Los Angeles California Tax Attorney Blog

California Tax Attorney:

Here is a quick summary of a recent US TAX COURT case against the Internal Revenue Service to challenge the taxpayer’s right to deduct donations to a Catholic Church. The case involves a married couple who got audited by the Internal Revenue Service concerning donations they deducted on their Internal Revenue Service Form 1040 tax return.

Anonymous U.S. Tax Petitioners v. COMMISSIONER OF Internal Revenue Service
Docket No. 6851-08. Filed May 2010.

Tax Problem
Can an American taxpayer deduct as charitable contributions of $25,050 in wire transfers to his wife’s relative who distributed the money for the benefit of the Catholic Church of a foreign country on their Internal Revenue Service Form 1040?

Can a taxpayer deduct the airfare expense incurred while rendering services for a Catholic church in a foreign country on their Internal Revenue Service Form 1040?

APPLICABLE TAX CODE SECTION

Internal Revenue Code §170 allows taxpayers to claim a deduction for a charitable contribution if the contribution is made to or for the use of a qualified organization.

Internal Revenue Code §170 (c)(2) identifies an eligible recipient of a charitable deduction as “a corporation, trust, or community chest, fund, or foundation created or organized in the United States or under the law of the United States”.

CAN YOU DEDUCT DONATIONS MADE TO CHARITABLE ORGANIZATIONS IN A FOREIGN COUNTRY?

Taxpayers claimed the charitable contribution deductions on their joint IRS Form 1040 Income Tax Return. Taxpayers also claimed a charitable contribution deduction for the airplane ticket taxpayer wife purchased to travel to her native country and provide services to Catholic churches of that foreign country. The IRS issued a notice of deficiency disallowing certain charitable contribution deductions. Most of the disallowed deductions originated from taxpayer wife’s donations and charity work for the benefit of Catholic churches in a foreign country. Taxpayers filed a tax court petition appealing the report issued by the IRS Audit with the US Tax Court .

Taxpayer’s wife was born in a foreign country. Her parents were devout Catholics. Her father served as an officer in that country’s army during the conflict with the guerilla forces. Taxpayer wife was a young girl when the guerrilla forces initiated a military campaign. Taxpayer wife’s uncle was a Catholic priest in her hometown. When the guerrilla forces seized her hometown, taxpayer wife witnessed over 400 of her fellow Catholics, including her uncle and other citizens of her hometown, being buried alive. The guerrilla forces destroyed much of her hometown, including the Catholic Church. The foreign country’s government eventually fell. Taxpayer wife and her family later escaped from their country to the United States. Taxpayer wife later married U.S. taxpayer. She is a member of a church that belongs to the local Catholic diocese near her home in Texas.

Taxpayer’s wife completed her college education and was hired as an engineer at an international corporation. After completing college she returned to her native country and witnessed extreme poverty. Her experience motivated her to contribute money and services to help rebuild Catholic churches in that country. These Catholic churches provide food, education, and shelter to the poor. During one of her trips to her native country, the local police detained and interrogated taxpayer’s wife about her activities in her hometown.. The police also informed taxpayer’s wife that they had been monitoring her whereabouts in the country and were aware of her family’s support for the former government.

Fearing for her life, taxpayer’s wife devised a plan to disguise her contributions to Catholic churches in her native country. She would wire the money to the personal bank account of her mother’s cousin (cousin) who lived in taxpayer wife’s original hometown. The cousin then transferred the money to selected Catholic churches in that country.

UNITED STATES TAX COURT DID NOT ALLOW TAXPAYERS TO DEDUCT DONATIONS TO A FOREIGN CHARITABLE ORGANIZATION
Taxpayers argue that the ultimate beneficiary of the wire transfers was the Roman Catholic Church, a qualified donee under Internal Revenue Code §170(c)(2), and that taxpayer wife thus made the wire transfers to or for the use of a qualified organization.

Taxpayers claim that the Catholic Church is a universal organization, and therefore Catholic churches in taxpayer wife’s native country are qualified as donees under Internal Revenue Code §170. The Tax Court found no basis as to if the Catholic churches in that foreign country to which taxpayer wife’s wire transfers were distributed were created or organized in the United States or under the laws of the United States in compliance with Internal Revenue Code . The language of Internal Revenue Code §170(c)(2) is explicit, and the Tax Court must follow such plain language.

Regarding the airfare expense deducted on the IRS Form 1040 Income Tax Return for Individuals , taxpayers assert that the unreimbursed expenditure incident to taxpayer wife’s services should be deductible under Internal Revenue Code §170 because petitioner wife worked on behalf of several qualified organizations.

Nonetheless, taxpayers have failed to show that any of the Catholic churches in the foreign country to which taxpayer wife’s rendered services is a qualified organization within the meaning of Internal Revenue Code § 170(c)(2). Taxpayer wife did not render services in the foreign country under the direction of, or to or for the use of her local church or the local diocese. The record shows only that her priest at her local church had some awareness of her work in her native country. Nor is there any evidence that petitioner wife provided those services.

US Tax Court found taxpayer wife’s testimony to be sincere. However, taxpayers have failed to prove that they contributed to a qualified organization under Internal Revenue Code §170 . Tax Court has held in favor of the Internal Revenue Service .

Los Angeles Tax Attorney:

California Income Tax - Franchise Tax Board FTB released

its annual list of top 250 California taxayers who haven't paid their taxes.

Tax Debt - Top 250 Honor Roll List

Highest Unpaid Tax Debt: $13,120,479
Lowest Unpaid Tax Debt: $ 290,964

Notable Celebrity:
Pamela Anderson (Website:http://pamelaanderson.com/)
Woodland Hills, CA 91367
Income tax due - $ 493,144.68 - 04/07/2009

According to the Franchise Tax Board FTB ,

Vast majority of individual and business taxpayers file their return and pay their lawful tax liability. Those who fail to pay the taxes they lawfully owe contribute to the tax gap. The tax gap is the difference between what taxpayers owe and what they voluntarily pay. As a result, an increased tax burden is passed on to those who pay what they owe. Closing the tax gap is in the best interest of all Californians.

FTB tries to collect taxes through tax liens, tax levy and wage garnishment. As part of the collection process, FTB annually publish the Delinquent Taxpayers list on their website Franchise Tax Board FTB to "encourage" tax payment compliance.

The FTB list shows the top 250 individual and business taxpayers with state income tax liens where the total balance owed is greater than $100,000. In most instances, taxpayers who owe to the FTB also owe even larger tax debt to Internal Revenue Service (IRS) Many of these taxpayers could benefit from either a Tax Bankruptcy or Offer in Compromise to resolve their tax situation.

Los Angeles Tax Attorney:

Here is a quick summary of a recent US TAX COURT case against the Internal Revenue Service to challenge the taxpayer’s right to deduct tax losses from a “S” Corporation. The tax case involves an attorney who claimed a loss from his incorporated law practice on his individual IRS Form 1040 tax return. IRS charged taxpayer with penalties and interests based on improper tax deduction.

R.WEISBERG et al v. COMMISSIONER OF Internal Revenue Service

Tax Problem
Is a taxpayer entitled to deduct a loss from his S corporation as a shareholder?

