Florida Tax Lawyer Blog

It's now nearly mid-May, and most people feel they can breathe easy - for at least another year - before the crunch of the next Miami tax season will be upon them again.

However, our Miami tax attorneys know that for others, the stress is just beginning. These are the individuals who have past due Miami tax returns. Maybe you were worried about having to pay more than you could afford in these uncertain economic times. Maybe you were disorganized and confused about how to fill out all the forms, so you kept putting it off - and now it's too late. Maybe you were seriously ill and physically could not. Or, maybe you just forgot. It's easy enough when you're busy with the business of living your life.

One mistake a lot of people make when they are past due on their returns is that they try to ignore it. And of course, the longer it goes on without anyone knocking at your door, the more you may feel it will be Ok. Alternately, you may feel that the more time goes by, the more trouble you are in - so it begins a vicious circle of avoidance that will leave you terrified of the consequences.

Here's the truth of the matter: Yes, you will likely face consequences in the form of fines and interest. But it's not likely you'll spend any time behind bars. The government may file a substitute return for you, based on information it's culled from other sources. But it won't have certain tax breaks or exemptions to which you may be entitled, and its likely to overstate the amount you owe. It's also possible that the IRS will put liens on your bank accounts and property to collect any money you owe.

Generally, the more time that goes by past the filing date, the greater the consequences. While every case is different (and that's why it's so important to consult with an experienced Miami tax attorney), here's the basic formula the IRS uses to figure out penalties for failure to file:

1. Failure to file penalty. For someone who hasn't filed their returns, the penalty starts out at 5 percent of the total balance owed for each month that passes since it was due. This penalty caps out at 25 percent.

2. Interest penalty. The interest on balances that aren't paid is 4 percent - give or take a few percentage points, depending on quarterly interest updates.

3. Failure to pay penalty. This is going to be 0.5 percent of your overall balance for each month that's gone by since the balance was due.

In severe cases, the IRS has the authority to fine up to $25,000 and seek a 1-year prison sentence against a person who fails to file.

However, when you work with a skilled Miami tax lawyer, he or she is going to work as your advocate and go-between, so that your contact with the government can be minimal. We can help work out installment payment agreements and advocate for smaller penalties, based on what you are actually able to pay.

Another option is to get what's called a declared uncollectible. This is not a permanent solution, but it will buy you some time. It's basically a declaration that you can't afford to pay what you owe. The IRS will verify this, and then will place a hold on collecting your taxes. They then will check back with you every year or two years to see what your financial situation is and whether they're able to collect.

The key is to contact an attorney as soon as possible.

Continue reading "Miami Past Due Tax Returns Require Immediate Attention, Experienced Attorney" »

Every action you take in your Miami tax law case is very important because your opponent is the government of the United States. Our experienced Miami tax attorneys understand what it takes to defend your rights.

Medeiros is a tax case about the redemption foreclosure process stipulated in tax-sale statutes. Medeiros et al., v. Bankers Trust Company et al., No. 2010-145-Appeal (R.I. S.Ct. Mar. 13, 2012). Redemption is a term used in foreclosures to explain the right of the borrower to pay off the amount they owe after they have defaulted and a foreclosure action has begun.

Each state has differing laws surrounding this right of redemption. However, in Florida where foreclosures occur through the judicial system, the court has ten days to approve a foreclosure sale. During the ten days, the borrower is able to still pay the outstanding loan amount, costs and fees associated with their property.

The legislature created this right of redemption to help those who are losing such a large thing, their home. Even in tax sales where the rights of the government and the homeowner are held equal, the homeowner still retains this crucial right of redemption.
Medeiros (plaintiff) purchased a home by securing a note with Bankers Trust Company (Bankers) for the cost of the home. Plaintiff made monthly payments to Bankers for a couple of years until he began to have financial difficulties. Because of these difficulties, plaintiff stopped paying Bankers and also failed to pay his real estate taxes to the town.

When a person fails to pay their real estate taxes, the town has the right to hold a tax sale for the debtor's property. In order to hold this tax sale, the town must first provide notice to the debtor and any interested parties. In this case, Bankers never received this notice of the tax sale. The tax sale occurred and the property was sold to Fiduciary Trust Services (Fiduciary). Fiduciary received a tax deed executed by the town.

A year after the tax sale, Fiduciary filed a petition to foreclose on Medeiros' right of redemption. Medeiros never filed an answer to this petition so the court barred all of his rights of redemption by granting a default judgment on behalf of Fiduciary.

