Federal Agencies Delinquent in Payroll Tax

In keeping with yesterday’s theme regarding payroll taxes, a recent article in The Washington Post highlighted an unexpected group of entities with payroll tax issues: federal agencies.

According to a report by the Treasury Inspector General for Tax Administration, there were 70 agencies that had 126 delinquent accounts, totaling up to $14 million dollars in unpaid taxes. More than half of those accounts were more than three years behind in their payment of payroll taxes. This group alone constituted a total of $2.6 million in delinquent taxes. The report also stated that 18 of the agencies had not appropriately filed 39 employment tax returns.

The IG report emphasized the need for federal agencies to follow the same filing and paying standards to which all American taxpayers are subject, although the report did not specifically identify the agencies with payroll delinquencies.

According to the report though, the IRS may not take enforcement actions against the agencies with payroll tax issues, nor may penalties or interest be assessed against them. This contrast s with the way in which the IRS handles the delinquent payroll tax issues of taxpayers and their businesses. If they fail to pay the taxes owed, they could find themselves dealing with federal tax liens and the seizure of property.

Looking at the 2008 as an example, the report indicated that of 132 accounts involving 68 federal agencies that were delinquent in regards to payroll tax, agencies paid the taxes in 43 cases. Of the cases, 48 were dismissed because of collection statute issues. The IRS did not pursue collection on 34 of those cases. From an examination of this year, it seems unlikely that most the $2.4 million in delinquent payroll taxes owed this last year will ever be recovered by the IRS.

This was not the first time that the issue of delinquent payroll taxes from government entities has been discussed in a report by the IG. A portion of this year’s assessment was discussed a previous report the IRS had failed to act upon appropriately.

The IRS  has stated that it is committed to collecting the delinquent taxes in a quick and efficient manner, and that it has made significant progress in that area.

 

Segal, Cohen & Landis
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Payroll Taxes: Who is Responsible?

When it comes to payroll taxes, one would assume that it would be the responsibility of the business owner to pay the tax bill. According to the IRS, all “responsible parties” must meet responsibility and willful requirements.

To determine whether an individual can rightfully be designated as a “responsible party” the courts take into account the following questions:

· What are the duties that the individual engages in at the place of business?

· Does the individual have the ability to sign checks on behalf of the business?

· Who are the officers, directors, and shareholders?

· Who is in charge of hiring or firing individuals employed by the company?

· Who is in control of the finances of the business?

To prove the other aspect, “willfulness,” the courts designate an individual has willfully engaged in the action when he meets the following requirements:

· The individual has knowingly paid other creditors before paying the IRS, despite being aware of an outstanding balance with the government agency.

· The individual has recklessly disregarded a known risk that taxes were not being paid.

According to the IRS, even if an individual does not have “actual knowledge” that taxes were not being appropriately paid, he is still liable if he disregards the facts with recklessness. The IRS must identify action beyond negligence, as that is not sufficient. Not investigating the practices within the business when notified that payroll taxes are not being paid constitutes the willfulness necessary to make the individual liable.

If you have any questions about payroll taxes, contact your competent tax professional. The IRS is extremely aggressive when it comes to payroll taxes. Any issues should be resolved immediately.

 

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Interim Chief May Lead IRS into Difficult 2013 Tax Season

According to an article in Reuters today, the IRS will most likely be lead by an interim chief after current IRS Commissioner Douglas Shulman steps down when his term ends mid-November.

Although many tax lawyers see this as an inconvenient time for turnover, they also see the IRS official that they predict will be appointed as interim boss as a very capable individual. The prediction of tax attorneys is that the Obama Administration will select Steven Miller to act as chief at the time that Shulman steps down.

Miller, who currently serves as IRS deputy commissioner for services and enforcement, is a familiar face to tax attorneys, as he has spent 20 years in the agency. He has also held several leadership positions, including serving as head of the IRS’ exempt organizations division and working with Congress in the Joint Committee of Taxation.

Tax attorneys remark that this is an extremely complicated tax season for the IRS, as a result of the “fiscal cliff” that Congress faces. Taxpayers will see ordinary income and investment income tax rates rise quickly if lawmakers do not extend the deep cuts made under Bush.

This is not the only tax issue weighing on the minds of taxpayers, tax attorneys, and the IRS. Congress has also failed act on several more tax issues, some of which include extending temporary tax provisions and constraining the Alternative Minimum Tax.

The upcoming changes to the healthcare system, of which the IRS still has a murky part, are also issues that an interim chief would have to face.

Tax attorneys, both wary and optimistic, will certainly keep on eye of the changing landscape of the Internal Revenue Service.