APPLICABLE TAX CODE SECTION

Internal Revenue Code §1363(a). A qualifying small business corporation that makes the proper election is generally not subject to income tax. Rather, its items of income, deductions, credits, and losses pass through to its shareholders, Internal Revenue Code §1366(a)(1), who then claim those items on their own income tax returns.

Internal Revenue Code §1366(d)(1). However, an S corporation shareholder may not claim a loss deduction greater than his basis in the S corporation, with “basis” in this context consisting essentially of his investment in the corporation. A taxpayer who claims a loss from a S corporation must establish his basis in the S corporation.

Internal Revenue Code §61 (a) includes in gross income “all income from whatever source derived” unless excluded by a specific provision of the Code.

CAN YOU DEDUCT LOSSES FROM YOUR CORPORATION?

Taxpayer, who is an attorney, owned shares in an S corporation and in 2000 personally guaranteed a line of credit to the corporation. The S corporation incurred losses in 2003, and taxpayer deducted part of those losses on his 2003 IRS Form 1040 Income Tax return. In March 2004 taxpayer took out a loan and paid off the corporation’s line of credit in the amount. The IRS disallowed the 2003 loss on the grounds that taxpayer had insufficient basis in the S corporation and determined a tax deficiency, a late-filing addition to tax, and an accuracy-related penalty.

TAXPAYER NEEDS TO ESTABLISH TAX BASIS IN THE CORPORATION BEFORE ANY DEDUCTIONS FOR TAX LOSSES ON IRS INDIVIDUAL TAX RETURN

The US Tax Court and tax audit records contained no information concerning taxpayer’s basis in his S corporation before 2000. In that year he personally guaranteed a line of credit for the firm. Under certain conditions, debt can contribute to a shareholder’s basis in an S corporation, but those conditions are not satisfied in this tax court case. US Tax Court has held that mere shareholder guaranties of S corporation indebtedness generally fail to satisfy the requirements of section Internal Revenue Code §1366(d)(1).

No form of indirect borrowing, including a guaranty, gives rise to indebtedness from the corporation to the shareholders for such purpose until and unless the shareholders pay part or the entire obligation. US Tax Court also held that the mere guaranty of a loan does not involve any economic outlay. Until the guarantor pays the obligation, the guarantor does not have an actual investment.

Taxpayer’s guaranty of the line of credit did not, by itself, increase his basis in the S corporation. Consequently, US Tax Court had no evidence that in 2003 he had a basis in any amount. In 2004 taxpayer incurred his own personal loan and used it to pay off the firm’s line of credit. It may assumed that by doing that act taxpayer did increase his basis in the S corporation per Internal Revenue Code §1366(d)(1). However, the year in issue here is 2003, and that act in 2004 did not increase his basis in 2003. Consequently, taxpayer has not shown that he is entitled to claim any portion of the loss in 2003. Overall, taxpayer’s guaranty of the S corporation’s line of credit did not increase his basis in the S corporation per Internal Revenue Code §1366(d)(1) during the year in issue. Taxpayer was not allowed to deduct the losses from his corporation on his individual tax return in 2003. The decision was entered for the Internal Revenue Service .

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%.

Los Angeles Tax Attorney:

If you are looking for information on the IRS voluntary disclosure or the IRS FBAR program you can visit here FBAR - Why file IRS Voluntary Disclosure or here IRS Voluntary Disclosure for FBAR

If you owe a debt to a bank or any other creditor and they agree to forgive or reduce the balance of the debt, the canceled amount of the debt may be taxed by the Internal Revenue Service.

The Mortgage Debt Relief Act of 2007 generally allows IRS taxpayers to exclude income from the reduced debt on their principal place of residence. IRS taxpayers who were able to reduce debt owed their home through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may not be taxed on the amount of the canceled debt.

Up to $2 million of forgiven debt is eligible for this IRS income tax exclusion ($1 million if married filing separately). The tax exclusion does not apply if the debt forgiveness is due to services performed, trades or offsets with the lender or any other reason which is not directly related to a decline in real estate value of the taxpayer's home or their changed financial circumstance.

If you have any questions regarding the Internal Revenue Service Rules or Procedures (IRS) you may contact us here.

Torrance Tax Attorney:

Here is a quick summary of a recent US TAX COURT case against the Internal Revenue Service to challenge the taxability of lawsuit settlement funds. The case involves money settlement received by a taxpayer from a class action against the US Air Force.

KEVIN HENNESSEY v.
COMMISSIONER OF Internal Revenue Service
Docket No. 20484-07.

Tax Problem
The issue is whether a lump-sum amount of money the petitioner received pursuant to a class action settlement agreement is excludable from gross income under section Internal Revenue Code 104(a)(2).

Internal Revenue Code

Internal Revenue Code §61 (a) includes in gross income “all income from whatever source derived” unless excluded by a specific provision of the Code.

Internal Revenue Code §104 (a)(2) excludes from gross “amount of any damages received (whether by suit or agreement and whether as lump sum or as periodic payments) on account of personal physical injuries or physical sickness”.

IS MONEY FROM LAWSUIT SETTLEMENT TAXABLE?
Mr. Hennessey and other officers, whom the U.S. Air Force selected for involuntary separation because of congressionally mandated personnel reductions in the Armed Forces, filed a complaint in the U.S. Court of Federal Claims. The plaintiffs claimed that the Board in charge violated their equal protection rights under the Fifth Amendment to the U.S. Constitution because it improperly considered race and gender in selecting officers for involuntary separation. The class action case was settled and each member received a lump-sum payment. When petitioners filed their tax return, they did not include in income the lump-sum payment.

IRS TAXES ALL COMPENSATION UNLESS EXCLUDED BY SECTION 104(a)(2)

The lump-sum payment was not compensation for physical injuries or physical sickness that Mr. Hennessey might have suffered as a consequence of any actions taken by the U.S. Air Force. Therefore, the exception of Internal Revenue Code §104 (a) (2) is not applicable. The decision was entered for the Internal Revenue Service .

Los Angeles Tax Attorney:

Congratulations Los Angeles Lakers #15

Los Angeles Lakers 2009 World Champions Game Highlights

Los Angeles Tax Attorney:

Internal Revenue Service IRS TAX has set a deadline for reporting offshore bank accounts and other offshore income activities through its voluntary disclosure program. Voluntary disclosure may eliminate risk of IRS criminal prosecution and reduce or eliminate assessment of tax penalties.

Even taxpayers who do not have offshore activities but have unreported income, fraud, unpaid taxes or unfiled tax returns will benefit from the IRS Voluntary Disclosure program.

Internal Revenue Manual Section 9.5.11.9
Voluntary Disclosure Practice:

IRS Voluntary Disclosure is the truthful, timely and complete communication from a taxpayer to the IRS, regarding the accuracy of the taxpayer’s federal income tax returns. The IRS considers voluntary disclosure along with other factors in the investigation of fraudulent tax reporting practices when determining whether criminal prosecution would be recommended. Voluntary disclosure is simply the procedural practice of the IRS, and does not provide the taxpayer with any rights.