When you receive notice of a court action, you must respond to the court through the filing of an answer. In an answer, the property owner has the opportunity to assert any claims they have to their interest in the property involved. If you fail to answer petitions or notices, you waive your rights in regard to the issue at hand. In this case, by failing to respond to the notice of Fiduciary's petition Medeiros lost his rights with reference to the property. The court notes that by doing this, Medeiro made a fatal mistake.

Medeiros later filed a motion to have his property rights re-vested. The court looked to specific Rhode Island statute that states that once a default is entered in a tax case, all rights of redemption are "forever barred" by the entered decree.

It would be unfair to allow a defaulting party to re-purchase their home after a default judgment is entered for the opposing party. Because Medeiros was petitioning for something that would have inequitable results, he was unable to repurchase his home and Fiduciary maintained their ownership of the property.

Continue reading "Right of Redemption in Miami Tax Sale's Discussed in Medeiros et al., v. Bankers Trust Company et al." »

Miami tax attorneys are concerned about a growing trend that the U.S. Internal Revenue Service is gearing up to begin promoting: virtual Miami IRS audits.

The IRS has already implemented a pilot program that gives taxpayers the opportunity to conference with agents using personal video technology. It puts you virtually face-to-face with an IRS agent who is supposed to answer your questions and guide you through the auditing process.

The problem, as we see it, is that doesn't give you the opportunity to consult with your Miami attorney, who would otherwise guide you through the process and help you avoid potential pitfalls and unintentional self-incrimination. It might be easy to be lulled into a false sense of security about the dangers of this process when you are having a friendly chat with the IRS agent on the screen.

The truth of the matter, though, is that agent is not looking out for your best interests. Having a tax attorney who will work with you through every step of what can be a very complex and arduous process is invaluable in terms of saving you not only from headaches, but also a great deal of time and money and the potential of facing criminal tax charges.

The pilot program is right now being vetted at 12 different locations. It's set up so that taxpayers can sign on, enable the video feature and talk with an IRS agent who appears on screen to answer your questions about any issues or problems you're facing. The goal is for these agents to be able to address your questions about filing a tax form or issues with your refund. But there's no guarantee that the agent on the other end isn't taking scrupulous notes and keeping your information in a file that could be later used against you.

What the IRS is hoping is that these types of inquiries could replace mailed correspondence audits, or letters that the revenue service ships out to taxpayers that ask a boatload of questions and additional information.

It used to be, those inquiries happened during in-person meetings, which the taxpayer was asked to attend at a local IRS office. But in an effort to cut down on expenses, the agents started using the mail-in system. They say the problem with the current system is a low response rate. Taxpayers are often confused about the questions, don't know what's being asked of them or how to respond. This ultimately leads to some individuals defaulting on their payments and having to pay stiff fines and penalties.

This illustrates why you need a Miami tax attorney to work with you. We understand the complexities of local, state and federal tax law, and can help you navigate the system.

This new technology might be convenient, but what you must understand is that the interests of the IRS are often going to conflict with your own. An IRS agent has years of experience in tax law, which is why you need someone on your side who has the same.

Continue reading "Miami Tax Lawyer: Be Wary of Video Audits" »

Just because a tax company has a large advertising budget does not mean the company can help you avoid a Miami tax evasion case.

Miami tax attorneys have been closely following the news regarding Tax Masters, the tax preparation company that has just been ordered to pay nearly $200 million for reportedly committing tax fraud on more than 100,000 customers across the country - including Florida. About $50 million of that has been ordered to come directly from the pockets of the CEO.

The company was the target of a probe conducted by the Florida Attorney General's Office back in 2010. At the heart of the issues both here and in Texas where the company is based, were allegations that the company aimed its sights on consumers who were having a hard time paying their taxes.

The company reportedly promised to work out settlement agreements with the IRS. But the company wouldn't start work until the filing fees - which sometimes ranged up to $9,000 - were paid in full. By the time customers came up with that money, critical deadlines were missed, which resulted in even more fees that customers had to pony up.

Additionally, the company failed to let customers know it had a no-refund policy and reportedly used debt collection tactics that were illegal.

Miami tax attorneys know that the best course of action if you are having trouble with your taxes is to contact a qualified tax attorney. This is an individual who is going to be looking out specifically for your best interests - and not the bottom line of a telemarketing company. Tax law can be complicated and confusing, and you need to know that whoever you bring on board to help you sift through all of it knows what they're doing and isn't out to scam you. It's important to note that just because a company may have saturated a market with advertising doesn't mean it's trustworthy.

