Newport Beach tax attorney Daniel Layton defends Orange County clients in IRS and FTB audits & collections, criminal tax defense, tax fraud & evasion cases, FBAR penalty defense, and foreign account disclosures (e.g., streamlined procedures).
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Will the US Tax Court Stay Proceedings If There Is a Potential Criminal Case Pending? If there is a legitimate fear that a criminal case could […] The post DWL Tax Law’s New FAQ’s – July 2020 Edition appeared first on Tax Attorney Orange County| Newport Beach, CA| DWL Tax...
Will the US Tax Court Stay Proceedings If There Is a Potential Criminal Case Pending?
If there is a legitimate fear that a criminal case could be impacted by ongoing civil proceedings, many courts, including the United States Tax Court, may stay the civil case, at least temporarily. Click here for more…
Doctor, Doctor, Give Me the News: Handling IRS Summonses for HIPAA Medical Records.
Although doctors, dentists, and others in the medical profession are familiar with the requirements of HIPAA, some IRS Revenue Officers and Revenue Agents are not well-versed in the privacy protections of the act. When a doctor, dentist, or psychiatrist receives a request for medical records (e.g., by way of an IRS summons) it will be incumbent on the health care professional to ensure that the IRS request complies with the disclosure requirements for HIPAA or to educate the agent on the acceptability of alternative (or redacted) records. Click here for more…
The post DWL Tax Law’s New FAQ’s – July 2020 Edition appeared first on Tax Attorney Orange County| Newport Beach, CA| DWL Tax Law.
CSED (IRS)- Understanding the IRS Collection Statute Expiration Date. What is CSED (IRS)? CSED is the IRS acronym for Collection Statute Expiration Date as it appears […] The post CSED – IRS Collection Statute Expiration Date appeared first on Tax Attorney Orange County| Newport Beach, CA| DWL Tax...
What is CSED (IRS)? CSED is the IRS acronym for Collection Statute Expiration Date as it appears in many IRS internal computer transcripts of taxpayer accounts, which tells the IRS collections officer what the IRS system has computed as the statutory expiration date for collection of the tax. Although the computer’s CSED date is sometimes inaccurate, it is still generally relied on by IRS employees in practice.
Almost any time the IRS is prevented from collecting by law, time is added to extend the IRS’s statute of limitations period (the allowed time per law) to collect. Some common actions extending the IRS’s time to collect include Requests for IRS Installment Agreement or Payment Plan, requesting an Offer in Compromise, requesting a Collection Due Process Hearing, or filing Bankruptcy.
The general rule is that the IRS must collect taxes within 10 years of the date of assessment. The assessment date is the date of the filing of the return (or 4/15 if later) or the date audit/exam liabilities are entered as assessments in the IRS’s records. However, bankruptcy and requests for installment agreement, among other things, can extend the statute of limitations pursuant to Section 6503 of the Internal Revenue Code. Certain actions extending the CSED, IRS favorably, are discussed below. For more specific information, a tax professional should be contacted.
Installment agreements: Section 6331(k) of the Internal Revenue Code prevents the IRS from enforced collection actions while the installment agreement is pending and for 30 days after denial or termination. The collection statute expiration date is tolled (extended) during the “pending” period plus 30 days.
Offer in Compromise based on Doubt as to Liability, Effective Tax Administration, or Doubt as to Liability: The statute of limitations for the IRS to collect is extended for the amount of time the Offer in Compromise is “pending” plus 30 days. For this reason, if a taxpayer’s account is not under immediate threat of collection, it may be preferable for some taxpayers to pursue either audit reconsideration, file an amended return, or file a claim for refund instead of an OIC based on doubt as to liability.
Collection Due Process Hearing (CDP): The CSED for the IRS’s collections is extended from the date the request for a Collection Due Process hearing is received by the IRS for as long as it is pending. If it is withdrawn, the date of the withdrawal is the last date for computing the extension. If a determination is made by the IRS, the last date for computing the period of extension is when it goes “final.” The filing of a Tax Court petition keeps the determination from going final until the Tax Court case is resolved. The final day is generally the date of the determination letter plus 30 days. One exception is where there is less than 90 days left on the limitations period when the CDP determination becomes final, then they get 90 days regardless.
Bankruptcy: With respect to a bankruptcy proceeding under Title 11 U.S.C., the running of the CSED period is suspended for the period during which the government is prohibited from collection (the duration of the bankruptcy proceeding unless a stay is lifted by motion of a creditor) plus 6 months thereafter.