 

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Pepsi Wins Court Battle Against the IRS

PepsiCo Inc won a victory against the Internal Revenue Service this week. The resolution of the $343 million dollar dispute will certainly have far-reaching implications for companies attempt to avoid taxes as they bring cash from foreign countries into the United States.

The decision gets to the essence of a debate that has been going on in corporate finance and tax law in regards to equity and debt, each of which allows certain advantages. There are times when companies try to “have their cake and eat it too” financially speaking, creating hybrid securities that can look like either equity in one instance, or debt in another.

Since the 1990’s, Pepsi has had a base in the Netherlands for its attempts to surpass Coca-Cola Co in European and Asian markets. The practice in question, that of composition of hybrid securities that had dual identities—as debt in the Netherlands but equity in the United States—was deemed “legitimate tax planning” by Tax Court Judge Joseph Goeke.

Tax lawyers for PepsiCo argued, with great success for the company, that it had equity stake in its Dutch subsidies. The courts deemed the payments made to the company, which is based in New York, were nontaxable returns on capital investment.

The IRS faced a suit from PepsiCo in 2009 after it attempted to collect taxes owed from the tax periods of 1998 to 2002. According to the IRS, the company’s Dutch payments to a parent company were not equity but debt, which makes it taxable corporate income.

Although the IRS refused to comment on the situation, PepsiCo’s spokesperson remarked that the company was pleased with the Tax Court’s decision.

 

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Romney Releases 2011 Tax Returns

According to information from Romney’s 2011 tax return his campaign released, the Republican presidential nominee paid an effective tax rate of just under 14% last year. Along with the information regarding this last year’s return, the campaign also reported an average tax rate for the past two decades, beginning in 1990. The average rate was calculated to be around 20%.

The release of his returns before the election was a promise Romney made to voters. The certified summer was apparently a step beyond that promise, making voters aware of a tax rate the never fell below 13% in the last twenty years.

Romney’s campaign indicated that the nominee paid more than $1.9 million in taxes on the $13.7 million dollars in income that was acquired mostly from investments. As tax professionals are aware, investments are taxed at a lower rate that income derived from employment.

The returns also gave a glimpse into the Romney’s charitable donations. According to the tax information released, the Mitt and Ann Romney donated about $4 million dollars in the year 2011. This amounts to about 30% of their income. The Romney’s chose not to use the entire amount to claim a deduction, citing Romney’s promise to voters that he would not fall below a tax rate of 13%. The professionals who prepared the candidate’s tax returns were reminded of this as they prepared the documents.

His spokeswoman, Michele Davis, commented that this is a reflection of Romney’s desire that Americans “need pay more than he or she owes under the law.”

 

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Mother Receives Tax Bill For Student Loans After Son’s Death

At a time when parents are grieving the loss of their children, there may be another thing to consider—the tax bill that they may be receiving as a result of the children’s student loans. Regina Friend, the Maryland single mother of a deceased son, is facing this difficult situation.

Ms. Friend’s son, Roswell Friend, committed suicide in 2011 while a student at Temple University. Devastated by the personal loss, Ms. Friend must now deal with what she deems “salt in the wound”—the IRS tax bill for the student loan Sallie Mae discharged shortly after the death of her son.

According to the IRS, any loan that is discharged or forgiven is treated as income. Of the $55, 400 in loans that are now deemed income by the IRS, Ms. Friend must now pay $14,000 in taxes. The local newspaper, The Sun, reports that although student loans signed solely in the student’s name are forgiven upon death, as Roswell Friend’s were, loans signed by a parent or with a parent are subject to tax collection when discharged by the loan company.

This issue is not a new one. Several other families have faced this financial hardship in the face of the death of children. The article cites Francisco Reynoso as an example. Mr. Reynoso, a gardener whose income amounts to $21,000 a year, co-signed a loan with his now-deceased child. He was stuck with the remaining debt.

If you are dealing with a similarly tragic situation, it is sometimes necessary to get outside assistance to deal with the IRS. Contacting your competent tax attorney may help you when working with the IRS regarding your tax debt.

 

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

The IRS Isn’t Saying “I Feel for You” to Prince Anytime Soon

Prince Rogers Nelson, the singer-songwriter known as “Prince,” is the next celebrity to find himself in tax troubles. Unfortunately for the Grammy-winner, Prince is facing the wrath of tax collecting entities in not just the United States, but also in France.

According to reports, Prince failed to comply with the court-backed summons. The summons, issued by the IRS on behalf of the French governmental taxation agency, asked Prince to appear so that his tax liability from the years 2009 and 2010 could be addressed.

This is not the first time Prince has been in trouble with the IRS. The state of Minneapolis, wherein he resides, has seen numerous years in which Prince has failed to pay his tax liability on time. Records indicate that he was forced to pay $1.3 million in back property taxes for several tax years just a short time ago.

