Baker Law Firm, P.C. Baker Law Firm, P.C. 2024-02-02T19:47:25Zhttps://www.cttaxlawyer.com/feed/atom/WordPress/wp-content/uploads/sites/1501535/2020/08/practice-img.pngOn Behalf of Baker Law Firm, P.C.https://www.cttaxlawyer.com/?p=470082024-02-02T19:47:25Z2024-02-02T19:47:25ZAn appeal is available when a lien or levy is possible
Although the IRS has the authority to place liens against personal property and levy their financial resources, the agency does sometimes make mistakes. The IRS may take actions that are inappropriate given someone's financial circumstances. Those who question decisions made by the IRS do have the right to due process review when facing major collection efforts.
The IRS has a legal obligation to notify individuals about pending collection actions. Someone who receives a Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320, Notice of Jeopardy Levy and Right of Appeal or other formal notice from the IRS could initiate an appeal. Such appeals can halt collection efforts and help people find a more reasonable solution for their tax debts.
A CDP appeal requires careful adherence to specific federal guidelines and IRS procedures. Those procedures include filing certain paperwork, attending a hearing in the United States Tax Court and presenting evidence about why the enforcement actions are inappropriate. Depending on whether the IRS intends to pursue a lien or levy, there is a slightly different procedure involved.
While it is possible for individuals to represent themselves during a Collection Due Process Appeal and at any necessary hearings, they are at risk of making mistakes. People may struggle to comply with court rules when representing themselves. Securing legal representation can make a major difference for those preparing for a CDP appeal.]]>On Behalf of Baker Law Firm, P.C.https://www.cttaxlawyer.com/?p=470072023-12-02T16:13:50Z2023-12-02T16:13:50ZThey have protection from enhanced collection efforts
In general, once the IRS accepts a payment plan proposal, the organization will stop pursuing other aggressive collection efforts. Specifically, the IRS cannot levy property when there is an Installment agreement in place. Even the process of negotiating an installment agreement can temporarily prevent attempts to levy. Those who apply receive 30 days of delayed collection efforts.
They must commit to regular payments
The IRS offers both short-term and long-term payment plans. The amount of the debt and someone's current income will determine which option is better. Those who can pay off their tax debt in 180 days or less won't need to pay a fee to enter into an installment agreement. If the payment plan lasts longer than 180 days, there will be fees someone must cover in addition to the taxes, interest and penalties already due. Taxpayers will need to submit the minimum monthly payment each month by its due date. So long as they continue making payments as negotiated, they can keep their taxes in good standing despite being unable to pay their debt in full immediately.
Many taxpayers understandably find interacting with the IRS difficult. Seeking legal guidance can make it easier to successfully obtain an installment agreement for major income tax debts.]]>On Behalf of Baker Law Firm, P.C.https://www.cttaxlawyer.com/?p=470062023-10-31T18:47:30Z2023-10-02T18:46:54ZConnecticut tax fraud penalties
Connecticut state law authorizes the government to charge someone with tax fraud or tax evasion for trying to avoid paying required taxes through misrepresentation. The best-case scenario would be a basic fraud charge, which might lead to a penalty that could be as much as the amount of tax not paid, effectively doubling what someone has to pay, along with a $1,000 fine. In scenarios where the state alleges that someone willfully did not pay taxes, file returns or submit accurate documentation, the state could find someone as much as $5,000 and incarcerate them for up to 5 years. These rules do not apply to mistakes but rather only to intentional fraud.
Federal tax penalties
The IRS has very strict rules regarding taxes that allow federal prosecutors to bring federal charges against those accused of fraudulent tax behavior. For individuals, the penalties can include up to $100,000 in fines and up to 5 years in prison. The person will have to pay for court costs, and they will also need to pay not just the taxes that they failed to pay due to fraud but an additional 75% of that amount.
Overall, conviction for tax fraud can be incredibly expensive and can also lead to someone having a lifelong criminal record. Seeking legal guidance to more fully understand the risks involved when facing tax fraud charges brought by the federal government or the state of Connecticut may help people better respond to those accusations.]]>On Behalf of Baker Law Firm, P.C.https://www.cttaxlawyer.com/?p=470052023-08-03T04:54:08Z2023-08-03T04:54:08ZDuring an investigation, the IRS may send letters to the subject of the inquiry and their employers or clients. It may also request records from accountants and other financial professionals. What should someone who recently learned that they are the subject of an IRS investigation do to protect themselves?
Avoid reactionary mistakes
One of the most common mistakes that people facing the IRS investigation make is to reach out to or confront the professionals looking into their circumstances. What people say during those emotional conversations could end up influencing the outcome of their case later. Instead of trying to make contact with the IRS, those subject to an investigation will need to reach out to a completely different professional party.
Obtain legal support
Any significant issue with the IRS could result in massive financial consequences and possibly criminal prosecution. An investigation could lead to prison time and fines that someone may spend years paying off in full. An attorney familiar with tax controversies and prosecution will be able to help someone handle their communication with the IRS. They can also help someone begin planning a defense strategy, possibly based on an analysis of their financial records and business dealings.
