The new IRS Form 8938 does not replace or otherwise affect a taxpayer’s obligation to file Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts), aka, FBAR. Individuals must file each form for which they meet the relevant reporting threshold. Adding to the confusion is that the Form 8938 and the FBAR have totally different requirements, luckily there is this FBAR v. Form 8938 instructions for reference.
If you are audited by IRS, there are just not a chance of crippling tax bill, but there is also an chance that your civil auditor will “refer” you to the IRS Criminal Investigation division. Read this important article to learn our Tax Audit Checklist: 9 Essential Facts.
Did you know that the IRS audited almost 1.6 million individual taxpayers in 2010? That’s an 11% increase over 2009 and more than double the rate of 2002. If you are audited, the IRS will attempt to open up 3 years for examination. So if you the IRS finds unreported income or unallowed expenses, the tax bill can be staggering. And worse still — an auditor may refer you the IRS Criminal Investigation Division. In 2010, the IRS recommended 1,511 cases for prosecution and got a conviction rate of 90% with an average sentence of 27 months. Fortunately, there are steps you can take to avoid audit red flags.
As it is right now, there are two types of tax audit format. One format is the face-to-face “field audit.” The second is the more common, correspondence, or “corr” audit. The IRS prefers the corr audit because the costs are low. But for taxpayers, ‘”corr audits” are awful Resulting in very high default audits. The reason is that the process is extremely user unfriendly (read more about “corr audits” here). Yesterday, however, the IRS taxpayer advocate announced the possibility of a new tax audit format: the video audit.
In the future, you will get applause for being so honest.
Injured Spouse relief is available for married taxpayer who wants to enjoy the benefits of filing a joint return without having to worry about having that benefit wiped out by their spouses’s pre-existing debts.
As I said before, if you fell prey to the Taxmasters Scam, the chances of getting anything but a nominal check back are incredibly slim. Therefore, don’t think so much about getting even with TaxMasters, it’s not going to happen. Focus on the reason you hired them in the first place. Your tax problem. TaxMasters is going away, but the IRS is not.
A client of ours, who claimed to one of to be many ripped off by TaxMasters, gave me a copy of a recent motion filed in the TaxMasters Bankruptcy. The news is not good for those who were ripped off — not good. Very little in the way of assets as I suspected.
Happy Thanksgiving. I guess. I’m not sure why I can’t give a rest today, unlike Taxlawprof Paul Caron, who compiles a list of things he and his peers are thankful for.
As opposed to a decision earlier this month that was unfavorable to a prison guard (who was not allowed to deduct go-kart racing expenses) an ex-Boeing employee who started a glider training business, who was clearly passionate about flying, prevailed: Read More…
Posits Dan Mitchell:
But part of me has always wondered whether lawyers deliberately or subconsciously make the system complex because it serves their interests. I know many tax lawyers who are now getting rich in private practice by helping their clients navigate the complicated laws and regulations that they helped implement. For these people, the time they spent on Capitol Hill, in the Treasury, or at the IRS was an investment that enables today’s lucrative fees.
Well,I don’t know about that…
The reason I became a tax [resolution] lawyer is because of the swell uniforms.
Or actually, the real reasons are more-or-less four-fold:
(1) I demonstrated an aptitude;
(2) There was a need;
(3) I like helping people in tough spots;
and;
(4) I know the hypocrisy will never go away. The flat tax is the water-carburetor pipe-dream of your flying-car future. Something that I know for sure is that folks are always going to end up with tax messes. And the more people rail about the complicated tax system, the more complicated it becomes, hence the bigger the messes.
Dan, you might be right for some tax attorneys…but me…I’m no engineer, I’m just a [high-priced] janitor. The code was like that when I got here.