As for the request from the French government, agents are attempting to assess the liabilities tied to concerts played by Prince during 2009 and 2010. The agents have indicated that additional documents are being requested in regards to the relationships between several of Prince’s business entities.

If you find yourself in tax trouble with the IRS, one of the best things you can do is contact a competent tax attorney to help you resolve your issue in the most efficient manner. If you delay, the issue will become increasingly worse.

 

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

The Tax Lawyer: The Positive Impact on Taxpayers as Seen Through Celebrities

Introduction

A tax lawyer is very important to taxpayers struggling with tax-related debt. In most cases, having a tax lawyer makes an incredible difference in dealing with the burden of back taxes. With a tax lawyer on one’s side, it is much easier to approach the IRS for compromises and other methods to pay off taxes. Without a tax lawyer, one may be clueless to the large amount of options that are available. There are many reasons why hiring a tax lawyer is an important step in getting rid of back taxes. One way to help prove that a tax lawyer provides effective tools to fight against the IRS is to give examples. Since celebrities are often involved in high-profile cases, they provide exceptional examples regarding the effectiveness of a tax lawyer. Note that some of these celebrities were in serious debt with the IRS due to a negligence of taxes. However, with the help of a tax lawyer, they were able to reduce their respective burdens. In each of these cases, a tax lawyer provided significant benefits to the client. Even though some of these cases dealt with thousands, if not millions, of dollars, celebrities were still able to manage their finances with the help of a tax lawyer.

 

Basic Tax Definitions

First of all, however, it is important to get acquainted with basic definitions regarding taxation, the IRS, and tax lawyers. Every individual is expected to pay taxes in exchange for public government services such as schools and transportation. When an individual neglects to pay taxes, they start to have back taxes. Since fees and interest rates accompany back taxes, it is important to talk to a tax lawyer whenever IRS notices come in the mail. The sooner this is taken care of, the better. If one neglects their back taxes, the IRS can take action. After several notices, the IRS will issue a tax lien. A tax lien is a final warning that gives the title of personal property to the government. This is when a tax lawyer is absolutely necessary for resolution. If a tax lien is neglected, the government will issue a tax levy. After a tax levy is issued, the government can take away personal property. Usually, individuals will consult with a tax lawyer in order to prevent such drastic action.There are ways around these consequences. A tax lawyer specializes in finding alternatives for those who are in debt. Since tax liens and tax levies affect credit scores and other important items, having a tax lawyer is necessary. They can successfully submit an offer in compromise. On top of that, tax lawyers are experienced and know what to do in order to make the IRS happy with required documents. In essence, the goal of a tax lawyer is to provide maximum benefits to his or her client. This means that the client might give up more than they want to in order to satisfy the requirements of the IRS. However, with a tax lawyer at their side, the client’s position would always be improved. A tax lawyer will always lead to a stronger case, which in turn will lead to a greater benefit.

Regarding Celebrities

Most of these examples will show how a tax lawyer provided benefit to a celebrity. However, in many of these cases, the celebrity neglected their taxes. All of their problems regarding taxes could have been solved if they had merely paid their taxes promptly. It is not okay to just wait to pay taxes, especially when dealing with a large sum of money. For those who have neglected taxes, a tax lawyer can help taxpayers make everything right. The best way to get rid of taxes, of course, is to just pay them. But a tax lawyer can help those who are not in a position to pay for all of their back taxes.

Dionne Warwick

 
The $2.2 Million Tax Lien

One celebrity who turned to a qualified tax lawyer for help was Dionne Warwick. For those who don’t know, Warwick is a singer who was popular in the 1960s for songs such as “Walk On By”. The tax lawyer that Warwick contacted successfully made a case for Warwick and saved her an incredible amount of money. Without the tax lawyer, Warwick may have had to pay a large sum. It all started when Dionne Warwick neglected some of her taxes. The IRS issued a $2.2 million lean on her property in order to compensate for the amount that had not been paid. Warwick believed that this was in error, so she contacted a tax lawyer. The tax lawyer looked into the case. The tax lien had been issued in 2009 for unpaid taxes dating back to around 1990. After collecting various details, the tax lawyer prepared a case to present to the IRS.

An Accounting Error

The tax lawyer determined that the amount was incorrect and brought it to the attention of the IRS. Once the IRS realized that they had incorrectly calculated the amount for the tax lien, it made the proper adjustments. The tax lawyer returned to Warwick with good news: approximately $1.2 million of tax debt had gone away. She would not have to worry about half of the tax lien.The IRS cited an accounting error as the reason Dionne Warwick had been charged with so much. This proves that the government is not always accurate. A tax lawyer can thoroughly review records and determine whether the IRS has overlooked anything. Usually, a tax lawyer can catch things that the individual would not have caught on their own. Interestingly enough, the IRS apologized for the incorrect amount. In other words, the use of a tax lawyer prompted a case that was so strong that the IRS publicly apologized.