In this case, TaxMasters - and its CEO - were found guilty in Texas of more than 100,000 counts of violating that state's Deceptive Trade Practices Act. The state attorney there remarked that it was a well-fought victory for consumers who had been swindled at the lowest point of the country's economic downturn.

The company reportedly did not contact the IRS on behalf of its clients, which would have helped prevent property liens, fees and other problems.

Tax Masters had an advertising budget that ate up about $16 million, according to CNNMoney - nearly 40 percent of its total revenue.

When ABC News conducted an investigation on the company last year, a representative reportedly told a person who owed about $19,000 that they could get their payments down to "next to nothing," and boasted about a 97 percent success rate - none of which was true.

The company has filed for bankruptcy, and it isn't clear whether the customers will see any financial relief, as the company is reported to owe some $10 million to creditors and claims its assets are less than $50,000.

The bottom line is that if you feel you are in over your head with your taxes, your best option is to contact an experienced Miami tax attorney, who can help you sort through the details of your case and uncover the best scenario given the facts.

Continue reading "Miami Tax Attorney: Fraud Charges Plague TaxMasters " »

Florida business owners are expected to receive a substantial measure of tax relief - more than $800 million, to be exact - following the swift, last-minute approval of a bill by state lawmakers this month.

Miami tax attorneys have been closely following the bill, which now only requires the governor's signature to become law. The measure was tacked on to another amendment to simply rename the state's unemployment program. Up until now, it had received little fanfare.

As it stands now, businesses have to pay about $170 per employee for unemployment compensation tax. The new measure would reduce that amount to about $120 - a whopping 41 percent reduction that will ultimately total hundreds of millions of dollars within three years.

Proponents of the measure say it provides necessary relief at a time when businesses are fighting to regain stable footing in a slumped economy.

The business community as a whole, though, is supportive of this measure. Over the next year and a half, it's going to save companies almost $550 million. Another $250 million is going to be saved over the next three years.

What this situation further shows is that tax law is always changing. Just look at the Foreign Account Tax Compliance Act that President Barack Obama signed into law two years ago. It was part of an effort to diminish offshore tax abuses by residents and citizens of the U.S.

Here are some other recent tax changes, as outlined by AOL's Money & Finance site:

1. There will be higher brackets, deductions and exemptions.
2. There will be new forms for capital gains or losses from mutual funds, sales of stocks or other investments.
3. There are going to be mixed mileage rates - $0.51 per mile for the first six months of 2011 and $0.55 per mile over the last six months. This is for business mileage, as well as medical mileage.
4. The 2 percent payroll tax deductions is going to continue through the rest of this year.
5. Last year, a provision allowed people to put off including their Roth conversion into the taxable income from last year. But that must now be added to this year's tax returns.
6. There are going to be higher exemptions for the alternative minimum tax (or AMT).

In addition to these, the IRS also lists several dozen updates to the tax code just in the last year.

What all of this illustrates is that the need for a Miami tax attorney is critical throughout this process. Even if you have been filing your own taxes for years, the changes can be complicated and creep up seemingly without warning. What you don't want to happen is to inadvertently make a mistake and wind up embroiled in an audit, which is going to drain a good deal of your valuable time and energy.

Continue reading "Miami Tax Relief For Small Businesses Expected to Pass Legislature" »

Freelancers - those who work on short contract or a single-assignment basis for other firms - and small business owners are more likely to face an IRS audit in Miami than those who work for larger corporations.

Miami tax audit attorneys understand that undergoing an audit can be stressful and time consuming. This is especially true when you are trying to handle this alone. It can almost seem as if life stands still while you are working through the process, especially when you know that the IRS does everything it can to find even the slightest violation of tax law, even if it was completely unintentional.

Freelancers are going to be facing even more scrutiny. A recent Reuters article - written by a freelance journalist - sought to explain this.

First, nearly 30 percent of all employees listed themselves as free agents in 2006. Free agents are basically people who perform temporary freelance or contract work or who are in consulting or who run their own business. That figure is according to the Kelly Services 2011 Free Agent Survey. What's more, that figure has since ballooned. In fact, it now figures to 1 in every 4 workers is a free agent.

With a growing number of workers being added to this category, the IRS wants to make sure that they are each filing their taxes the right way.

In 2010, almost 25 million people filed their taxes as sole proprietors. Using the Schedule C forms, they report either a loss or profit of a business that is not incorporated. The chances of Schedule C operations being audited are almost twice that of a larger corporation. In fact, while about 1 percent of corporations are audited, about 3 percent of small businesses undergo that scrutiny. That means they are three times as likely to get audited.

