Los Angeles California Tax Attorney Blog

Los Angeles Tax Attorney:

Last year IRS filed tax lien against California Governator. The IRS tax lien against Schwarzenegger sought $79,000 for taxes or penalties related to informational tax returns pursuant to IRC 6721.

Almost a year later, Schwarznegger got his IRS tax lien released. According to TMZ, tax lien filed against the Governor was released last week.

It’s not clear whether Maria and Arnold paid the taxes or if these taxes and penalties were satisfied through the tax penalty abatement procedure. Regardless, Governor won’t have to worry about IRS seizing his cars or issuing tax levy on his bank accounts this Valentine.

Alleged IRS Tax Code violation fixed.

Now, if his wife stops violating California vehicle code...we’ll all be little safer.

Los Angeles Tax Attorney:

Internal Revenue Service IRS
released information on its tax audit and tax collection activity results from 2009. Tax Audit, Tax Collection and Tax Audit Category base on income can be found here .

Interesting points to note:

1) IRS Collected through tax levies and tax liens $48.9 Billion Dollars last year. However that was about $7 Billion less than in 2008.

2) IRS audited 1,099,639 tax returns last year which shows an increasing trend over the last 10 years. It is expected that IRS will increase its tax audit by 3.5% in 2010.

3) If you make less than $200,000, your chances of getting audited is about 1%.

4) If you make between $200,000 and million dollars, your chances of getting audited is about 3%.

5) If you make more than $1,000,000, your chances of getting audited is about 6.5%.

California Tax Attorney:

Internal Revenue Service IRS catches another tax evader.

Another UBS client pleaded guilty today in a criminal IRS tax case concerning FBAR and Offshore Bank Accounts. According to the Wall Street Journal, US Taxpayer Barouh operated a watch business since 1976 and hid some of his unreported income in various UBS offshore accounts.

A Florida man pleaded guilty to filing a false tax return by failing to report income on money held in UBS AG (UBS) Swiss bank accounts.

In addition to any jail sentence, Barouh has agreed to pay some $5 million, half the estimated amount he owned or controlled offshore, as well as any additional taxes, interest and penalties.

In all likelihood, this taxpayer probably could not have participated in the preferred voluntary disclosure program which ended last year. Before any criminal tax case comes to an indictment or reaches guilty plea stage, there would have been an ongoing tax investigation into this taxpayer before the tax amnesty program became available.

Based on the IRS FBAR-Voluntary Disclosure program, any taxpayer(s) under any tax investigation would not have qualified for the tax amnesty program which existed last year.

If you did not disclose your foreign bank account(s) to the IRS yet, there are several options that are availabe to avoid criminal exposure so you can avoid sleepless nights.

California Tax Attorney:

Last year Democrats Proposed 30% Tax on Foreign Banks that refuse to disclose US Taxpayers as part of continuing efforts by the IRS to quash offshore asset protection and tax evasion strategies conjured up by various financial planners. US Taxpayers with offshore or foreign bank account are required to disclose this information by filing IRS Foreign Bank Account Report.

The Baucus-Rangel bill proposed to impose a thirty percent (30%) withholding tax on income from U.S. financial assets held by a foreign financial institution unless the offshore bank agrees to disclose the identity of any U.S. taxpayers with an account at the foreign bank with additional condition to annually report on the foreign account balance including payments and withdrawals from the foreign bank account.

However, the FBAR game has suddenly changed with this new development from Germany. According to Tax Section of Businessweek , Germany has decided to buy stolen bank data from a former employee of an unidentified Swiss bank. The data contains names of German citizens who hold undisclosed foreign bank accounts.

Swiss government issued a statement expressing its concern over Germany’s decision to buy stolen information but IRS may make similar decision in light of the billions of dollars which the IRS may realize from its recent FBAR Voluntary Disclosure program.

Any offshore or foreign banks with complex operation will eventually realize that in the digital age, it would be nearly impossible to maintain banking secrecy as it existed in previous generations. The source for the stolen Swiss Bank data is from a computer specialist at the Swiss bank.

Los Angeles Tax Attorney:

Here is a quick summary of a recent US TAX COURT case against the Internal Revenue Service . The ruling on this case may apply to other documents filed with the tax court or the IRS including late filed FBAR Voluntary Disclosure Program.

Tax Court Petitioners MADDOX v.
COMMISSIONER OF Internal Revenue Service

TAX PROBLEM:

This case seems to reflect the current trend by IRS Attorneys when dealing with tax court petitions that they receive 90 days after issuance of Notice of Determination arising from IRS Tax Audit or Collection Due Process hearing.

IRS TAX CODE

Internal Revenue Code §6213(a) provides that a petition for redetermination of a deficiency determined by the Commissioner is timely filed if it is filed within 90 days after a notice of deficiency is mailed. Internal Revenue Code §7502 - If a petition is received by the Court after the 90-day period, then the postmark date can be deemed the date of delivery.

IRS MAY CHALLENGE TAX COURT PETITION IF RECEIVED 90 DAYS AFTER MAILING NOTICE OF DEFICIENCY

The IRS moved to dismiss this case on the ground that the petition was not filed within 90 days of the mailing of the notice of deficiency. Taxpayers state the petition was timely mailed even though not received by the Court within the 90-day period. IRS mailed on October 7, 2008, a notice of deficiency to taxpayers. A petition signed by taxpayers’ attorney, dated December 17, 2008, was received and filed by the Court on January 23, 2009, which was 108 days after the mailing of the notice of deficiency. The U.S. Postal Service (USPS) cancellation stamps appeared on the envelope, but the exact date of cancellation was illegible. January 5, 2009, was the 90th day after the mailing of the notice of deficiency. On March 11, 2009, the IRS filed a motion to dismiss for lack of IRS tax court jurisdiction.

TAXPAYER'S TESTIMONY MAY BE SUFFICIENT TO SHOW THAT TAX COURT PETITION WAS MAILED

Taxpayers’ attorney mailed the petition by placing it in the mailroom in his office building before 4 p.m. on Friday, January 2, 2009. The mailroom was locked, and only building tenants and the USPS had access. The outgoing mail was placed in a USPS basket.

Usually, the postmark placed on the envelope in which the petition has been mailed is accepted as evidence of timely mailing and timely filing. In this case, however, the postmark is illegible. Because taxpayer’s petition was received and filed outside the prescribed period, bearing an illegible USPS postmark, it will be considered timely filed only if petitioners can show the date that the postmark was made and that the date was within the 90-day period.

Taxpayers have shown that the envelope was postage prepaid and had a USPS cancellation. Taxpayers also testified that the petition was timely placed in the USPS mail before the expiration of the 90-day period and timely postmarked (illegibly). The envelope was received by the Court and the petition was filed.

The decision was entered against the Internal Revenue Service . The tax court denied the IRS' motion to dismiss tax court case and concluded that the tax court petition was timely postmarked, timely mailed and timely filed.

Note that some documents filed with the IRS may be deemed filed upon receipt while others are deemed filed upon mailing of the document. Check with your tax attorney on the filing variations.