Yearly Archives: 2022

There are few things that can send a chill down your spine more than mail from the IRS. Just seeing the agency’s name on an envelope’s return address creates anxiety. If you find yourself in that position and open the mail to find a CP2000 notice inside, you don’t need to panic, but you do need to know what to do.

What Is a CP2000 Notice?

The Internal Revenue Service sends out CP2000 notices to taxpayers whose submitted tax returns do not reflect what’s been submitted by employers and others that provide the agency with information on the income you’ve received over the course of the tax year. Though these forms are not notifications that you’re subject to an audit, they do carry the full weight of an IRS inquiry, and as such you are required to respond fully and promptly by the indicated deadline.

The CP2000 is not just a notice that something doesn’t look right. Also known as an underreporter inquiry, it is notification that the income information the agency has received about you via forms like your W-2 and any 1099s does not match the information you’ve provided on your tax return. It can also point to issues the agency has regarding credits or deductions that you’ve taken. In addition to detailing those discrepancies, it will also suggest the amount of tax that you owe based on the new information and the amount of penalty that the agency has calculated would be appropriate based on the information they have.

A CP2000 notification is not the final word on monies owed or penalties. These notifications are computer-generated, and the system is not considered infallible. Taxpayers can file appeals arguing against both the determination and the penalties, and these appeals frequently address the situation completely or significantly reduce the amount owed. But they do need to be answered.

What should you do if you receive a CP2000 Notice?

Take a deep breath, a CP2000 notice is no reason for panic, but it is definitely a reason to reach out to our tax office. That’s because there is a specific process that needs to be followed, and it must be completed within the time frame that the IRS dictates. At its core the process involves investigation and response, but the steps are more complicated than that. If you’re a current client, contact our office so we can help you with these steps. If you aren’t a client yet, it’s highly recommended that you contact us and don’t try to undergo this complex process alone:

• 

  Determine whether you do, in fact, owe the taxes that the IRS has indicated that you owe. To do that you’ll need to retrieve all of the documents and statements that you’ve received under your Social Security Number for the year to make sure that you included everything on your tax return. 

• If you find that you failed to include all income, you’ll need to recalculate your taxes, determining whether the missed information impacts deductions or credits that you’re owed or that you took. This calculation can then be compared to the number that the IRS provided for both the taxes you owe and the penalty that has been suggested.
   
• If you believe that the IRS calculation is correct, respond using the form provided, including any monies owed. If the amount exceeds your ability to pay at the moment, the IRS provides the ability to ask for an installment agreement. 

• If you believe that the IRS calculation is wrong or only partially correct, you will need to provide documentation of why and submit that information to the agency. If some of their information is correct and your tax return needs to be modified, include the corrected return. Note that there is a difference between a corrected return – which is what you should use – and an amended return. Once the IRS reviews your corrections, they will either accept them and make the correction on your behalf or reject your response. 

• If you agree that errors existed and want to discuss the penalties proposed by the IRS, the underreporter notice response can be used for these purposes. 

• Await a response from the IRS. If you have not heard back in eight weeks, you can either call to determine the outcome of your case or check online to see whether a resolution has been noted. If the agency denies your response you are able to file an appeal. 

If you need professional help

Receiving a CP2000 notice is intimidating, and seeking professional assistance with the process is a smart move. If you’d like our help with responding, start by gathering the following: a copy of the notice and the associated tax return; tax returns from the year before and after the return the notice was sent about; copies of any responses that you’ve submitted and any other CP2000 notices you’ve received in the past; and any documents associated with deductions or expenses related to the subject of the CP2000. With those things in hand, contact us and set up a time to discuss your situation.

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

According to Law360, A Florida woman is eligible for relief from joint tax liability with her former husband for tax years 2006 through 2008, the U.S. Tax Court held on June 6, 2022 in Jan E. Pocock v. Comm', docket numbers 2558-17 and 23569-17L, U.S. Tax Court.

Jan Pocock qualified for innocent spouse relief from joint liability for those years under Internal Revenue Code Section 6015(f), the Tax Court said. The Tax Court concluded that the liabilities at issue were attributable to her ex-husband, and Jan Pocock hadn't engaged in asset transfers with him as part of a fraudulent scheme and she hadn't been a knowing participant in the filing of fraudulent joint returns.

The court said that not granting her relief would cause Jan Pocock economic hardship and under the circumstances, trying to investigate the accuracy of the returns would've risked her safety because she suffered spousal abuse.