Although people sometimes think that they can handle the early stages of an investigation on their own, the mistakes that they make in those first weeks could not only delay the development of an effective defense strategy but we might put them at significantly increased risk of prosecution. A defense attorney can handle all communication with authorities and ensure that someone remains technically compliant with the investigation process without exposing themselves unnecessarily. As a final note, those that have already retained a lawyer during a tax investigation will be in a better position to learn about their rights and what steps to take should they end up arrested or indicted.
Understanding how to respond appropriately to an IRS investigation may help someone minimize any negative consequences that the investigation could inspire.]]>On Behalf of Baker Law Firm, P.C.https://www.cttaxlawyer.com/?p=470042023-07-03T07:47:53Z2023-06-05T07:47:02Zhow the process works and how to respond can significantly reduce the stress associated with an audit. Consider these key points every individual should understand about income tax audits.
Triggers for an audit: Knowing what catches the tax authority's eye
Certain factors can trigger an audit, including inconsistencies between your tax return and the data the tax authority has received, unusually high deductions relative to your income, large cash transactions or random selection. Keeping meticulous records and being honest and accurate in your tax reporting can reduce the likelihood of an audit.
Types of audits: Correspondence, office, and field audits
There are three types of audits: correspondence, office and field audits. Correspondence audits are conducted through mail and are the most common. Office audits involve visiting the tax authority's office, while field audits are when an auditor visits your home or business.
Responding to an audit notice: Be prompt and prepared
If you receive a notice of audit, it's essential to respond promptly. Gather all relevant documents, such as bank statements, receipts and logs supporting your tax return information. Consulting a tax professional can also be beneficial.
Rights during an audit: You're not powerless
During an audit, you have certain rights, including the right to professional and courteous treatment by the tax auditor, the right to appeal the audit findings and in some cases, the right to legal representation.
After the audit: Agreement, disagreement, and appeal
Once the audit is complete, you must sign the examination report or a similar document if you agree with the findings. If you disagree, you can request a conference with a manager, mediation or file an appeal if your request is not resolved at the managerial level.
While income tax audits may seem daunting, they don't have to be a cause for panic. With that said, seeking legal guidance can help to better ensure that your rights are protected and that your stress level related to the situation remains as low as possible under the circumstances.]]>On Behalf of Baker Law Firm, P.C.https://www.cttaxlawyer.com/?p=470022023-04-24T15:47:37Z2023-04-24T15:47:37ZCapital gains on the liquidation of long-term investments
Couples often need to divide long-term investments such as stocks, bonds, and real estate. If these assets have appreciated in value since they were acquired, the sale of these assets can result in capital gains tax.
Capital gains tax is calculated based on the difference between the asset's sale price and its cost basis (purchase price). Depending on the length of time the asset was held, the tax rate can vary, since long-term investments are taxed at a lower rate than short-term investments.
The IRS alimony recapture rules
The IRS has specific rules regarding alimony payments, including a provision known as alimony recapture, which applies when the total amount of alimony paid in the first three years after the divorce is substantially reduced in the third year. The goal of this rule is to stop payments as part of a property settlement from being improperly characterized as alimony for tax purposes, which is illegal.
Tax consequences on the sale of the marital residence
Another asset that is often divided during a divorce is the marital residence, and selling it to divide the proceeds is common. If the sale of the house results in a gain that exceeds the exclusion that the IRS grants couples for a primary residence, the parties will need to pay capital gains tax on the excess amount.
Allocation of the dependency exemptions
The tax deductions that can be claimed for dependent children are valuable, so the issue of which parent gets the deduction can be contentious. In some cases, parents will agree to alternate years in which they claim the exemption. However, it's important to ensure that both parents understand the tax implications of this arrangement and how it will affect their tax returns.
Ultimately, the tax consequences of a divorce can be very hard to understand, which is why it’s usually best to seek experienced guidance as you go.]]>On Behalf of Baker Law Firm, P.C.https://www.cttaxlawyer.com/?p=470002023-02-24T14:03:30Z2023-02-05T14:01:46ZYou may have outstanding tax debt with the Internal Revenue Service (IRS). If you’re struggling to resolve it, then the IRS may pursue collective activities. The IRS will formally notify you about what collective activity they intend to take if you have unpaid tax debt. There are two kinds of letters you may receive:
IRS Letter 3172: Notice of Federal Tax Lien Filing and Your Right to a Hearing
IRS Letter 1058: Notice of Intent to Levy and Notice of Your Right to a Hearing
However, if you believe the amount you owe the IRS is wrong and you shouldn’t be suffering from a lien, levy or wage garnishment, then you may consider filing a collection due process appeal. When filing a collection due process appeal, you should first understand what each letter means. Here’s what you should know:
IRS Letter 3172
A Notice of Federal Tax Lien (NTFL) is used to protect government interests in real estate, personal property and financial assets by notifying state and local county recording offices about your outstanding debt. A lien may be placed on your vehicle, for example. Selling your vehicle may be difficult as the IRS could take money from the sale to pay off your debt.
