Solve Tax Problems: Why Use A Professional?
Whether or not to utilize a tax profession such as a CPA or tax attorney is an important decision. Here are some things to consider:
1. Huge agencies. The tax agencies are massive organizations with many highly trained professionals on their side. Despite any hype to the contrary, they are there to collect taxes—not to provide independent counsel to taxpayers.
2. Tax return filings. Taxpayers are required to prepare and file their own tax returns. Even if the taxpayer is well educated and informed, the tax codes are vast and complex. Even tax attorneys and CPAs struggle to keep up. Thus trying to prepare your own return is not a good idea unless it is very simple such as a wage earner with no special income or deductions. Even then it would be wise to utilize tax software.
3. Tax avoidance. Taxpayers have a legal right to arrange their affairs in such a manner to minimize tax liabilities. This is called tax planning or tax avoidance and is highly advisable for taxpayers that are self employed, have a high net worth or otherwise complex tax situations. There are many legal ways to reduce taxes such as charitable donations, tuition fees, savings plans, estate planning, asset depreciation and so on.
4. Tax evasion. Taxpayers are required by law to file tax returns, not cheat on the accounting and pay taxes due. Failure to do this could result in criminal proceedings for tax evasion. It would be very wise to engage an experienced tax attorney if the IRS is contemplating this route. Dealing with the CID (criminal investigation division) is no small matter.
5. Overdue taxes. The IRS (for federal taxes) and the Franchise Tax Board (for California taxes) are basically collection agencies. Once a tax return is filed with tax due, the tax agency collection procedures kick in to full gear. In a very short time, they will take very aggressive action to collect any taxes due including tax liens, bank account liens, asset seizure and wage garnishment. There are a number of remedies such as negotiating installment agreements and offer in compromise.
Free Initial Consultation With John Spurgeon
Taxpayers looking to solve tax problems would be wise to engage an experienced tax attorney and/or CPA. John Spurgeon is both a CPA and tax attorney in Pasadena, California servicing clients in the San Gabriel Valley and the greater Los Angeles area. John Spurgeon & Associates have the proven knowledge and skill to effectively represent taxpayers when dealing with the IRS tax or the Franchise Tax Board. Please call 626-440-9518 for a complimentary initial consultation.
IRS Tax Problems: Beware of Fraudulent Acts
Auditors are trained to spot common types of fraudulent acts by taxpayers. The acts are called badges of fraud. Common badges of fraud include a business with two sets of books, false receipts and altered checks. These kinds of acts can land you in big trouble.
Auditors are trained to look for fraud. They know the tax law is complex and expect to find a few errors in every tax return. Hopefully, they will give you the benefit of the doubt if the error is interpreted as an honest mistake.
A careless mistake on your tax return might cause a 20% penalty to your tax bill. Tax fraud causes a 75% civil penalty. The line between negligence and fraud is not clear and subject to interpretation by Uncle Sam.
At the first hint of an IRS tax problem, contact a tax attorney. Let the attorney help you and the government distinguish what is negligence and not fraud.
John Spurgeon is a tax attorney in Pasadena, California servicing clients in the greater Los Angeles area. John Spurgeon & Associates, who are both tax attorneys and CPAs, have the proven knowledge and experience to effectively deal with IRS tax liens or the Franchise Tax Board. Please call 626-440-9518 for a complimentary initial consultation.
Tax Tips: Tax Surprises in Divorce
What if the tax law were to affect each of your family law cases? Consider the dangers and opportunities of taxation during and after divorce to help cushion your financial blows. Make the best use of available tax exemptions and relief to ensure truly equitable asset division and fair child and spousal support.
Consider the following tax tips and be sure you understand each:
● Family support taxation, payment and recapture.
● Taxation of “family home” transfers.
● Taxation of stock options.
● Account for factors that can skew the financial analysis of assets.
● Know how to make the best use of “innocent spouse” rules.
Use the following as a check list with your tax attorney.