 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

According to Law360,  professor lost his appeal of more than $308,000 in penalties for intentionally failing to report his foreign bank accounts after the Third Circuit held on June 6, 2022 that a district court did not commit clear error in upholding the penalties.

The lower court relied on abundant evidence that Richard Collins checked boxes on his tax returns indicating that he had no foreign accounts when he had several in France as well as Canada, where he was a dual citizen, a Third Circuit panel said in its ruling. 

Collins Also Was An Experienced Foreign Investor Who Told His Foreign Banks To Withhold Correspondence, The Court Said.

Collins deposited his earnings in accounts located in France, Canada and Switzerland, according to the decision. He failed to report any account until 2010 when he voluntarily amended his 2002 through 2009 tax returns and joined the Offshore Voluntary Disclosure Program, or OVDP. After amending his returns, he left the program.

The Internal Revenue Service later discovered that he owed an additional total of more than $71,000 from investing in foreign mutual funds, according to the ruling, and Collins promptly paid the amounts. 

$308,000 for the 2007 and 2008 tax years, according to the ruling. 

Collins Failed To Pay And The Government
Sued Him In District Court. 

The Court Upheld The Penalties And Added Failure To Pay Penalties Under The Federal Claims Collection Act.

The Third Circuit Noted, However, That Penalties For Failing To Report Foreign Accounts Stem From The Bank Secrecy Act, Not The Internal Revenue Code, And The District Court Was Therefore Able To Apply Them.

Do You Have Undeclared Offshore Income?

 

Want to Know Which OVDP Program is Right for You? 

Contact the Tax Lawyers at 

Marini & Associates, P.A.   

for a FREE Tax Consultation 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

According to Private Wealth, Private Trust Companies are state-chartered organizations that provide fiduciary services to members of a family. It can only do business with the family, not outsiders. They are a unique option available to wealthy families to help them address key issues and challenges of intergenerational wealth transfer. 

The private trust company is established to serve as a trustee and is limited to one family. It enables the wealthy family to put all the trust assets together in one structure. 

According to Vince Annable, CEO and Founder of VFO Advisory Group and author of The Household Endowment Model: Wealth Planning for Affluent Families, 

“With A Growing Number Of States Enacting Legislation Supportive Of Private Trust Companies, They Are
Gaining In Popularity Among Wealthy Families.

These entities usually provide these families with wealth planning and family governance at a level otherwise unavailable.” 

While single-family offices and private trust companies are distinct entities, the private trust company can fill some of the roles of a family office such as investment management and administrative services including record keeping. The relationship between single-family offices and private trust companies is set by the wealthy family. For example, the two entities can operate independently where the private trust company obtains back-office services from the single-family office through a service contract. 

The private trust company’s board of directors is composed of trusted professionals of different ages and tenures who have a very solid understanding of the interests and concerns of the wealthy family. This approach produces a form of “institutional memory” that better ensures the ongoing agenda of the wealthy family is addressed.

“With A Private Trust Company, The Family Usually Has Extensive Flexibility And Control Over Decision Making,”

says Homer Smith, Executive Director of the Integrated Family Office Practice and Founder of Konvergent Wealth Partners. “For example, the wealthy family can choose who is on the board of the private trust company and how voting on important matters works.”

When there are meaningful family-owned assets in trusts such as privately held business interests, there is a strong likelihood of the decisions that are made to be more attuned to the wealthy family’s interests at the time. Additionally, when the board includes different technical specialists (e.g., lawyers, accountants, wealth managers), they are likely to make better decisions because of their familiarity with the wealthy family and the specific assets. 

Many times, family members are on the investment committee of the private trust company. This gives them influence over the ways the family monies are allocated. This level of involvement is often significantly greater than the level of possible involvement with traditional trustees. If the single-family office is managing the monies in the trusts, the wealthy family is still very much involved in the process. 

Privacy is also enhanced as the wealthy family can often control the flow of information. The people chosen to be on the board, for instance, are all loyal to the wealthy family. According to Aaron Yen, Senior Partner, Ascendent LLP, “For non-US citizens, the privacy issues surrounding private trust companies can be particularly attractive. They can be effective in bringing assets into the United States while maintaining a high level of privacy.”

While there are substantial benefits of private trust companies to wealthy families, they are a long-term commitment. Sometimes family members take on certain responsibilities. Also, many times, trusted professionals are brought in to assist. Like single-family offices, private trust companies are family businesses. Consequently, avoiding potentially dipterous complications requires a succession plan. It is usually wise to address succession within the private trust company when it is established. 

Want to Know More About Private Trust Companies?

     Contact the Tax Lawyers at

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