As each case if different, taxpayers should not rely on a similar taxpayer’s situation where criminal prosecution was not recommended. It is important to note that this practice doesn’t apply to taxpayers with illegal source income.

For a IRSvoluntary disclosure to occur, the communication must be truthful, timely, complete, and meet the following requirements:

The taxpayer must express willingness to cooperate with the IRS in determining his/her correct tax liability, and the taxpayer does actually cooperate.

The taxpayer must make good faith arrangements with the IRS to pay in full, the tax, interest, and any penalties owed to the IRS, and to be determined by the IRS.

A disclosure is considered timely if it is received before:

The IRS has initiated a civil examination or criminal investigation of the taxpayer, or has notified the taxpayer that it intends to initiate such an examination or investigation.

The IRS received from a third party (e.g., informant, other governmental agency, or the media) information regarding the taxpayer’s noncompliance.

The IRS has already begun a civil examination or criminal investigation that is directly in connection with the specific liability of the taxpayer.

The IRS has acquired information directly related to the specific liability of the taxpayer from a criminal enforcement action (e.g., search warrant, grand jury subpoena).

Below please find a few examples of what constitute a voluntary disclosure:

An attorney writes a letter to the IRS enclosing amended returns from a client which are complete and accurate (reporting legal source income omitted from the original returns). The letter states that the taxpayer will pay the tax, interest, and any penalties determined by the IRS to be applicable in full. The correspondence meets the timeliness standard set forth above.

The IRS sends a notice stating that it has no record of a tax return filed for a certain year and inquires whether the taxpayer has filed a return for that year. The taxpayer has not filed that year’s tax return and makes a disclosure after receiving such a letter. The individual files complete and accurate returns and makes arrangements with the IRS to pay, in full, the tax, interest, and any penalties determined by the IRS to be applicable . Because the IRS hasn’t started investigation or notified the taxpayer of its intent to investigate, this is considered a voluntary disclosure.

Examples of what are not voluntary disclosures include:

A correspondence from an attorney requesting to resolve his/her client’s tax liability, and that his/her client wants to remain anonymous. This does not meet the requirements of voluntary disclosure and in addition, the identity of the taxpayer is not disclosed.

If a taxpayer discloses its IRS tax liability, while already under grand jury investigation. The end result would be the same whether or not the taxpayer knew about the grand jury investigation.

A taxpayer who is in a partnership, is not currently under investigation and makes a disclosure. However, the partner in the partnership is under investigation. The disclosure in this case is not considered a voluntary disclosure because the investigation of the specific liability is already under investigation, whether or not the taxpayer knew about the investigation.

A taxpayer’s employee notifies the IRS regarding a double set of books. Thereafter, the taxpayer discloses to the IRS. Since the IRS has already been informed by the third party of the specific taxpayer’s noncompliance, this is not a voluntary disclosure, whether or not the taxpayer knew of the about the third party’s contact with the IRS.

Internal Revenue Manual Section 9.5.11.9.1
Voluntary Disclosure Protocols

All voluntary disclosures must meet the requirements contained in subsection 9.5.11.9 above. There is not particular format that the voluntary disclosure must abide by when making the voluntary disclosure communication. In addition, the communication by the taxpayer or their representative can be either verbally or in writing. Determining whether or not a communication is a IRS Voluntary Disclosure can only be done by examining the facts and circumstances of each situation and investigation.

Los Angeles Tax Attorney

United States Tax Court US TAX COURT intervention to expedite release of federal tax lien may not be required due to a new guideline issued by the IRS.

Internal Revenue Service IRS TAX today announced an expedited process that will make it easier for financially distressed homeowners to avoid having a federal tax lien block refinancing of mortgages or the sale of a home.

If taxpayers are looking to refinance or sell a home and there is a federal tax lien filed, there are options. Tax Attorneys may request that the IRS make a tax lien secondary to the lien by the lending institution that is refinancing or restructuring a loan. Taxpayers or their representatives may request that the IRS discharge its claim if the home is being sold for less than the amount of the mortgage lien under certain circumstances.

The process to request a discharge or a subordination of a tax lien takes approximately 30 days after the submission of the completed application, but the IRS will work to speed those requests in wake of the economic downturn.

“We don’t want the IRS to be a barrier to people saving or selling their homes. We want to raise awareness of these lien options and to speed our decision-making process so people can refinance their mortgages or sell their homes,” said Doug Shulman, IRS commissioner.

Filing a Notice of Federal Tax Lien is a formal process by which the government makes a legal claim to property as security or payment for a tax debt. It serves as a public notice to other creditors that the government has a claim on the property.

In some cases, a federal tax lien can be made secondary to another lien, such as a lending institution’s, if the IRS determines that taking a secondary position ultimately will help with collection of the tax debt. That process is called subordination.

Taxpayers or their representatives may apply for a subordination of a federal tax lien if they are refinancing or restructuring their mortgage. Without lien subordination, taxpayers may be unable to borrow funds or reduce their payments. Lending institutions generally want their lien to have priority on the home being used as collateral.

Tax Attorneys may apply for a certificate of discharge of a tax lien if they are giving up ownership of the property, such as selling the property, at an amount less than the mortgage lien if the mortgage lien is senior to the tax lien.

The IRS may also issue a certificate of discharge in other circumstances if the taxpayer has sufficient equity in other assets, can substitute other assets, or is able to pay the IRS its equity in the property. Without a tax lien discharge, the taxpayer may be unable to complete the home ownership change and the ownership title will remain clouded.

Los Angeles Tax Attorney: Last week's firestorm regarding Sarah Palin's wardrobe expenses generated several calls regarding tax implications or tax problems for Governor Palin stemming from her $150,000.00 clothing shopping spree.

Politics aside (Democrats position: $150,000 for clothes...she’s no Josephine Six Pack, Republicans Position: Remember John Edwards $400 hair cut), from an IRS tax perspective, it may be a non issue. (United States Tax Court US TAX COURT holds the jurisdiction to resolve any tax problems that may arise out of Palin's tax situation.)

Uniforms provided by employers for business use are not taxable to the employee. I’m not sure if Sarah Palin is “employed” by the Republican Party because she is still the governor of Alaska. It may be possible that she is employed by both entities. Regardless, Palin’s clothing from Neiman Marcus and Saks 5th Avenue probably would not constitute “uniform” as defined by the IRS TAX CODE Although if RNC argued that all female members of the party must wear certain type of Valentino or Armani in red or black while on stage to campaign, it may have a plausible counter argument if such clothing items were not usable for ordinary wear.

Some of my colleagues believe that she would need to declare fair rental value of the clothes she used on her income tax return but certainly not the full $150,000 RNC spent on her clothes. However, what would be the rental value for these clothes? Difference between cost less resale value?

I think the fair rental value or fair use valuation would be the correct tax position in most ordinary circumstances. However, RNC or Palin’s tax attorney could probably argue that she would not need to declare any rental value for these clothes.

The reason?

Most used clothing items have very little resale value. However, assuming that Governor Palin never owned these clothes, RNC could auction off Palin’s clothes which would probably generate revenues in excess of 10 to 20 times the cost basis for these clothing. (Campaign Fund Raising Issues?) In essence, the argument would be that Palin didn’t rent these clothes, she provided service and added value by having worn these items. This issue would be determined by the United States Tax Court US TAX COURT.