The IRS can file suit to foreclose or reduce a tax liability to judgment at any time before the end of the IRS’s collections period. For that reason, waiting out a CSED for the taxes to expire is a risky proposition. In any event, the law requires taxes to be paid and, if possible, full payment (including through payment plans or offer in compromise) is the one way to make sure the balance due disappears forever.
The above is not an exhaustive list of the statutory collection time extension or tolling rules, but are applicable in many cases, but not to all cases. This can be a very technical area of law, with serious repercussions if the precise rules applicable to a taxpayer’s case are not personally evaluated and applied with great attention to detail. A tax professional should be consulted before making any decision that relies on or may affect the IRS’s CSED.
Daniel W. Layton, Esq., is a former IRS trial attorney, former federal prosecutor, and currently the principal of DWL Tax Law in Newport Beach, Orange County, California.
Posted 04/06/2020 by Daniel Layton.
The post CSED – IRS Collection Statute Expiration Date appeared first on Tax Attorney Orange County| Newport Beach, CA| DWL Tax Law.
What You Need to Know About IRS Corona Virus Relief (03-31-2020) The various news releases for IRS Corona Virus relief, as they are updated, from the […] The post What You Need to Know About IRS Corona Virus Relief (03-31-2020) appeared first on Tax Attorney Orange County| Newport Beach, CA| DWL Tax...
The various news releases for IRS Corona Virus relief, as they are updated, from the IRS can be found at https://irs.gov/coronavirus. Among those are the tax return extension and tax payment extension deadlines to July 15, 2020, for 2019 returns. A list of the IRS corona virus releases to date can be briefly summaries as follows (in order of most generally applicable first):
IR-2020-58 – Tax Day is now July 15: Treasury and the IRS have extend filing deadline and federal tax payments for 2019 individual and corporate returns to July 15, 2020, as part of the corona virus relief, regardless of the amount due.
IR 2020-61 – This is the economic impact payments for eligible taxpayers of up to $1,200 for individuals or $2,400 for married couples. Parents also receive $500 for each qualifying child. The full release should be read because it details the income limits, what happens if you did or did not file a return for last year or this year, getting the payment by direct deposit or by mail.
IR-2020-59 – This release details the IRS’s temporary “People First Initiative” (were they not first before?). This is applicable to those who currently owe the IRS. The release is a long one and should be read by anyone in danger of liens, levies, garnishments, or other enforcement actions and by anyone who is in danger of defaulting on a current payment plan or offer in compromise.
IR-2020-57 – Treasury, IRS and Labor announced a plan to implement Coronavirus-related paid leave for workers and tax credits for small and midsize businesses to swiftly recover the cost of providing Coronavirus-related leave.
Payment Deadline Treasury News Release – Treasury and IRS issued guidance that Form 1040 filers owing under $1 million and corporate filers owing under $10 million for their 2019 returns could wait until July 15, 2020 to pay. The filing deadline was later extended to the same date by IR-2020-58.
IR-2020-54 – The IRS said that health plans that otherwise qualify as HDHPs will not lose that status merely because they cover the cost of testing for or treatment of COVID-19 before plan deductibles have been met. The IRS also noted that, as in the past, any vaccination costs continue to count as preventive care and can be paid for by an HDHP.
IR-2020-62 -IRS: Employee Retention Credit available for many businesses financially impacted by COVID-19
IR-2020-57 – Treasury, IRS and Labor plan to implement Coronavirus-related paid leave for workers and tax credits for small and midsize businesses. This is long one. The key takeaways are:
https://irs.gov/coronavirus should be checked for updates after March 31, 2020.
Posted on 03/31/2020 by Daniel Layton.
The Corona Virus (Covid-19) economic impact payments: What you need to know The IRS has issued the following press release (as of 3/31/2010 still up but […] The post Corona Virus Economic Impact Payment: How Do You Get It, When Is it Coming, and Where Is It? appeared first on Tax Attorney Orange County| Newport Beach, CA| DWL Tax...
The IRS has issued the following press release (as of 3/31/2010 still up but check https://irs.gov/coronavirus for any update) about what you need to know about the corona virus economic impact payments:
IR-2020-61, March 30, 2020
WASHINGTON — The Treasury Department and the Internal Revenue Service today announced that distribution of economic impact payments will begin in the next three weeks and will be distributed automatically, with no action required for most people. However, some seniors and others who typically do not file returns will need to submit a simple tax return to receive the stimulus payment.
Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible.
Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples. Parents also receive $500 for each qualifying child.
The vast majority of people do not need to take any action. The IRS will calculate and automatically send the economic impact payment to those eligible.
For people who have already filed their 2019 tax returns, the IRS will use this information to calculate the payment amount. For those who have not yet filed their return for 2019, the IRS will use information from their 2018 tax filing to calculate the payment. The economic impact payment will be deposited directly into the same banking account reflected on the return filed.