IRS Letter 1058
A bank levy allows the IRS to take property or financials forcefully to pay off said debt. They may liquidate your home, vehicle or valuable assets to do so. Likewise, you may also suffer from wage garnishment because of your unpaid debt.
Right to a hearing
These kinds of letters can seem intimidating, but you should be aware that each letter has a right to a collection due process hearing. You can request a collection due process hearing within 30 days of receiving your letter. During this hearing, you may dispute the amount of debt owed and discuss other methods of collection. It’s often important to understand your legal options when appearing for a collections due process appeal.]]>On Behalf of Baker Law Firm, P.C.https://www.cttaxlawyer.com/?p=469992022-10-05T20:23:36Z2022-10-05T20:23:36ZThe federal tax fraud penalties
The IRS is notorious for imposing strict fines and significant interest. You will need to make arrangements to pay those costs and the past due amount of taxes or risk prosecution and of slowly growing balance on the taxes due.
Those accused of income tax fraud could face both federal prosecution and civil penalties. A conviction could mean up to five years in federal custody and financial penalties. The IRS can assess a massive fine for tax fraud. Individuals may need to pay as much as $250,000 in fines, while corporations could face fines of as much as $500,000.
If the IRS alleges you committed civil tax fraud, not criminal fraud, you may have to worry about fines and penalties of as much as 75% of the amount unpaid, but no jail. In some scenarios, the IRS may choose to pursue both civil and criminal claims against you.
The Connecticut state penalties
The state can hold you accountable by assessing a financial penalty, which can be as much as the total amount of taxes you didn't pay. You may also have to pay an additional fine of up to $1,000. If the state claims you intentionally submitted inaccurate information and failed to pay your income taxes, the fine could increase to $5,000. The penalties could also include up to five years in state custody.
Those who make mistakes on their federal income tax return will almost certainly carry over some of those mistakes onto their state return paperwork. Connecticut may assess its own penalties in addition to whatever the IRS expects you to pay.
Learning about the consequences of tax fraud allegations could help you determine the best response to those charges.
]]>On Behalf of Baker Law Firm, P.C.https://www.cttaxlawyer.com/?p=469972022-08-09T20:01:28Z2022-08-09T20:01:28Zan IRS investigation, you will want to take certain, specific steps to protect yourself.
Seek professional guidance
Do not assume that you can handle a major tax issue without help. If there is one most common mistake committed by those facing allegations of tax evasion or tax fraud, it is that they allow hubris to affect their decision-making.
They assume, for example, that accountants from the IRS won't have the social skills to make them feel pressured in an interview, so they assume that their charismatic nature will help them move through the process with few challenges. Other times, they may underestimate exactly how thorough the IRS is when gathering evidence and preparing a case. They may fail to understand the terminology used and how the words that they choose during a conversation could help the state build a case against them.
Most people dealing with tax controversies will do themselves a serious disservice if they try to handle the whole situation on their own. If you bring in a lawyer, you will have someone there to handle negotiations and tough conversations on your behalf. You will also have someone who can explain the allegations that led to the investigation and what kind of evidence will be necessary to counter those allegations.
Start gathering and reviewing financial records
Unless you already keep all of your most important financial paperwork together as digital files, you may quickly realize how hard it is to gather everything for your defense planning or to provide requested documents to the IRS.
Gathering your own records and going over them with the lawyer who will help you will make it easier for you to prove there was no misconduct or to develop a workable strategy for pushing back against the claims made by the IRS. Your lawyer could also help you negotiate a payment arrangement or navigate the complex process of claiming innocent spouse relief if you never personally knew about the tax issues previously.
Getting the right help when dealing with civil and criminal tax issues will reduce your chances of lasting financial or legal consequences.]]>On Behalf of Baker Law Firm, P.C.https://www.cttaxlawyer.com/?p=469742022-06-03T20:54:21Z2022-06-03T20:54:21ZSometimes tax audits are good thingsTax audits aren’t always bad. Sometimes, you could end up seeing that you deserve a higher tax refund, allowing you to get more money back from the government.
Of course, most people worry that they will owe more to the IRS, so it’s helpful to get some financial and legal support to determine the likelihood of that happening.
Making an error isn’t likely to result in legal action
If you made an error on your tax forms, it’s unlikely that the error will result in harsh penalties like criminal charges. Instead, you may have to pay what you owe as well as some fines or fees.
The tax code is extremely complex, which is why it’s common to see people make mistakes. The IRS knows this is the case, so it’s unlikely to assume fraud unless the errors on a tax form were intentional.
Don’t fear an audit: Take action
You should not have to fear an audit. You can take steps to protect yourself during the investigation and, if you owe money, negotiate with the IRS for a more positive outcome. It’s reasonable to be worried about an audit, but the right help can make it much easier on you and help you handle your case professionally.]]>