10 Things You Should Know About the IRS

Experienced and Skilled San Diego Tax Attorneys

If you are facing a tax controversy with the IRS and your business or personal assets are at stake, it is imperative that you retain the legal representation of Milikowsky Tax Law. Whether you are involved in a civil or criminal tax matter in the US or abroad, our firm is fully equipped to represent you. We can passionately pursue your goals and offer you the zealous representation you deserve. Our full service law firm has one mission: to exceed the expectations of our clients in a timely manner on a reasonable budget. Based on our extensive tax, business and litigation experience, our services are of great viable options and carefully weighed solutions to individuals and businesses facing tax matters. To ensure you receive proper services from our firm from the start, Our San Diego tax lawyers will analyze the facts, review the factual chronology and conduct legal research in order to build an effective plan of action on your behalf. Do not hesitate to secure our representation!

1. The IRS can obtain a credit report on a taxpayer without their prior authorization.

The Fair Credit Reporting Act (FCRA) applies to the IRS; however, a consumer reporting agency may provide a consumer report to the IRS if one of the permissible purposes listed in 15 U.S.C. § 1681b (a) is satisfied. In sum, there must be a balance owed to the government.

2. If there is an open audit or you owe a balance to the IRS, the IRS can summons bank records from your bank.

Generally, the IRS is required to provide you with a notice after a summons is issued and sent to the bank. Notices are not required for jeopardy assessments where there is a risk that the funds may be transferred outside of United States jurisdiction.

3. The IRS can levy funds from your bank account or send a levy notice to your employer or customers.

This requires that the IRS follow proper procedures where you have a balance owed to the federal government and the IRS has provided you with sufficient notice of the levy (usually through a "notice of intent to levy" and "final notice of levy.")

4. The IRS requires taxpayers to report earnings from illegal activity.

Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity. This usually arises in drug cases where a person is prosecuted for a crime and then the IRS assesses the individual based on the amount of money they earned from the illegal activity.

5. There is no statute of limitations for the IRS to assess you if you failed to file a tax return or you filed a fraudulent tax return.

Typically, the IRS has 3 years to audit you once you file a return.

6. The IRS has a department called the Taxpayer Advocate Service (TAS) whose sole purpose is to ensure every taxpayer is treated fairly, and understands his or her rights.

TAS offers free services to taxpayers who are having difficulties with the IRS (i.e. the IRS is not following the proper procedures or there is a hardship involved). TAS will not provide legal advice and is not intended to be a substitute for an attorney. However, TAS can be very effective in resolving disputes. From time to time, our firm contacts TAS for assistance in the resolution of controversial tax matters.

7. The penalty for failing to file your income tax return is 5% per month of the balance you owe to the IRS.

The penalty for failing to pay your income tax owed is only ½% per month. Each penalty maxes out at 25%. So if you owe $10,000 for 2012 and you did not file a tax return, you could owe the IRS up to $2,500 more for failing to file your return if your tax returns are more than 5 months past due and you did not file for an extension.

8. The IRS may abate one penalty during your lifetime based on your good behavior (i.e. you have been compliant in filing your returns and paying the taxes you owe).

There is no general formula. Anyone can apply to have a penalty abated.

9. As a business owner, you may be personally liable for certain taxes:

Payroll taxes owed to the IRS – you are liable for the "trust fund" portion of the taxes – the taxes your employees paid and the company was obligated to hold in trust for the government. Similarly, when a business has a tax debt and assets (money, equipment, patents, etc.) transferred to another person or business without compensating the company for the fair market value of those assets, the IRS may be able to collect a portion or possibly all of the taxes owed from the transferee. This is commonly referred to as "transferee liability." The same is true for California state sales tax.

10. Fraud penalties and certain taxes (i.e. payroll taxes, trust fund recovery penalty) are not dischargeable in a bankruptcy.

Protect your business and assets – call today!

Facing the IRS can be an intimidating, stressful and exhausting experience. As such, we strongly advise you to secure our representation immediately. Our legal professionals understand tax law and are dedicated to client satisfaction. When you work with our firm, we can help you make every decision an informed one. We will navigate through the legal complexities with you and manage your case from start to finish.

Are you or your company under investigation by the IRS or state tax agency? Do you owe a significant amount in taxes? Are you planning to buy or sell a business? If so, contact Milikowsky Tax Law for supportive assistance and qualified legal counsel. Our San Diego IRS attorneys know tax law. Schedule your free initial consultation today!

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