Re-post: Former IRS official Lois Lerner’s Takes the Fifth Amendment At Congressional Hearing

Former IRS official Lois Lerner’s refusal to answer questions at a congressional hearing on the targeting of tea party groups sparked an angry exchange on Wednesday between Chairman Rep. Darrell Issa and committee Democrats.

Lerner headed the IRS division that improperly targeted tea party and other conservative groups for extra scrutiny when they applied for tax-exempt status from 2010 to 2012. She appeared at a Wednesday hearing by the House Oversight Committee.
But when Issa asked her questions about her role in the matter, Lerner repeatedly invoked her constitutional right not to incriminate herself.

The fireworks began after a frustrated Issa abruptly adjourned the hearing, prompting an outburst by Maryland Democrat Rep. Elijah Cummings.

“I am a member of the Congress of the United States of America,” Cummings yelled as Issa dismissed the meeting and cut of microphones. “I am tired of this.

“We have members over here, each who represent 700,000 people. You cannot just have a one-sided investigation. There is absolutely something wrong with that. And, it’s absolutely un-American,” Cummings yelled.

“We had a hearing. We are adjourned. I gave you an opportunity to ask a question. You had no questions,” Issa, a Republican from California, responded.

“I do have a question,” Cummings said.

“I gave you an opportunity to speak,” Issa replied, and left the meeting room.

Lerner invoked the Fifth Amendment in response to several questions by Issa about her role in the IRS targeting of conservative groups seeking tax-exempt status. The hearing
Wednesday was her second appearance before the committee.

After the hearing, Issa answered questions outside the meeting room. He said Cummings had an opportunity to ask a question during the hearing, but that he instead “went into an opening statement.” Issa said opening statements had already been completed. He said he left the hearing because “there was no question pending.”

“The fact is, Mr. Cummings came to make a point of his objections to the process we’ve been going through. He was actually slandering me at the moment that the mikes did go off, by claiming that this had not been a real investigation,” Issa said.

“Just because Mr. Cummings would like to have a more convenient truth, doesn’t give him the right to make a speech,” he added.

Cummings exited the hearing more composed than moments before, and reviewed the extent that Congress had worked to investigate the claims against the IRS.

“We have now interviewed 38 IRS employees. Hundreds of thousands of pages of documents from IRS have been reviewed, $14 million plus and counting in man-hours (have) been expended in addressing the various investigations with regard to the IRS.

“And, still, there has not been any evidence whatsoever that there was political motivation in regard to this targeting, in regard to these efforts,” Cummings said.

Issa said the investigation by Congress would continue.

Republicans have been considering holding Lerner in contempt, a move that House Speaker John Boehner backed today.

Boehner said he would wait for a final report of what happened from Issa, but he wants Lerner to testify.

“At some point I believe that she has to testify,” Boehner told reporters. “Or she should be held in contempt.”

The Fifth Amendment being pleaded by an IRS official?  Hmmm . . . remember the Fifth Amendment skit played out by Dave Chappelle?  Check it out . . . plain laughable . . .








The National Taxpayer Advocate’s Office (TAO) & its 2013 Annual Report to Congress

Every year, the National Taxpayer Advocate’s (NTA) Annual Report to Congress identifies at least 20 of the nation’s most serious tax problems. These issues can affect taxpayers’ basic rights and the ways they pay taxes or receive refunds, even if they’re not involved in a dispute with the IRS. As your voice at the IRS, the NTA uses the Annual Report to elevate these problems to Congress and the highest levels of the IRS, and to recommend solutions.
The Taxpayer Advocate Service (TAS) first identified many of the issues in this report when large numbers of taxpayers couldn’t resolve tax-related problems and came to TAS for help.
Read the National Taxpayer Advocate Office’s rendition of the most serious problems involving IRS taxpayers and their tax issues:

Billionaire Warren Buffet Offers $1 Billion for the Perfect NCAA March Madness Basketball Bracket

This is a re-post of an article from Forbes . . . Billionaire investor Warren Buffet will pay you $1 billion dollars if you submit a perfect NCAA March Madness Bracket.  Check out the details below . . .

It’s not every day that Brady gets sent packing, Manning sends potential travelers scrambling to the midwest and a Stanford grad makes news for freaking out on reporter Erin Andrews but that’s exactly what happened on Sunday. It was a play-off day to remember and had many already looking forward to the Super Bowl.

Not everybody is thinking about football.

