers with better payment terms than most other options.

Taxpayers who can’t pay according to the GIA and SLIA terms face tax liens if they owe more than $10,000. Taxpayers also need to request the GIA or SLIA before the IRS files a tax lien. After the lien is filed, taxpayers must pay their full balance to get the lien released, or pay down the balance to $25,000 to start lien-withdrawal proceedings. 

Here are a few other tips related to these simple agreements:

1. Avoid a tax lien – pay down the balance to get into a SLIA. Here’s the best plan for taxpayers who owe more than $50,000: Get an extension to pay of up to 120 days, get funds to pay the balance down to under $50,000, and obtain a SLIA. Doing so will avoid the filing of a tax lien. 

2. For SLIA, it’s the “assessed” balance – not the total amount owed. The $50,000 SLIA threshold is based on the taxpayer’s assessed balance – not the total amount they owe. The assessed balance includes tax, assessed penalties and interest, and all other assessments for each tax year. It doesn’t include accrued penalties and interest after the original assessment. For example, if a taxpayer’s original assessment is under $50,000 for an older tax year, he may accrue additional penalties and interest that puts the total balance over $50,000. In this situation, they would still qualify for a SLIA based on the original assessed balance. Taxpayers can also designate payments to reduce their “assessed balance only” to help them qualify for a SLIA.

3. Apply and pay automatically to reduce fees. The IRS increases installment agreement setup fees if taxpayers pay by check. Reduce the setup fee by agreeing to automatic direct debit payments. Automatic payments also avoid a monthly reminder letter from the IRS about the payment due.

4. Pay by direct debit or payroll deduction to avoid default. IRS installment agreements have a high default rate. To avoid a default, taxpayers must make their monthly payments. The best way to avoid missing a payment is to have the payment automatically deducted from the taxpayer’s financial accounts.

5. Don’t owe again. The second most common cause of defaulted installment agreements is filing future tax returns with unpaid balances. Taxpayers need to change their withholding and/or make estimated tax payments to avoid owing taxes that they can’t pay in the future.

6. Taxpayers can miss one payment a year. Most IRS payment plans allow taxpayers to miss one payment per year and not default. It’s best for the taxpayer to notify the IRS in advance if they can’t make a payment.

7. If the taxpayer’s financial situation worsens, get an ability-to-pay plan. Taxpayers can always renegotiate their payment plans if their financial circumstances change. For example, if a taxpayer loses their job, they may not be able to pay the IRS. In these cases, the taxpayer can contact the IRS and provide documentation on their ability to pay. This may mean a lower payment or even payment deferral (called currently not collectible status). Be careful here: If the taxpayer owes more than $10,000 and can’t pay within 72 months, the IRS is likely to file a tax lien.

8. Remember to ask for penalty abatement at the end of the plan. One important action to take at the end of a payment plan is to request abatement of the failure to pay penalty. Taxpayers should consider using first-time abatement or reasonable cause abatement if they qualify. 

Each year, more than 3 million taxpayers get into a payment plan with the IRS. With tax reform, we can expect that more taxpayers will need a payment plan in 2019. Taxpayers who owe less than $100,000 should first look at 36-, 72-, or 84-month payment plans with the IRS. Many will also benefit from the help of a qualified tax professional to find the best option. 

Need Help with an Installment Payment Plan?

 Contact the Tax Lawyers at 

Marini& Associates, P.A.  
 

 

for a FREE Tax HELP Contact Us at:

www.TaxAid.com or www.OVDPLaw.com 

or Toll Free at 888-8TaxAid (888) 882-9243 





Read more at: Tax Times blog

The IRS has provided guidance on taxpayers and their representatives making verbal requests for transcript information, in their update to the Internal Revenue Manual: Verbally Providing Transcript Information.

Tax transcripts are summaries of a taxpayer's tax information. There are different types of tax transcripts such as wage and income transcripts and return transcripts. Wage and income transcripts are used by tax professionals to make sure that their clients’ returns contain all of the information that has been reported to the IRS. Return transcripts are used by lenders to verify a borrower's income.  

Tax professionals with authorization (i.e., a properly completed Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization) can obtain client transcripts by: 

(1) calling IRS to request a taxpayer's tax transcripts be mailed to the taxpayer's address of record; (2) calling IRS to have a taxpayer's masked or unmasked transcripts placed in the practitioner's e-Services secure mailbox; or
(3) using IRS e-Services Transcript Delivery System (TDS) to obtain a taxpayer's masked or unmasked transcripts. 

