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When you miss a filing deadline for your income taxes, it can be tempting to keep putting it off.  In fact, many people find themselves in the situation where they’re worried about what will happen if they file late, and end up simply not filing—and then skip the next year, and the year after that.

What happens when you build up a few years of unfiled taxes?  Unfortunately, if you owe money, the amount will keep growing.

We can help.  Whether filing filing your taxes timely or catching up on unfiled taxes, do not hesitate to contact us for help.

If you can’t pay your full tax debt, or if paying it all would create a financial hardship for you, an IRS offer in compromise may be an option. An offer in compromise is an agreement between you and the IRS, where the IRS agrees to accept less than the full amount you owe.

The two main reasons the IRS may agree to accept less than the full amount you owe are for what is known Doubt as to Collectability or Effective Tax Administration.

Another reason the IRS may accept payment of less than the full amount of tax owed is Doubt as to Liability (that is, you don’t believe you owe the tax, or you don’t believe the amount is correct).

There are two kinds of payment options for an offer in compromise — Lump Sum Offer or Periodic Payment Offer.   You must select one of them and include payment with your offer. The amount of the first and following payments will depend on the total amount you offer and which payment option you choose.

For the IRS to accept an offer, you have to file all tax returns due and be current with estimated tax payments or withholding. If you own a business and have employees, you must file all returns and be current on all your federal tax deposits.

After the IRS notifies you that it has accepted your offer and you pay the reduced amount you’ve agreed to, your entire tax debt is considered resolved as long as you fulfill the terms of the offer agreement.

Feel free to contact us to learn more about the IRS offer in compromise program and to discuss whether you would be a good candidate for an IRS offer in compromise.

If you’re financially unable to pay your tax debt immediately, you can make monthly payments through an installment agreement. As long as the tax debt is paid in full, the payment of penalties or interest can be reduced or eliminated, and the fees associated with setting up the agreement can be avoided.

Before applying for any payment agreement, you must file all required tax returns.

The IRS will generally not take enforced collection actions when an installment agreement is being considered; while an agreement is in effect; for 30 days after a request is rejected; or during the period the IRS evaluates an appeal of a rejected or terminated agreement.

The IRS is also testing expanded criteria for streamlined processing of taxpayer requests for installment agreements. The test is scheduled to run through September 30, 2017.

During this test, more taxpayers will qualify to have their installment agreement request processed in a streamlined manner. Based on test results, the expanded criteria for streamlined processing of installment agreement requests may be made permanent.

Contact us at any time to see which type of IRS installment agreement may be the best fit for you.

If you have received a Notice of Deficiency (90-day letter) from the IRS, you have 90 days (150 days if the Notice is addressed to a person who is outside the country) from the date of the Notice to file a petition with the Tax Court if you want to challenge the tax the IRS proposed.

An experienced tax attorney can be instrumental in making sure all necessary issues and arguments are properly raised and preserved in the tax court petition.  This is very important, especially, during settlement negotiations with the IRS attorney.

If you are interested in seeing how we can help with your tax court petition, please do not hesitate to contact us at any time to see how we can help.

An IRS audit is a review/examination of an organization’s or individual’s accounts and financial information to ensure information is reported correctly according to the tax laws and to verify the reported amount of tax is correct.

Taxpayers can randomly be selected for an audit or can have their returns selected when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for audit.

Having an experienced tax attorney on your side to protect your rights and properly respond can serve as a great help to ultimately minimizing or eliminating any possible liability.

Please feel free to contact us to discuss resolving your audit.

A tax levy is an administrative action by the IRS to seize property to satisfy unpaid taxes.  The IRS can issue a levy to take a taxpayer’s income and assets. The process to accomplish this follows several steps. First, the IRS is required by law to provide the taxpayer with: a Notice and Demand for Payment, a Notice of Intent to Levy and a Notice of a Right to a Collection Due Process hearing.

For most taxpayers, the IRS accomplishes these requirements by sending five letters, starting about six weeks after the taxpayer files a return. The five letters are often referred to as the automated collection “notice stream.”

If the taxpayer receives the last notice and doesn’t pay the balance or makes other arrangements to pay the balance, the IRS can levy the taxpayer’s income and assets, including garnishing wages and/or self-employment income and seizing funds in bank accounts. The latest annual figures show that the IRS has issued almost 3 million levies to taxpayers.

If you know you owe a tax balance (meaning the IRS didn’t make a mistake, you filed the return correctly, and the balance can’t be reduced by filing an amendment), there are ways to remove and avoid an IRS levy or wage garnishment.

