Yearly Archives: 2022

According to Law360, a New York City couple asked the Second Circuit to scrap a U.S. Tax Court decision holding them liable for more than $800,000 in taxes and penalties, saying their signatures were forged on documents used to hold them accountable.

Om and Anjali Soni told the appeals court that $158,000 in penalties and fines for their 2004 tax return would have been barred by the Internal Revenue Service's statute of limitations if not for documents forged by their accountant giving the IRS extensions to assess taxes, according to a brief filed on August 29, 2022.

Further, they argued, the Tax Court wrongly approved a $643,000 tax deficiency on their 2004 joint tax return when it ruled that even though Anjali Soni didn't sign the return, she was bound by the doctrine of "tacit consent," which confirms the validity of a joint tax return signed by only one spouse in certain situations.

The Tax Court ruled against the Sonis in January, deciding they were liable for an income deficiency of $643,000 for 2004, plus a $29,000 late fee and a $129,000 penalty for underreporting income.

The couple claimed the deficiency stemmed from using tax preparers who wrongly advised them to claim a $1.7 million loss on an investment, eradicating any 2004 tax liability, according to the brief. However, they claim the deficiency is moot because while the return shows the couple's signatures, neither Om nor Anjali Soni signed for Anjali, and they don't know who did, according to the brief.

The couple said the new accountant they used after the IRS began investigating their return did prison time after pleading guilty in 2016 to other forgery and fraud charges, according to the brief. 

During the couple's Tax Court trial in 2019, the accountant admitted to signing the couple's names to a document giving him power of attorney in 2008, and signing ensuing documents over the next decade giving the IRS more time to assess taxes on the Sonis, without telling the couple, "for expediency's sake," according to the brief.

The accountant said he was acting as a friend of the Sonis because he had been the accountant on the $1.7 million investment deal that drew the attention of the IRS, according to the brief.

In addition to the power of attorney document, the accountant signed nine 872 forms consenting to give the IRS more time to assess tax, according to the brief. 

They said the Tax Court was wrong to find that they had given their accountant "implied" authority and that their subsequent actions treating the accountant as their representative throughout the IRS appeals and litigation process essentially "ratified" the documents.

J. Mark Lane of Lane Crowell LLP, who represents the Sonis, told Law360 he found it unbelievable that the IRS won the case at trial.

"If you read the transcript of the trial in this case, I think you'll see that there was insufficient evidence to support the Tax Court's decision," Lane said. "All of the evidence essentially went the other way."

Have an IRS Tax Problem?

 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

A domestic corporation cannot pay its transition tax liabilities in installments because it had a tax deficiency due to negligence or intentional disregard of federal regulations, the Internal Revenue Service Office of Chief Counsel said on Friday, September 2, 2022.

The IRS said in Chief Counsel Memorandum 202235009 that the corporation, which was not named, was not entitled to elect to pay the transition tax in installments because the company's return did not reflect the final transition tax regulations, resulting in a deficiency assessed by the IRS. 

Have an IRS Tax Problem?

 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

Third-party payment networks, such as PayPal and Venmo, must report to the IRS any transactions for goods or services in excess of $600 starting this year. 

Beginning January 1, 2022, all third-party payment processors in the United States are required to report payments received for goods and services of more than $600 a year. 

This means if you’ve sold goods or conducted a business service and collected payment through Venmo, PayPal, Cash App, Square, Stripe, Etsy, or eBay, you will receive a 1099-K Payment Card and Third-Party Network Transactions Form, and that income will be reported to the Internal Revenue Service.

The change was made to capture income made by gig workers and entrepreneurs with a side hustle. In the past, companies were only required to send an IRS Form 1099-K for gross payments exceeding $20,000 and more than 200 transactions within a calendar year.

If you’re sending or receiving money through one of these apps, you need to be proactive in making sure you aren’t mistakenly sent a 1099-K.

The House’s Build Back Better Proposal would have separately required third-party payment networks to apply backup tax withholding to such payments. However, the Build Back Better Proposal did not pass in 2021. 

But the IRS is aware of this leakage or revenue from third-party payment networks, such as PayPal and Venmo and will continue enforcement efforts to ensure the taxpayers properly report income from these third-party payment networks.

Have an IRS Tax Problem?

 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

On August we posted IRS Is Going After Tax Evaders, Not Honest Americans - Rettig Op-ed, where we discussed that IRS Commissioner Chuck Rettig published an op-ed on Yahoo Finance: IRS sets the record straight: We’re going after tax-evaders, not honest Americans.

One issue that politicians and others have not covered is what exactly IRS Criminal Investigation does and to that end, we refer you to the IRS CI’s 2021 Annual report, which explores CI’s unique role in tax administration and its relationship to law enforcement more generally.

The bulk of what CI does in terms of time and agent hours is work on general tax fraud investigations, as this shows:

According Procedurally Taxing, Building a fraud case is time intensive and can often involve high profile people and businesses. CI also assists on non tax investigations like its Illegal Source Financial Crimes Program. According to the CI Annual Report, in these cases, “special agents’ investigations focus on individuals who receive income from illegal sources, such as embezzlement, bribery, and fraud. They also focus on money-laundering schemes, where individuals launder their ill-gotten gains by making the money appear as if it came from legitimate source.”

There is lots more in the report, including solid numbers on investigations, prosecutions and employee numbers including that the IRS Criminal Investigation (CI) is comprised of nearly 3,500 employees worldwide, approximately 2,500 are Special Agents whose investigative jurisdiction includes tax, money laundering and Bank Secrecy Act laws. 

Not 87,000 New Special Agents, As Falsely Reported Concerning The Recently Passed Inflation Reduction Act 2022.

CI is a key part of our tax system, with its employees investigating and at times recommending prosecution of criminal tax violations and other related financial crimes to the Department of Justice. 

While most taxpayers will never interact with CI, it is an important part of a system that depends on the community at large respecting and complying with the law.

Have an IRS Tax Problem?

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