2017 Annual Income Tax Seminar – June 23, 2017
Join our firm members at the 2017 Annual Income Tax Seminar, scheduled for Friday, June 23, 2017, at Whittier Law School, in Costa Mesa, California.
This all-day event features presentations by leading tax experts, and topics include:
Setting the Bar High: Lisa Nelson ’05 rises in tax law and returns to Chapman as faculty
Great read from Chapman University.
Attorney Lisa Nelson, B.A. English ’05, has been on a dynamic path since graduating from Chapman, making partner in a law firm after roughly 10 years. In her work, she examines the intricate details of tax law ranging from foreign tax to small disputes.
Unpaid Taxes Over $50,000 May Result in Loss of Passport
Due to the enactment of the Fixing America’s Surface Transportation (“FAST”) Act in December 2015, a new section was added to the Internal Revenue Code, 26 U.S.C. §7435, authorizing the Commissioner of the IRS (IRS) to certify to the Secretary of State a “seriously delinquent tax debt” for purposes of revoking, denying or placing limitations on a taxpayer’s passport. As of the date of this article the IRS has not yet started certifying tax debt to the State Department, however according to the IRS website, certification will begin in early 2017.
A tax liability meets the definition of “seriously delinquent tax debt” when an individual’s tax debt is unpaid, legally enforceable and meets these additional criteria: (1) the tax has been assessed, (2) the amount exceeds $50,000, and (3) an IRS Notice of Lien has been filed and administrative appeal rights have been exhausted or expired, or an IRS levy has been made pursuant to IRC §6331.
Three Circuit Courts to Consider the Issue of When a Challenge to an Underlying IRS Liability can be Raised in a Collection Due Process Appeal
Docketed in the Fourth, Seventh, and Tenth Federal Circuit Courts are cases which address the ability of a taxpayer in a Collection Due Process (CDP) appeal to challenge the merits of the underlying tax liability when the taxpayer previously had the opportunity to challenge the liability administratively. Iames v. Commissioner, Docket No. 16-1154, (4th Cir.), Our Country Home Enterprises, Inc. v. Comissioner, Docket No. 16-1279, (7th Cir.), Keller Tank Services II, Inc. v. Commissioner, Docket No. 16-9001 (10th Cir.). At issue in all three cases is I.R.C. §6330(c)(2)(B), and what exactly the phrase “otherwise have an opportunity to dispute such tax liability” means. Our firm, The Law Offices of A. Lavar Taylor, represents the taxpayers in each of the three pending Circuit Court cases.
These three cases present an issue of first impression for the Courts of Appeal. At issue is the language of §6330(c)(2)(B) which allows for the challenge to the amount of an underlying liability if “the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability”. In these three cases a notice of deficiency was not, and could not, have been issued to the taxpayers. As such the issue before the Courts of Appeal is what exactly constitutes an “opportunity to dispute such tax liability”.
Federal Agency Targets Individuals who Purchase Real Estate through a Shell Company
On July 22, 2016, the Financial Crimes Enforcement Network (FinCEN) announced an expanded Geographical Targeting Order (GTO) aimed at identifying individuals who purchase residential real estate property through a shell company. FinCEN is a bureau of the U.S. Department of Treasury. FinCEN’s mission is to safeguard the financial system from illicit use, combat money laundering, and promote nation security through the collection, analysis, and dissemination of financial intelligence. FinCEN carries out its mission by receiving, maintaining, analyzing, and disseminating financial transaction data. This includes the processing of Form 8300, a Form that is required to be filled out when businesses receive more than $10,000 in cash in one transaction or in two or more related transactions. Form 8300 must also be filed in specified special situations, such as when a GTO is in force.
This GTO is in effect from now through February 23, 2017. The new GTO is aimed at the following metropolitan areas: (1) Los Angeles County; (2) San Diego County; (3) San Francisco (including San Mateo and Santa Clara); (4) New York City (all boroughs); (5) Miami-Date County; and (6) San Antonio, Texas (Bexar County).
Fighting the IRS (and the California Employment Development Department) in Worker Classification Disputes
What do you do when the IRS (or the California EDD) shows up and wants to audit your payroll tax returns to determine if the people you are paying as independent contractors should be treated as employees for payroll tax purposes? While you may be tempted to handle the audit yourself, that could get you into lots of trouble.