If your wages have been garnished or are facing an IRS levy, we can help.  Feel free to contact us at any time to discuss your options.

During tough times, businesses may resort to using IRS payroll tax money to stay afloat. With bank lending tight, employee tax withholding is a ready-but dangerous-source of immediate operating capital.

The IRS does not like being made an unwilling partner to a loan. The IRS feels they trusted the owners and operators of a business to protect the employee payroll tax withholdings and timely pay them to the government. This violation of trust is the basis for the trust fund recovery penalty.

The trust fund recovery penalty allows the IRS to collect the unpaid withholding taxes from the assets of the owners and operators of the business.  It penalizes those who had control over the decision to divert the payroll money from the IRS to other creditors of the business.

The trust fund recovery penalty is equal to the income taxes, social security taxes, and Medicare taxes withheld from employee paychecks. The trust fund recovery penalty is authorized by Sec. 6672 of the Internal Revenue Code (IRC).

The Trust Fund Recovery Penalty is nondischargeable in the bankruptcy of the responsible person.  If a taxpayer is held personally responsible, the IRS could pursue the individual’s personal assets to collect, including liens and levies. A responsible person can be an officer, employee, director, shareholder of the corporation, member or an employee of a partnership.

We represent taxpayers who face a proposed Trust Fund Recovery Penalty or have been assessed the penalty, and can seek to have the penalties reduced or eliminated.  If you are or may be facing a Trust Fund Recovery Penalty, contact us for more information on whether you should be subject to this penalty and to see if we could be of assistance.

While many taxpayers initially may welcome government efforts to catch those who hide their money in offshore bank accounts, they are often surprised to learn that they themselves may be in violation of the law.  The U.S. has a unique system of “worldwide income reporting,” whereby U.S. persons are required to report income that is earned outside the U.S., even if that income has already been taxed.  As a result, if you have recently moved to the United States and maintain bank accounts in your home country or foreign income-generating assets, such as rental real estate (even if it is only partially owned by you or it was inherited) you must report the income from these assets and pay tax in the U.S. (including at the state level in many cases), even if tax has been paid in your home country.

In part because of the high levels of noncompliance with foreign tax reporting requirements (oftentimes out of innocent ignorance), the IRS has developed voluntary disclosure programs that allow taxpayers to come forward, correct their past mistakes, pay past-due taxes, and pay a set penalty (or, in some circumstances, pay no penalty). The first, the Offshore Voluntary Disclosure (OVDP), was initiated in 2009 and has changed over the years. The second, the Streamlined Compliance Filing Procedures was developed more recently as the IRS acknowledged that there are many taxpayers whose actions were truly innocent (non-willful) and should thus be penalized less.

If you maintain undisclosed offshore assets, feel free to contact us to learn more about these IRS programs and for advice on minimizing any potential tax liability or penalties.

The Bank Secrecy Act (BSA), P.L. 91-508, requires certain U.S. persons who have a financial interest in or signature authority over a foreign financial account to report the account annually to the Department of Treasury by electronically filing Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (commonly called FBAR), through FinCEN’s BSA E-Filing System. An FBAR is a form required for any individual or business that has ownership or signatory authority over any foreign accounts, retirement accounts, business accounts, etc. that has an annual aggregate total that exceeds $10,000 at any time during the year.  It does not matter whether you already reported the account and paid tax in a foreign country, or that the account is not taxed in the particular jurisdiction in which the account is held (for example, most Asian countries do not tax bank interest).

FBAR reporting requirements make it essential for taxpayers domestically and abroad to comply with U.S. tax laws.  The penalties for noncompliance are harsh, hence, it’s important to be in compliance.

We are prepared to guide you through this process and help you understand that complying with federal income tax requirements does not relieve you of  filing obligations for FBAR.  Feel free to reach out to us at any time to help you with your FBAR filings.

A Collection Due Process Hearing (“CDP Hearing”) is a hearing to determine whether an IRS Collections action is proper under the Internal Revenue Code.  The hearing is conducted by the IRS Office of Appeals, which is an independent agency within the IRS that exists to resolve disputes between taxpayers and the government.  The hearing is held before an impartial IRS Appeals Officer, who is typically a former IRS Revenue Agent.