The IRS doesn't even shy away from admitting this. In fact, of their three online videos that detail the auditing process, every single one features a case involving a small business owner.

The reason has to do with the fact that the IRS usually finds more omissions and errors from these entities. That's usually because smaller operations and freelance workers don't usually have an accountant or CPA who is checking every detail - and tax code can be very complex.

Additionally, a number of freelancers and small business owners report some or all of their income to the government, but they may unwittingly deduct a laundry list of expenses that they aren't supposed to. Overstating those deductions can decrease how much you owe the government, but it's not a risk worth taking because it's all going to come out in the event of an audit.

The point is that small business owners and freelancers don't need to panic - but they should be prepared. Having an experienced Miami-Dade County IRS tax audit attorney checking all of these facts for you is going to help a great deal in the long run. This is because while the IRS is going to try to squeeze you for every last nickel they can, an audit lawyer is going to be looking out first for your interests. Having someone to not only assist you with the back-and-forth communication but also in assuring that the paperwork is correct is going to relieve you of huge headaches later on.

Continue reading "Miami Tax Audit More Likely for Small Business, Freelancers" »

Federal authorities say that theft of identity and tax fraud in Miami and across the country has reached epidemic proportions.

Miami tax attorneys have been closely following the news from CBS4 in Miami, which reports that epicenter of the problem is the Miami-Fort Lauderdale metropolitan area.

The Federal Trade Commission reports that South Florida had more identity theft complaints than anywhere else in the country last year.

It's especially prevalent this time of year, as scammers hone in on those refund checks. Federal prosecutors have been quoted as saying that this type of rip-off costs the government billions of dollars every single year.

A report from the General Accountability Office in 2008 found that there were about 52,000 complaints about tax refunds that year. Fast forward to two years later. That figure has soared to more than 250,000.

It's gotten so bad, that the FTC says it gets more than 50,000 complaints of identity theft each week. Most of those, they say, are tax refund fraud.

What is making it so pervasive is the advent of high-speed internet, combined with high-tech tax filing systems.

One resident in Sunrise was quoted as saying that she learned someone had stolen her social security number when she went to file her tax return. A single mother from Broward, she said she was alerted that her taxes had already been filed. She knew there was a mistake.

This is how it is for many individuals. Having an experienced Miami tax attorney can sometimes help to prevent these instances, or at least catch them early on and help guide you through the process of what to do next if you are targeted.

Cyberscams are described by authorities as "cocaine on a card." That's because they are fairly easy to get, one scam begets another. It's gotten so bad, police say there are even cyberscam parties - in which people host events to teach others how to pull off these online heists.

Access to personal taxpayer information, tax software and an electronic filing number from the IRS - and a person is well on their way to perpetuating the theft.

The key to protecting yourself is to make sure you aren't giving out any type of personal information over the phone or internet. You'll also want to shred any and all private records before you trash them. Filing your tax return as soon as possible will also give you a leg up on whether anyone else has tried to do it first.

And of course, consulting with a Miami tax attorney can give you a leg up on all of it.

Federal prosecutors are discussing the possibility of pushing specific legislation that would close loopholes that currently allow scammers to operate. Until then, get ahead of the game and contact an experienced Miami tax attorney.

Continue reading "Miami Tax Fraud Has Reached "Epidemic" Proportions" »

A recent CNNMoney article reported that the Internal Revenue Service is warning customers to avoid 12 comment scams that can lead to major Miami tax controversy problems.

Miami tax attorneys recognize that there are many scams out there targeting consumers. This time of year, with tax season in full swing, this is even more of an issue. These scams are designed to victimize consumers financially, but they can also end up hurting the consumer long-term by giving them unwanted attention by the IRS.

Identity theft is a popular tool used by criminals to try to prey upon everyday citizens. They can do this through fake websites, devices placed on ATM machines or other places where credit cards are swiped and other means. When the consumer unknowingly is victimized, they don't find out for days or weeks later, when strange charges show up.

Vigilance is especially critical around tax time because some scam artists are able to intercept tax return checks and steal the money after having stolen a person's identity. Sometimes, a person will file a tax return with a stolen identity, so when the real person files their return, they are automatically red-flagged for fraud.

Even if it can be proven that the person was victimized, they can be marked in the IRS' system, which can lead to suspicion in the future. This is a way of victimizing the person twice for something they may have had no way of preventing.

According to the news article, the IRS has a list of 12 -- the "dirty dozen" tax scams that people use. Some of these are used by taxpayers and others done to taxpayers to victimize them. Either way, the IRS is looking out.

• Identity theft: As mentioned, it can lead to fraudulent tax returns and unwanted attention from the government.