Today, Warren Buffett had tongues wagging about basketball. The billionaire, who ranks 4th on Forbes list of top billionaires, with an estimated worth of $53 billion, wants to make you an offer: he’ll give you $1 billion for a perfect March Madness bracket.

Nope, that’s not a typo.

Buffett, together with his company, Berkshire Hathaway, are offering $1 billion to any person who can correctly pick the winners of all 63 games in this year’s NCAA men’s college basketball tournament. Buffett and Berkshire Hathaway are partnering with Quicken Loans, owned by fellow billionaire Cleveland Cavaliers owner Dan Gilbert, to offer the ‘Quicken Loans Billion Dollar Bracket.’ Gilbert is listed at #384 of Forbes’ list of billionaires with an estimated net worth of $3.9 billion.

It’s a pretty safe bet to say that they’re good for it.

But are you up for the challenge?

The odds of winning are said to be one in 4,294,967,296. That feels about right, considering that it’s all I can do to make it past the first round with my final four teams still intact.

Don’t worry if you don’t have the chops to pick a perfect bracket. Quicken will still award a whopping $100,000 each to the 20 most accurate “imperfect” brackets for use in buying, refinancing or remodeling a home.

It’s enough to make you start reading ESPN every day, right? I have to think they’re already salivating at the notion. The network’s tweet earlier today about the contest has been retweeted over 38,000 times.

The details are as follows: pick all of the correct winners and win. If there is more than one winner (statistically, that’s nearly unfathomable), you’ll share the $1 billion prize.

The $1 billion will be paid in 40 annual installments of $25 million. Or if you don’t want to wait around that long, you can claim a lump sum payment of just half: $500 million.

There’s nothing to it to enter. No fee. In fact, it’s so simple, joked Buffett, throwing in a reference to a Geico commercial, “To quote a commercial from one of my companies, I’d dare say it’s so easy to enter that even a caveman can do it.”

You can enter the contest at any time beginning Monday, March 3rd, 2014 through Wednesday, March 19th, 2014. Brackets will be made available on Selection Sunday, March 16, 2014, and will initially be limited to 10 million entrants, but only one per household. For more information, you can check out the Quicken Loans page on Facebook.

What happens if you actually win the $1 billion? That’s more than 68 miles of cash in stacked one dollar bills. Let that sink in for a minute.

And then forget about all of the houses and cars and cool gadgets you’ll buy.

Let’s focus on the tax consequences (trust me, Mr. Buffett would want you to). You’re going to owe some serious cash to Uncle Sam. Assuming you’re single (though, with a $1 billion, I’d guess you won’t stay single for long), you’ll pay about $394,213,920 in federal income taxes on $1 billion ($197,955,348 if you took the lump sum). Keep in mind that while the highest bracket for 2014 (39.6%) kicks in at $406,750, our income tax system is progressive which means that you don’t pay a flat rate. Even as a billionaire, you pay the same rate (10%) on the first $9,075 as everybody else and so on.

That calculation includes little to nothing in the way of deductions. I’m going to assume you’ll be phased out of most deductions and credits at that point – and really, would you want that to be the time you met the 10% of adjusted gross income (AGI) for your medical expenses deduction?

Would there be any other tax breaks available to the winner? Mr. Buffett is, of course, infamous for touting the inequity of a system where the top income earners tend to pay proportionately less. That doesn’t seem to be the case here – not off the bat.

The folks who tend to benefit from our tax system do so because their income is not taxed as ordinary income. It’s taxed as something far more advantageous – like capital gains or certain kinds of dividends. That clearly wouldn’t be the case here. It’s also not wages or interest.

It’s not gambling income. Unlike most other office pools, you don’t pay to enter, and it isn’t a proper lottery, raffle or game of chance. Gambling winnings are fully taxable but casual gamblers do get something of a break: you can report your losses (assuming you itemize) on your Schedule A as a miscellaneous deduction not subject to the 2% AGI limit. You can’t report more in losses than you claim in winnings but in this case, I think it’s a safe bet to say that losing a billion dollars in gambling would be far more painful than paying taxes for winning a billion dollars. Fortunately, with this contest, no one would be in the position to figure it out.

