Five Things to Look for in a Tax Resolution Company

My law firm’s blog recently posted a new article explaining five essential things to look for in a tax resolution company. You can read a snippet of the post below, or read the full entry at the RoniDeutch.com Tax Relief Blog.

1. Professional and Useful Website

You would be surprised how much you can learn about a business using the Internet. Before hiring a tax resolution company, you should always spend a few minutes reviewing their website. Look for informative testimonials and information about any chambers of commerce, or professional organizations the company is aligned with.

In addition to information about the business on their website, you should also see if they offer information on topics related to tax debt resolution. If the company employs experts knowledgeable about the various IRS tax resolution programs, then the company should have useful information such as informative articles, a glossary of tax related keywords, newsletters and a blog (that is updated regularly) for you to review.

2. Successful Track Record

A quality tax resolution company will be able to provide evidence of a successful track record of resolving delinquent accounts with the IRS. If you cannot find information on a company’s website about recent resolutions that is has achieved for its clients, then you should consider asking a representative of the company for this information. If you do speak with a tax resolution company, you should also inquire as to whether the company has experience in resolving cases similar to yours.

Mcdonald's Co-Owner Admits Cheating IRS Out of More than $600k

Yesterday a McDonald’s franchise owner in Minnesota plead guilty to charges of IRS tax evasion. The husband and wife cheated the IRS out of more than $600,000 in payroll taxes, and could face up to five years in prison as a result.

According to the Star Tribune post below, the couple cheated the IRS by failing to turn over the employment taxes that were collected.

Stephen J. Kopel, 62, of Rosemount, pleaded guilty Tuesday in federal court in Minneapolis to willful failure to account for and pay taxes.

Kopel, whose S&P Foods Inc. operates a McDonald's near 150th Street and Robert Trail, failed to pay over employment taxes to the IRS from 2003-2006. The total in unpaid taxes from those years was $627,437.41.

Kopel faces a potential maximum penalty of five years in prison. Sentencing has yet to be scheduled.

IRS visits Sacramento Carwash in Pursuit of 4 Cents

Over the weekend my hometown of Sacramento, California showed up on all the tax news sites and blogs after the SacBee reported that IRS officers visited a local carwash because of a 4 cent tax liability. Although the original debt was only 4 cents, IRS fees and penalties raised the total to $202.35. However, the owner of the local carwash asserts he has never owed the IRS and is baffled by hour a 4 cent debt could result in over $200 worth of fees. Check out the following story on the incident via SacBee.com.

Arriving at Harv's Metro Car Wash in midtown Wednesday afternoon were two dark-suited IRS agents demanding payment of delinquent taxes. "They were deadly serious, very aggressive and very condescending," says Harv's owner, Aaron Zeff.

The really odd part of this: The letter that was hand-delivered to Zeff's on-site manager showed the amount of money owed to the feds was ... 4 cents.

Inexplicably, penalties and taxes accruing on the debt – stemming from the 2006 tax year – were listed as $202.31, leaving Harv's with an obligation of $202.35.

Zeff, who also owns local parking lots and is the president of the Midtown Business Association, finds the situation a bit comical.

"It's hilarious," he says, "that two people hopped in a car and came down here for just 4 cents. I think (the IRS) may have a problem with priorities."

Continue reading at SacBee.com…

IRS Outlines Steps to Assist Taxpayers?

In this new press release, the IRS explains the tactics they are using to assist “unemployed taxpayers and others,” however as one of the attorneys at my law firm pointed out some of the statements they make are nearly identical to ones they made in this press release—published a year ago.

Last year, the IRS promised to provide assistance in the following areas:

• Postponement of Collection Actions
• Added Flexibility for Missed Payments
• Additional Review for Offers in Compromise on Home Values
• Prevention of Offer in Compromise Defaults
• Expedited Levy Releases

Then in this new release the IRS now promises to help taxpayers in the following ways:

• Postponement of collection actions in certain hardship cases
• Added flexibility for missed payments on installment agreements and offers in compromise
• Additional review of home values for offers in compromise
• Accelerated levy releases for taxpayers facing economic hardship

Is the IRS really putting extra effort into helping unemployed taxpayers, or just reusing an old press release? Either way, actions speak louder than words and I just have not seen any real action on these objectives.