The IRS must first notify the affected taxpayer in writing of his or her right to a hearing.  As applied to liens and levies, these notices have historically taken the form of a Notice of Federal Tax Lien and Your Right to a Hearing  or a Notice of Intent to Levy and Notice of Your Right to a Hearing.  However, the Service has more recently begun to issue automated final notices (i.e., a Notice LT11, Notice of Intent to Levy) which, according to their terms, provide taxpayers with CDP rights.  After filing the request, all collections activity on tax debt is put on hold until the hearing is resolved.  These notices are time-sensitive, hence, taxpayers who receive these notices need to respond in a timely fashion so as to preserve their CDP rights.

The ability to file a collection due process appeal is probably the most powerful right you have in defending against IRS enforcement by levy or seizure.  If you have received any of these notices, contact us to discuss how we can help put a hold on collection and preserve your rights to this hearing.

Many married taxpayers choose to file a joint tax return because of certain benefits this filing status allows them.  When filing jointly, both taxpayers are jointly and severally liable for the tax and any additions to tax, interest, or penalties that arise from the joint return even if they later divorce.  Joint and several liability means that each taxpayer is legally responsible for the entire liability.  Thus, both spouses on a married filing jointly return are generally held responsible for all the tax due even if one spouse earned all the income or claimed improper deductions or credits.  This is also true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns.

In some cases, however, a spouse can get relief from being joint and several liability through what is known as Innocent Spouse Relief.  Generally, relief from additional tax is possible if a spouse or former spouse failed to report income, reported income improperly or claimed improper deductions or credits.

If you believe you are potential candidate for Innocent Spouse Relief, contact us at any time to learn more and to see how we can help.

As with federal taxes, when you miss a filing deadline for your state taxes, it can be tempting to keep putting it off.  In fact, many people find themselves in the situation where they’re worried about what will happen if they file late, and end up simply not filing—and then skip the next year, and the year after that.

What happens when you build up a few years of unfiled taxes?  Unfortunately, if you owe money, the amount will keep growing.

We can help.  Whether filing filing your state taxes timely or catching up on unfiled taxes, do not hesitate to contact us for help.

The New York State (NYS) Offer in Compromise program is the form of debt settlement that the State uses  allowing qualifying, financially distressed taxpayers the opportunity to put overwhelming tax liabilities behind them by paying a reasonable portion of their tax debt.

The assistance of an experienced tax attorney can be crucial in assisting you with your NYS offer in compromise negotiation as process is thorough and often document intensive as the State is often settling for less than the full amount due.

We have been successful in getting our clients into offers where they pay less than the amount due.  If you would like for us to review the feasibility of a potential Offer, do not hesitate to contact us.

NYS taxpayers who are financially unable to pay the full amount of your liability all at once,  may qualify for an installment payment agreement (IPA).  An IPA is somewhat similar to those employed in many retail establishments for the purchase of goods and services. Under the states IPA, taxpayers are allowed to pay off their  total tax liability in monthly installments. However, agreeing to pay the tax debt through an installment plan does not put a cap on the total amount owed. Until the tax liability is satisfied, interest and any penalty will continue to accrue on any unpaid balance.

Whether or not a taxpayer enters into an IPA, the State may also file a tax warrant with the County Clerk and the Secretary of State. The warrant helps protect the interests of the state and secures the debt, however, levy action, such as an ongoing income execution, will be suspended when an IPA is put in place.

The length and terms of an IPA may  depend on various factors, such as the taxpayer’s income and expenses, as well as the total amount due.  Do not hesitate to contact us to learn more and discuss whether an IPA is good option for you.

Under the State’s Voluntary Disclosure and Compliance Program, eligible taxpayers who owe back taxes and haven’t filed related returns can avoid monetary penalties and possible criminal charges by: telling the department what taxes they owe; paying those taxes; and entering an agreement to pay all future taxes.

Applicants for the voluntary disclosure and compliance program cannot be under audit by the tax department; the tax department must not have determined, calculated, researched or identified the tax liability at the time of the disclosure; the applicant must not be a party to any criminal investigation being conducted by any agency or political subdivision of New York State; and the applicant cannot disclose participation in certain tax shelters. The voluntary disclosure can cover any type of tax administered by the tax department (for example, income taxes, sales taxes, etc.). The tax department will issue a voluntary disclosure and compliance agreement to applicants that qualify for the voluntary disclosure and compliance program. The approved applicant must sign the voluntary disclosure and compliance agreement and comply with its terms in order to receive the benefits of the voluntary disclosure and compliance agreement.