Lisa Nelson and Jonathan Amitrano selected 2016 Southern California Super Lawyers Rising Star
There is much to celebrate at The Law Offices of A. Lavar Taylor, LLP. The Law Offices of A. Lavar Taylor, LLP is proud to announce that Partner Lisa Nelson and Associate Jonathan Amitrano have been selected to be on the 2016 Southern California Super Lawyers Rising Star list. This prestigious award is given to the top 2.5% of attorneys who have demonstrated excellence in the practice of law. Rising Stars are selected after a vigorous selection processing combining research, peer nominations, and peer reviews. Please join our firm in congratulating Lisa and Jonathan for being recognized for their exemplary work and dedication to tax controversy law.
FTB Statute of Limitations on Collection
If you have an outstanding Franchise Tax Board (FTB) income tax liability, or if you are a practitioner representing clients before the FTB, it is important to understand the FTB collection statute of limitations.
California Revenue & Taxation Code (R&TC) §19255(a) prohibits the collection of a tax after 20 years have lapsed from the date the latest tax liability for a taxable year becomes due and payable. While on its face this rule appears to indicate that the FTB has only 20 years to collect on an outstanding tax liability, R&TC §19255(a) is much more complex. The term “latest tax liability” refers to the most recent assessment. Pursuant to R&TC §19255(c)(2), If the FTB makes an assessment for a given tax year, the collection statute for any liability owed prior to the new assessment is reset. For example, Mike files his 2011 income tax return on April 15, 2012, reporting a balance owed of $10,000, which Mike cannot pay. The FTB audits Mike in the spring of 2014, and issues a $5,000 assessment which went final (and therefore became “due and payable”) on June 12, 2014. The FTB now has twenty years from June 12, 2014 to collect both the balance reported on the originally filed return (April 15, 2012 return), as well as the audit assessment.
Update On The “Late Return” Dischargeability Litigation: 9th Circuit To Hold Oral Argument in Smith Case
Here is a recent article our Lavar Taylor wrote for www.ProcedurallyTaxing.com
We welcome back A. Lavar Taylor who updates us on developments in the Ninth Circuit regarding whether a late-filed return is a return for purposes of the discharge rules in the Bankruptcy Code.
Watch Out For IRS Phone Call Scams
The Internal Revenue Service (IRS) has released a warning stating that all American taxpayers should beware of scammers. Every year when tax season rolls around, scammers attempt to prey on unsuspecting consumers. Unfortunately, vulnerable citizens such as recent immigrants and the elderly are usually top targets. If you answer the phone, and the person on the other end claims to be a representative of the IRS, watch out! The IRS very rarely contacts taxpayers over the phone or through e-mail. Typically, the agency first contacts taxpayers using snail mail. You should be very skeptical of anyone calling you on the phone who claims to work for the IRS, if they have not first sent you a letter. Before you make any payment, or give them any personal information, you should speak to an experienced tax attorney.
Six Warning Signs of an IRS Phone Impersonation Scam
Owing Federal Taxes Could Cause You to Lose Your Passport
Congress recently passed a five year, $300 billion dollar transportation bill known as the Fixing America’s Surface Transportation Act (FAST Act). The primary goal of the bill is to allocate Federal money to update American infrastructure, but tucked deep within the bill is a key tax provision that could have serious ramifications for those who owe money to the IRS. In addition to having to deal with the interest, the penalties, tax liens, levies and other headaches, a serious Federal tax delinquency may now cost you your U.S. passport. Loss of your U.S. passport will mean that you cannot travel outside the United States. For taxpayers living in certain states that have not complied with the Real ID Act, the loss of your U.S. passport might also make it difficult to travel on airplanes in the United States and to enter certain federal buildings and facilities.
If you have any questions about this new law, please contact the Law Offices of A. Lavar Taylor LLP.
FTB Upgrades Online Access
As of January 4, 2016, the FTB started rolling out the new and improved MyFTB. This is the online access to taxpayer accounts which will now provide more detailed information to those of us who represent taxpayers. Individuals may still sign up for access to their own individual or business account.