CNN Headline News Appearance

I was interviewed last Friday during a segment on CNN’s Headline News. During my appearance I offered general tax season advice and also explained how the IRS is going to be extra aggressive to recoup lost revenue. If you missed my interview then be sure to check it out in the embedded video below.

Health Effects of IRS Collections

I put a lot of effort into writing about the financial consequences of unpaid tax debts on my blog. However, the stress of an IRS audit or the back tax collection process can lead to very serious health problems as well. To help the readers of my blog avoid a serious medical issue, I have put together the following list of common health effects of IRS collections. By staying aware of potential problems, you can establish a routine to properly manage your stress.

Chronic Stress

Dealing with the IRS can be stressful for any American. However, when the stress becomes chronic it can lead to a whole other set of medical issues. Chronic stress is the human body’s response to large amounts of stress for prolonged periods of time. If untreated, chronic stress can seriously inhibit both your mental and physical health in a variety of ways including headaches, insomnia, anxiety, mood swings, depression, hypertension, hemorrhoids, and even varicose veins. In more serious cases chronic stress can develop into panic attacks, and eventually a panic disorder. All of these symptoms are difficult to live with, and impossible to ignore. If you are experiencing any signs of chronic stress, then I highly recommend seeking the opinion of a medical professional.

Eating Problems

As a response to insomnia, depression, or stress it is very common to unknowingly alter your eating habits. Disorders related to eating can develop quickly, and be hard to recognize. If you find yourself not following your usual eating habits because of stress, then you should try planning balanced meals a day ahead of time. That way you can stick to your plan, and ensure you are receiving proper nutrition. Additionally, having an eating plan can make it difficult to skip meals, or resort to only eating unhealthy fast food. If you continue to struggle with your eating habits then you might want to seek support from friends and family, or even a trained therapist.

Depression

Severe stress and mild to severe depression often go hand-in-hand when dealing with life changes and prolonged problems, such as IRS collections. Depression comes in many degrees of severity, but recognizing that you have a problem with depression is not always easy. Everyone feels depressed at times, but if your depression continues to last, and you become so unhappy that it is difficult to get out of bed then you may have a more serious disorder. Try spending more time with close friends and family, especially on your most stressful days. If this does not help then you may want to visit a doctor or psychiatrist to see if your depression is a problem that needs medical treatment.

Dental Health

Constantly worrying about a tax problem can also lead to dental issues, if you are not properly managing your stress. Studies show that individuals facing large amounts of severe stress for an extended period of time have higher chances of developing tooth or gum disease. It is also common for people to begin grinding their teeth while under stress, which can also lead to dental problems. Therefore, it is important to remember your dental health – and not neglect your teeth – while going through a stressful time in your life.

PTSD

Once the IRS collection process is over and the weight is lifted from your shoulders, you should still monitor your health and mental well being for an extended period of time. Post-traumatic stress disorder can happen to anyone – and in varying degrees – that have dealt with such a stressful situation that their body could not handle it at the time. Common symptoms of PTSD are flashbacks, lucid nightmares, sleeplessness, anxiety, and emotional numbness. If you experience any of these symptoms make an appointment with your doctor as soon as possible.

Other Serious Risks

The list goes on and on when it comes to the health effects of an unhealthy state of mind. In addition to the problems listed above, other serious risks include ulcers, obsessive-compulsive disorder, severe anxiety, hyperthyroidism, hair loss, heart disease, and even cancer.

Prevention

Obviously the best way to avoid any of the aforementioned health problems is to remove the issue causing you stress. However, when it comes to tax debts simply removing the problem is much easier said than done. One option is to hire a tax lawyer who can handle your IRS back tax account. Once they have a power of attorney on file, you can forward your lawyer all letters and calls you receive from the IRS. Additionally, take active steps to keep your body relaxed such as yoga, meditation, or daily breathing exercises. If you are still having trouble dealing with the stress then you should consider seeking help from a medical professional as well.

