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Boston Tax Law Blog

What you need to know about the June 30 FBAR deadline

If your investment portfolio includes funds held in an overseas account, you need to pay attention to an upcoming tax filing deadline. U.S. persons (this includes citizens and residents) with an interest, even a signature interest, in a foreign account need to pay attention.

An account or combination of foreign accounts with an aggregate balance of $10,000 or more in 2015 will trigger the reporting requirement. Form 114, Report of Foreign Bank and Financial Accounts (FBAR) needs to be efiled by June 30. There are no filing extensions.

What the IRS has to say about selling your home

In the not-too-distant past, homeowners watched in horror as their most prized asset plummeted in value and their prospects of realizing a profit on its sale rapidly diminished. Fast forward to the present, however, and things are considerably different.

Indeed, with the recession now fully in the rearview mirror and the economy continuing to improve, it's once again become a seller's market for residential real estate. As encouraging as this development is for homeowners, questions naturally arise as to how the Internal Revenue Service treats the sale of a primary residence.

John Oliver gives away medical debt without triggering taxes

In the latest episode of HBO series “Last Week Tonight with John Oliver,” the host created a company and bought approximately $15 million of consumer medical debt for pennies on the dollar. He then relieved 9,000 of their old medical debts.

This television giveaway drew attention to the ease of entry into the debt collection business. Collection tactics have become very aggressive as more organizations outsource debt collection. Even Federal agencies like the IRS have run pilot programs with private collectors.

Tax Court allows late filing caused by winter storm Octavia

The IRS allows taxpayers to appeal from agency decisions. A taxpayer petition must be filed within 30 days in a collection due process case, however.

Miss the deadline and you generally lose the right to have a judge review your case. A recent tax court decision found a taxpayer’s appeal was in fact timely filed when it was delayed one day by a winter storm that had shut down the court.

Wyly widow found to be "innocent spouse" in tax fraud case

The twisted tale of former billionaire brother Sam Wyly and his late brother Charles took a new turn recently when a federal bankruptcy judge found that the pair had committed tax fraud with a convoluted scheme of offshore bank accounts, shell corporations, trusts and other tax shelters. The brothers system involved transferring their interest in various commercial enterprises (among them such well-known companies as Michael's arts and crafts stores and Bonanza Steakhouses) to trusts in exchange for private annuities.

The IRS claimed that the brothers' scheme was purposeful to avoid capital gains taxes and pursued tax evasion and fraud charges and payment of back taxes. The pair also faced securities fraud charges prior to Charles' untimely death. Bankruptcy proceedings were initiated by Sam and by Charles' estate prior to a 2015 ruling finding that the Wyly brothers owed billions in back taxes, penalties and interest as a result of their shady tax dealings.

Massachusetts man accused of failing to file tax returns

The income requirements for filing taxes are quite low. If filing single, you need to file a federal return if you earned more than $10,300 in 2015. The amount doubles for a married couple. If you earned more than $8,000, you need to file a state return. Filing a return is necessary if you expect a refund of taxes withheld by an employer or through the Earned Income Tax Credit.

With this background, an investigation by the Boston Globe indicated that a Massachusetts investor and developer only filed one state return in the last quarter-century. In lawsuits questioning his dealings in real estate transactions, there is evidence that the man earned significant profits.

Do you need to report an offshore account?

If you had one or several accounts outside the U.S. that had more than a combined amount of $10,000 at any time over the year, you probably need to file. The Report of Foreign Banks and Financial Accounts (FBAR), FinCEN Form 114 needs to be electronically filed with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

When does the report need to be filed? The due date is June 30, 2016. No extensions are allowed to file the FBAR. Next year the due date will change to coordinate with the more well known tax filing deadline of April 15.

More New England towns consider selling tax liens

The sale of debt is expanding from past due medical accounts and unpaid credit card balances to tax liens. The private investors who purchase these debts are usually much more aggressive with their collection efforts.

Recently, Harwich has considered selling liens to private investors. The town has 326 properties with tax title liens. The amount owed in unpaid taxes is approximately $5.6 million, according to CapeCod.com.

Work-related “uniform:” Does this include wardrobe costs?

The general answer is no. How broad in the definition of uniform?

A recent tax court case offers guidance. Forbes summarized the facts of the case. An employee worked for a clothing company. He was required to wear company-branded clothing whenever representing his employer. Clothing costs over the year were substantial, so he claimed then as work-related and deducted them on his taxes.

Prison sentence handed down in tax evasion case

Another tax season has come to an end. Now the IRS begins reviewing returns searching for discrepancies and underreported income.

The Service also works in coordination with other federal agencies to investigate fraudulent schemes. Masslive.com reported on a prison sentence handed down in one of these at the beginning of the month.

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