Aftermath

Warwick was still responsible for approximately $1 million of her tax lien. It is important to note that a tax lawyer cannot simply get rid of unpaid taxes. A tax lawyer can provide other options that help an individual, but the IRS must eventually be paid. At this point, Warwick had several options. She probably consulted with her tax lawyer to figure out which option was best for her situation. Even when the IRS determines that the correct amount has been charged, a tax lawyer can point an individual in a direction that produces a reasonable plan for the payment of their back taxes.

Nicolas Cage

Overspending, Extravagance, and Negligence

Nicolas Cage is another classic example of how a tax lawyer can be effective. Cage is famous for his appearances in movies such as Leaving Las Vegas and Adaption. Lately, however, he has been taking less ambitious roles. Cage has also been less ambitious when dealing with his taxes, which led to various consequences. During the first decade of the twenty-first century, he neglected to pay a significant portion of his taxes. He eventually had to hire a tax lawyer to help with expenses. It is worth noting that several negative elements contributed to Cage’s debt. Considering his large salary, one would think that it would be very difficult for a man of his position to be in debt with the IRS. However, due to his spending activities, Cage accumulated a large amount of taxes that could not be paid off right away. With the help of a tax lawyer, Cage started working on paying for his taxes.

 

A tax lawyer helped redirect Cage from negative spending. Many individuals are victim to negative spending habits in the same way that Cage was. He purchased homes in areas that he did not frequently visit. He was not careful with his money. He made mistakes with his tax returns. He did not report some of his income and inappropriately deducted some expenses. The tax lawyer picked up on these facts quickly and assisted him with taking care of it. Another unfortunate habit Cage developed, which required the eventual assistance of a tax lawyer, was that he did not set aside a portion of his earnings for taxes. In spite of receiving a large sum of money for appearing in a variety of different films, Cage failed to pay the IRS for taxes. It is very fortunate that Cage found a tax lawyer to assist him. It is easy to make the same mistakes that Nic Cage did. It is indeed tempting to spend money that one should not be spending. One must do everything they can to avoid this temptation. Unfortunately, many people are already in debt because they could not control spending. A tax lawyer is trained to help all individuals, even those who have been irresponsible with finances.

The Situation

Of course, the IRS eventually caught up to Cage’s activities and demanded payment. In 2008 the IRS evaluated Cage for his activities from the early 2000s. Eventually it was determined that Cage owed $1.8 million in back taxes. Even though his business managers attempted to help explain Cage’s expenditures to the IRS, Cage needed the help of a tax lawyer. He knew that he had a significant advantage if he had a tax lawyer. Business managers attempted to justify Cage’s deductions and calculations on his tax returns. Cage would not have been successful with presenting this information. The business managers did not consider all options in the way a tax lawyer would. If Cage had not hired a tax lawyer, this case would probably not have a happy ending.

The Solution

The tax lawyer looked through the tax returns and IRS documents for errors. It is important to note here that a tax lawyer is especially useful for verification. As stated before, Warwick’s case was won partially due to the tax lawyer double-checking the expectations of the IRS and finding errors. A tax lawyer is trained to find everything that inexperienced eyes would overlook. Whenever a tax lawyer finds an error, there is definite potential for a reduction of taxes. Once Cage’s tax lawyer informed the IRS of their mistakes, he started building his case. The tax lawyer argued that the IRS double counted some of the deductions that had been restricted. Thanks to the hard work of Cage’s tax lawyer, the tax burden was reduced. Cage ended up paying for about a third of the original obligation. He and his tax lawyer considered it a victory.

Pete Rose

Regarding Tax Lawyers and the Prevention of Severe Consequences

Sometimes a tax lawyer provides benefits that do not initially appear to be significant. Upon closer examination, however, one can determine that the presence of a tax lawyer prevented the worst-case scenario from coming true. Some people may think that the worst is coming, but with the help of a tax lawyer this does not always have to be the case. In the end, the individual may still have to give something valuable up, but the final consequences are much better than they would have been without a tax lawyer.

