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Showing posts from 2017

New Email Scam

Here we go again:

Hi, how are you and your family? I have been in search for someone bearing this name in your country therefore when i saw your name, i am pleased to contact you and determine how best we can assist each other. I am working with a savings company here in Ipoh, Perak of Malaysia as the manager of the warehouse department. I believe it is in my destiny for me to have come across your name. I have a business i wish to share with you. I believe it will interest you, because it is in connection with your name and you will benefit from it.
A citizen of your country deposited a consignment of One Million, Seven Hundred and Fifty Thousand United States Dollars ($1,750,000.00), with the company i am working with in 2014 for 36 calendar months, and the due date for the deposit contract is 22nd of June 2017. Sadly, he died in a car accident in Japan. He was in Japan on a business trip where he met his end. The company headquarters’ boss does not know about his death. I knew about …

Trump's tax plan

Today, Pres. Trump unveiled the general outline for his new tax plan. Yes, to my great amazement, he is talking about simplification of the Internal Revenue Code. I do not know if Congress will let this happen, but the compliance cost of federal and state taxes is far too high and has become a large impediment on business growth in the economy in general.

One way that simplification is being proposed is that there would be a reduction in the current seven tax brackets 23 tax brackets of 35%, 25% and 10%. Also itemize deductions, other than charitable donations and mortgage payments, would be eliminated. This means that medical deductions, state and local tax deductions, casualty and theft losses, and unreimbursed employee business expenses would be eliminated. As part of the simplification, there would be an elimination of the estate tax at the federal level. Although that would affect only a small amount of estates, it would eliminate tax planning for everyone's estate.

Another i…

IRS Hires Collection Agencies -Watch out for Scammers

As a tax attorney, I get frequent calls and emails from people concerned about calls from the IRS.Almost all of these are scams and not real. The IRS post some information on this website about the scammers, but the scammers are too fast in changing their tactics for the IRS. Unfortunately the IRS is now making it easier for the scammers.

The IRS is now hired some collection agencies to try to collect money from taxpayers. Unfortunately, scammers are going to hop on this and many people are going to be fleeced out of their money. If anyone calls from the IRS, you should immediately get their name, telephone number and address. You should then contact your tax lawyer.

The IRS is hired for private debt collection agencies:
Conserve
Pioneer credit
Performant
CBE group.

Here in New Jersey, Pioneer credit has been a leading debt collector for the Division of Taxation. Unfortunately, they have many Rules and our quick to try any kind of collection activity permitted by the Division of Taxat…

No privilege for CPA and Taxpayers

There is been a long-standing rule that attorneys and clients have a privilege for their communications under most circumstances. This is not true for tax return preparers, accountants and CPAs under many circumstances, particularly where it matters most-when the IRS is attacking a taxpayer for criminal sanctions or fraud.

That is why it is crucial to have a tax attorney involved for giving documents to an accountant or tax preparer if there may be any issues. This is especially true during audit IRS collection matters.

Unfortunately, another cases come down from the Tax Court defeating any claim of a client and CPA privilege. This was reported by Parker tax publishing in their latest newsletter:

Taxpayer Had No Legitimate Expectation of Privacy in Records Held by CPA A district court denied a motion to suppress all evidence relating to tax records the IRS obtained from a taxpayer's CPA. The court rejected the taxpayer's argument that Code Sec. 7609 and the Code of Professional …

Scam Letters that appear as IRS Notices

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This is a scam notice received by clients that looks legitimate. The scam artists have taken the IRS logo and make the letter look like it's really from the IRS. It is not! If you click on the link it asked all kinds of personal information so the scam artist can empty your bank accounts, file fraudulent tax returns and even get credit cards in your name!

If you receive any notices from the IRS you need to immediately contact a tax lawyer. Do not click on any of the hyperlinks!

This is very serious!!!!!!


From: IRS-gov.us<usa1.tax-payers.rvs@wwt.net>
Date: Fri, Feb 17, 2017 at 8:24 PM
Subject: Your IRS Data Require Immediate Action
To: usa1.tax-payers.rvs@wwt.net



Dear IRS User,
This is an Important Message regarding your IRS Filing, from the previous year and current year.Our system indicates you have some changes in your record with us
and We will like you to Kindly follow the given instructions in order to comply with our new sytem requirements.To avoid future difficulty with …

IRS can Steal Your Passport - Let's stop it!

Prohibiting citizens from traveling abroad was the hallmark of many communist countries such as East Germany, the Soviet Union, Cuba, North Korea and China. Now, the US joins this dishonorable crowd by prohibiting travel by American citizens.

