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Boston Tax Law Blog

IRS begins using private collection agencies next spring

A federal law enacted almost a year ago authorized the IRS to start working with private contractors to collect overdue federal tax debts. Next spring, four contractors will begin taking over older, overdue accounts that the Service is no longer actively working.

The move is to continue collection efforts and fill in when the IRS lacks the resources to go after the debt. Dealing with the IRS can be a difficult experience and it may be even harder to resolve tax collection cases when private contractors are involved.

Massachusetts estate tax on property outside the state

An estate tax return must be filed after the loss of a loved one. The federal Estate and Gift Tax exemption has increased over the last few years to its current $5,450,000. A couple can combine the exclusion to pass up to $10.9 million dollars without federal tax consequences.

However, Massachusetts has a lower exemption amount of $1 million. And the state does tax Massachusetts residents on the value of property owned outside of the state. This can have significant consequences for snow birds with homes in Florida. In this blog, we explain more.

How to submit an Offer in Compromise that will be accepted?

Make a mistake in the filing process or offer an amount that is too low and you could have to start from scratch again. In our last post, we explained how it is necessary to be up-to-date in filing your tax returns.

In this post, we discuss the OIC filing process in more detail and what you need to do while waiting on a decision.

All tax returns must be filed before an Offer in Compromise

It may become impossible to stay ahead of tax debt as penalties and interest add to the balance. An offer in compromise (OIC) may provide some relief. It is a way to settle with the IRS for less than the full amount you owe.

A prerequisite, however, is to file all required tax returns. The IRS will not consider an OIC application if you have unfiled returns. This does not apply to the current year though if you have received a valid filing extension.

IRS collection actions: 10 year statute of limitations

The amount of the time that the IRS has to collect back taxes is generally 10 years. Certain actions can stop the clock. An offer in compromise is one of them.

In this post, we will look at a story where a taxpayer was not successful in arguing the state of limitation barred collection efforts. The saga starts in 1997 and illustrates that time alone is not always sufficient.

What are the fees for tax installment agreements?

The IRS recently proposed a new fee schedule that would take effect at the beginning of 2017 for taxpayers who enter installment agreements. While the overall fee increases, direct debit and online options will reduce the total you pay.

What are the general requirements to qualify for an installment agreement? You need to owe less than $50,000 in income tax, penalties and interest. You also have to file all required returns.

Tax evasion plea deal could result in two years behind bars

Federal taxes are in large part paid through income withholdings by employers. The employer is trusted to withhold the right amount from employee wages and turn that sum over the IRS.

In Boston, a longtime owner of the city’s largest taxi company hadn’t been doing this. Coupled with the tax issue were other employment law lapses. The company hired drivers who were in the U.S. without proper documentation and never paid overtime when employees worked more than 40 hours in a week.

Short-term rentals remain tax free in Massachusetts

This month, Airbnb starts collecting taxes from hosts of short-term rentals in Los Angeles. Massachusetts will not follow this lead. Even after Airbnb lobbied for a recent tax proposal that would have extended hotel levies to short-term rentals.

The defeat wasn’t a complete surprise, because Governor Charlie Baker has said he would not raise taxes on private rentals. Others have noted that the additional income (up to $20 million per year) could be helpful in expanding the state’s earned income tax credit.

An inheritance in Swiss accounts triggers criminal charges

This was not solely a Swiss account inheritance. But it does raise issues for anyone who inherits a financial portfolio that includes international bank or investment accounts.

The U.S. attorney’s office reports that the taxpayer allegedly went through some great lengths to hide millions of dollars from a 2003 inheritance. Apparently, the taxpayer was listed as the executor and failed to disclose the full value of the inheritance on an estate tax return. Then approximately four million dollars was funneled into six undeclared bank account in Switzerland and France.

Taxes and the sharing economy: issues in play as legislative session ends

One of the threads we've been following in this blog is the impact of the ever-increasing sharing economy on taxes.

Services such as Uber and Lyft for ride-hailing and Airbnb for short-term housing rentals have become remarkably popular in a very short time. But they have also created new types of tax compliance issues for people who provide such services.

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