In addition to the three methods for obtaining tax transcript information described above, taxpayers and authorized representatives can call the IRS and ask for information contained on a tax transcript to be provided verbally.

Before responding to a taxpayer and/or a taxpayer's representative's request for verbal disclosure of tax transcript information, taxpayers and their representatives need to confirm their identity and their entitlement to receive the requested tax transcript information. 

A taxpayer, after confirming their identity, can give Oral Disclosure Consent (ODC) to have tax transcript information released to a third-party only when it relates to the resolution of an open tax matter, such as an IRS-issued notice. 

Have IRS Tax Problems?

 Contact the Tax Lawyers at
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A federal district court found in Estate of Kelley, (DC NJ 10/22/2020), that transferee and fiduciary liability attached to the estate of an individual who, as executor, distributed the assets of his sister’s estate to himself while leaving the estate tax liability unpaid. Further, the court found that fiduciary liability attached to the decedent's daughter, executrix of his estate, who paid herself ahead of paying the estate tax liability of her father’s estate. 

Where an estate fails to pay estate taxes, a transferee of that estate is personally liable for any unpaid estate tax up to the value of the property he or she received. (Code Sec. 6324(a)(2))

Personal liability can attach to the extent of the distribution if the government establishes three elements: (1) the fiduciary distributed assets of the estate; (2) the distribution rendered the estate insolvent; and (3) the distribution took place after the fiduciary had actual or constructive knowledge of the unpaid taxes. (Tyler, (CA3 2013) 111 AFTR 2d 2013-2300)

An executor of an estate who pays the debts of the estate, or distributes assets to himself, before paying a claim of the U.S. is personally liable for that claim to the extent of the payment or distribution. (31 USC §3713(b)) 

Code Sec. 6324 applies to individuals who receive transfers from a decedent's estate that owes estate taxes, while 31 USC §3713 provides creditor priorities that estate fiduciaries must follow. Under Code Sec. 6901, the liability of a transferee or a fiduciary is assessed, paid and collected in the same manner as the original tax. When a fiduciary is also a transferee, either statute or both statutes may apply to that individual.

Lorraine Kelley died on December 30, 2003. The estate’s co-executors were Richard Saloom, Kelley’s brother, and Richard Lecky. Saloom and Lecky filed the estate’s tax return on September 23, 2004.

After an IRS examination of the returns, Saloom, on behalf of the estate, consented to the assessment of additional liability based on a corrected gross estate. 

Between 2003 and 2007, Saloom, who was the sole beneficiary, distributed and received all of the property of Kelley's estate. By January 2008, the Kelley estate had no property and still owed over $400,000 in estate tax.

Saloom made estate tax payments to IRS and, prior to his death on March 21, 2008, instructed his daughter Rose Saloom to continue to make payments to IRS toward the tax liability owed by Kelley's estate.

As executrix of Saloom’s estate, Rose filed a state inheritance tax return listing one of his liabilities as $456,406 in indebtedness for “federal tax.” Rose, who was the sole beneficiary, distributed and received all of the property of Saloom's estate.

The district court found that Saloom was liable as a transferee and as a fiduciary for the tax liability owed by Kelley's estate. 

Saloom was liable as transferee to the extent of the distributions he received from the estate. Since he received $2.6 million in property from Kelley's estate when the estate owed IRS over $688,000 in estate taxes, he was personally liable for the entire amount of estate tax. 

In addition, Saloom was personally liable as a fiduciary under Tyler because he (1) distributed all the assets of Kelley's estate; (2) the distribution rendered the estate insolvent and unable to pay its creditor, IRS; and (3) Saloom knew that Kelley's estate owed unpaid estate taxes because he was making payments on the tax liability. 

Finally, Rose was also personally liable as a fiduciary under Tyler because she (1) distributed all of the assets of Saloom's estate to herself; (2) that distribution rendered the estate insolvent; and (3) Rose knew that Saloom was liable for Kelley's estate tax because she filed a state inheritance tax return listing one of his liabilities as $456,406 in indebtedness for “federal tax."

Have IRS Estate Tax Problem?

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

Read more at: Tax Times blog