Further, what is the difference between expensive clothing provided to news anchors or stand-up comedians like Jay Leno by their respective stations and the situation here? They are all celebrities looking good for their jobs...right? Leno or Katie Couric don’t pay taxes for the different wardrobes which they wear every night. Regardless, Wardrobegate’s political damage may be significant but the IRS tax impact to Palin should be nominal.

Californa Sales Tax BOE - Board of Equalization Tax Attorney

California Board of Equalization California Sales Tax

Sales Tax for Construction Restaurant and Bars

APPLICATION OF TAX TO RESTAURANT EQUIPMENT CONTRACTORS

The Board of Equalization, in conjunction with the Restaurant Equipment Contractors Association, has made a study of components involved in lump-sum contracts for the furnishing and installing of restaurant equipment. Review Construction Sales Tax Basics Here

Application of California sales tax may differ based on type of contract you have with your contractor as well as classification of items used to construct the restaurant or bar. Sales tax amount for materials, equipments and fixtures will vary significantly and it may result in huge tax savings for either the restaurant owner or contractor depending upon classification method.

The following are some items which are usually considered to be materials when furnished and installed by a construction contractor in performing a contract for the food industry:

Carpeting, including padding and trim when affixed to the real property by glue, nails, etc.
Doors
Ducts installed in walls, ceilings, and floors
Grab bars (for handicapped lavatories)
Millwork
Pass window frames and shelves
Wall corner pieces and wall caps
Wall covering materials (wallpaper; paneling; etc.)
Wall flashing
Wall mirrors

The following items furnished and installed by contractors to the food service industry are generally classified as fixtures:

Bolt-down counter stool bases, with stools attached thereto
Bolt-down table bases with table tops affixed
Custom fabricated cash stands
Custom fabricated cocktail back bar superstructures
Custom fabricated cocktail back bar
Custom fabricated cocktail bars
Custom fabricated counters
Custom fabricated dishtable assemblies
Custom fabricated make-up tables
Custom fabricated pot racks
Custom fabricated scullery sink assemblies
Custom fabricated seating assemblies/booth units
Custom fabricated serving counters
Custom fabricated service stands
Custom fabricated soffits
Custom fabricated walk-in coolers and freezers that are affixed to the real estate
Dispensers for soap, towels, toilet tissue
Faucets
Freezers
Hoods
Lighting fixtures
Motors
Plumbing fixtures
Refrigeration compressors
Refrigerators
Safes, imbedded in concrete in the buildings
Water heaters (built into fixtures or into water systems)
Water softeners (built into fixtures or into water systems)

Fixtures also include the following items which are built into fixtures or otherwise built into the realty and which may not be removed without damage to the items or the realty:

Char-broilers
Dish dispensers
Dishwashers that are built into a dishtable
Disposals
Drink dispensers
Freezers
Griddles
Ice cream cabinets
Ovens
Refrigerators
Roll warmer
Scrap chutes
Soda fountain systems
Soup warmers
Syrup rails

The following is a list of items which may be generally considered to be machinery and equipment when freestanding or when they are not firmly affixed to the building or built into it or another fixture and which may be readily removed without damage to the building, the unit, or other fixture:

Adding machines
Artifacts items
Bar stools
Beverage and juice dispensers
Bulletin boards
Can openers
Chairs
Char-broilers
Chinaware, silverware, pots and pans, paper goods, culinary items
Coffee makers
File cabinets
Flight-type dishwashers
Floor racks
Griddles
Hot water hoses
Ice bins
Ice cream cabinets
Ice making machinery
Iced tea dispensers
Iced tea machine
Lockers
Microwave ovens (freestanding)
Milk dispensers
Mixers
Ovens
Portable bins and tables
Ranges
Reach-in freezers (self-contained)
Reach-in refrigerators (self-contained)
Roll covers
Safes
Salamanders
Scales
Shelving units
Silverware boxes
Slicers
Table lamps
Tables
Time car racks
Time clocks
Toasters

California Tax Attorney

Internal Revenue Service IRS TAX and United States Tax Court US TAX COURT released information regarding tax fraud related scams using the name of the IRS and US Tax Court.

Economic Stimulus Payments Scam

In this scam, a taxpayer receives an e-mail pretending to come from the IRS which tells the recipient he or she is eligible for an economic stimulus payment. The message recommends direct deposit into the taxpayer’s checking or savings account. To receive the payment, recipients must click on a link to complete and submit an online form by a certain date; otherwise, the e-mail warns, payment may be delayed. The form requests personal and financial data, including checking or savings account numbers that the scammers can use to gain access to the accounts.

In reality, the way members of the public receive their economic stimulus payment is to file a tax return with the IRS, not a special form. Additionally, the IRS does not request personal or financial information via e-mail.

Information on how to obtain an economic stimulus payment may be found in the Economic Stimulus Payments Information Center on the this Web site. For more information on stimulus-related scams, see IR-2008-11.

“Taxpayers should take steps to keep their personal information out of the hands of identity thieves,” said IRS Commissioner Doug Shulman. “That includes not falling for any of the phony e-mails or faxes now in circulation pretending to come from the IRS.”

Although most of these scams consist of e-mails requesting detailed personal information, the IRS generally does not send e-mails to taxpayers, does not discuss tax account matters with taxpayers in e-mails, and does not request security-related personal information, such as PIN numbers, from taxpayers.

IRS Tax Lawyer

Internal Revenue Service IRS TAX and United States Tax Court US TAX COURT released information regarding tax fraud related scams using the name of the IRS and US Tax Court.

“Taxpayers should take steps to keep their personal information out of the hands of identity thieves,” said IRS Commissioner Doug Shulman. “That includes not falling for any of the phony e-mails or faxes now in circulation pretending to come from the IRS.”

Although most of these scams consist of e-mails requesting detailed personal information, the IRS generally does not send e-mails to taxpayers, does not discuss tax account matters with taxpayers in e-mails, and does not request security-related personal information, such as PIN numbers, from taxpayers.

Refund e-Mail Scam

There are several variations of the refund scam, in which an e-mail claiming to come from the IRS falsely informs the recipient that he or she is eligible for a tax refund for a specific amount. The bogus e-mail instructs the recipient to click on a link to access a refund claim form. The form requests personal information that the scammers can use to access the e-mail recipient’s bank or credit card account.

This notification is phony. The IRS does not send unsolicited e-mail about tax account matters to taxpayers.

Filing a tax return is the only way to apply for a tax refund; there is no separate application form. Taxpayers who wish to find out if they are due a refund from their last annual tax return filing may use the Where’s My Refund? interactive application on this Web site. IRS.gov is the only official IRS Web site.

Los Angeles Tax Attorney Internal Revenue Service IRS TAX today announced an increase in the optional standard mileage rates for the final six months of 2008. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

The rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through Dec. 31, 2008. This is an increase of eight (8) cents from the 50.5 cent rate in effect for the first six months of 2008, as set forth in Internal Revenue Procedure 2007-70. IRS TAX AUDIT - Auto Expense Miles

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2008. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

"Rising gas prices are having a major impact on individual Americans. Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile," said IRS Commissioner Doug Shulman. "We want the reimbursement rate to be fair to taxpayers."