The benefits of the voluntary disclosure program include limiting the number of years of tax returns that must be filed and payment of tax and interest to the “look-back period”, the abatement of penalties and various degrees of protection against criminal prosecution. Applicants may request a “limited look-back period” if taxes are owed for more than 3 years. However, 6 years of tax returns and tax payments and interest will be required in the case of fraud or tax evasion.

To learn more about the State’s Voluntary Disclosure Program and whether it would be a good option for you, feel free to contact us.

Vendors registered to collect and remit sales tax in New York must maintain accurate records of all sales and purchases made as all sales of tangible personal property are subject to sales tax unless specifically exempt.  In contrast, sales of services are generally exempt from NYS sales tax unless specifically taxable.

NYS conducts audits on individuals and businesses to promote compliance with tax laws, and as a means of increasing State revenue.

As part of the ordinary course of business, most companies eventually will undergo a sales and use tax audit. Most auditors are professional and even friendly but please don’t mistake that professionalism for being your friend. While few auditors will admit it, their primary goal is to issue a substantial sales and use tax assessment.

If a taxpayer’s books and records are inadequate, NYS may apply a reasonable method to determine whether additional taxes are due. Such methods can include analysis of a taxpayer’s credit card receipts, cost of goods sold, etc. Penalties may be imposed for failure to maintain inadequate records.

A taxpayer could be subject to penalties and interest if additional tax is due, be subject to criminal penalties if there was a willful failure to maintain proper records, or have their Certificate of Authority revoked.  In addition, sales tax liabilities may flow through to individuals held responsible for collecting and remitting the tax. A personal liability means the State could pursue the individual’s personal assets to collect on the sales tax liability, including tax, interest, and penalties.

Our goal to see that your business is treated fairly during a sales tax audit. We help insure that gray areas in the sales tax law are interpreted in your favor. We also defend you against the sales tax auditor making unfair assumptions or erroneous projections about your business’s revenue. Feel free to contact us to see if we can help if your business during a sales tax audit.

Even if have a primary residence outside New York and you believe you reside outside the State, if you also own or use property in New York  State, the Department of Taxation and Finance (the “Department”) may claim you are a resident of  New York City or New York State for income tax purposes. Hence, even if you spend a majority of time outside New York State, you may be subject to a residency audit.

A residency audit is designed to determine whether you were correct in filing your New York personal income tax return as a nonresident or part-year resident or, instead, should have filed as a resident. Because New York residents are subject to tax on their worldwide income while nonresidents are subject to tax only on that portion of their income attributable to (“sourced to”) New York, the difference in tax liability can be significant, particularly if you have substantial investment income. This is especially true for nonresidents that work in New York City because New York City does not impose an income tax on nonresidents.

The separate and distinct areas to be examined during the audit of a nonresident individual are Domicile and Statutory Residency.

The relevant state regulation states that “Domicile in general, is the place an individual intends to be his permanent home – the place to which he intends to return whenever he may be absent. If a taxpayer claims a change in domicile, the burden of proof is on him/her to show the domicile change to outside of New York.

A taxpayer who is not domiciled in New York State or City but maintains a permanent place of abode in New York State or City (e.g., an apartment) and spends more than 183 days (any part of a day spent in New York counts as a NY day, with a few exceptions) in New York State or City, will be a resident for New York State or City income tax purposes. The most important exception is time spent in New York City or State solely for transportation purposes (e.g., passing through New York City in a car or bus or utilizing airports and bus and train terminals etc.).

We represent taxpayers who are undergoing New York State or New York City residency audits. Feel free to contact us at any time to help you understand the strengths and weaknesses of your claimed residency status and to see if we can assist you with your residency audit.

In most instances, when a taxpayer purchases a taxable item or service in the state, or if it is delivered to you in the state, the seller will collect sales tax. The seller then pays the tax over to the Tax Department.

When sales tax has not been collected on taxable items or services, tax is required to be paid when the items or services are used in New York. Use tax is a tax imposed on the use of taxable items and services in New York when the sales tax has not been paid.

Common situations in which a business operating in New York State would owe use tax include: purchases of taxable property or services made outside New York State, purchases made over the Internet or by phone from businesses that are located outside of New York State, purchases of taxable property or services on an Indian reservation, purchases where the taxable property or services are used in a different local taxing jurisdiction than where they were purchased or where they were delivered, withdrawal of taxable property from inventory for use by the business, or use of taxable property that is manufactured, processed, or assembled by the business.

Determining whether you owe use tax, calculating it properly, and reporting it are all significant as failure to pay the use tax you owe by the due date may result in the imposition of penalties, interest, or both.  If you are facing a NYS use tax assessment, contact us to learn more and to see how we can help.