• Phishing: This is where scammers use e-mail, phone calls or social media to try to steal information


• Bad tax preparers: Three out of five taxpayers use professionals to prepare their taxes because of the complexity. Preparers should have a Preparer Tax Identification Number to prove legitimacy. If a person promises large returns, doesn't provide a copy or asks you to lie, it's probably not good.


• Hiding income in offshore accounts: The IRS has set up a program to help people avoid jail time in exchange for paying fees and penalties for using offshore accounts.


• Free money doesn't exist: Flyers have been promising big returns, but the IRS believes these are typically scams aimed at low-income taxpayers.


• Inflating income or expenses: This is the easiest way to end up getting audited. If the numbers don't add up and there's no excuse, it could lead to prosecution.


• False forms: Some people attempt to file fraudulent forms with their returns, but this can also be criminal.


• Trying to fight the IRS: Some companies promote fool-proof arguments to beat the IRS, but many have been proven useless by courts.


• Claiming zero wages: Some people attempt to fraudulently file a return with no income to get a better return.


• Charitable donations: Some believe that inflating non-cash donations and others will help, but the IRS is keeping an eye out for exaggerations.


• Small business ownership: If you own a small business and don't report it, you could get busted. The IRS is making an effort to find people who are skirting the laws.


• Misusing trusts: Trusts can be used legally to reduce taxes, but it can be done fraudulently as well.

Continue reading "IRS: Beware of Tax Scams That Can Lead To Miami Tax Controversy" »

A recent report from The Washington Post states that congressional staffers alone owe about $10 million in unpaid taxes, a big chunk of the $1 billion owed by federal workers nationwide.

Why is it that the average citizen can be stuck facing Miami tax evasion charges at a time when federal employees are skirting the law and not paying taxes themselves?

Miami tax defense lawyers don't understand how government workers can somehow get a break, while hard-working Florida residents in the state or private sector have their feet held to the fire every time taxes are due. Regardless of what seems "fair" and what doesn't, the federal government may attempt to bring charges anyway.

According to the news article, the recently-released figures come when some lawmakers are trying to get the government to fire employees who are behind on paying their taxes. Yet, those efforts have slowed down and the government is trying to trim improper payments made to delinquent government contractors and beneficiaries, The Post reports.

Roughly 98,000 federal, congressional and post office employees owed $1.03 billion in unpaid taxes by the end of the 2010 fiscal year, according to IRS records. The number of employees who owed dropped, but the amount owed increased by about $32 million.

Republican lawmakers have introduced bills that would force federal agencies to fire workers who don't pay taxes and purposely avoid making payments. Exceptions would be made for some employees, depending on the circumstances.

While congressional staffers made up 4 percent and $2.1 million of what is owed, 2 percent came from the Executive Office of the President. About 26,000 civilian employees in the armed services owed $225.7 million. Even federal employees who were retired didn't pay taxes. The newspaper reports that two percent of the 1.8 million federal retirees owed $470 million.

Whether a federal employee, state employee, private sector employee or retiree, every American must pay taxes. There aren't going to be many situations where a person can get away with simply withholding tax money and not paying their share.

But there are other situations where simple mistakes in this complex tax code can lead to misunderstandings with the government. The last thing anyone wants is problems with the IRS, so making sure you are well-represented in an audit or Miami tax controversy situation is important.

Having the government come after you can be intimidating, but you have rights. Among those is the right to contest what the government is saying. Having an experienced Miami tax evasion lawyer on your side is a good first step. The code is in-depth and can be problematic to a person who isn't completely familiar with it. It is also helpful to know how federal authorities approach cases and the things they tend to look for in order to prove the charges. A skilled tax attorney can help resolve a tax controversy and possibly help avoid criminal charges if brought into the situation as soon as possible.

Continue reading "Federal Employees Owe More Than $1 Billion in Unpaid Miami Taxes" »

A couple from Broward County was recently charged in a tax fraud case for allegedly cashing millions of dollars worth of income-tax refund checks sent to people who are under investigation for stealing identities in order to file fake tax returns, The Miami Herald reports.

This is the time of year that the IRS is ramping up its efforts to make as many arrests as possible. Some will be legitimate, while others will be overblown, but still covered in the news media. Miami tax fraud charges are serious and can be based off a number of scenarios.

In some cases, a simple tax mistake can lead to an audit and there is a fine line between a person making a mistake on their tax return forms and investigators believing it was intentional and therefore criminal. In other cases, a person may have deliberately not paid taxes or not turned in a return years ago and have continued the practice out of fear they would get caught if they submitted one.