While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

The new six-month rate for computing deductible medical or moving expenses will also increase by eight (8) cents to 27 cents a mile, up from 19 cents for the first six months of 2008. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

The new rates are contained in Announcement 2008-63 on the optional standard mileage rates.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. IRS Mileage Expense for Tax Audit

California Franchise Tax Board lists names of individuals and businesses that owe taxes to the state. Top 250 who owe taxes to California FTB

According to the FTB, there are several notable individuals owe a lot of taxes to FTB.
Among the list are O.J. Simpson, the comedian Sinbad, and Dionne Warwick, who owes over $2.7 million.

At the top of the list is a $6.1 million corporate tax delinquency. One other corporate delinquency is in the top 10 highest tax amounts, owing $2.7 million. The remaining eight of the top 10 amounts owed are for personal income tax delinquencies, owing from $2.1 million to $4.4 million. Six of the top ten have California addresses, and four are located out of state.

FTB is required by law to post a list of the 250 state income tax debtors who owe the largest amounts greater than $100,000 in tax, after first notifying them that their delinquencies will become public. Since January 2008, the State has received approximately $4.2 million in payments from taxpayers desiring to keep their names from being posted. More than $500,000 was collected last year when the original list was posted in October.

Taxpayers who do make the list can have their information removed by paying the tax in full, or agreeing to pay by installment. Tax liabilities under appeal, litigation, in bankruptcy proceedings, or under consideration for an Offer in Compromise are not included on the list.

IRS Selects Tax Attorney From Los Angeles California

Los Angeles Tax Attorney – Internal Revenue Service Tax Attorney Donald L. Korb has selected David Hasen as the 2008-2009 Professor in Residence.

The IRS professor in residence reports directly to the IRS chief counsel and provides tax advice and assistance on a wide array of tax related legal issues within the scope of his or her legal expertise.

Hasen has been an assistant professor at the University of Michigan Law School since 2002. Also during the spring 2008 term, he has been a visiting faculty member at the University of Southern California - Los Angeles, Gould School of Law. Previously, he taught as a visitor at Hastings College of the Law in California concerning IRS tax problems.

Hasen has written about the taxation of financial instruments, the tax consequences of unwinding transactions and the taxation of advance payments. Hasen worked as an associate in the tax law groups of national tax law firms based in San Francisco. He holds a J.D. from Yale Law School, a Ph.D. from Harvard University and a B.A. from Reed College.

The IRS Office of Chief Counsel revived its Tax Professor in Residence program in 2006 after being dormant since the late 1980s. The program provides some of the nation's top tax legal academicians the opportunity to contribute to the development of IRS' legal tax policy and IRS tax administration.

Orange County Tax Attorney — National Taxpayer Advocate Nina E. Olson announced today that the IRS will accept applications for a part-year Low Income Taxpayer Clinic (LITC) matching grant from qualified organizations that will provide IRS tax services to qualified taxpayers in the following areas: Los Angeles, California; Central Oregon; Boise, Idaho; Minneapolis, Minnesota; Reno and Las Vegas, Nevada; St. Louis, Missouri; Brownsville and Laredo, Texas; Southwest Florida; New Mexico; Colorado; Mississippi; and Northeast Pennsylvania.

The supplemental application period for this grant will run from March 24, 2008, until April 24, 2008. The grant will cover the balance of the 2008 grant cycle (the 2008 grant cycle runs January 1, 2008, through December 31, 2008), and successful applicants may be eligible for a regular full-year grant for the 2009 grant cycle.

LITCs are qualifying organizations that provide representation for free or for a nominal charge to low income taxpayers involved in tax disputes with the IRS. They also provide education on taxpayer rights and responsibilities to taxpayers for whom English is a second language.

The LITC grant program is a federal program that is administered by the Taxpayer Advocate Service. The Taxpayer Advocate Service is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should.

The program is now in its tenth year and continues to expand. To date in 2008, the LITC Program Office has awarded LITC grants to 154 organizations in all 50 states, the District of Columbia, Puerto Rico, and Guam.

To be considered for a supplemental 2008 LITC grant, a qualifying organization must be in a position to provide qualified services to taxpayers in the aforementioned areas. Qualifying organizations can apply for matching grants for the remainder of the 2008 grant cycle if they either provide representation for free or for a nominal fee to low income taxpayers involved in tax disputes with the IRS or provide education on taxpayer rights and responsibilities to taxpayers for whom English is a second language.

Examples of qualifying organizations include: (1) clinical programs at accredited law, business or accounting schools, whose students may represent low income taxpayers in tax disputes with the IRS, and (2) organizations exempt from tax under I.R.C. § 501(a) which represent low income taxpayers in tax disputes with the IRS or refer those taxpayers to qualified representatives.

As noted, the supplemental application period will begin March 24, 2008.

Applications for grants must be electronically submitted or postmarked by April 24, 2008. Grant decisions will be made by June 1, 2008, and funds awarded can only be used for the remainder of the 2008 grant cycle. Grant funds may be awarded for start-up expenditures incurred by new clinics during the grant cycle.

Taxpayers with IRS tax problems in the following communities may contact tax attorney here.: Aliso Viejo Anaheim Brea Buena Park Costa Mesa Cypress Dana Point East Irvine El Toro Foothill Ranch Fountain Valley Fullerton Garden Grove Huntington Beach Irvine La Habra Ladera Ranch Laguna Beach Laguna Hills Laguna Niguel Laguna Woods Mission Viejo Monarch Beach Newport Beach Newport Coast Orange Placentia Rancho Santa Margarita San Juan Capistrano SantaAna Seal Beach Tustin Westminster Yorba Linda

Tax Attorney Advice - Each year there are over 10 million IRS taxpayers who haven't filed their taxes or IRS 1040 tax return.

Taking the following action may save a lot of taxes and avoid criminal prosecution by the IRS. If you are being contacted by the IRS or are receiving threatening letters from the Internal Revenue Service, you may need to contact a tax attorney for guidance.

File All Tax Returns

Taxpayers should file all tax returns that are due, regardless of whether or not full payment can be made with the return. Depending on an individual’s circumstances, a taxpayer filing late may qualify for a payment plan. All payment plans require continued compliance with all filing and payment responsibilities after the plan is approved.

Facts About Filing Tax Returns

Failure to file a return or filing late can be costly. If taxes are owed, a delay in filing may result in penalty and interest charges that could increase your tax bill by 25 percent or more per year.
There is no penalty for failure to file a tax return if a refund is due. But by waiting too long to file, you can lose your refund.

In order to receive a refund, the return must be filed within 3 years of the due date. If you file a return, and later realize you made an error on the return, the deadline for claiming any refund due is three years after the return was filed, or two years after the tax was paid, whichever expires later.

Taxpayers who are entitled to the Earned Income Tax Credit must file a return to claim the credit even if they are not otherwise required to file. The return must be filed within 3 years of the due date in order to receive the credit.

If you are self-employed, you must file returns reporting self-employment income within three years of the due date in order to receive Social Security credits toward your retirement.