Rose’s Trouble With The IRS

Pete Rose is the perfect example of an individual who lost something important, but still greatly benefited from having a tax lawyer. Pete Rose was a famous baseball star. Unfortunately, several controversies led to his eventual infamy. Back in the early nineties, he tricked the IRS and did not report all of his income. Because of this, he had to go to jail and he served community service hours. Pete Rose found himself in trouble again when he failed to pay taxes in the 2000s. His record with paying taxes did not really help his case. Therefore, he sought the help of a good tax lawyer for his needs. The tax lawyer assessed the situation and determined the proper reaction. Unfortunately, all of the taxes were valid and Rose would have to pay them at some point. Fortunately, Rose’s tax lawyer presented some alternatives to prevent further penalty. If Rose had not done anything, he probably would have gone back to jail for neglecting his taxes. Fortunately, a tax lawyer presented alternatives to prevent severe consequences. One of the options presented by the tax lawyer involved selling personal property. Rose determined that he would have to sell a property he had in Los Angeles in order to provide money to the IRS. The tax lawyer pointed out that it was much better to sell the property while it was still in his control. As every tax lawyer knows, if the government proceeds to a tax lien of a tax levy, the individual loses control. Rose was able to avoid additional jail time. While this could be considered a victory, he had to sell his personal property, which is a better alternative to jail. A tax lawyer is great at pointing out alternatives such as this.

Other Notes About Rose’s Case

Individuals who simply cannot pay taxes at the moment should not be concerned with jail time. They should definitely consult a tax lawyer, but they should not be worried about being imprisoned in the same way Rose was in the 1990s. Rose did not just ignore taxes. He also committed tax fraud. That, specifically, is why he went to jail. A tax lawyer can handle the situations that they are approached with, however, a tax lawyer cannot make all taxes go away. They can provide the steps that are needed to prevent serious consequences with life-changing ramifications.

Judy Garland

Not Every Story Ends Well

It is well known that Judy Garland played Dorothy in the critically acclaimed Wizard Of Oz. Not many people know that Garland died at a young age, however. Garland’s lifestyle prior to her death is disheartening. She did not live the life of a star by any means and struggled financially. She owed a lot of taxes and suffered the consequences. A tax lawyer could have stepped in to help with back taxes. If Garland had lived today, she probably would have been guided to seek a tax lawyer for help. Fortunately for us today, a tax lawyer is much easier to obtain.

After Oz

Garland was not very successful after Wizard of Oz until two decades later when A Star is Born went into production. Many predicted that Garland would be launched back into fame. However, the studios chose to edit the film in a way that angered the audience. The film was not a success and Garland did not get nearly as much money as she had anticipated. Since Garland spent as though she was a star, she owed a lot of money in taxes. This is where a tax lawyer could have been helpful. A modern tax lawyer would have advised Garland to sell personal property so that she could take care of taxes and not worry about them anymore. A modern tax lawyer would have done anything to prevent serious action.

The Unfortunate Ending

Unfortunately, Garland did not take any of the necessary steps to avoid consequences. She neglected taxes until the government took her home away. A modern tax lawyer would have pointed her to other available options. Unfortunately, Garland spent the remainder of her life traveling between hotels to survive. Her finances were insufficient to purchase a permanent place to live. She died very unhappy. Garland’s example must be taken with a grain of salt since the world she lived in was vastly different from ours. However, she most certainly could have taken measures to help prevent her unfortunate ending. Thankfully, today’s stories are not so depressing since a typical tax lawyer is very experienced. Anyone who is considering “waiting off” his or her taxes should strongly reconsider. Consultation with a tax lawyer can help individuals understand why paying a tax immediately is such a necessity. Waiting for too long only causes trouble. Ignoring taxes made Judy Garland an unhappy person. There are other options available. A qualified tax lawyer can expand these options in ways that were previously unimagined.

Kenneth Starr

A Tax Lawyer versus Other Professionals

Another reason to hire a tax lawyer is that they are much more qualified to deal with taxes than many other financial advisors. In some cases, financial advisors may give incriminating advice. Financial advisors do not always take tax expenses into consideration. On the other hand, a tax lawyer knows what they are doing when it comes to taxes. One reason that it is bad to rely solely on the advice of financial advisors as opposed to a tax lawyer is that financial advisors will act on their own self-interest. They must give advice that maximizes profit. Sometimes, this means ignoring obligations such as taxes in order to give the appearance of more profit. A tax lawyer, on the other hand, acts in the interest of a client. In order to succeed as a tax lawyer, one must make sure all clients stay out of trouble. The same cannot be necessarily said of financial advisors. An infamous example of how a financial advisor led people wrong is Kenneth Starr.

Flawed Advice

Kenneth Starr was a significant investment for various celebrities including Al Pacino and Martin Scorsese. Many important individuals relied too much on him rather than a tax lawyer. Since they lacked a tax lawyer, they made various mistakes. Thankfully, Starr got most of the blame and suffered consequences. This is not always the case, however. A tax lawyer should always be available to double check financial work.