It’s not business income. Well, probably not. There are folks who enter games, contests and sweepstakes for a living (remember that Julianne Moore movie?) but that’s some serious dedication to the cause. Assuming that you did enough research and really dedicated yourself to winning, you could possibly treat it as your business (or more likely, a hobby). If you did, you would report your winnings (of course) but could also deduct any reasonable expenses associated with winning. If you classed it simply as a hobby, you would report winnings as “other income” (good ol’ line 21 on your federal form 1040) and claim related deductions against your winnings if you itemize. Those miscellaneous itemized deductions would be limited to those in excess of 2% of your AGI. You can’t carry excess deductions forward or backwards but again, as with potential gambling losses, if your deductions exceed your winnings in this regard, you have bigger things to worry about.

If, however, you can carve out an argument that your work to enter qualified as a business, you would report your winnings – but this time on a Schedule C. You would also claim your related deductions on a Schedule C. In that event, your deductions wouldn’t be limited to a percentage of your AGI. Kind of brilliant if you could pull it off. But don’t get too giddy: this one will require some serious dedication and extensive documentation to pull off. And if you try too hard to prove your point – and you’re lying – you’ll likely get smacked with a pretty serious penalty. So unless you really do the whole contest circuit for a living, skip to the next paragraph.

At the end of the day, this is a contest. It’s a great contest with an unbelievable prize. But it’s still a contest. If you win a prize in a lucky number drawing or other contest, you must include your winning in your income on form 1040 at line 21. It’s “other income.” It’s a significant amount of “other income” but still other income. There’s no offset, no reduction. In fact, there’s only one way to avoid reporting this income – and it can be found in the instructions for the form 1040: “if you refuse to accept a prize, do not include its value in your income.” But that would be seriously crazy. You should, at the very least, ask your tax professional (or favorite tax blogger) if she – I mean, he or she – wants it.

Bottom line: some or all of that $1 billion will be taxable. But it’s still a billion dollars to start with – so complaining about taxes should be done quietly.

It’s the ultimate March Madness. The NCAA tourney – which will play second fiddle to the real contest this year – starts March 18.

You should not have to struggle to settle IRS debt on your own. Instead, turn to one of our attorneys who specializes in IRS OIC claims. We are dedicated to helping you settle IRS tax problems. 

If you are struggling with circumstances that involve IRS tax debts, you deserve professional aid! Our attorneys all know how to win IRS tax cases. If you contact us, we will help you settle IRS debt once and for all. After you schedule an appointment, you will meet with a devoted IRS tax lawyer who will help you through your legal battle. After your claim is resolved, you will never again have to worry about your IRS tax problem haunting you. Our team of lawyers has assisted many clients through the years. Now it is your turn! You truly can settle IRS debt for good!






Statutes of Limitation: What You Need to Know to Defend Against IRS & State Tax Debts

Statutes of Limitation: Defense against the IRS and the FTB Back Tax Debts

Our Firm receives several calls from people looking for help with IRS and State back tax problems.

One particular call from a taxpayer stood out as he owed several back taxes to the IRS and the California Franchise Tax Board (CA FTB).

He says he owed a lot of taxes for tax years from 1992 to 1966.  Had he filed the returns on time?  Yes.  Had he filed bankruptcy in the meantime?  No.  Had he filed an offer in compromise?  No.  Has he heard anything from the IRS in the last three years?  No, but he thought that was because he had moved and not written to the IRS collection department to tell them about the move.  Has he filed a tax return from his new address?  Yes.

I told him not to worry, that he probably didn’t owe the taxes anymore because it took more than 10 years for the IRS to collect those taxes.  And then, it occurred to me that I should explain how statutes of limitation can work to the taxpayer’s advantage.

Audit and Assessment – 3 Years for the IRS, 4 Years for the CA FTB

The IRS has a 3-year limitation period on assessment from the time of the return’s filing.  That means that if 3 years pass from the time you, the taxpayer, filed your return, the IRS can no longer audit you for that tax year.

Sounds simple, right?  But when did you actually “file the return?”  Let’s take a return for the 2011 tax year.  If you filed it before April 15, 2012, the law states that the return was filed on April 15.  If you had an extension until October 15 and filed the return on September 1, the limitation period starts on October 15.

If you filed the return late, the law states that it was filed on the day the IRS received it.

In California, the FTB generally enjoys more liberal state laws than the IRS.  The FTB has four years to assess more taxes on a filed return.