A major change that has been implemented is the submission and processing of power of attorney forms. The FTB will no longer accept faxed powers of attorney. Instead, taxpayers who hire professionals to represent them before the FTB should use the online option to submit a power of attorney. A representative can input the information online for the taxpayer, however it will not be processed until the taxpayer logs in to their “MyFTB” account and approves or rejects the power of attorney, or the intended representative submits a signed Form 3520 with their online application. The online process will be a faster process overall and it will provide immediate feedback on potential errors. Alternatively, a power of attorney form can be mailed to the FTB. The problem with snail mail is the processing time is estimated to be approximately 90 days. Clearly the state is leaning green.
In Memoriam – Fred Richard Shapiro
Our dear colleague and friend Fred Richard Shapiro (“Dick”) passed away Friday October 23, 2015, at the age of 80. Dick had an amazing mind for numbers and could cite IRS code sections easier than some people can count. He brought his extensive tax background and incomparable negotiating skills to our firm in 1996. His almost 20 year career with us was filled with devotion and fun. He will be greatly missed.
We know he is saving a seat for us at the big restaurant in the sky! Descansa en paz nuestro amigo!
It’s a Shame to Not Pay Your Taxes
Pursuant to California Revenue and Taxation Code Section 19195, the Franchise Tax Board must publish, twice a year, a list of the top 500 taxpayers (individuals and corporations) who owe the FTB more than $100,000 in tax. The legislative intent is to close the tax gap but to the lay person the purpose of the list is apparent – shame those taxpayers into paying. But does it work?
First, the FTB must send notification by certified mail to taxpayers who are vetted for the list 30 days prior to posting their information. This is to allow the taxpayer an opportunity to resolve their tax account before being published on the wall of shame. How does a taxpayer resolve an account to avoid publication? The FTB considers the following as resolution of a delinquent tax account for purposes of avoiding inclusion in the list:
New Law Alters FBAR Filing Deadline
Recent changes to the law have altered the due date of FinCen Report 114, a form commonly referred to as the FBAR. The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 was recently signed into law, which alters the due date for FBAR filings.
The FBAR has historically had a filing deadline of June 30 of the following year. Starting with tax year 2016, the June 30 deadline has been changed to April 15, to coincide with the Form 1040 deadline. This means your 2016 FBAR will be due on or before April 15, 2017. Similar to Form 1040, you will now be able to extend the time to file your FBAR by a maximum of six months. For taxpayers living abroad who have a Form 1040 due date of June 15, the Act’s reference to Treasury Regulation §1.6081 appears to indicate that the FBAR deadline will likewise be June 15.
Lavar Taylor – Most Honored Professionals Award
Mr. Lavar Taylor has recently been selected as one of America’s Most Honored Professionals for his continuous professional recognition, an accomplishment realized by the Top 5% of American Professionals.
Super Lawyer Award to Jonathan Amitrano
Jonathan Amitrano has recently been selected as a 2015 Southern California Super Lawyers Rising Star. This award is given to the top 2.5% of attorneys who have demonstrated excellence in the practice of law.
New Mandatory Filing Requirement for U.S. Persons with an Ownership Interest in a Foreign Business
Most taxpayers are familiar with the need to file forms to report to the IRS foreign financial accounts and interests in foreign corporations and partnerships. There is one other filing requirement, Form BE-10, which is called the Benchmark Survey of U.S. Direct Investment Abroad. The survey is conducted every five years. The survey for 2014 was originally required to be filed by May 29, 2015. Due to the lack of publicity, the due date has been extended to June 30, 2015. It is to be filed with the Department of Commerce ‘s Bureau of Economic Activity.
Congress enacted legislation in 1976 authorizing the Commerce Department to collect information about U.S. ownership of foreign business entities every five years. The legislation is codified at 22 U.S.C. secs. 3101 et seq. Prior to the report for the 2014, year, filing was discretionary. The form for 2014 is mandatory and is required to be filed by June 30, 2015. By law, the information provided is to be confidential and is only to be used for statistical and analytical purposes.
Court Jurisdiction: It’s Not Just for Law Professors
This article appeared in the January 2015 issue of CCH’s Journal of Tax Practice & Procedure. Download article here.
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Discretionary Disallowance of Compensation Paid to Workers: The Need for Guidance under R&T Code Sections 17299.8 and 24447
Can the IRS collect from the general partner for the partnership’s tax liabilities?