Taxpayers who continue to not file a required return and fail to respond to IRS requests for a return may be considered for a variety of enforcement actions. Continued non-compliance by flagrant or repeat nonfilers could result in additional penalties and/or criminal prosecution.

Documents Required to File Your Taxes - IRS Tax Return Form 1040:

Forms W-2 – Forms from employers showing wages for the year.

Forms 1099 – Forms from banks and other financial institutions showing interest and dividends. Forms 1099 also report self-employment income.

Information on expenses to claim on the return, such as itemized deductions, child care expenses, or employee business expenses.

Social Security numbers for dependent children and any other person claimed as a dependent

A copy of the last tax return filed.

We are tax attorneys and serve our clients in the following areas: New York, Los Angeles, Chicago, Houston, Philadelphia, Phoenix, San Antonio, San Diego, Dallas, San Jose, Detroit, Jacksonville, Indianapolis, San Francisco, Columbus, Austin, Memphis, Baltimore, Fort Worth, Charlotte, El Paso, Milwaukee, Seattle, Boston, Denver, Washington DC, Las Vegas, Portland, Oklahoma City, Tucson, Albuquerque, Long Beach, Atlanta, Fresno, Sacramento, New Orleans, Cleveland, Kansas City, Mesa, Virginia Beach, Omaha, Oakland, Miami, Tulsa, Honolulu, Minneapolis, Colorado Springs, Arlington.

Tax Attorney Analysis of Potential IRS Tax Court Ruling-Tax Audit or Tax Problem From Plastic Surgery Expense Deductions.

Los Angeles - San Franciso Tax Attorney - The rate of plastic surgery in California especially in Los Angeles, Beverly Hills, Malibu, Pacific Palisades, Manhattan Beach, Palos Verdes, Newport Beach, Orange County, San Jose, San Franciso have seen dramatic increases over the last decade.

As tax attorneys, we are often asked by our clients in the entertainment industry whether certain surgical enhancements may be claimed as a deduction or expense.

Most tax lawyers are aware of the IRS Tax Court case involving “Chesty Love.” To generate more revenue from her profession as a stripper, Chesty Love decided to get breast implants to make her a size 56-FF and expensed the cost of the surgery. IRS tax court judge allowed Chesty to write off the cost of her operation equating her breast enhancement as a necessary expense alas “stage prop” to generate revenue.

However, can ordinary IRS taxpayers deduct breast implants or eye surgery and not run into tax problems in the event of a tax audit?

According to the IRS Attorney Tax Revenue Ruling #200357 issued by the IRS ,amounts paid by individuals for breast surgery, breast implants, vision correction surgery, and teeth whitening medical care expenses within the meaning of IRS Code § 213(d) may be deductible under § 213 of the Internal Revenue Code?

Hypothetical IRS Tax Court Case Scenario 1- Breast Implants and Tax:
Taxpayer A undergoes mastectomy surgery that removes a breast as part of treatment for cancer and pays a surgeon to reconstruct the breast.

Hypothetical IRS Tax Court Case Scenario 2 - Lasik and Tax:
Taxpayer B wears glasses to correct myopia and pays a doctor to perform laser eye surgery to correct the myopia.

Hypothetical IRS Tax Court Case Scenario 3 - Teeth Whitening and Tax:
Taxpayer C’s teeth are discolored as a result of age. C pays a dentist to perform a teeth-whitening procedure. A, B, and C are not compensated for their expenses by insurance or otherwise.

IRS Tax Court Rulings:
General IRS Tax Law or Tax Code Applicable to Medical Expenses:
Section 213(a) allows a deduction for expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, spouse, or dependent, to the extent the expenses exceed 7.5 percent of adjusted gross income. Under § 213(d)(1)(A), medical care includes amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.

Medical care does not include cosmetic surgery or other similar procedures, unless the surgery or procedure is necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. Section 213(d)(9)(A). Cosmetic surgery means any procedure that is directed at improving the patient’s appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. Section 213(d)(9)(B).

Tax attorney would argue that A’s cancer is a disfiguring disease because the treatment results in the loss of A’s breast. Accordingly, the breast reconstruction surgery ameliorates a deformity directly related to a disease and the cost is an expense for medical care within the meaning of § 213(d) that A may deduct under § 213 (subject to the limitations of that section).

Tax Attorney would argue that cost of B’s laser eye surgery is allowed under § 213(d)(9) because the surgery is a procedure that meaningfully promotes the proper function of the body. Vision correction with eyeglasses or contact lenses qualifies as medical care. See Rev. Rul. 74-429, 1974-2 C.B. 83. Eye surgery to correct defective vision, including laser procedures such as LASIK and radial keratotomy, corrects a dysfunction of the body. Accordingly, the cost of the laser eye surgery is an expense for medical care within the meaning of § 213(d) that B may deduct under § 213 (subject to the limitations of that section).

In contrast, IRS tax attorney would argue that the teeth-whitening procedure does not treat a physical or mental disease or promote the proper function of the body, but is directed at improving C’s appearance. The discoloration is not a deformity and is not caused by a disfiguring disease or treatment. Accordingly, C may not deduct the cost of whitening teeth as an expense for medical care.

California and Hawaii Taxpayers Struck by IRS Payroll Tax & Income Tax Problems Created by IRS Tax Evasion and Tax Avoidance Schemes.

Los Angeles - San Jose Tax Attorney: According to the Internal Revenue Service, lawyers from the IRS with the support of tax attorneys from DOJ announced that IRS has obtained civil injunctions against more than 100 tax promoters of illegal IRS tax avoidance schemes and fraudulent IRS tax return preparers in an ongoing crackdown that began in 2001.

Many of the illegal tax promoters targeted taxpayers in Los Angeles, Alhambra Burbank Carson Cerritos Downey El Monte Lawndale Lomita Long Beach Oakland Palmdale Pasadena Pomona San Jose Santa Monica Studio City Van Nuys West Los Angeles and Woodland Hills with income tax and payroll tax avoidance schemes. These taxpayers along with the tax promoters may receive IRS tax audit notice as part of the ongoing IRS tax investigation.

Many of the IRS Tax related injunctions, obtained in cooperation with the tax attorneys at Department of Justice, also order the IRS tax promoters to turn over taxpayer lists and to cease preparing IRS federal income tax returns for others.

Signaling a renewed fight against tax fraud and tax evasion, the IRS stepped up the use of injunctions to stop the tax evasion and tax fraud schemes designed to avoid income tax and payroll tax debt.

The IRS becomes aware of abusive tax promoters through a variety of means, including ongoing IRS tax audit, state of California tax audits,or referrals from external sources such as tax professionals.

The IRS is currently investigating more than 1,000 additional tax avoidance promoters for possible referral to the Justice Department and conducting individual and business tax audit on thousands of IRS tax scheme participants.

If you are currently being audited or think that you might be under IRS tax investigation, you may contact our offices located in Oakland, San Jose, San Mateo, Long Beach, Pasadena, Torrance, Los Angeles and San Francisco to speak with an experienced IRS tax attorney.