Greedy for money, Kenneth Starr took advantage of his access to powerful individuals. He gave them wrong advice, especially when it came to paying taxes. If any of these celebrities had hired a tax lawyer, they would have noticed something was wrong. Instead, Starr set up a scheme that went after the money of certain celebrities. He made mistakes that no tax lawyer would have. It is certain that Starr ripped off his clients and manipulated them on purpose, but some tax troubles probably came from a lack of knowledge. Pacino and Scorsese suffered greatly due to the actions taken by Starr. They should have taken the advice of a tax lawyer rather than rely on the advice of a single representative. With a tax lawyer, these celebrities would have saved a lot of trouble.

Justice is Served

Starr’s scheme was eventually discovered and he went to jail. But one cannot help but wonder the implications this has on financial advisors. It proves that some financial advisors cannot be trusted. This is especially true for those acting in their complete self-interest. A tax lawyer is much less likely to engage in this kind of behavior because it incriminates them. One must make the decision to have reliable advisors. Having the help of a tax lawyer is one of many ways to make sure finances are being dealt with properly. Pacino and Scorsese were implicated for their mistakes even though they were not really the ones that made them. If any individual improperly files taxes due to the advice of an inexperienced advisor, they must suffer the consequences. Even if the blame lies on the advisor, the IRS may take action on the client as well. Hiring a tax lawyer ensures the accurate and ethical payment of taxes. A tax lawyer can catch errors ahead of time and help make the necessary changes. There are many problems that a tax lawyer will prevent. Hiring a tax lawyer early on in the taxpaying process means that an individual can quickly and efficiently take care of their taxes. It also means that they have extra personal security should any discrepancy arise.

Ruben Studdard

Start With Paying Taxes Now!

There is no telling what the next few years will bring. That is why it is important to contact a tax lawyer and make sure everything is settled. It is important to use a tax lawyer to help get in the habit of paying taxes. Once one has gotten in the habit of paying taxes, there is a much smaller chance of dealing with negative items such as tax levies and tax liens. A good example of how taxes can come unexpectedly is Ruben Studdard. One of the many reasons that this season two winner of American Idol has substantially declined in fame is that he had issues with taxes. It is very likely that he did not pay much attention to having a tax lawyer prior to his fame. Once Studdard got famous, he was caught off guard by the regulations for his new level of income.

Anything Can Happen

Studdard had no idea that he would be launched into fame. Once he was declared winner, he was struck a little bit off guard with his financial situation. His higher income led to higher taxes. Since he did not have a tax lawyer to advise him, he ended up being in debt to the government. A tax lawyer would have immediately outlined a plan to pay taxes. During the three years following his victory, Studdard accumulated $200,000 in tax debt. This undoubtedly took a huge portion of his new income. Studdard contacted a tax lawyer and took care of this problem promptly. He did not contact his tax lawyer as early as he could have, however. If he had contacted his tax lawyer promptly, he would have been spared a lot of trouble. His negligence of taxes garnered negative media attention and contributed more to his infamy than his fame. This all could have been prevented by a tax lawyer. Anything can happen at any moment in time.

The best way to prepare oneself is to hire a tax lawyer to make sure taxes are paid as quickly as possible. By the time Studdard was forced to pay his taxes, he was already declining in fame. His second album, which was released around the time, peaked at #20 on the charts, which pales in comparison to his previous effort. Studdard most likely had to adjust once again to the new amount of income he was receiving. If he had been communicating consistently with a tax lawyer, a lot of grief would have been prevented. A tax lawyer can prevent “surprises” by consistently giving advice. One should not have the attitude that a tax lawyer is not necessary. A tax lawyer is absolutely necessary for survival in the financial world. Do not act like these celebrities. Take these examples and realize the importance of a tax lawyer. A tax lawyer will always be willing to help. It is unfortunate that some celebrities did not stay on top of their taxes. It led to negative press coverage and frustration. It all could have been prevented if a tax lawyer had been brought into the picture. It would not have taken that much time for a tax lawyer to review the documents of each celebrity and determine their respective needs.

 

Conclusion

Even celebrities have troubles with taxes. As proven by this article, a tax lawyer is incredibly useful to all kinds of individuals. If a tax lawyer can help a celebrity reduce debt, then a tax lawyer can certainly help an individual who is not a celebrity. An experienced tax lawyer knows everything there is to know about paying taxes. This article has proven that even in high profile cases, a tax lawyer can suggest helpful alternatives to help individuals take care of their obligations. There are various ways to take care of back taxes than some individuals do not know about. A tax lawyer can prevent severe consequences from occurring in order to benefit the client. There are various items to consider regarding a tax lawyer. In order to qualify as a tax lawyer, an individual must be thoroughly educated in IRS regulations. In other words, when one speaks to a tax lawyer, they are speaking to someone who knows the ins and outs of filing tax returns and other items.