There is a big difference between how the IRS and the FTB go about “assessing” a tax, and how their audit procedures work.  For the IRS, assessment occurs at the end of the audit process.  Thus, the IRS generally tries to reach potential audit targets within a 1-2-year window after the return is filed.  If the 3-year clock has been ticking for 2 years and 10 months, and you haven’t heard from the IRS, you are unlikely to get audited for that year – although there are relatively uncommon exceptions.  The IRS has to start its audit soon enough that it can complete the process and issue a Statutory Notice of Deficiency more than four months before the end of the limitation period, for reasons that are too complicated to mention here.

The relatively uncommon exceptions?  The IRS gets 6 years to audit you if it can show a large understatement of income, and if it can show that your return is fraudulent, it can open the audit and assess at any time; there is no statute of limitations on a fraudulent return.

The FTB, on the other hand, assesses the increased tax as soon as it smells a problem.  For all intents and purposes, the FTB generally shoots first and asks questions later.  The FTB starts its process with a Notice of Proposed Assessment; this counts as the “assessment” for purposes of the statute of limitations.  This notice can be mailed on the last day of the 4-year clock, and it’s still effective.

If the taxpayer gets audited by the IRS and agrees to a higher assessment, the taxpayer has a duty to inform the FTB within 6 months.  The FTB then has 2 years to make its assessment.  If the taxpayer doesn’t make the 6-month deadline, there is no limitation period – the FTB has an infinite amount of time to make the assessment.

These assessment clocks can be tolled (and often are) by agreement between the taxpayer and the taxing authority.  Sometimes this is a good idea, especially if the taxpayer just needs a bit more time to gather records to show to the auditor.  Sometimes it’s a bad idea, if the tax authority’s case is not very strong.

Obviously, the laws strongly favor the taxing authorities: our legislatures want to make sure that people do not get out of taxes owed by skillful procedural.  And while the FTB’s laws sound even more tilted against the taxpayer, there is a counterbalance: the FTB is generally less effective at opening and closing audits, and investigating a taxpayer’s affairs, than the IRS.  “Generally,” of course, doesn’t mean that it can’t be extraordinarily effective if it wants to be.

Collection – 10 Years IRS, 20 Years FTB

Once the assessment is made, the taxing authority then has to try to collect it.  The IRS has 10 years.  The date that the collection authority ends is called the “CSED” (Collection Statute Expiration Date).  The 10-year clock can be tolled by any of several events: bankruptcy, offer in compromise, or collection due process hearing.  Installment agreements do not toll the collection period.

For the FTB, the statutory period is 20 years.  Installment agreements, bankruptcy, military service, presence in a disaster area, and child support collection actions all toll the statutory period.

While I have counseled taxpayers at the end of the IRS’s 10-year period, I have never counseled anyone at the end of the 20-year period.  The main reason is that the statute of limitations is less than 20 years old: prior to July 1, 2006, there was no statute of limitations on collection actions for income tax in California.  No one has yet had their California tax liability extinguished by operation of time.

Period before Dischargeability in Bankruptcy – 3-year, 2-year, 240-day Rules

Taxpayers may discharge their liabilities in bankruptcy.  However, the law requires the taxing authorities to have a chance to collect those liabilities before the taxpayer can discharge them.  Thus, 11 USC Sec. 507(a)(8) and 523(a) work together to create several rules, familiar to most bankruptcy attorneys: in order for a tax liability to be discharged, it must come from a return last due more than three years before the bankruptcy filing (this is October 15 if the taxpayer got an extension), actually filed more than two years before the bankruptcy filing, and the tax on that return must have been assessed more than 240 days prior to the bankruptcy filing (this becomes relevant in an audit situation).  These periods may be tolled by bankruptcy, collection due process hearings, and offers in compromise.

Because these rules are set by federal bankruptcy law, not federal and state taxation law, they are identical for the IRS and the FTB.  But there is yet a wrinkle between the two: the 240-day rule operates slightly differently for the FTB than for the IRS.

The “assessment date” for the IRS is straightforward: it is the date appearing on the transcript, the date that the tax return was received, the taxpayer agreed to an increased assessment, or the date that a U.S. Tax Court decision became final.  For the FTB, it is the date that the assessment proposed in the Notice of Proposed Assessment becomes “final.”  While the NOPA serves as the assessment date for all kinds of clocks (including the inter-agency agreement determining priority of liens), it does not serve as the starting period for the 240-day rule.  Rather, the 240-day clock starts 60 days after the NOPA, thus effectively giving the FTB a 300-day period before dischargeability is allowed.