Similar to the IRS Trust Fund Recovery Penalty, a New York State (NYS) responsible person assessment means the State can pursue the individual’s personal assets in order to collect the business’s tax liability.

When a business entity fails to remit its Sales or Use Tax, NYS will impose personal liability for an entity’s unpaid taxes which attaches specifically to any officer, director and/or employee of a corporation. For partnerships, LLC’s or Sole Proprietors, liability attaches to any general or limited partner and/or employee with such a duty (without regard to the entity’s operating status) who has been charged with the duty to assure compliance with the sales and use tax law.  Taxpayers assessed as a responsible person are personally liable for 100% of the unpaid sales tax, regardless of the individual taxpayer’s percentage of ownership and cannot discharge this liability in personal bankruptcy. Taxpayers are also liable for the interest and penalties that are assessed.

With regard to withholding tax, NYS may pursue individuals to collect a business’s unpaid withholding tax if that person had the duty to collect the tax and willfully failed to perform the duty. The unpaid tax is assessed against the individual as a penalty and is not dischargeable in personal bankruptcy.  Taxpayers assessed as a responsible person are personally liable for 100% of the unpaid withholding tax, regardless of the individual taxpayer’s percentage of ownership.  Note, however, the individual is not liable for any penalties assessed against the company with respect to the unpaid withholding tax.

Do not hesitate to contact us if you are facing a responsible person assessment.  We represent taxpayers facing such assessments and under the proper circumstances, we will challenge the State’s assertion that a taxpayer was responsible for an entities unpaid taxes.

A tax warrant is the equivalent of a legal judgment against the taxpayer and creates a lien against real and personal property when filed. A tax warrant gives the State the legal authority to pursue collection against the taxpayer’s real and personal assets on an unpaid tax.   The warrant is a public record, on file at the County Clerk’s office and with the Secretary of State. It publicly acknowledges that the taxpayer owes New York State (NYS) taxes and can adversely affect credit ratings and make it difficult to get a loan or buy or sell real property. A warrant remains on file with the County Clerk and the Secretary of State until the tax liability is satisfied or the warrant expires.

The significance of a tax warrant also comes into play when calculating the twenty-year statute of limitations NYS has on collection. This period begins to run on the first day a tax warrant could be filed by the State.  After a tax warrant is filed, NYS may proceed with collection action, including bank levies.

Most frequently, a levy is made on bank accounts, and requires a bank to remove money from the account and send it to the department.  A levy can also be made on money that any third party owes the taxpayer, such as a loan or rent owed to you. If you are a business taxpayer, a levy can even be made on the cash in your register. Property will not be levied on if the department estimates that the expenses to levy and sell the property are greater than the expected sale proceeds. NYS does not provide the taxpayer advance notice of issuance of a levy.

An income execution is a one of the more common types of levies that may be issued against ones wages.  Under an income execution procedure, subject to certain income thresholds, a taxpayer will be asked to voluntarily submit a fixed amount of your wages, up to 10% of gross earnings, to the department. If the taxpayer does not voluntarily pay this amount within 20 days of receiving the department’s notice and continue to pay this amount until the debt is satisfied, their employer will then be ordered to take up to 10% of gross wages, subject to certain income thresholds, directly out of their paycheck and pay it to the department. The income execution remains in effect until the outstanding tax liability is satisfied.

If you are facing collection action by the State, feel free to contact us to go over your rights and to see if we can stop or put hold on collection.

A taxpayer who disagrees with audit finding will be given the opportunity to participate in a mediation conference with the auditor. This conference is held under the under the auspices of the Bureau of Mediation and Conciliation Services (BCMS), which is a separate operating bureau within the Department of Taxation reporting directly to the Commissioner of Taxation and Finance. The goal of the Conciliation Conferee is to resolve tax disputes without the necessity of a formal hearing before the Division of Tax Appeals. A request for a Conciliation Conference must generally be made within 90 days after the issuance of a Notice of Determination.

The taxpayer who deems the Conciliation Order issued by the Conferee following the Conference unacceptable, may request a formal hearing before the Division of Tax Appeals within 90 days after the Conciliation Order is issued. Hence, it is recommended that taxpayers pursue a conciliation conference in lieu of or prior to filing a petition with the Division of Tax Appeals.

To take advantage of the impartial forum and timely process offered through a NYS Conciliation Conference, feel free to contact us at any time.