Informant Says He Will Assist Further in Tax Case Against Swiss Bank

Bradley Birkenfeld, a former UBS banker and informant in the UBS case is now saying he can further assist in the tax case against the bank. He was slated to start a three year prison sentence early in January, but is reportedly hoping that additional cooperation with the government will reduce that sentence.

As this article on NYTimes.com explains, Birkenfeld was sentenced in August, but filed a new postponement request earlier this week with a federal district court in Florida.

The filing also requested a hearing to reconsider the 40-month sentence imposed on Mr. Birkenfeld on Aug. 21.

Prosecutors described Mr. Birkenfeld as the man most responsible for igniting an investigation into rich Americans’ use of secret Swiss bank accounts to avoid taxes. Partly because of Mr. Birkenfeld’s disclosures, UBS has agreed to disclose to the United States the names of 4,450 wealthy Americans suspected of hiding assets and dodging taxes in secret accounts.

The United States Treasury loses an estimated $100 billion a year to offshore tax cheats.

UBS in Talks to Settle Case on 52,000 Accounts

After months of negotiation it looks like UBS, the largest Swiss bank, has finally agreed with the Federal government to give up the names of over 52,000 Americans who are suspect of using their accounts to illegally avoid paying their taxes.

According to Bloomberg.com, “UBS agreed to an unprecedented breach of Swiss secrecy laws by giving the Internal Revenue Service data on more than 250 accounts. Switzerland, which supports UBS in the case, said the U.S. push for data on 52,000 other accounts is a threat to its sovereignty and would force the bank to violate Swiss criminal laws protecting bank secrecy.

“Over the last week or so, there have been high-level officials from the two governments meeting, trying to narrow the issues and bring about a resolution,” Stuart Gibson, a Justice Department senior litigation counsel, told U.S. District Judge Alan Gold today at a hearing.

UBS attorney Eugene Stearns said the bank learned on July 11 about discussions between the Swiss and U.S. governments.

“We are anxious for the governments of these two democracies to resolve these issues,” said Stearns. “It’s a minefield trying to resolve these issues.”

Lynnley Browning of the New York Times also weighed in on the latest developments noting that “the dispute between UBS and the United States has escalated into a diplomatic drama and has threatened to pierce the veil of Swiss financial secrecy. UBS and the Swiss government have said they will not disclose client names, even if ordered by a judge, because doing so would violate Swiss laws governing financial secrecy and subject UBS executives to prosecution in Switzerland.”

In February, the Internal Revenue Service, backed by the Justice Department, sued UBS, the world’s largest private bank and a pillar of the Swiss economy, to force it to disclose the names of 52,000 wealthy American clients suspected of tax evasion through UBS’s offshore private banking division.

The Justice Department also increased its pressure on UBS on Sunday, saying in a separate filing that it would consider imposing unspecified monetary sanctions on the bank if it failed to turn over the names upon a judge’s order.

Feds Come After Redding Couple for Alleged Tax Scam

From SacBee.com:

A Redding couple faces felony charges for running a tax-return scheme and claiming more than $159,000 in false refunds.

A federal criminal complaint accuses Shannon Elaine Ford, 32, and Michael Joseph Ford, 31, of operating a tax return preparation business and recruiting taxpayers, promising them large returns, a news release from acting U.S. Attorney Lawrence G. Brown's office states.

The couple allegedly filed more than 34 tax returns using false tax forms relating to income from nonexistent small businesses. The couple also misdirected federal and state tax return checks to their own bank and credit union accounts, the complaint alleges.

The fraudulent tax returns claimed more than $159,000 in false refunds.

The Fords allegedly ran the scam, which involved more than 20 victims, from March 2004 to March 2007.

Shannon Ford is charged with conspiracy, 34 counts of filing false tax returns, 17 counts of bank fraud and aggravated identity theft. Michael Ford is charged with conspiracy, five counts of filing false tax returns and seven counts of bank fraud, the release states.