Whatever the case, an experienced Miami tax fraud lawyer must be hired in order to ensure the individual's rights are upheld. These charges are typically filed by federal prosecutors, which sometimes can increase the potential penalties.

In this case, the Coral Springs couple operated a check cashing business in Oakland Park. The 75-year-old man and 54-year-old woman are accused of setting up a conspiracy to get rich off of other people's tax refund checks. The checks had forged endorsements, the newspaper is reporting.

Court documents cited by the newspaper state that the couple cashed $5.26 million in tax return checks that the government alleges were fraudulently obtained. It's unclear, though, how much money they made off of the commission.

Federal prosecutors tell the newspaper the number of identity theft crimes have quadrupled since 2007. The feds allege this couple not only stole other people's money, but stole their identities to make it happen.

They vow to bring additional charges against other people in South Florida who may be using computers, the Internet and other means to steal from taxpayers and the IRS. Tax returns have become a more popular place for identity thieves to strike as online tax return services have become more popular.

The news article doesn't specifically state how the couple allegedly stole the people's identities to cash the checks, nor does it state how they got the checks or whether they knew the checks were fraudulent. If a person runs a check-cashing business, they are going to run across thousands of checks. It will be interesting to see how the government tries to prove they knew the checks were fraudulent and how they benefited.

When a person is charged, there is little proof provided. It's not until the case progresses that the true facts come to light. A piece of paper typed by a prosecutor to show the charges isn't the same as a conviction. So, potential jurors -- the public -- must keep an open mind and not believe that someone is guilty simply because they were arrested. Everyone deserves a fair trial and a shot at justice.

Continue reading "Broward Couple Faces Tax Fraud Charges In Alleged Multi-Million Dollar Scheme" »

CNNMoney recently reported that the Internal Revenue Service audited one out of every eight millionaires in the country, the third straight year the agency has increased its enforcement of the nation's richest residents.

Given the 99 percent vs. 1 percent movement that captivated the nation and much of the world in 2011, some may feel glad that the government is stepping up its efforts to look into the finances of the richest people in our country. But our Miami tax lawyers would warn you that this doesn't mean the IRS isn't going to look at small business owners and middle class taxpayers, too.

Anyone can get wrapped up in a Miami tax controversy, regardless of the person's income level. That's part of the reason why people are so terrified of the IRS. People know that one mistake -- on purpose or not -- can lead to a lot of headaches.

But while having a strong accountant is important, ensuring you have consulted with an experienced Miami tax lawyers is also important. The IRS is serious about money and when it believes there has been a mistake, auditors can be ruthless. Tax controversies can quickly move from simple mistake to criminal offense. That's why having a lawyer by your side to work out the issues is critical.

According to the CNNMoney article, about 12.5 percent of all taxpayers who earned one million or more were audits during the fiscal year 2011. That's the highest enforcement rate since 2004, according to IRS statistics. The rate in 2010 was 8.4 percent and 6.4 percent in 2009.

Part of the reason for the increased enforcement is the IRS has upped its efforts to cut discover who is using offshore accounts and to punish those who are evading paying taxes through those accounts. That is a major reason why there have been more IRS audits of millionaires in recent years.

Again this year, as it has in recent years, the agency offered those with offshore accounts a chance to confess to using these accounts and to pay penalties, owed taxes and other fines in lieu of being prosecuted on criminal charges.

Taxpayers who bring in $200,000 a year or higher also were at risk of being audited more than in the past. The agency said that about one in 25 of these people were audited last year. About one in 98 taxpayers who earn less than $200,000 per year were audited.

In 2011, the IRS audited 1.6 million 2010 returns, with three out of four being conducted by mail rather than in-person by an agent. In 2011, the IRS' revenue slipped about four percent to $55 billion.

One in 98 is still many people considering how many people make less than $200,000 in a year. Don't attempt to fight the IRS alone. Even a simple mistake by a person who files their taxes on their own can lead to problems with the IRS -- something no American wants to deal with. And disputes can lead to potential criminal problems, which can be avoided.

Continue reading "IRS Audits 1 in 8 Millionaires; What Does That Mean For Average Joe in a Miami Tax Audit?" »

Recent news that two new voluntary IRS programs are allowing taxpayers to pay reduced penalties and avoid prison time if they disclose information about offshore accounts is disturbing because it brings up a fairness issue about people charged with tax evasion in Miami.

In essence, the IRS programs allow people to pay their way out of prison if they are willing to rat out others who may have been involved in their tax evasion practices. But there are many small business owners and every day citizens throughout Miami who are charged with tax evasion. But because they don't have information on big bank officials or the money to bulk up the government's coffers, they are treated differently.