Specifically, Congress and the previous Obama administration passed a law authorizing the State Department to revoke a passport of an American citizen if $50,000 or more of taxes are due. The IRS has a public pronouncement on this:

https://www.irs.gov/businesses/small-businesses-self-employed/revocation-or-denial-of-passport-in-case-of-certain-unpaid-taxes

The IRS claims that sometime in 2017 they are going to implement this draconian policy. We now have a new Secretary of State, Rex Tillerson. He can simply tell the IRS that he is not going to revoke anyone's passport. President Trump can make an Executive Order prohibiting any regulations enforcing this misguided law. Finally, and more importantly, Congress should immediately repealIRC § 73…

Domestic Production Activities Deduction

The “manufacturers’ deduction” isn’t just for manufacturers The Section 199 deduction is intended to encourage domestic manufacturing. In fact, it’s often referred to as the “manufacturers’ deduction.” But this potentially valuable tax break can be used by many other types of businesses besides manufacturing companies.

Sec. 199 deduction 101
The Sec. 199 deduction, also called the “domestic production activities deduction,” is 9% of the lesser of qualified production activities income or taxable income. The deduction is also limited to 50% of W-2 wages paid by the taxpayer that are allocable to domestic production gross receipts.
Yes, the deduction is available to traditional manufacturers. But businesses engaged in activities such as construction, engineering, architecture, computer software production and agricultural processing also may be eligible.

The deduction isn’t allowed in determining net self-employment earnings and generally can’t reduce net income below zero. But it can …

2016 Tax Return - Take Bonus Depreciation

Why 2016 may be an especially good year to take bonus depreciation Bonus depreciation allows businesses to recover the costs of depreciable property more quickly by claiming additional first-year depreciation for qualified assets. The PATH Act, signed into law a little over a year ago, extended 50% bonus depreciation through 2017.

Claiming this break is generally beneficial, though in some cases a business might save more tax in the long run if they forgo it. However, 2016 may be an especially good year to take bonus depreciation. Keep this in mind when you’re filing your 2016 tax return.

Eligible assets
New tangible property with a recovery period of 20 years or less (such as office furniture and equipment) qualifies for bonus depreciation. So does off-the-shelf computer software, water utility property and qualified improvement property. And beginning in 2016, the qualified improvement property doesn’t have to be leased

It isn’t enough, however, to have acquired the property in 2016.…

Can you defer taxes on advance payments?

Can you defer taxes on advance payments? Many businesses receive payment in advance for goods and services. Examples include magazine subscriptions, long-term supply contracts, organization memberships, computer software licenses and gift cards.

Generally, advance payments are included in taxable income in the year they’re received, even if you defer a portion of the income for financial reporting purposes. But there are exceptions that might provide you some savings when you file your 2016 income tax return.

Deferral opportunities

The IRS allows limited deferral of income related to advance payments for:
Goods or services,Intellectual property licenses or leases,Computer software sales, leases or licenses,Warranty contracts,Subscriptions,Certain organization memberships,Eligible gift card sales, andAny combination of the above. In the year you receive an advance payment (Year 1), you may defer the same amount of income you defer in an “applicable financial statement.” The remaining in…

IRS Taxpayer Advocate calls for Congress to reform Internal Revenue Code

Tax season for individuals starts January 23, 2017 for the 2016 return. Unfortunately, most individuals are facing increasingly complex and confusing tax laws. It is not just businesses that are suffering. The National Taxpayer Advocate has called for Congress to simplify the Internal Revenue Code which takes individuals and businesses more than 6 billion hours a year to comply with filing.

The idea espoused by the Taxpayer Advocate the Congress was to have a neutral Tax Code and cut individual tax rates as well as business tax rates. This means that many of the exclusions, exemptions, deductions and credits would be eliminated as the trade-off for simplification and rate reduction.The recommendation is that Congress start with the tax code without any reductions and then only add back deductions, such as exclusion of capital gains on home sales, if the benefits outweigh the complexity of the provision. The idea is to have a simpler compliance mechanism and use tax is for collecting r…

115th Congress - Will we get Tax Reform and Simplification?

Yesterday, the 115th Congress convened.The Republicans are in charge of both the House and Senate and there is been a lot of talk about tax reduction and "tax reform". Does this mean we will get tax simplification? Since President Reagan signed the Internal Revenue Code of 1986, there have been more than 30,000 changes, excluding Obama care. The fact is the Internal Revenue Code is ridiculously complex and far too much time and money spent in our society both by individuals and businesses in complying and planning for our burdensome tax laws.

There definitely will be a push to lower corporate tax rates. This is good but let's also simplify our business tax structure.

Even more unnecessary and confusing is the personal side of the Internal Revenue Code. For example the alternative minimum tax, designed to force a few wealthy millionaires of the late 1960s to pay tax, has now resulted in more than 1/4 of the middle class paying this burdensome tax. The AMT must go!

There a…