Being audited may well top the list of taxpayers' worst nightmares. This process can easily consume a person's time, energy and money as it can be extremely frustrating to deal with the IRS for months on end. Fortunately, there are a few steps that one can take to potentially avoid an audit. For individuals who own a business, it is important that they keep all business and personal expenses separate. If an action was taken for both personal and business purposes, such as taking a trip or having lunch with a friend who is also a client, it is probably best to keep these expenses listed as personal ones. It is also important that one does not list a hobby as a business. Keeping well-organized records is also vital toward avoiding an audit. Before making any deduction, one should ensure that he or she has the receipt or other evidence to support it. Keep all of these documents together with each year's tax return.
Recent court rulings may allow the IRS to have access to Massachusetts consumers' tax documents that were previously privileged. While the old rules allowed the IRS to access information from accountants regarding their clients, information given to attorneys was typically considered part of the attorney-client privilege. Accountants did have a loophole for keeping information confidential and out of the possession of the IRS when a tax lawyer hired an accountant, thus making this information part of the attorney-client umbrella. However, the IRS has filed several lawsuits that are changing the rules regarding these privileges. In a Ninth Circuit case, the court ruled that an appraisal could not be kept from the IRS by the taxpayer, lawyer and accountant. In another case, the court required a lawyer and accountant to disclose their discussions.
A former Amtrak employee recently fled to avoid going to prison due to tax evasion. As a jury delivered its verdict of 29 guilty felony counts, the 60-year-old defendant was nowhere to be found. The woman was found guilty of insurance fraud, tax evasion, perjury and grand theft from her employer's retirement board. She received in excess of $500,000 from disability payments due to accidents that the prosecution says she faked. She could receive up to 33 years in prison, but she escaped while she was free on a $50,000 bail that the judge ordered during her trial that lasted two months.
In Worcester, Massachusetts, a Jewish Synagogue and day school has been seized by the IRS. The Internal Revenue Service took the building for nonpayment of taxes owed to the government, originating from tax obligations incurred in 2004. The synagogue owes back taxes to the federal government in the amount of $435,235 dollars. The bulk of back taxes owed are from payroll taxes. This information was obtained through the Worcester County Registry of Deeds as well as through the Internal Revenue Service. The synagogue and day school are still in business although the building has been put up for public auction with bids starting at $472,000.
Signing a joint tax return may result in serious implications for an innocent spouse. However, filing a joint return is a completely voluntary action and should likely be avoided in some situations. When a person signs a joint tax return, he or she creates joint and several liability. This term means that the IRS can go after either spouse to collect the full amount of any tax that is owed. Even if a divorce court finds that the tax liability rests on one spouse, the IRS does not have to honor this finding and can still pursue tax collection procedures against either spouse. In a similar fashion, a probate court's findings can also be ignored and an innocent spouse can be left to pay off the tax liability.
Money is the topic of the year for most people, agencies, states and the federal government as the economy sluggishly recovers from the recent recession. Bills are hard to pay for everyone, and many find themselves in serious debt. In fact, one of the biggest topics of the current election is the country's outstanding debt and what should be done to fix it.
A Worcester, Massachusetts, jury found two men and a woman guilty of multiple tax crimes. The Internal Revenue Service and Justice Department worked together to convict the trio of multiple tax crimes based on fraud. The charge stemmed from a payroll scheme in which the three paid employees with cash. The people also worked together to hide certain income and assets of employees as part of a so-called warehouse banking scheme. The three were also convicted because of taxes filed incorrectly in regard to their own income tax returns. One of the defendants received an additional conviction for tax evasion.
The IRS recently announced new tax laws that would provide relief to dual citizens. However, the new laws have both positive and negative aspects. The new tax laws are for non-residents, including dual citizens who lived outside the United States beginning in 2009. Furthermore, the non-resident must not have filed a United States tax return for at least three years and be considered low risk by the Internal Revenue Service. If you are currently under an IRS investigation or haven't disclosed all your income in the country where you live, you are generally considered high risk. The benefit of using the new tax laws is a reduction in the possible penalties that you could wind up paying.
State and federal revenue criminal departments have different sets of criminal codes that are completely separate from one another: separate criminal charges, separate courts and separate punishments for breaking Massachusetts versus federal criminal statutes.
Many Massachusetts residents would be surprised to learn that the Internal Revenue Service has been overlooking fraud. However, this may be the case. Specifically, sources say that the process is occurring when people apply for taxpayer identification numbers. Many are alarmed that the agency has skimped on financial security.