Our Miami tax evasion lawyers recognize that with tax season only a few short months away, the IRS will be more and more active as people and companies attempt to get through another year without a frustrating audit. Our lawyers are trained to help people who get caught up in legal problems brought on by the federal government.

Taxes can be a complex process, especially for those who are trying to get the best possible return and the most money back after a year of paying, paying, paying. Sometimes, things are missed and mistakes are made. In many cases, those mistakes go by the wayside. In other cases, federal investigators come after people with an army, seeking prison time. It is our job to stand in between and prepare a defense that can help a person avoid a conviction or penalties, such as probation or prison time.

According to CNNMoney, a 2009 IRS program that allowed voluntary disclosure of offshore tax evasion practices brought in $3.4 billion and a 2011 program has so far netted about $1 billion in payments from alleged criminals. In total, 33,000 taxpayers have come forward and participated.

The IRS, based on the success of those two programs, recently announced a similar program for 2012. Those who disclose information are required to pay a 27.5 percent penalty on the highest aggregate balance in their offshore accounts during the eight tax years prior to when they disclose their accounts. That's an increase of 2.5 percent from the 2011 program.

Those with smaller accounts than millionaires and billionaires may be eligible for smaller penalties, some ranging from 5 to 12.5 percent, instead of the nearly 30 percent penalty. The program also requires payments of taxes, interest and late fees for up to eight years.

The programs allow for people who know they will be caught to voluntarily pay back money and avoid an indictment, facing a courtroom, judge and jury as well as the prospect of being held in prison. Those who don't disclose and are convicted can be sent to prison and also be required to pay 50 percent penalties, or the whole amount if fraud is alleged, as well as late fees on top of court costs and penalties.

Continue reading "IRS Gives Offshore Tax Evaders Second Chance, But What About Miami Tax Evasion Suspects?" »

Tax evasion is a serious federal crime and years can go into exploring possible charges that prosecutors file against defendants.

That's why seeking an experienced defense firm is critical at the earliest stages of such cases. Our Miami tax defense lawyers understand an early defense can be the best offense.

Often, the Internal Revenue Service and its agents and investigators will attempt to turn minor allegations of tax impropriety into major criminal charges. They understand that along with possible prison time, a defendant can be subjected to fines and fees, including unpaid amounts of taxes, as determined by a judge.

In United States v. Hassebrock, an Illinois case, a man was charged with tax evasion and failure to file a tax return.

According to court records, the man appealed his conviction, alleging his Sixth Amendment rights were violated when he wasn't allowed to present argument that his indictment should have been dismissed.

The judge, and later an appeals court, ruled that he waived his claim under the Speedy Trial Act because he didn't make the argument before trial. The courts ruled that his convictions had merit after having been backed by substantial evidence.

One avenue on appeal where the man was successful was in the area of restitution. The case hinges on the man's 2004 tax year, where he earned money from his oil business, including a $2.5 million settlement. But the man didn't file a tax return or ask for an extension.

According to testimony at trial, his accountant prepared tax liability both with and without the settlement proceeds. But, the accountant testified, the man asked him to conduct nothing further. Though there was evidence that he had filed an extension some months after the deadline, he was convicted and sentenced to 32 months in prison. He was also ordered to pay $997,582.19 in restitution, on top of fines.

His arguments about speedy trial rights being violated and his right to a new trial were denied. However, the appeals court ruled that the nearly $1 million he owed should be vacated because the judge who ordered restitution didn't provide a basis for why it was ordered.

The case was sent back to the judge, who may very well be able to re-order the payments, if there is a valid reason. Restitution is a big deal in tax cases because not only can a person be sent to prison, they can be stuck with a major bill when they get out, and without a job or job prospects, repaying it can be a difficult task.

An experienced Miami tax lawyer can work to reduce the money owed, even if a person is convicted. That's an important element in tax evasion cases in Miami, along with defending against the basic allegations. All angles must be covered in these cases because of the severity of the charges.

Continue reading "United States v. Hassebrock Case Shows Tough Task of Defending Miami Tax Cases" »

A recent case out of Illinois highlights for us the difficulties of Miami tax controversies and what can be done to help the taxpayer.

As our Miami tax lawyers have previously written about on our blog, European nations are now facing an epidemic because of allegations that many citizens don't pay taxes or lie to the government about what they make. Until recent years when the world's economy began collapsing, those countries put little effort into collecting taxes.