On top of that, an experienced tax lawyer has been through many cases and has knowledge that can only be obtained through such experience. A tax lawyer is a valuable resource for anyone dealing with taxes. One cannot present a very strong case alone. A tax lawyer is necessary if one is serious about reducing taxes or planning for payment. A tax lawyer knows what the IRS wants and will guide an individual through the process of appealing to the IRS. This is critical in ensuring a positive outcome for any procedure dealing with the government. A tax lawyer can be considered for any part of the tax-paying process. A tax lawyer knows how to prevent negative action from the IRS. This should be the priority of any individual in order to prevent trouble. If an individual already owes back taxes, a tax lawyer can point out methods of appeal. Those dealing with tax liens and tax levies must consult a tax lawyer before the IRS takes away their property. A tax lawyer is especially helpful if an individual believes they are being improperly taxed. They may even find errors that were not picked up the first time around, such was the case with Nicolas Cage and Dionne Warwick. Tax lawyers were able to pick up on items that resulted in the large reduction of their taxes. The government is not always perfect, and individuals must explore all of their options. The best way to explore all options is to find a tax attorney who is both qualified and experienced.Without a tax lawyer, several individuals would be in bad situations. Do not become one of these people. If you are experiencing troubles with back taxes, contact a tax lawyer immediately. A tax lawyer is available to help you with whatever you need. A tax lawyer is the ticket to financial security when it comes to taxes. They exist to help you.

The IRS and Attorney-Client Privilege

An article in Forbes magazine discussed what it deemed “an age-old topic: what tax information can the IRS get?” According to the article, there has been a renewed interest in the topic, as taxpayers consider the dangers of undisclosed bank accounts and the benefits of voluntary disclosure.

While you cannot be forced to incriminate yourself under the Fifth Amendment, you can be forced to turn over documents, such as foreign bank account records. Using any number of court-backed requests—summons subpoenas or search warrants—the IRS can obtain the information that it is seeking.

It is a different story though, if the information and the documents are in the hands of a tax attorney. Protected by attorney-client privilege, the information is not subject to summons or subpoenas from the IRS. Not even a confession of the location of income or assets in offshore accounts to your attorney can be relayed to the IRS.

The article states that this information should impact in the way that the taxpayer handles his case. Any documents that the taxpayer receives from foreign bank accounts are “fair-game” for the IRS. On the other hand, if the tax attorney obtains the documents on behalf of the taxpayer, the documents will then fall under attorney-client privilege.

It is essential to note though, that accountants do not fall under the umbrella of attorney-client privilege. Although accountants received a statutory tax preparation privilege in the 1990s, the privilege does not extend to criminal cases. An accountant may be forced to divulge any information or documents that the IRS request if the matter is criminal.

There is a way that the taxpayer, the tax attorney, and the accountant can all be protected under attorney-client privilege—the Kovel letter. The letter, named after the case United States v. Kovel, presents a scenario in which the tax attorney hires an accountant to work for him on the taxpayer’s case. The key lies in “for him,” not for the taxpayer. The accountant is then acting a subcontractor to the tax attorney on the accounting for the taxpayer.

Unfortunately for taxpayers, the Kovel letter is not as relevant as it has been in the 50 years since the case was decided. The IRS has done a great deal to erode the principle; recent court victories are a testament to this fact.

The only way to obtain secure advice, away from the IRS, is to work with a tax attorney. It is there that attorney-client privilege is safe.

 

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999

Tax Lawyers-Profiles in Tax Law: Randolph Paul

Randolph Evernghim Paul, a tax attorney in the beginning of the 20th century, was known as one of the “architects of the modern tax system.” A common name among tax lawyers, Paul would change the landscape of taxation with his extensive knowledge and experienced gained within the far reaches of tax law. Living and dying within the intricacies of tax law, Randolph Paul—a tax lawyer, a prominent tax law professor, and an advisor to President Roosevelt—was undeniably influential in the birth of the tax system American citizens are familiar with today.

Paul began his distinguished career in a rather inconspicuous way—as the switchboard operator at a New York law firm. Although he had already graduated from law school, Paul demonstrated a work ethic that would carry him through the years and into prominence in the eyes of tax lawyers. There are not many tax lawyers today who would accept such a lowly position, but this did not faze a man who would become esteemed by those very tax lawyers in the years to come. After working at the switchboard for five years, Paul accepted a position with a tax law specialist, one of New York’s tax lawyers by the name of George E. Holmes. It was there that the young attorney found a passion for tax law, and for the next two decades, he dedicated himself to learning all he could about taxation. It would only be a few years before he joined the ranks of noted tax lawyers.