Los Angeles Tax Attorney - We serve California taxpayers with IRS or California State tax problem, tax audit, tax levy, tax lien, offer in compromise residing in the following areas: Alhambra Beverly Hills Burbank Carson Cerritos Culver City Downey El Monte Gardena Glendale Lawndale Lomita Long Beach North Northridge Palmdale Pasadena Pomona Rancho Palos Verdes Redondo Beach Rolling Hills San Gabriel San Pedro Santa Clarita Santa Fe Springs Santa Monica Sherman Oaks Studio City Torrance Valencia Van Nuys West Covina West Hollywood West Los Angeles and Woodland Hills.

All taxpayers should be aware of tax preparers such as Hazel Harris who according to government complaint targets elderly customers who receive Social Security benefits and generates fraudulent income tax refunds on their behalf.

The Government and IRS Tax complaint states that Harris tells her clients she is an accountant who specializes in refunds for Social Security recipients. In order to increase business, she is alleged to have advised potential customers to contact current clients who have received refunds as a result of her fraudulent return preparation.

Harris reportedly generates improper tax refunds by reporting only half of her customers’ Social Security benefits as taxable income, and by fabricating amounts of taxes withheld. Additionally, she has prepared the clients’ returns for multiple years at one time, regardless of whether a return has already been filed for those years.

The government alleges that Harris has prepared more than eight-thousand federal income tax returns for others since 2001. According to Internal Revenue Service (IRS) estimates, she has claimed over $3.5 million in fraudulent refunds.

Continue reading "Tax Fraud-California Taxpayers Defend Against False IRS Tax Return" »

Los Angeles Tax Attorney — The Internal Revenue Service announced today that Hawaii and California taxpayers in Los Angeles, Long Beach, Honolulu, El Monte, Torrance, Pasadena, Santa Monica, Redondo Beach, Irvine, Santa Ana who normally do not file a tax return but must do so this year in order to receive their 2008 IRS tax economic stimulus payment.

IRS Taxpayers who haven’t filed tax returns in the past must have at least $3,000 of income from any combination of earned income, Social Security retirement or disability benefits, certain Railroad retirement benefits, or disability compensation, disability pension, or survivor benefits paid by the Veterans Affairs. The minimum economic stimulus payment is $300 for individuals and $600 for married couples. Contact your IRS tax attorney to verify your tax status.

To obtain a payment, all people who are eligible for payments of up to $600 for individuals ($1,200 for married couples) must file a tax return in order for the IRS to know their name, address and eligibility. Parents also may qualify for a $300 payment for each eligible child younger than 17. Valid Social Security numbers are required.

Continue reading "IRS Tax Refund-Hawaii and California Taxpayers Must File IRS Tax Return to Receive Tax Stimulus Payment or Tax Refund" »

Torrance Tax Attorney —The Internal Revenue Service(IRS) announced today that it has automated the user fee calculations for IRS taxpayers entering into an installment agreement throughout California including IRS taxpayers seeking payment plan in the Los Angeles, Long Beach, Pasadena, Torrance, Gardena, Garden Grove, El Monte, Sherman Oaks, Woodland Hills, Orange, San Jose.

Previously, IRS taxpayers were required to submit a paper IRS Form 13844 to request a reduced user fee. Now, eligibility for reduced fees is determined automatically by the IRS.

An IRS installment agreement allows IRS taxpayers who have tax problems to pay their full tax debt in smaller, more manageable amounts, though penalties and interest continue to accrue on the unpaid portion of that IRS tax debt. IRS taxpayers are charged a one-time fee to set up an installment agreement with the IRS. A reduced fee is available for qualifying taxpayers.

Contact a tax attorney if you have any tax problems (310) 788 9820.

Continue reading "IRS Tax Problem? Installment Payment Plan for California taxpayers in Los Angeles, Long Beach, Torrance, Pasadena, Gardena, Orange and Riverside County." »

Many Los Angeles, Long Beach, Orange, Riverside, San Jose area business owners and taxpayers who have IRS tax problems may not have been aware of the tax settlement program called offer in compromise. Tax attorneys who handle these type of cases should prepare a comprehensive tax and financial analysis in order to prepare the most favorable tax settlement proposal which would result in minimum tax debt being paid to the IRS.

Although the IRS discourages and may create obstacles to have your IRS taxes reduced, a good tax attorney will often be able to prepare legal arguments that would contest and challenges put forth by the IRS concerning the tax settlement proposal.

An IRS Offer in Compromise allows taxpayers to settle their tax liabilities for less than the full amount. The objective of the IRS Offer in Compromise program is to accept a compromise when it is in the best interests of both the taxpayer and the government and promotes voluntary compliance with all future payment and filing requirements.

Major Changes to the IRS Offer in Compromise Program

The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), created major changes to the IRS IRS Offer in Compromise program as it relates to lump sum offers, periodic payment offers, and a determination as to when an offer is accepted. These changes affect all offers received by the IRS on or after July 16, 2006.

Continue reading "IRS Offer in Compromise - Resolve Tax Problem - Los Angeles, Long Beach California Tax Attorney" »

Los Angeles Tax AttorneyLos Angeles – The Internal Revenue Service today announced that interest rates for the calendar quarter beginning April 1, 2008, will drop by one percentage point. The new rates will be:

• six (6) percent for overpayments [five (5) percent in the case of a corporation];
• six (6) percent for underpayments;
• eight (8) percent for large corporate underpayments; and
• three and one-half (3.5) percent for the portion of a corporate overpayment exceeding $10,000.

These rates relate to interest on IRS taxes but not on the IRS Tax penalties. Often times, our clients in Los Angeles, Long Beach, Torrance, El Monte, Pasadena and San Jose California area taxpayers are inundated with IRS tax, interest and penalties. Depending on your case, some of your interest and much of your penalties may be reduced. If you require more information contact us at 310 788 9820.

Under the Internal Revenue Code, the rate of interest on IRS tax is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment of tax rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation tax, the underpayment tax rate is the federal short-term rate plus 3 percentage points and the overpayment IRS tax rate is the federal short-term rate plus 2 percentage points.

The rate for large corporate tax underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

California IRS Offices to Contact Third Parties for IRS Tax Audit and IRS Tax Collection

Los Angeles Tax Attorney - In 1998, the Congress amended Code Section 7602 to prohibit Internal Revenue Service employees including IRS Agents and IRS Auditors from contacting third parties with respect to the taxpayer’s IRS tax liability without providing reasonable advance notice to the taxpayer that third-party contacts may be made.

Most IRS tax attorneys and tax lawyers who resolve tax problems were concerned that (1) that such contacts by the IRS may have negative effect on the taxpayer’s business and could damage the IRS taxpayer’s reputation in the community, and (2) that taxpayers should have the opportunity to resolve his tax problems through his tax attorney before the IRS contacted third parties.

IRS third party contact notice provides a general tax notice to the taxpayer before most third-party contacts are made, and then to periodically (or upon the taxpayer’s request) provide the taxpayer with a record of the persons contacted by the Internal Revenue Service. If you are a taxpayer located in Los Angles or California with IRS tax problems, IRS tax audit or IRS tax levy collection, make sure you contact IRS tax attorney so that your IRS tax rights are protected.