You should not have to struggle to settle IRS debt on your own. Instead, turn to one of our attorneys who specializes in IRS back tax debt & IRS OIC. We are dedicated to helping you settle IRS debt and/or state tax debt.

If you are struggling with circumstances that involve IRS tax debt or state tax problems, you deserve professional help! Our tax attorneys all know how to win IRS OIC and state tax problem cases. If you contact us, we can help you settle IRS debt once and for all. After you schedule an appointment, you confer with a devoted IRS OIC lawyer and United States Treasury Dept. Practitioner who will help you through your IRS battle. After your claim is resolved, you will never again have to worry about your IRS tax problem or state tax debt haunting you. Our team of lawyers has assisted many clients through the years. Now it is your turn! You truly can resolve IRS debt or state tax problem case for good!

Remember the GM Bailout? Well…just got word that U.S. Taxpayers will be on the hook for almost $10 Billion Dollars for the bad investment!

This is a re-post of an Article describing how the US Taxpayer will be on the hook for a $10 billion dollar bad investment by the Federal Government.  What does this mean for you?  It means taxpayers (new and old) will be covering the $10 billion dollar loss on the Federal Government’s bad investment bailout of the corporate giant (too big to fail) General Motors.

So, get ready for some serious aggressive collection action by the Federal Government – not only to possibly cover what you owe in principal amount, but also the tax bill generated by this God-awful investment.  Check it out, below:

“US to Sell Rest of GM Shares by Year-End, May Lose $10 Billion

The U.S. government expects to sell the last of its stake in General Motors by the end of the year, bringing an end to a sad chapter in the 105-year-old auto giant’s history.

The Treasury Department, in a statement issued Thursday, said it still owns 31.1 million shares of the auto giant, less than 2 percent. It plans to sell them by Dec. 31, as long as the price holds up.

Shares of GM briefly hit $39 in trading early Thursday. They pulled back a bit by midday, but still were up 76 cents, or 2 percent, to $38.45. The shares have gained 34 percent this year.

The government received 912 million shares in exchange for a $49.5 billion bailout during the financial crisis in 2008 and 2009. So far it has recovered $38.4 billion of the money, but selling the remaining shares at Wednesday’s $37.69 closing price gets the government $1.17 billion, leaving taxpayers short by roughly $10 billion.

The government says the bailouts of GM and Chrysler were needed five years ago to save the American auto industry and more than a million jobs. It never expected to get all of the money back.

“Had we not acted to support the automotive industry, the cost to the country would have been substantial — in terms of lost jobs, lost tax revenue, reduced economic production and other consequences,” Deputy Assistant Treasury Secretary Tim Bowler said in the statement.

The lack of government ownership should boost GM’s car and truck sales, North American President Mark Reuss said Wednesday at the Los Angeles Auto Show. GM was tagged with the derisive moniker “Government Motors,” and, at least initially, taking aid from the taxpayers kept some buyers away from GM vehicles. But company research later showed that subsided.

Taxpayers’ initially got a 61 percent stake in GM in exchange for the bailout, which was needed because GM nearly ran out of cash and may have faced liquidation. Treasury gradually has sold off its stake since a November 2010 initial public offering. The Canadian government, which also took part in the bailout, still owns about 8 percent of GM stock.

Once the U.S. government exits, GM will be free of restrictions on executive pay that came with the bailout. CEO Dan Akerson has complained that the restrictions have hurt GM’s ability to recruit executives.

GM went through bankruptcy protection and was cleansed of most of its huge debt, while stockholders lost their investments.

Since leaving bankruptcy in 2009, GM has been profitable for 15 straight quarters, racking up almost $20 billion in net income on strong new products and rising sales in North America and China. It also has invested $8.8 billion in U.S. facilities and has added about 3,000 workers, bringing U.S. employment to 80,000.

The company now is sitting on $26.8 billion in cash and is considering restoration of a dividend. It hasn’t paid U.S. federal income taxes since leaving bankruptcy due to write-offs from accumulated net losses.”

If you are struggling with circumstances that involve IRS debt you deserve professional help! Our attorneys know how to handle IRS OIC and/or IRS collection cases. If you contact us, we can help you settle IRS debt once and for all. After you schedule an appointment, you confer with a dedicated IRS tax attorney and Federally Authorized DOT Practitioner who can help you through your administrative IRS battle. After your claim is resolved, you never again have to worry about your IRS tax problem haunting you. Our team has assisted many clients through the years. Now it is your turn! You truly can settle IRS tax debt for good!