I. DETERMINE FILING STATUS
A. Claiming Head of Household
B. Should a separated Couple File jointly or separately? Pros and Cons
C. Dependent Exemptions and Credits
II. RELIEF FROM JOINT AND SEVERAL LIABILITY – INNOCENT SPOUSE
A. Three Types of Relief
B. Joint Returns
1. Obtaining Relief Under IRC§6015(c) and IRC§6015(b)
a. Factors Weighing in Favor of Relief
b. Factors Weighing Against Relief
2. Equitable Relief Under IRC§6015(f)
C. Married Filing Separate Returns §66 (a-c)
D. Requesting Relief – Form 8857
III. SPOUSAL AND CHILD SUPPORT
A. Is the Support Tax Deductible?
B. What Qualifies as deductible spousal support?
C. Spousal Support: Payment to Third Party and “Recapture”
D. Child Support
1. Qualified Payment
2. Contingency Relating to the Child
3. Support Calculation Case Study
IV. TAX CONSEQUENCES IN THE DIVISION OF ASSETS
A. Requirements for §1041
1. Transfers Within One Year After Marriage Ends
2. Six Year Presumption – “Related to the Cessation” of Marriage
B. §1041 and Basis
C. Marital Residence Exclusion Requirements
V. DIVIDING STOCK OPTIONS AND PENSION PLANS
A. Glossary of Relevant Terms and Concepts
B. The Taxable Event
C. ISOs (Incentive Stock Options) vs. NQs (Non-Qualified Stock Options)
D. Dividing Stock Options: Transfer Taxes and Reporting Tips
E. QDROs to Divide Pensions
1. Definition
2. Key Components to Include
3. When to File a QDRO
4. Distribution Under a QDRO
VI. OTHER TAX CONSIDERATIONS
A. Equalizing Notes
B. Legal Expenses
C. Carryover Items
For more tax tips and other related tax attorney tips, please visit http://www.taxproadvocate.com
John Spurgeon is a tax attorney in Pasadena, California servicing clients in the greater Los Angeles area. John Spurgeon & Associates, who are both tax attorneys and CPAs, have the proven knowledge and experience to effectively deal with IRS tax liens or the Franchise Tax Board. Please call 626-440-9518 for a complimentary initial consultation.
Solve Tax Problems: Dealing With IRS Tax Liens
A federal tax lien is a legal claim on a taxpayer’s property to secure an unpaid tax debt. The IRS for federal income taxes and the Franchise Tax Board for California income taxes are basically collection agencies for the government. Taxpayers are required to prepare and file their own tax returns. In addition, taxpayers must be proactive to solve tax problems.
When A Lien Is Filed
A Notice of Federal Tax Lien is filed after:
• The amount of the tax liability is determined
• A Notice and Demand for Payment has been issued by the IRS
• Full payment is not made within 10 days
The lien is filed against the taxpayer’s assets so that the IRS ensures they get paid as a priority creditor in the event of bankruptcy or sale of assets such as your car or home. A tax lien will likely adversely affect a taxpayer’s credit rating as the lien is a public record.
Releasing A Lien
Once the taxes owing have been paid, the IRS has 30 days to release the tax lien. However, the IRS is a gigantic bureaucracy that does make mistakes—thus they may need to be nudged to get the lien released.
Credit Reporting Agencies
In an ideal world the credit reporting agencies would recognize that the lien had been satisfied and take it off a taxpayer’s credit report. As a practical matter it would be advisable to check your credit report and if needed send them a copy of the Certificate of Release.
Trouble Shooting
In you are in the process of getting a mortgage or otherwise need your credit report cleared up but the lien is overdue being released, then you could contact the Office of the Taxpayer Advocate. This office is a separate branch of the IRS and offers a free service to assist taxpayers in resolving matters with the IRS. Alternatively a tax attorney or CPA could be engaged to resolve the matter.
Free Initial Consultation with John Spurgeon
Taxpayers looking to solve tax problems would be wise to engage an experienced tax attorney and/or CPA. John Spurgeon is both a CPA and tax attorney in Pasadena, California servicing clients in the San Gabriel Valley and the greater Los Angeles area. John Spurgeon & Associates have the proven knowledge and skill to effectively represent taxpayers when dealing with the IRS tax or the Franchise Tax Board. Please call 626-440-9518 for a complimentary initial consultation.