But now, every country is taking a closer look at tax collection, especially with tax season right around the corner. The Internal Revenue Service is ramping up its efforts to go after people it suspects have evaded taxes, filed false returns or not filed returns at all.

In the case of United States of America v. Kokenis, an Illinois businessman was charged and convicted because of tax-related issues.

After being convicted of eight counts of filing a false income tax return, the man was sentenced to 71 months in a federal prison. On appeal, he argued two legal issues -- one that he should have been allowed to present evidence that he acted in good faith and two that the judge at sentencing wrongly applied facts to determine how much time behind bars he would get.

According to court documents, the man was president of two energy companies started by his father. He, along with two sisters, was a shareholder in one of the companies. Classified as a Subchapter S corporation, that means the income and tax burden went to its shareholders, who are required to report the income on their tax returns.

The company's accountant alerted the IRS of issues, which then audited the company. The case came down to major transactions the energy companies made with other businesses. The accountant testified that when he prepared tax returns for Kokenis, he instructed him to change the returns so it showed no income from the sale, though the purchase price was about $4 million.

On appeal, the man argued that he should have been allowed to present evidence that he had a good-faith belief that he wasn't violating any tax laws. The judge ruled that he would have to testify in order to do so. Second, he claimed that he should have been awarded a good-faith jury instruction and third, that the judge took into consideration evidence that he was acquitted of when sentenced.

An appeals court ruled against the man on all three issues and upheld his sentence. Much of this is legal wording that some people may not understand, but it is all critical in tax-based criminal cases. These are complex and, as you can tell from the sentence, serious.

If you are worried about an IRS audit of your personal finances or your company, contact an experienced Miami tax lawyer today. It is better to prepare in advance of any potential criminal or tax action than to wait until it may be in progress.

Continue reading "United States v. Kokenis Shows Tough Sentences, Complexity of Miami Tax Charges" »

The Associated Press recently reported that a former banker at the Swiss bank UBC AG was sentenced to five years on probation, but no time behind bars, for his role in a Miami tax fraud case.

In large-scale white collar crimes, such as tax fraud or tax evasion, defendants are sometimes tempted to take the first plea offer the prosecution makes because they believe they could get convicted at trial.

But an experienced Miami tax lawyer will tell you that the first offer is rarely the best offer. That doesn't mean plea negotiations are a bad thing. When there is but one defendant and his or her personal finances are in question, a plea deal takes on a different meaning than when many people are accused in connection with a large-scale business fraud.

That's because if there are multiple defendants and millions of dollars at stake, the government needs an insider who is credible to testify. In either situation, a plea may work out, but relying on a plea may mean that not enough is being done to prepare for a possible trial.

As the Florida Tax Lawyer Blog previously reported, a former UBS banker was charged in August with offshore tax evasion. In that case, a Swiss national who handled North America business for the Swiss bank was charged with tax evasion by defrauding the United States after allegedly helping U.S. clients hide their assets from the government.

Others from UBS have also faced charges as the U.S. government continues to crackdown on unreported offshore assets.

The most recent defendant, a 45-year-old who worked for UBS from 1995 to 2008, faced at least 10 months in prison after he pleaded guilty to tax fraud conspiracy in 2010. Prosecutors had asked for a five-month prison term, but didn't oppose probation.

The Associated Press reports that this man is one of nearly two dozen former UBS workers and some from other banks who have allegedly helped U.S. clients avoid taxes. In 2009, sensing that many wealthy Americans were doing this, the IRS agreed not to impose criminal penalties if people admitted to it and paid taxes and late fees. The bank paid a $780 million fine and turned over account information for 4,500 clients.

The reason this defendant wasn't sentenced to prison was because he cooperated. In the federal court system, defendants can get their sentences reduced if they offer "substantial assistance," if the crime wasn't "sophisticated" and if the alleged act was only a one-time crime, not a large-scale scheme.

In this case, the judge ruled that the man had provided substantial assistance by recording phone calls with customers, providing details about how UBS worked and helping prosecutors to charge two other officials and a third who hasn't been identified, the news service reports.

There are times when providing help to prosecutors and entering into a plea agreement can be beneficial to the defendant. Other times, without an iron-clad agreement in place, the government can seek to get out of the deal and use information against the defendant. Remember, they're trying to put the defendant in prison.

An experienced Miami tax fraud lawyer knows the advantages and pitfalls of a plea deal. These are complex cases and require a strong work ethic and much preparation before a plea can even be discussed. Trust in experience.

Continue reading "Former UBS Banker Gets 5 Years of Probation After Flipping For the Prosecution" »