Please contact us at 1-888-756-9969 to discuss the next steps in resolving your issues.  If you do not get in direct contact with us immediately, please leave a message with the front office staff with the best day, time and phone number to call you back and we will follow through on that promise.

The Federal Government hacked Google and Yahoo’s private networks

This is a re-post of an article reporting on the fact that the Federal Government’s special agency, the National Security Agency (NSA) has hacked into Google’s and Yahoo’s cloud-based services. This means that any personal email accounts either on a or has been accessed by Big Brother.

Click here to see how the NSA hacked into Google

As the Federal Government gets better and better at linking computer systems, emails, bank accounts, cable, electric, gas or other information that may reside within a digital medium, be prepared for the new search & seizure issues and compromise of our privacy rights, our constitutional rights as guaranteed by the 4th and 14th amendments against illegal search and seizure and potential violations of our due process rights.

If you don’t think that this is a serious matter, click & read on here . . .

IRS Offer in Compromise Pre-Qualifier Calculator

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If This Doesn’t Scare You About The IRS, Then We Don’t Know What “WILL” – As In Good “WILL” Hunting: Welome To Big Brother!


Reuters reports on how the IRS Manual instructed Federal Agents on how to hide secret DEA/NSA intelligence.

The nation’s tax collectors – INTERNAL REVENUE SERVICE – were instructed for two years on how to conceal evidence obtained by a secret unit inside the Drug Enforcement Administration (DEA) cooperating with the National Security Agency (NSA) – click here for a little Matt Damon inspired description of the NSA:

An Internal Revenue Service Manual (IRM) posted online in 2005 and removed in 2007 instructed agents on how to conceal classified evidence forwarded by the DEA’s Special Operations Division (SOD) in investigations of Americans, Reuters reports.

Reuters reported Monday that the SOD forwards tips acquired from the National Security Agency, “wiretaps by foreign governments, court-approved domestic wiretaps,” and a DEA phone and Internet database called DICE. These tips go to federal agents and local law enforcement officers.

Officials at both the DEA and the NSA stressed that the DICE database and the NSA database currently at the center of controversy were different databases.

Recipients of the information are then instructed to engage in a decades-old law enforcement technique called “parallel construction;” the tipped-off agent might use other non-secret means to justify beginning an investigation into a suspect and conceal the origin of the evidence.

On Wednesday, Reuters reported that the IRS manual — no longer available online — instructed agents to use the evidence as leads, but find new “independent” evidence to justify the investigation.

Evidence obtained from SOD, which is closely guarded by the DOJ – Department of Justice, cannot be directly used in an investigation.

The IRS already came under fire earlier this year for having a policy that allowed its criminal division to engage in the warrantless search of a suspect’s electronic communications. That policy was amended following pressure from members of Congress.

The parallel construction technique advised by the SOD is legal, but not without its critics.

Both Republican Congressman Mike Rogers, Chairman of the House Permanent Select Committee on Intelligence, and Kentucky Republican Senator Rand Paul have both spoken critically of the program.

Rogers, a former FBI agent, told talk show host Mike Huckabee, “If they’re recreating a trail, that’s wrong and we’re going to have to do something about it.”

Paul, who has staked his claim on the defense of the Constitution, also expressed concern over the technique, noting that the protection of individual liberty was just as important a function of the government as national security.

Two dozen federal government agencies comprise the unit, which was formed in 1994, including the Federal Bureau of Investigation, Central Intelligence Agency, Department of Homeland Security, National Security Agency and Internal Revenue Service.

The unit engages in investigations involving drug crimes, money laundering, and organized crime.

White House Press Secretary Jay Carney told reporters during a Tuesday press conference that the Justice Department was “looking at some of the issues raised” by Reuters’ report on Monday.

Justice Department spokesperson Peter Carr gave a similar statement to the Daily Caller. “The department is looking into the issues raised by the story,” said Carr.

Read more:


Using Bankruptcy as a strategy to discharge IRS tax debts

We get inquiries from taxpayers riddled with back taxes asking if filing for bankruptcy will get rid of their IRS tax debts in one false swoop.

Our response has always the same – it depends.  Many bankruptcy attorneys are focused on helping their clients with most of their more pressing financial debts (e.g. credit card debt, mortgage debt, medical bills etc.).  While the client’s IRS tax debts are important, more often than not, they generally seem to form a smaller part of the debtor’s “debt pie.”