In the coming weeks, Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail.
Yes. People who typically do not file a tax return will need to file a simple tax return to receive an economic impact payment. Low-income taxpayers, senior citizens, Social Security recipients, some veterans and individuals with disabilities who are otherwise not required to file a tax return will not owe tax.
IRS.gov/coronavirus will soon provide information instructing people in these groups on how to file a 2019 tax return with simple, but necessary, information including their filing status, number of dependents and direct deposit bank account information.
Yes. The IRS urges anyone with a tax filing obligation who has not yet filed a tax return for 2018 or 2019 to file as soon as they can to receive an economic impact payment. Taxpayers should include direct deposit banking information on the return.
For those concerned about visiting a tax professional or local community organization in person to get help with a tax return, these economic impact payments will be available throughout the rest of 2020.
The IRS will post all key information on IRS.gov/coronavirus as soon as it becomes available.
The IRS has a reduced staff in many of its offices but remains committed to helping eligible individuals receive their payments expeditiously. Check for updated information on IRS.gov/coronavirus rather than calling IRS assistors who are helping process 2019 returns.
IRS: Employee Retention Credit available for many businesses financially impacted by COVID-19 Corona Virus The IRS has issued the following press release: IR-2020-62, March 31, 2020 […] The post IRS: Employee Retention Credit available for many businesses financially impacted by COVID-19 Corona Virus appeared first on Tax Attorney Orange County| Newport Beach, CA| DWL Tax...
The IRS has issued the following press release:
IR-2020-62, March 31, 2020
WASHINGTON — The Treasury Department and the Internal Revenue Service today launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.
The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: State and local governments and their instrumentalities and small businesses who take small business loans.
Qualifying employers must fall into one of two categories:
These measures are calculated each calendar quarter.
The amount of the credit is 50% of qualifying wages paid up to $10,000 in total. Wages paid after March 12, 2020, and before Jan. 1, 2021, are eligible for the credit. Wages taken into account are not limited to cash payments, but also include a portion of the cost of employer provided health care.
Qualifying wages are based on the average number of a business’s employees in 2019.
Employers with less than 100 employees: If the employer had 100 or fewer employees on average in 2019, the credit is based on wages paid to all employees, regardless if they worked or not. If the employees worked full time and were paid for full time work, the employer still receives the credit.
Employers with more than 100 employees: If the employer had more than 100 employees on average in 2019, then the credit is allowed only for wages paid to employees who did not work during the calendar quarter.
Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees’ wages by the amount of the credit.
Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter. If the employer’s employment tax deposits are not sufficient to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.
Eligible employers can also request an advance of the Employee Retention Credit by submitting Form 7200.
Updates on the implementation of this Employee Retention Credit, Frequently Asked Questions on Tax Credits for Required Paid Leave and other information can be found on the Coronavirus page of IRS.gov.
IRS Issues Press Release on Leniency on IRS Collections and Compliance Enforcement Due to Corona Virus, Including Temporary Relief in Some Cases from Levies, Garnishments, and […] The post IRS Issues Press Release on Leniency on IRS Collections and Compliance Enforcement Due to Corona Virus appeared first on Tax Attorney Orange County| Newport Beach, CA| DWL Tax...
IRS Issues Press Release on Leniency on IRS Collections and Compliance Enforcement Due to Corona Virus, Including Temporary Relief in Some Cases from Levies, Garnishments, and Automated Lien Filings, and Defaults for Missed Installment/Payment Plan/Offer in Compromise Payments.
The IRS has issued the following press release:
IR-2020-59, March 25, 2020
WASHINGTON — To help people facing the challenges of COVID-19 issues, the Internal Revenue Service announced today a sweeping series of steps to assist taxpayers by providing relief on a variety of issues ranging from easing payment guidelines to postponing compliance actions.
“The IRS is taking extraordinary steps to help the people of our country,” said IRS Commissioner Chuck Rettig. “In addition to extending tax deadlines and working on new legislation, the IRS is pursuing unprecedented actions to ease the burden on people facing tax issues. During this difficult time, we want people working together, focused on their well-being, helping each other and others less fortunate.”
“The new IRS People First Initiative provides immediate relief to help people facing uncertainty over taxes,” Rettig added “We are temporarily adjusting our processes to help people and businesses during these uncertain times. We are facing this together, and we want to be part of the solution to improve the lives of all people in our country.”