After working in conjunction with Holmes as tax lawyers, Paul decided to open a tax law practice of his own, Lynn, Paul & Havens. After working with other tax lawyers of his choosing in private practice, Mr. Paul joined the firm Lord, Day, & Lord. Before his time in public service for the Roosevelt administration, Paul served unofficially as an advisory to the Treasury in the last years of the 1930’s. He was offered an official position as the assistant secretary for tax policy, but he declined the appointment, stating that he would rather remain among privately practicing tax lawyers.

His perspective changed though, along with that of the nation as a whole, that fateful day of the attack on Pearl Harbor. As Americans looked for ways to assist in the war effort, Paul decided to do his part, accepting a job as special assistant to the U.S. Secretary of the Treasury at the time, Henry Morgenthau. A few months later, Paul accepted the appointment of general counsel for the Treasury; his experience working closely with tax lawyers would profit him greatly in a time of great economic change.

During World War II, after having worked with tax lawyers in private practice, Mr. Paul served at this post, Treasury general counsel. It is during this time that Mr. Paul transformed the income tax from a tax that would reach only the poor to a tax that included middle class Americans. Throughout his tenure in the Roosevelt administration, Paul was undeniably one of the most influential proponents of Keynesian economics. He argued without hesitation that taxes could be and should be used as a regulatory tool for the United States economy.

In the midst of the war, the Treasury scrambled to find additional revenue to pay for the war efforts. For Paul, with his extensive taxation background among tax lawyers, part of the solution lay in the income tax. From his perspective, a broader tax would bring increased revenues in the most equitable manner, asking the nation as a whole to pay for the war efforts. While he was a proponent of a far-reaching income tax, Paul was an opponent of a nationwide sales tax. He was firm in his belief that such a tax would be “unjust, unwise, and unworkable.” It was the regressive nature of the tax that he feared, remarking to lawmakers that the tax burden would fall most heavily on the poor.

There were many who disagreed with his perspective sales tax. Many business owners, lawmakers, and even other tax lawyers saw a sales tax as a way to raise revenue in large amounts, and very quickly. Paul was quick to point out that such a tax had its disadvantages, as it would negate any revenue gains with exemptions that such a tax would necessitate. The key, Paul would consistently remark, was in raising individual and corporate income tax. Any naysayers regarding this opinion would have to infiltrate the circles of tax lawyers who understood what an impact the influx of tax revenue would mean to the government.

In 1942, on the advice of Paul and other income tax proponents, President Roosevelt asked Congress for a dramatically expanded income tax, which would make the tax reach millions of more Americans in the middle class. This expansion of the income tax also saw the birth of another taxation tool: withholding. From that time, withholding became a part of the system; wages and salaries became subject to this aspect of the system that Paul saw as an enforcement necessity.

When it came to the war, the economic effect that Paul and other tax lawyers feared the most was inflation. He saw it as inevitability, with the majority of production efforts being focused on producing the weapons and other necessities to sustain a war of that scale. The income, which he predicted would swell during the time of war, would demand goods that would be low in supply as consumer good production decreased.

Paul was not the only one within the presidential administration that worried about inflation. Other policymakers put wage and price controls into place, but Paul believed that, once again, taxes were the best way to combat this economic disarray. In his own words, Paul said that “Price ceilings and wage controls, by themselves, will check but not halt, the upward course of prices.”

In addition to working with tax lawyers and advising the Roosevelt administration on tax matters, Paul also served as the director of the New York Federal Reserve Bank. He worked closely with Beardsley Ruml, though they disagreed on a number of taxation aspects. Ruml was a leading figure when it came to the debate regarding the new withholding aspect to taxation and the way that tax collection was being conducted. He proposed that the government forgive a year’s worth of tax payments in an effort to ease taxpayers into the pay-as-you-go taxation. Paul, always the advocate of equality among tax lawyers in the reaches of taxation, opposed the idea as a way to give wealthy taxpayers a break.

When he left service in the Roosevelt administration, Paul returned to private practice, organizing Paul, Weiss, Rifkin, Wharton & Garrison. The firm, which employed enough tax lawyers to have its own tax section, served high profile clients like Henry Ford, Standard Oil, and General Motors.

Randolph Paul died as he lived, within the reaches of tax law. While he was testifying in front of a congressional committee, as he outlined his complaints about President Eisenhower’s tax policy, suddenly slumped over in his chair. He was pronounced shortly afterward. People reached across the aisle to eulogize Paul. His influence shaped the landscape of taxation law for tax lawyers, policymakers, and taxpayers for decades to come.

 

Segal, Cohen & Landis
9100 Wilshire Blvd. Ste. 601E
Beverly Hills, CA 90212
(310) 285-3999