The couple was scheduled to appear Tuesday before U.S. Magistrate Judge Dale A. Drozd.

IRS to Offer Deal to Tax Evaders

From The New York Times:

The Internal Revenue Service, under pressure to bring in money to the faltering economy, plans to give offshore tax evaders a big break.

The agency has drafted a plan that significantly lowers a penalty that applies to wealthy Americans who hide money overseas in secret accounts, a person briefed on the matter said Thursday. The plan is intended to lure out of hiding scores of wealthy people who must come forward and declare their accounts in order to take advantage of the lower penalty.

The plan was developed amid a widening investigation into wealthy American clients of UBS but will apply to clients of other banks as well.

Under the plan, according to the person briefed on the issue, the IRS will cut an onerous penalty for not filing a Report of Foreign Bank and Financial Account, known as an FBAR — something offshore tax evaders have not done.

The current penalty is 50 percent of the high balance of each account over the last three years — an amount that can wipe out an investor’s accounts in just two years — but the I.R.S. will reduce that penalty to 5 percent to 20 percent, depending in part on whether the wealth was inherited.

The I.R.S. will also require taxpayers to pay any taxes and interest owed over the last six years, as well as assess a standard, accuracy-related penalty of 20 percent. Taxpayers must also file amended returns for the last six years.

The proposal, which the IRS is communicating to its field agents who audit returns, does not allow taxpayers to escape potential prosecution, but it makes that outcome less likely, in particular for those covered under the 5 percent FBAR penalty, this person said.

“They need to get money back into the system, so they needed to sweeten the deal,” the person said.

Bailed Out Companies Owed IRS Millions

News broke this week that at least 13 companies receiving TARP funds owe a combined total of $220 million in unpaid federal taxes. Frankly, since these companies were running into the ground, this is not really surprising. And, since 40 million individual taxpayers owe the IRS, these corporations are in good company. Where it gets a little trickier, however is that each company who accepted TARP funds signed contracts stating that they did NOT have unpaid taxes.

We are left with two possibilities.

1. These executives were even more out of touch with their companies’ functioning than we previously thought. That they truly did not know they owed the IRS millions of dollars. Ignorance, evidently, is bliss!

2. If these executives were not ignorant of their companies’ enormous debts to the government, then this is outright criminal. They signed their names, took billions of dollars in aid, all the while defrauding the government and American taxpayers.

Which is worse? Incompetence or dishonesty?

And where in this were their lawyers? As an attorney and a business owner, I certainly wouldn’t sign anything that hadn’t been reviewed by my attorney. It is just good common sense: read the contract before you sign it. But clearly, common sense is not so common anymore.

Geithner Pledges ‘Ambitious’ Crackdown on Tax Havens

From Bloomberg.com:

Treasury Secretary Timothy Geithner said the U.S. government will mount an “ambitious” program to crack down on companies that use offshore locales to avoid paying taxes.

Closing loopholes and hunting tax evaders are especially important at a time when the economy is deteriorating and the government is running a record budget deficit, Geithner told the Senate Finance Committee today in Washington.

“We’re going to have a much more ambitious effort to deal with offshore tax havens,” Geithner said in response to questions from the panel. Allowing companies and individuals to escape paying their share “isn’t fair, particularly given the scale of the fiscal challenges we inherited,” he said.

A congressional report released in January found that in 2007 83 of the 100 largest publicly traded U.S. companies had units in low-tax or no-tax jurisdictions like the Cayman Islands or the Isle of Man. They included American International Group Inc., Citigroup Inc., Bank of America Corp. and Morgan Stanley, all of which were given taxpayer money through the $700 billion financial rescue.

Some of Geithner’s counterparts in Europe have vowed to take similar action, and the issue may be discussed when finance ministers for the Group of 20 industrial and developing nations meet next week in the U.K.

Yesterday, German Finance Minister Peer Steinbrueck said Switzerland should change laws that shield foreign tax dodgers from investigation in their home countries.

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