Brief filed with the United States court of Appeals for the Ninth Circuit.
Court Jurisdiction: It’s Not Just for Law Professors By A. Lavar Taylor
Lavar Taylor is the Founder of Law Offices of A. Lavar Taylor, APC, in Santa Ana, California. He has li8gated cases in all of the courts discussed in this article, as well as in the federal Courts of Appeals and the U.S. Supreme Court.
INTRO Lavar Taylor discusses the statutes governing the jurisdiction of the four key courts which have jurisdiction over almost all civil tax disputes at the trial level (i.e., the Tax Court, District Courts, the U.S. Court of Federal Claims, and Bankruptcy Courts) and also examines some of the case law which interprets these jurisdictional provisions.
IRS Criminal Investigation Division Announces New Policy on Structuring Cases
The IRS has recently issued a new policy relating to civil forfeiture in structuring cases. Structuring is the practice of executing financial transactions in a pattern calculated to avoid the creation of certain records or reports. Pursuant to 31 CFR §103.22, financial institutions are required to report each deposit, withdrawal, exchange of currency or other payment or transfer, by, through, or to such financial institution which involves a transaction in currency of more than $10,000. When an individual or business deposits or withdraws more than $10,000 in currency through a financial institution, the institution files a currency transaction report (CTR). CTRs are used by the government as a way to verify income and to catch individuals engaged in illegal transactions and money laundering.
IRS Criminal Investigation Division Announces New Policy on Structuring Cases
The IRS has recently issued a new policy relating to civil forfeiture in structuring cases. Structuring is the practice of executing financial transactions in a pattern calculated to avoid the creation of certain records or reports. Pursuant to 31 CFR §103.22, financial institutions are required to report each deposit, withdrawal, exchange of currency or other payment or transfer, by, through, or to such financial institution which involves a transaction in currency of more than $10,000. When an individual or business deposits or withdraws more than $10,000 in currency through a financial institution, the institution files a currency transaction report (CTR). CTRs are used by the government as a way to verify income and to catch individuals engaged in illegal transactions and money laundering.
To avoid the generation of CTRs, some taxpayers intentionally make cash deposits of less than $10,000. When financial institutions see such deposits they will often file a suspicious activity report (SAR). A SAR notifies the government of the suspicious activity which is occurring in a given financial account, and the government will use this information to initiate investigations into the reported structuring. In many structuring cases, the taxpayer does not become aware of the government’s investigation into their structuring of funds until the government seizes all of the funds from their financial account.
IRS Completes the “Dirty Dozen” Tax Scams for 2015
We’ve Moved
As of 11/1/2014 our new address is located at 3 Hutton Centre Drive, Suite 500 Santa Ana, CA 92707-0516
What Constitutes an Attempt to Evade or Defeat Taxes
What constitutes an attempt to evade or defeat taxes for purposes of Section 523(a)(1)(C) of the bankruptcy code: the ninth circuit parts company with other circuits.
BY A. LAVAR TAYLOR
Bankruptcy and Insolvency Tax
The following is a list of several bankruptcy and insolvency tax publications.
2009
“Does a State Court’s Approval of a Final Account and Report Bind Federal Entities?”, California Receivership News, a magazine publication of the California Receivers Forum (Summer 2009)
Tax Collection
- Attorneys in the firm have authored articles and a number of legislative and administrative proposals, including proposals dealing with “Innocent Spouse” laws and Collection Due Process appeals. A number of the ideas contained in these proposals were eventually enacted into law, including a) the expansion of the Tax Court’s jurisdiction in Collection Due Process cases, b) modification of the Tax Court’s jurisdiction in Innocent Spouse cases, and c) an increase in the amount of damages available when the IRS violates the law while seeking to collect taxes.
- ““Litigating the FBAR Penalty in District Court and the Court of Federal Claims,” California Journal of Tax Litigation (March, 2014)
Related Tax Links
The following are helpful tax related links.
FEDERAL:
- Tax Professor Blog: www.taxprof.typepad.com
- Federal Tax Crimes: http://www.federaltaxcrimes.blogspot.com/
- Joint Committee on Taxation: www.jct.gov
- US Senate Committee on Finance: www.finance.senate.gov
- Tax Bill Tracker: ria.thomsonreuters.com
STATE: