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Famous Tax People 08
Accounting Web posted a great article about famous tax cheats for 2008—sort of a looking back for tax cheaters.
The list: Wesley Snipes, Joe Francis (Girls Gone Wild), Nicholas Cage, Helio Castroneves and Paul Hogan (Crocodile) among others.
Read the whole story Click Here
Interesting story.
Bill Lowrance
Taxes 2008–What Is New
IRS has published the Form 1040 that individuals file for their 2008 tax returns. Yes, it is time to think about filing your 2008 individual income tax return. The normal due date is April 15, 2009. There a some new changes this year. IRS publishes the new Form 1040, along with instructions, every year. The instructions are, believe it or not, organized and easy to read.
Many people are talking about the economic stimulus payment, recovery rebate credit and withdrawal of your stimulus payment from a tax favored account, see my favorite tax blogger Taxgirl. You should read the IRS 1040 instructions, page 6, for some plain talk explanations. Click Here
Any stimulus payment you received is not taxable for federal income tax purposes, but it may reduce your recovery rebate credit. What? The recovery rebate credit, you ask. The credit is available if, for some reason, you did not receive a stimulus payment in 2008 and meet other requirements. In the instructions there is a full explanation and a somewhat workable “worksheet.”
Other new items:
First time home buyer: If you bought a home after April 8, 2008, and before July 1, 2009, and did not own a main home during the prior 3 years, you may be able to take the “first time home buyer credit.” The single largest provision in the $15.1 billion package of housing tax incentives in the recently enacted Housing Assistance Tax Act of 2008 (the “Housing Act”) is a measure allowing individuals buying their first home to take a tax credit of up to $7,500 of the purchase price. Qualified home buyers can subtract the credit amount from their federal income tax when they buy a home and even get a refund if the credit exceeds the tax. However, they are then required to pay the credit back over 15 years. The result is that the credit resembles an interest-free loan that must be repaid to the government.
The IRS standard mileage rate for business use of your vehicle in 2008 is 50.5 cents per business mile driven through June and 58.5 cents per business mile thereafter. The standard mileage rate for 2009 is 55 cents. You will need to allocate your automobile expenses between business and personal use based on miles driven during the year. Proper recordkeeping is crucial in the event of an IRS challenge.
If you received an economic stimulus payment last year that was directly deposited to a tax favored account and you withdrew the payment by the due date of your return (including extensions), the amount withdrawn will not be taxed. Good news, eh?
Of course, I must tell you that all of the above information is general in nature. It is not meant to tax advice or a legal opinion. Always consult a tax professional before thinking that information here is a “slam dunk” for tax advice.
Bill Lowrance
IRS Explains All The Tax You Want To Know
The annual “More Tax Than You Want To Know” is now available via the IRS website. Publication 17 explains everything you need to know about your taxes, returns and filing. See Publication 17
From IRS News:
“The IRS has placed its comprehensive tax guide for individuals on IRS.gov, updating it for tax year 2008. The updated on-line version of IRS Publication 17, “Your Federal Income Tax,” contains more than 900 interactive links.
Publication 17 has been updated with important changes for 2008, including information on the new recovery rebate credit, new first-time-homebuyer credit, and an additional standard deduction for real estate taxes. It has been published annually by the IRS for more than 65 years and has been available on the IRS Web site since 1996.
As in prior years, the publication provides information on how to file an individual tax return, what to include as income, how to calculate capital gains and losses, how IRAs and other expenses can affect how much income to report, whether to take the standard deduction or itemize, and how to figure taxes and credits.”
Printed copies of Publicaiton 17 will be available in January 2009.
All the good year to you.
Bill Lowrance
Lowrance Law LLC
IRS Eases Process To Avoid Federal Tax Lien
Selling your property is almost impossible if the IRS has filed a tax lien. If you are trying to sell or refinance your home and there is a tax lien, you can file certificate of subordination of federal tax lien. There is no special form, but you or your representative can send in a letter requesting subordination of the lien. You must include certain information in the letter. Follow the instructions in IRS Publication 784.
The Internal Revenue Service 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. Taxpayers or their representatives, such as their lenders, 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 is in Publication 783. See Today’s IRS Announcement Here
As always if you need help, call me.
Bill Lowrance
Lowrance Law LLC
McLean, VA
IRS Increasing Workforce-More Enforcement
The IRS announced that it is hiring senior level Economists and Internal Revenue Agents (International Examiner, Financial Products & Transactions Examiner, and Team Member/Domestic Agents for entry on duty in March and April 2009. This is another indicator that the IRS will be stepping up enforcement efforts in 2009 and subsequent years. Special emphasis will be on international transaction including offshore bank accounts, offshore trusts, offshore income and other cross border transactions.
IRS Announcement: See Whole Article Here
“Do you have a specialty in tax administration? Do you have family, friends, or neighbors with this expertise who might be interested in joining the Internal Revenue Service? If so, look no further—the Large and Mid-Size Business (LMSB) Division of the Internal Revenue Service has challenging positions available now!
LMSB is seeking to fill 100 technical GS-11, GS-12, and GS-13 positions nationwide, including Economists and Internal Revenue Agents (International Examiner, Financial Products & Transactions Examiner, and Team Member/Domestic Agent) with entry on-duty dates planned for March and April 2009. To view more details and apply for these vacancies, visit the Office of Personnel Management Web site for IRS jobs at: http://jobsearch.usajobs.opm.gov/a9trirs.asp . Select “Economist” or “Internal Revenue Agent” under Occupational Series and click on Search for Jobs.”