IRS Tax Savings for Los Angles and California Businesses and Taxpayers:

Los Angeles Tax Attorney — The Internal Revenue Service released additional information today about the upcoming economic stimulus payments in a specially designed section for Los Angeles and California IRS taxpayers.

Most IRS taxpayers just need to file a 2007 tax return in order to automatically receive the stimulus payment.

Internal Revenue Service provides extensive set of information for all taxpayers with questions about the IRS tax stimulus payments, commonly referred to as rebates. The questions and answers include important information for low-income workers and certain recipients of Social Security, Railroad Retirement benefits and veterans’ benefits.

IRS also provides extensive examples of how much Los Angles, Orange, Long Beach, Torrance, Woodland Hills, Pasadena, Sherman Oaks taxpayers can expect to receive in tax stimulus payments. The page includes more than two-dozen payment scenarios affecting different types of taxpayers.

Continue reading "IRS Tax Savings for Los Angles and California Business and Taxpayers" »

As the housing market and the mortgage businesses continue to crumble, even the once wealthy mortgage lenders are facing tax problems. Los Angeles Tax Problems for Mortgage Brokers With the wave of recent foreclosure filings and bankruptcy filings in Los Angeles, Long Beach, Pasadena, Torrance and other areas of Los Angeles County, home prices may continue to deteriorate.

IRS Tax and Penalty Collection to increase in Los Angeles and California metro regions.

IRS Tax Attorneys and lawmakers advising Congress are likely to endorse giving Internal Revenue Service more tools to improve IRS tax debt collection, compliance and boost revenue.
Internal Revenue Service faces congressional pressure collect additional $290 billion per year in taxes which go uncollected each year.

Los Angeles and California based IRS centers have been increasing support staff trained for IRS tax collection and audits over the last three years. IRS and the government concurs that collecting additional tax, interest and tax penalties from those who already owe IRS taxes is seen as a smarter move than raising new taxes or tax penalties.

If the president's proposals pass, it would require that brokerage houses and mutual funds to report to the Internal Revenue Service monies invested by taxpayers into various securities. Currently, taxpayer or brokerage houses are not required to report to the Internal Revenue Service such investment records. IRS estimates that if the new tax proposal passes, IRS would raise additional 7.5 billion dollars from 2008 through 2018. “President’s new tax proposal has high level of support from both houses of Congress and is likely to pass this Congressional term,” said tax attorney Victor Yoo, Los Angeles tax attorney with Tax Lawyers Group, APC.

Los Angeles has one of the nation’s highest number of self employed or small business operations. IRS is increasing its enforcement and compliance activities with respect to these taxpayers. IRS Tax Audits overall have increased every year over the last three years. IRS targets many of these businesses which its believes are involved in high cash volume business including the garment, restaurant, travel, tour and numerous other service related sectors where compliance and reporting requirements may be lacking.

In addition, IRS will continue to monitor single cash transactions involving more than $10,000.00. The Tax Reform Act of 1984 required businesses that receive large cash payments to report them to the Internal Revenue Service. The statute was designed to help the Service “identify taxpayers with large cash incomes.” In addition, the Patriots Act and other collateral legislation allows increased surveillance on transfer of funds including cash. A bank or a business who in the coarse of his trade or business is paid more than $10,000 in cash in one or more related transactions must file a return with the Service. It is common that such filings would trigger an IRS Audit or investigation.

Betting on the Los Angeles Lakers to win the NBA title this year? How about the Los Angeles Dodgers winning the World Series? If you have gambling winnings, IRS wants to tax you.

Payors of $1,200 or more on winnings from bingo or slot machines, or $1,500 or more from keno, must file information returns on Form W-2G with the service center by February 28 following the calender year in which the winnings were paid.

Beginning this year the Internal Revenue Service will require all poker tournament sponsors to report tournament winnings of more than $5,000. Casinos will also implement federal withhold 25 percent taxes from gambling winnings.

You are required to report gambling winnings on IRS Form 1040 on line 21. However, keep in mind that you are allowed to offset gambling losses against gambling winnings. Because of high audit exposure against those who claim gambling losses it is important to keep a good record of your gambling losses such as dates, wager amounts and type of gambling activity.

An IRS income tax return may be made your tax attorney if the taxpayer is unable to make it by reason of illness or continuous absence from the United States for a period of at least 60 days before the due date, or if the taxpayer requests written permission from the IRS and the IRS finds good cause to allow such substitution.

A return that is signed by the IRS tax attorney on behalf of the taxpayer, but without the taxpayer having first executed a valid IRS power of attorney, is not a valid tax return from the IRS' perspective.

Tax Liability for income, estate, and gift taxes generally is reflected on required tax returns. To the extent that these tax returns disclose that IRS tax debt exists, the IRS may summarily assess those tax amounts even if you or your tax attorney did not execute the return.

Keep in mind that, any person liable for any Internal Revenue tax or for its collection must make a reutrn or statement of tax liability.

Many taxpayers that meet with our lawyers in our Los Angles office often have not filed their IRS tax returns in many years. I actually met with someone who hasn't filed a IRS tax return in over 25 years.

In terms of helping anyone with this type of tax problem it is important to prepare and file all unfiled tax returns. Besides the fact that unfiled tax returns could lead into criminal tax and tax fraud related problems with the IRS, you will probably pay less in taxes by filing your IRS tax return on your own.

What happens if you do not file IRS Tax Return?

Return Made by Service

Income, gift, and estate tax laws is based upon self-assessment by the taxpayer; deficiencies asserted by the government are subject to restrictions concerning notice and assessment. If no return is filed, or if the return is false or fraudulent, an authorized employee of the Service may make the return for the taxpayer from such information as can be obtained.

That's right, IRS can file a tax return for you. Doesn't this sound good? Not so fast. When IRS files a return on your behalf, they usually do not give you any tax credit, exemptions, allowances or expense which you may have been able to claim. This means that you will probably pay much more taxes than you would've imagined.

A common IRS tax problem or IRS tax controversy concerns raised by our Los Angeles, Riverside and Orange County clients to our tax attorneys centers around the tax problem which arises through foreclosure and short sales of real estate.

We are not talking about real estate taxes but IRS tax problems which arise as our housing markets crash in Los Angeles, Orange and Riverside areas.

IRS tax law requires all lenders to report to the Internal Revenue Service when they obtain partial or full satisfaction of a debt which is secured by interest in real estate. The lender is also required to report to the IRS when the borrower abandons property that is security for the debt.

Many California homeowners have no equity or are facing negative equity prospect in their homes also known as "upside-down" mortgages. Foreclosures are also exploding as Los Angeles, Orange County and Riverside Counties face year over year increase of foreclosures in excess of 290%. These events would normally trigger tax problems for many homeowners in California.

For example, if you owe $500,000 mortgage and the value of the home drops from $500,000 to $300,000, foreclosure sale at $300,000 relieves the borrower $200,000 in mortgage debt. This cancellation of debt in the amount of $200,000 is considered as income by the IRS. These borrowers, in addition to losing their house, would also get a rude awakening from the IRS in the form of debt forgiveness tax which could be in excess of $50,000.00. This surprise tax problem would devastate most people in Los Angeles, Orange and Riverside County.