This week was a busy one for tax relief news topics. Here are highlights of the ones we covered on the Tax Resolution University Blog:
Tax Fraud/Tax Schemes and Identity Theft
The tax season officially began on January 30. Therefore, it’s no coincidence there is already an increase in stories about tax schemes including tax fraud and identity theft. Here’s one we covered this week:
- Reno, Nevada resident, Edward David Simon, 52 was charged with 10 counts of false tax claim fraud, 10 counts of unlawful use of a means of identification, 10 counts of mail fraud, and 10 counts of aggravated identity theft. Simon allegedly received more than $100,000 in refunds from the IRS for filing false and fraudulent tax returns between Feb. 10 and May 3, 2010. Simon allegedly used the names and Social Security numbers of others to claim refunds of about $5,200. He also submitted forged W-2 forms showing earned income and had another person file the tax forms and mail them to the appropriate IRS processing center. For these charges, Simon could face over 20 years in prison and millions of dollars in fines.
Hire a Tax Professional or Use Tax Software
Last week I was quoted in The Fiscal Times article “Tax Hell: New Laws, New Reasons to Hire an Expert” about the benefits of hiring a tax professional over using tax software. My answer is straightforward: If you have straight W-2 wages and a simple return – tax software is fine. If you have more a more complicated return due to mortgage interest, stock or dividend income, property taxes, or you have a small business; it pays to hire a licensed tax professional.
IRS News: Returns Claiming Education Credits Delayed
I wrote a post on the Tax Matters blog about the IRS’ announcement that it was delaying tax returns claiming education credits until the middle of February due to a processing error. This will affects taxpayers who use Form 8863, Education Credits, to claim the American Opportunity Tax Credit and the Lifetime Learning Credit. The IRS has stated the delayed start will have no impact on taxpayers claiming other education-related tax benefits, such as: Tuition and fees deduction – using Form 8917 and Student loan interest deduction – Using Form 1040 series.
A Forbes article titled “Are Tax Protesters Actually Winning?” inspired me to write a post on the subject. The article’s author, Peter J. Reilly highlighted the case of Laurel Ann Curtis versus the IRS. According to Reilly, Curtis really got creamed in her last appearance in Tax Court (Reilly believes her entire tax liability including interest, penalties and fines is over a million dollars.) So if that’s the case, how is it that Curtis, (who wrote a book about her winning against the IRS) actually “won?” According to Reilly, the court “victories” the protesters boast about, are limited to an occasional criminal acquittal and penalty reductions. Not only do they not “win” – they end up owing more IRS back taxes than a negotiated IRS tax settlement could have. Some protesters, like Wesley Snipes, wind up in jail.
Offshore Account Compliance
The IRS is handing down more severe penalties on non-compliant offshore account holders than ever before. Some are calling it “harsh.” Take the case of Florida widow, Mary Estelle Curran of Palm Beach who pleaded guilty to filing false 2006 and 2007 tax returns. Mrs. Curran failed to report inherited Swiss and Lichtenstein bank accounts from 2001 through 2007. For her willful non-compliance, Mrs. Curran is now facing harsh IRS penalties that include 50% of the highest balance – in her case $21,666,929 (considerably more than the $667,716 in taxes she would have paid) and a possible prison sentence of up to six years. Voluntary disclosure is the only way to come clean and compliant. “Quiet Disclosures” such as closing a foreign bank account will not solve disclosure problems. If you have undisclosed offshore accounts, you need to consult a tax attorney or Certified Tax Resolution Specialist with expertise in handling offshore compliance cases to let you know what your options are. They can help you negotiate an offshore tax settlement that avoids prosecution.
Next week: Tax Resolution Success Stories and New TaxMan Episodes
On the run up to tax day, I will continue to post client success stories and testimonials to encourage taxpayers with unresolved tax debt issues that they are not alone. All they have to do is take the first step (like our former clients did) to get the IRS tax relief they need. Also stay tuned for new episodes of the national network television show, TaxMan.
Have a great weekend!
More Tax Help, IRS News and Tax Relief Tips:
- IRS Releases 2012 Data Book
- FATCA-No Tax Relief for Americans Living Abroad
- Offshore Tax Accounting Paperwork
- Florida Woman Receives $21 Million Penalty for Offshore Accounts
- Treasury Proposes Multilateral Agreement for Offshore Compliance