Bill Lowrance
Lowrance Law LLC
McLean, VA
US Tax Investigations–Foreign Bank Accounts and Tax Havens
Thanks to Tax Prof Blog for A NYT Story on the expanded US Justice Department and IRS investigation of foreign banks, Credit-Suisse and HSBC and their private banking services.
The new investigation relates to the present investigation into UBS Bank in Switzerland See See Prior Post. The IRS and US Department of Justice (DOJ) are really looking for US citizens who are stashing money and assets in foreign accounts without reporting such accounts in filings with the IRS. This investigation will come to fruition in the next several months to a year or more. In this type of investigation, the government moves forward slowly and methodically. The IRS and DOJ have to conduct the investigaitons using various international information gathering treaties and agreements.
Don’t worry, however, the wheels of justice grind slowly. The IRS and DOJ will eventually get some information about US citizens putting money in foreign bank accounts. The information will be used to identify the people, find their tax filings, updated contact information and reported financial holdings. The resulting case will go through either the civil or criminal process. If you have a foreign account you have reported to the IRS, carefully plan your future.
Bill Lowrance
Your Virginia Tax Attorney
Lowrance Law LLC
If You Disagree With IRS Audit Appeal You Will
What can you do if the IRS audits your tax return and determines you owe more money? If the amount IRS says you owe is less than $25,000, and you disagree with that determination, you should file an appeal.
The two most active IRS divisions are the examination and collection functions. The examination division will audit your tax return and determine if you owe additional tax. The collection division attempts to collect taxes that you owe the IRS. In both situations, if you disagree with the IRS, you can file an appeal to the Office of Appeals, see Appeals. The Appeals mission is to settle tax disagreements without having to go to Court and a formal trial. The Office of Appeals is independent of any other IRS office and provides a venue where disagreements concerning the application of tax law can be resolved on a fair and impartial basis.
If the IRS audits your return and they make a determination of additioan taxes due. If the amount involved is less than $25,000, you can utilize the small case request for Appeals Division rather than the more complicated formal written protest. You can represent yourself if you can adequately explain why you disagree with the IRS findings. Basically, you send a letter requesting Appeals consideration and explaining the audit changes you do not agree with and the reason you don’t agree.
For specific guidance in preparing a small case request/protest, refer to Form 12203, Request for Appeals Review.
If the IRS determines you owe more than $25,000 in additional tax, you may want to consult with your CPA, accountant or tax attorney.
Bill Lowrance
Swiss Bank UBS Clients Hiring Tax Attorneys
Some US citizens who have secret, offshore Swiss bank accounts are hiring attorneys and going to the IRS to disclose the unreported accounts. All this activity stems from the prior indictment of a UBS bank executive for providing some US citizens with aggressive, advanced tax avoidance (evasion?) schemes. See prior post Click Here. Various news accounts report that over 20,000 US citizens have secret Swiss accounts at UBS. Of course, foreign accounts must be reported when you file your tax return. Not reporting the foreign accounts is a separate criminal tax violation.
A Reuters story reports that some USB clients are hiring tax lawyers to pursue amnesty using the IRS voluntary disclosure program. See Reuters Article
The IRS voluntary disclosure program is a little known method to disclose to the IRS any tax violations so that you can, hopefully, avoid criminal prosecution. See IRS Disclosure Announcement. The voluntary disclosure program is utililzed by tax attorneys in assiting clients before a criminal tax investigation starts. Just so you know, when a Special Agent of the IRS Criminal Investigation Division (CID) knocks on your door, you are in serious trouble. A “voluntary disclosure” does not automatically guarantee immunity from prosecution; however, a voluntary disclosure may result in prosecution not being recommended. This practice does not apply to taxpayers with illegal source income.
If you have one of the UBS accounts, find a good tax attorney and consider alternatives, including voluntary disclosure, to take before the CID agents come to your door.
Bill Lowrance
Your Virginia Tax Attorney
Economic Stimulus Act 2008 & Business Tax Benefits
The Economic Stimulus Act of 2008 contains two provisions that provide tax benefits for businesses. The first provision increases the limit up to which a business can expense property purchased and placed in service during its 2008 tax year. The second provision provides an additional 50 percent special depreciation allowance for property acquired and placed in service during calendar year 2008.
Unlike the economic stimulus payments that millions of individuals have already received, the tax benefits for businesses are not automatic; businesses must act to take advantage of the new provisions by purchasing qualifying property.
The Joint Committee on Taxation estimates that businesses stand to lower their 2008 tax bills by roughly $45 billion as a result of the two business provisions in the Economic Stimulus Act of 2008; these provisions accelerate into 2008 the tax benefits that otherwise would not have been available until future years.
Bill Lowrance
Swiss Bank Hands Over US Citizens’ Account Informtion
A few months ago, the IRS and US Department of Justice filed a court action against Swiss bank, UBS, the world’s biggest bank to the rich, requesting US citizens secret bank account information. See Story Here. UBS has given some information to the Department of Justice and the IRS.
The IRS is looking for secret bank accounts held by US citizens who may be committing tax fraud or evasion. See See Reuters Article
After the IRS gets the information, they will identify and locate the US citizen having the account. Believe me, the IRS will come knocking on your door.
Call me.
Bill Lowrance
Your Virginia Tax Attorney