If, however, a taxpayer is considering a Chapter 7 bankruptcy petition for IRS back taxes, it is important to consider the two (2) types of bankruptcy mechanisms and the two (2) types of taxes.  Essentially, the effect of declaring bankruptcy to discharge your tax debts depends on both the type of bankruptcy and the type of taxes that are owed.

A Chapter 7 Bankruptcy (or BK) provides for the liquidation of all non-exempt assets (varies from State to State in accordance with applicable law) and the discharge of debts that are eligible for discharge.  A Chapter 11 or Chapter 13 BK essentially establishes a payback plan of certain debts in whole or in part.

Personal income taxes are eligible for discharge in Chapter 7 BK, but only if the taxes are at least 3 years old.  Under Chapter 13, you agree to make monthly payments over a period of 3-5 years to pay either a portion or all of your taxes, and under a Chapter 11 BK, you have up to 6 years from the date of assessments. Because taxes are a priority claim, you generally pay the entire tax claim under an 11 or 13 BK.  Payroll taxes, however, are generally not dischargeable in Chapter 7 BK.

A Chapter 7 BK can effectively discharge your old income tax debts, but you must ensure that the taxes are over 3 years old from the date the taxes became due (if an extension was requested, you must use the extension deadline as the trigger date). Therefore, more recent taxes are not dischargeable.

Income taxes, whether more or less than three years old, are generally not dischargeable under a Chapter 13 wage earner plan or Chapter 11 reorganization.

It is also equally important that you:

• ensure that the tax returns have been filed at least 2 years prior to the petition.

• ensure that the taxes have been assessed as an audit deficiency for at least 240 days.

• make certain if you either negotiated a settlement through an Offer in Compromise with the IRS, or had your tax claim adjudicated, the 240 day period is extended.

Bankruptcy won’t discharge taxes if you understated income or filed fraudulent tax information for the years you want discharged. The IRS can enforce collection for any deficiency discovered through an audit, so it is important to ensure that your taxes for these years are accurate.

Also, filing bankruptcy does not affect liens presently attached to your property. The IRS can, with bankruptcy court approval, still sell and seize your property. Your remaining tax obligation will be eligible for discharge.

A Chapter 11 or Chapter 13 BK may pay dividends for you if you can fully pay your taxes over time. A Chapter 13 gives you 3 to 5 years to pay your taxes and the IRS cannot harass you during this time.

As a business or in a profession, you can elect a Chapter 11 reorganization which can generally give you up to 6 years from the date of assessment to fully pay the IRS.  A Chapter 13 or Chapter 11 BK is recommended only if you have assets you do not want to lose. If you have relatively few assets and substantial income tax debts, then you may want to wait the 3 years and fully discharge the tax under a Chapter 7 BK.

The IRS may be a powerful organization; however, the federal bankruptcy laws are considerably more powerful. Once you file a bankruptcy petition, the IRS must stop all further collection action. So, bankruptcy can be an effective way to save your assets and stretch out your payments to the IRS.

Bankruptcy is probably not your best alternative if the IRS is your only major creditor. If you have few assets and not many other creditors hounding you, you may want to consider filing a petition for an Offer in Compromise with the IRS s you can probably resolve your claim for a very small sum or be classified as “uncollectible,” which essentially suspends all IRS collection action for a period of 6 to 12 months, but does not stop the statutory accruals (penalties and interest).

Lastly, you don’t want to not file bankruptcy unless you first review your situation with an experienced bankruptcy lawyer and a Federally Authorized Tax Practitioner (preferably a tax controversy attorney) who can counsel you on whether other alternatives may be preferable.

The Real Housewives of New Jersey Teresa Giudice and her husband Joe Giudice: Tax & Federal Fraud Charges

I can’t stand reality tv shows – they lack character, creativity and good old fashion family values.  What they do have, however, is sugar and spice and all that jazz that makes for tv and cable ratings.

However, not all good things come to an end.  For the Giudices, Joe and Teresa, I hope that that the money they are making off their reality tv celebrity fame can fund their need for good old fashioned legal representation as they are in some serious IRS  tax “hot water” right now … that’s tax “trouble” to regular folks, like you and me.

Check out this video clip on their federal fraud situation here:  Joe & Teresa Guidice charged with federal tax fraud