Category: Tax

Tax Resolution Boot Camp – A Trial Lawyer’s Perspective

I recently had the opportunity to attend the two-day tax resolution “boot camp” offered by the American Society of Tax Problem Solvers (ASTPS). In spite of the name, ASTPS is a fantastic organization, and this “boot camp” was by far the best seminar of any sort I have attended. ASTPS is an organization for tax attorneys, enrolled agents (EA), and certified public accountants (CPA). No one else would join this organization, because the IRS no longer allows anybody else to solve the “tax problems” that ASTPS deals with. Simply put, appeals and complex collection matters are outside the domain of what un-enrolled tax preparers, or even those who have completed the annual tax preparer’s program, generally do. Besides, who would want to hire such a person for a complex tax matter, such as an audit, appeal, or an offer in compromise? The tax resolution “boot camp” was taught by a person, who is both a CPA and an Enrolled Agent. In fact, all the presenters met...

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A Special Thank You to the Stoneham Office of the Internal Revenue Service

I need to say something nice about someone at the Internal Revenue Service. I should preface this by saying that for the most part the individuals that I have dealt with at the Internal Revenue Service have been professional and helpful. Many have even been friendly. However, I thought that this recent experience was special and so I wanted to give a special shout out to the Stoneham Collections Office for going out of its way to help me and my client. I have a client whose divorce I did some years ago. At the time, neither he nor his wife were working and the agreement simply said that they would alternate claiming the tax credit for their child. Now my client is working, and I am doing his taxes. He did not claim the child in 2012, but we did claim the child in 2013. Unfortunately, the wife's address is impounded, and her former attorney is no longer practicing law. We did not know how to get a hold of her. After considerable networking we found her. She was not very cooperative....

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Early Retirement Distributions from IRAs, 401(k)s and other Retirement Savings Plans

The Internal Revenue Service has put out this article "Early Retirement Distributions and Your Taxes". I want to discuss it because it has been a major issue for many of my clients. In fact, I have a running joke whenever a client hands me a form 1099-R (the form that people receive when they take a distribution from a retirement plan) that they "did this to make me look bad". It seems that any time a client takes an early distribution from a retirement plan that it destroys their refund and sometimes even causes them to owe tax when they would otherwise receive refunds. This is true even if they "took the taxes already" which only means that some tax was withheld. Generally speaking, the withholding that is done is inadequate. There are also "hidden costs" to a 401(k) or other retirement withdrawal. I wanted to discuss this article when it came out, but it came out during the height of...

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The Irs’ New Tangible Property Regulations – Avoiding Having To Depreciate Even Major Structural Repairs

2014 was the first year under the new Tangible Property Regulations (“TPR”) that the Internal Revenue Service has finally published. It turns out that the new TPR are surprisingly taxpayer friendly. Because we do so many tax returns that involve investment real estate, including owner occupied multifamily homes, we have needed to get familiar with TPR quickly. The new “routine maintenance safe harbor” in TPR has opened up opportunities for taking immediate write-offs of significant repairs and restorations that in the past had to be depreciated. There are also new safe harbors for “small taxpayers” and “de minimis” transactions, that also aid in the immediate expensing of items we used to depreciate. It has taken some time to get comfortable with these new regulations, but fortunately we do such a volume of these kinds of tax returns that our office has gotten rather fluent with this. One of the nice things about TPR in general is that it defines “small...

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Be Wary Of Crooked Tax Preparers – Two More “Vanna Victims” Today

I had two new tax clients come in this morning who both transferred from the same tax preparer, and who both had tragic stories to tell.  In both cases the tax preparer was named “Vanna”, but did not put his name on the tax return. The first individual was audited by the IRS.  They disallowed all of his bogus tax deductions.  They disallowed the thousands of “unreimbursed employee business” miles he drove to and from his job (not only were the miles inflated, but commuting miles are not deductible).  They disallowed his clothing expense (clothes that can be worn in normal life, such as my suits, are not deductible).  They disallowed his “meals and entertainment” expenses (meals and entertainment are usually personal expenses).  They disallowed his travel expenses (vacation travel is not deductible).  They now want interest and penalty.  They charged him $17,000!  I asked if he told the IRS that “Vanna” did his tax return.  He said that the IRS told him...

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You Can No Longer Discharge Late Filed State, And Possibly Soon Federal, Income Taxes In Bankruptcy

As we enter the last month of tax season, people who owe taxes have to consider their options.  I often warn clients that nothing good comes from delaying filing.  In addition to the interest and penalty they will have to pay for not paying their taxes on time, they will also need to pay penalties for not filing their tax returns on time.  The IRS is very good about entering into payment plans of up to six (6) years.  Even the DOR is often open to payment plans.  There is usually a deal to be made, even when there is no current ability to pay any taxes. Unfortunately, the First Circuit Court of Appeals, the appellate court whose jurisdiction includes Massachusetts and New Hampshire, has recently given another reason why people should file their taxes on time.  The court held in the consolidated cases of Fahey v. Mass. Dept. of Rev., No. 14-1328; Perkins v. Mass Dept. of Rev.,
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The Department Of Revenue Has A New Identity Verification Program

I have posted in the past about Tax Refund Identity Theft.  I have put up a number of posts on Facebook about this subject, and more recently about the problems TurboTax has been having.   For example, I posted this article about TurboTax suspending e-filing of state tax returns because there have been so  many problems with fraudulent returns being filed on TurboTax. The states are fighting back against this problem.  For example, a number of states suspended...

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IRS Has Refunds Totaling $1 Billion For People Who Have Not Filed A 2011 Federal Income Tax Return

If people do not file their taxes on time, then they need to file their taxes late.  If you owe tax, then there is penalty and interest to pay for filing late.  If you receive a refund, then there is no penalty.  However, you need to file your tax return within three (3) years of its original due date, in order to receive a refund.  As such, the deadline for filing a tax return in order to receive a 2011 tax refund is April 15, 2015.  The IRS says that they still have over $1 Billion of 2011 refund money available. You may file older tax returns, but the IRS will not send a refund check.  Filing back taxes is hard to do, but not impossible.  We are available to prepare back taxes, not only back to 2011, but much...

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Bankruptcy, Taxes, Payment Plans And A New Special Deal

I posted in October about Bankruptcy, Taxes, Payment Plans And A Special Deal.   In that blog, I linked to my Favorite Fall Payment Plan, which is to pay $200 in the Fall to stop the phone calls and pay the rest when the tax refund arrives.  I also announced a special deal, which is that anyone who hires me for a new bankruptcy filing would also get a free individual tax return.  The details are described more deeply in the blog.  However, for people without businesses or non-owner occupied investment property “free” really does mean free.     That offer has expired, but I am extending it throughout the tax season now. I am also adding another “Special Deal”, but it requires that you specifically mention this blog (and that you...

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Record Keeping And Health Savings Accounts

When you withdraw money from a Health Savings Account (HSA), you will receive a 1099 saying how much was disbursed. That 1099 does not necessarily say what you used it for. If you withdraw money from an HSA in order to pay any kind of health care expense, that would include eye glasses, prescription drugs, dentists and almost any other kind of health care or medical expense, then you should not pay tax on the withdrawal. If you withdraw the money and use it for something else, then that withdrawal is taxable. Because the 1099 itself is not always so clear on how much of it was properly used and how much of it was not, it is a good idea to save those receipts. I do not believe that taking two or three thousand dollars from an HSA for medical expenses is much of a red flag for the Internal Revenue Service. However it is a good practice to make sure that you have your documentation whenever you are claiming a deduction or offset. Health Savings Accounts are one of those areas that you...

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