These new changes include issues ranging from postponing certain payments related to Installment Agreements and Offers in Compromise to collection and limiting certain enforcement actions. The IRS will be temporarily modifying the following activities as soon as possible; the projected start date will be April 1 and the effort will initially run through July 15. During this period, to the maximum extent possible, the IRS will avoid in-person contacts. However, the IRS will continue to take steps where necessary to protect all applicable statutes of limitations.
“IRS employees care about our people and our country, and they have a strong desire to help improve this situation,” Rettig said. “These new actions reflect just one of many ways our employees are working hard every day to assist the nation. We care, a lot. IRS employees are actively engaged, and they have always delivered for their communities and our country. The People First Initiative is designed to help people take care of themselves and is a key part of our ongoing response to the coronavirus effort.”
More specifics about the implementation of these provisions will be shared soon. Highlights of the key actions in the IRS People First Initiative include:
Existing Installment Agreements –For taxpayers under an existing Installment Agreement, payments due between April 1 and July 15, 2020 are suspended. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Debit Installment Agreement, may suspend payments during this period if they prefer. Furthermore, the IRS will not default any Installment Agreements during this period. By law, interest will continue to accrue on any unpaid balances.
New Installment Agreements – The IRS reminds people unable to fully pay their federal taxes that they can resolve outstanding liabilities by entering into a monthly payment agreement with the IRS. See IRS.gov for further information.
Offers in Compromise (OIC) – The IRS is taking several steps to assist taxpayers in various stages of the OIC process:
Non-Filers –The IRS reminds people who have not filed their return for tax years before 2019 that they should file their delinquent returns. More than 1 million households that haven’t filed tax returns during the last three years are actually owed refunds; they still have time to claim these refunds. Many should consider contacting a tax professional to consider various available options since the time to receive such refunds is limited by statute. Once delinquent returns have been filed, taxpayers with a tax liability should consider taking the opportunity to resolve any outstanding liabilities by entering into an Installment Agreement or an Offer in Compromise with the IRS to obtain a “Fresh Start.” See IRS.gov for further information.
Field Collection Activities – Liens and levies (including any seizures of a personal residence) initiated by field revenue officers will be suspended during this period. However, field revenue officers will continue to pursue high-income non-filers and perform other similar activities where warranted.
Automated Liens and Levies – New automatic, systemic liens and levies will be suspended during this period.
Passport Certifications to the State Department – IRS will suspend new certifications to the Department of State for taxpayers who are “seriously delinquent” during this period. These taxpayers are encouraged to submit a request for an Installment Agreement or, if applicable, an OIC during this period. Certification prevents taxpayers from receiving or renewing passports.
Private Debt Collection – New delinquent accounts will not be forwarded by the IRS to private collection agencies to work during this period.
Field, Office and Correspondence Audits – During this period, the IRS will generally not start new field, office and correspondence examinations. We will continue to work refund claims where possible, without in-person contact. However, the IRS may start new examinations where deemed necessary to protect the government’s interest in preserving the applicable statute of limitations.
Earned Income Tax Credit and Wage Verification Reviews – Taxpayers have until July 15, 2020, to respond to the IRS to verify that they qualify for the Earned Income Tax Credit or to verify their income. These taxpayers are encouraged to exercise their best efforts to obtain and submit all requested information, and if unable to do so, please reach out to the IRS indicating the reason such information is not available. Until July 15, 2020, the IRS will not deny these credits for a failure to provide requested information.
Independent Office of Appeals – Appeals employees will continue to work their cases. Although Appeals is not currently holding in-person conferences with taxpayers, conferences may be held over the telephone or by videoconference. Taxpayers are encouraged to promptly respond to any outstanding requests for information for all cases in the Independent Office of Appeals.
Statute of Limitations – The IRS will continue to take steps where necessary to protect all applicable statutes of limitations. In instances where statute expirations might be jeopardized during this period, taxpayers are encouraged to cooperate in extending such statutes. Otherwise, the IRS will issue Notices of Deficiency and pursue other similar actions to protect the interests of the government in preserving such statutes. Where a statutory period is not set to expire during 2020, the IRS is unlikely to pursue the foregoing actions until at least July 15, 2020.
Practitioner Priority Service – Practitioners are reminded that, depending on staffing levels and allocations going forward, there may be more significant wait times for the PPS. The IRS will continue to monitor this as situations develop.
“The IRS will continue to review and, where appropriate, modify or expand the People First Initiative as we continue reviewing our programs and receive feedback from others,” Rettig said. “We are committed to helping people get through this period, and our employees will remain focused on these and other helpful efforts in the days and weeks ahead. I ask for your personal support, your understanding – and your patience – as we navigate our way forward together. Stay safe and take care of your families, friends and others.”
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