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New York Tax Lawyer Blog

What 'Seinfeld' taught us about taxes and the IRS

This month marked 25 years since “Seinfeld” debuted on television. And while it is often described as a “show about nothing," but in reality it was about all of the ordinary things New Yorkers go through in life, including paying taxes.

Recently, a Forbes article highlighted the fact that taxes and the IRS were discussed in at least 10 episodes. One episode talked about gift taxes, another discussed classifying workers as independent contractors and there was even an episode that highlighted the importance of mailing dates.

Foreign account tax issues may concern some New York residents

Tax time comes and goes every year, and residents in New York may wonder if filing taxes on foreign accounts on-time is always the best thing to do. Typically, the answer to that question is yes, but those with a first time FBAR, or Foreign Bank Account Report, may benefit from waiting to avoid tax issues. As the deadline for FBAR filings just recently passed, account holders -- particularly those who are new to foreign accounts -- may wonder how filing now will affect them.

To avoid tax issues, such as the need to amend a return shortly after filing, it is always beneficial to have all necessary information and documents in place. Sometimes, the required information needed to file simply isn't available in time. While submitting a tax filing after deadline may result in penalties, the cost would be far less than not filing at all.

IRS adopts Taxpayer Bill of Rights

Thanks to the efforts of the “national taxpayer advocate,” Nina E. Olson, the Internal Revenue Service recently adopted a "Taxpayer Bill of Rights." If you have received an audit notice or fear that you might, it’s important to know how your rights protect you.

Under the Taxpayer Bill of Rights, you have the right to:

Understanding the newest reform to the FATCA

In the president’s most recent proposed budget, a relatively obscure direction appears. It reads that the federal government shall “Provide for reciprocal reporting of information in connection with the implementation of FATCA.” This provision will likely mean little to many Americans and will affect few Americans directly. However, it will impact certain individuals and corporations in significant ways.

FATCA stands for “Foreign Account Tax Compliance Act of 2010.” This legislation helps to ensure that American individuals and companies do not misuse offshore accounts in attempts to evade federal tax liabilities. This important law was inspired partially by a number of tax investigations that revealed significant abuses of the system and evasion of massive federal tax liabilities.

Tax debts could be sent to collections under proposed bill

A new measure has been proposed in the U.S. Senate that would require the Internal Revenue Service to send delinquent tax debts to a private debt collector. If it becomes law, the measure would require the IRS to send unpaid tax bills to collections if the IRS is unable to locate or make contact with the debtor for a year.

The U.S. Taxpayer Advocate said in a letter to lawmakers that sending unpaid tax debts to private debt collection agencies would be a “bad idea,” and is one that has failed in the past. Additionally, the taxpayer advocate told lawmakers that the measure would unfairly target the nation’s poor and vulnerable taxpayers.

What is an offer in compromise?

When a person owes substantial tax liabilities to the IRS, he or she may feel paralyzed with worry. However, the IRS has an Offer In Compromise program that could allow the individual to settle the tax debt for less than is owed or, in some rare situations, eliminate the debt completely.

Essentially, the IRS Offer In Compromise program is for individuals who cannot afford to pay the tax liabilities that they owe and doing so would create a financial hardship.

Report: Fewer Americans to be audited this year

An IRS audit is the review or examination of an individual or business's accounts and financial records in order to determine whether information is being reported correctly and the right amount of taxes were paid.

With the tax deadline last week, many Americans shifted their concerns from making sure they filed their taxes on time to wondering if they would be selected for an audit.

The IRS conducts audits at random and also when certain issues raise red flags, which we have discussed in past posts.

Use caution when selecting a tax preparer last minute

If you are one of the many New York residents who are waiting until the last minute to file your 2013 income tax return, you may be starting to panic and desperate for help.

However, before you turn to just any tax preparer, make sure that you find someone you can trust and that you find out their fees upfront.

Tax records: Keep or shred?

Unless you are someone who likes to wait until the last minute, chances are that you have already filed your 2013 income tax return. And maybe, unless you are someone who is very neat and tidy, the papers you used to do so are still in a messy pile on your desk.

You may have stared at the pile of W2s, property tax statements, receipts and other papers, and contemplated putting them right into the shredder. But you probably decided that wouldn’t be a good idea in case you get audited, which was a good decision to make.

More deductions that could trigger an audit

We are in the middle of tax season in New York and the rest of the country, and it seems like everyone who is preparing their income taxes have a common fear in the back of their minds: getting audited.

Because the IRS does some random auditing there is no way to protect yourself 100 percent; however, knowing what the IRS looks for can reduce your chances of getting targeted.

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