Boston Tax Law Blog

Taxes and statute of limitations: How long to keep tax records

On behalf of Levins Tax Law posted in Tax Controversies on Wednesday, February 6, 2019.

With the technology available today, keeping records may not seem as difficult as it did in the past when most things were on paper. However, that does not always resolve the issue of how long Massachusetts taxpayers should retain their tax records. When it comes to taxes and statute of limitations, how long the paperwork should be kept largely depends on the information, but a good rule of thumb would be to keep relevant tax paperwork, including prior returns, as long as possible.

Having said that, most people need to make sure they keep their prior returns for at least three years. This time begins running either from the date the taxes are filed or the date they are due. Any documentation regarding property you own, such as automobiles, real estate and more, also needs to be kept at least three years.

You may need to file an audit reconsideration request

On behalf of Levins Tax Law posted in Tax Controversies on Wednesday, January 30, 2019.

Have you moved to Boston or to another location here in the city recently? Did that move prevent you from knowing that the IRS send you communications regarding an audit, so you failed to appear for it? Perhaps you did attend, but now have new information to provide the agency that could potentially change the outcome. You may be able to file for an audit reconsideration request.

Several different scenarios could provide you with an affirmative response to your request. For instance, the agency may re-evaluate its decision if the new information you provide changes the outcome. It may also do so if an assessment resulted from the IRS filing a tax return on your account, but you later filed your return, and the tax is correct on your return.

Reality TV star convicted of tax evasion goes to prison

On behalf of Levins Tax Law posted in Tax Evasion on Thursday, January 24, 2019.

Many celebrities use creative accounting techniques in order to avoid paying too much to the IRS, but most of them are legal. On occasion, one of them gets into trouble because they "colored outside the lines" and end up facing charges for tax evasion. One such celebrity, reality TV star Mike Sorrentino, recently began an eight-month prison sentence arising out of such a charge. Massachusetts residents may avoid the same fate by understanding what he did.

What did Sorrentino do wrong? In 2011, he owed a certain amount of taxes, and the government alleged that he failed to pay the full amount due, but that alone does not necessarily sound like tax evasion. Right? Many people, even some here in Massachusetts cannot pay what they owe the IRS. Well, it is not that simple.

Do you know everything, or are you an 'innocent spouse?'

On behalf of Levins Tax Law posted in Tax Controversies on Wednesday, January 16, 2019.

Did you know everything about your family's finances? Did you rely on your spouse to handle it all, including filing income tax returns? If the IRS later comes after your former spouse and you, you may qualify as an "innocent spouse," which means that you may not be held liable for any wrongdoing by your ex-spouse during the marriage.

In many Massachusetts families, one person tends to handle most or all of the financial matters. You may have thought this worked well during your marriage since you do not like dealing with the money. You were content for your spouse to tell you what you could spend and that the bills were paid.

How does the government shutdown impact operations at the IRS?

On behalf of Levins Tax Law on Wednesday, January 9, 2019.

Anyone that has recently called the Internal Revenue Service (IRS) for assistance with tax filings likely received an automated message. Due to the current, partial government shutdown, a message would state “live telephone assistance” from the IRS “is not available at this time” and likely will not return until the government reinstates full operations.

What happens in the IRS during the shutdown? Like other federal agencies, the IRS is operating on a reduced staff. Of the almost 80,000 employees who regularly report to work, approximately 9,950 are “excepted” from furlough. These individuals include those funded through advanced appropriations, those who perform tasks “necessary for the safety of human life or protection of government property,” and the short-term exception of those employees needed to bring about an orderly “closedown” of the office.

IRS warns taxpayers of potentially fraudulent tax preparers

On behalf of Levins Tax Law posted in Internal Revenue Service on Monday, January 7, 2019.

It is the beginning of a new year. During the first few months of the year, many Massachusetts residents turn their attention to tax time and the need for assistance in preparing their returns. The IRS warns taxpayers that there are some people out there waiting to take advantage of individuals as they search for someone to provide much needed help. These fraudulent tax preparers could potentially wreak havoc on unsuspecting individuals' lives.

Considering the changes made to the tax laws that took effect for 2018 taxes, making sure that the best assistance possible is received becomes a priority. In order to make sure that an individual does not fall prey to an unscrupulous person, the IRS recommends taking certain steps to ensure that the tax preparer is legitimate. For instance, a Massachusetts resident could ask for a preparer's IRS Preparer Tax Identification Number, which paid preparers must obtain.

A charitable heart could spell trouble with the IRS at tax time

On behalf of Levins Tax Law posted in Internal Revenue Service on Wednesday, January 2, 2019.

New laws went into effect for the 2018 tax year that affect the income tax filings of people here in Massachusetts and others across the country. If not fully understood, some of them could end up in trouble with the IRS. This even extends to those with giving hearts since certain charitable contributions may not be tax deductible depending on the circumstances.

When making donations, many here in Massachusetts and elsewhere count on the tax deduction they provide. Those deductions will more than likely not be possible under the 2017 Tax Cuts and Jobs Act for many people. That is, unless the person donating gives amounts that exceed the new standard deduction of $12,000 for a person filling as an individual or $24,000 for married couples filing jointly.

Is there more than one way to settle tax collection cases?

On behalf of Levins Tax Law posted in Tax Controversies on Tuesday, December 25, 2018.

It just is not always possible for many Massachusetts residents to meet their financial obligations. Medical emergencies, job losses and other catastrophic events can quickly drain any monetary resources a family may have. Another event that can result in an adverse financial event is owing taxes. Fortunately, more than one way exists to deal with tax collection cases.

Massachusetts residents who owe taxes to the federal government may be able to deal with that debt without breaking the bank. The IRS understands that some people cannot pay their tax bills in one lump sum. It may be possible to enter into a partial payment installment agreement, an installment agreement for the full amount owed or an offer in compromise to satisfy the debt.

How IRS treatment of bitcoin could help at tax time

On behalf of Levins Tax Law posted in Internal Revenue Service on Wednesday, December 19, 2018.

For some time, cryptocurrencies such as bitcoin were all the rage. People here in Massachusetts and elsewhere made a good deal of money on this new type of currency. For this reason, in 2014, the IRS announced these assets are to be taxed as capital gains when people make money from them.

In the last two years, the value of bitcoin, along with other cryptocurrencies, has declined. While this may not be good news for many people, it could provide those who have lost money in recent years with a silver lining. Since the IRS treats them as capital assets, any losses up to $3,000 can be claimed on income tax returns each year. The total loss may be spread out over several tax years.

Tax charges stem from Panama Papers disclosure

On behalf of Levins Tax Law on Friday, December 14, 2018.

New York prosecutors brought charges for conspiracy and tax fraud against four men across the globe. One was a Massachusetts accountant arrested in Boston. Counts against him included wire fraud and willful failure to file a Report of Foreign Bank and Financial Accounts (FBAR).

These were the first U.S. indictments related to the leak of documents from Mossack Fonseca law offices in Panama (often called the Panama Papers). In London and Paris, arrests were made of an investment adviser and client, but an implicated Panamanian lawyer remains at large. German police also raided Deutsche Bank headquarters in Frankfurt on suspicion the bank helped launder money through offshore tax havens.