The Internal Revenue Service’s (“IRS”) First Time Abate (“FTA”) policy provides for an abatement of certain financial penalties for taxpayers with a record of tax compliance who are current with filing and payment requirements. It is essentially a streamlined IRS process to abate or remove a first-time tax penalty as a one-time consideration based on a taxpayers’ compliance history.
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Posted in Tax Law & IRS Defense
Calendaring important IRS deadlines can save you a lot of headaches at tax time. To avoid paying penalties, keep a calendar and review tax deadlines with your accountant, CPA, or tax attorney. The following are a few examples of important dates:
January 15, 2014 is the deadline for the 2013 4th quarter estimated tax payment.
January 31, 2014 is the deadline for employers to distribute Form W-2 Earnings Statements to employees, businesses to issue Form 1099 Statements, and self-employed individuals to file and pay taxes.
February 28, 2014 is the deadline for businesses to mail in Forms 1099 and 1096.
March 17, 2014 is the deadline for corporate tax returns. It is also the final deadline for a corporate taxpayer to file an amended corporate tax return for tax year 2010 and still claim a refund.
April 1, 2014 is the deadline to file tangible personal property tax returns on Form DR-405.
April 15, 2014 is the deadline to file individual tax returns and make tax payments, final deadline for an individual taxpayer to file an amended tax return for tax year 2010 and still claim a refund, file estate income tax or trust income tax returns, final deadline to file amended estate income tax or trust income tax returns for year 2010 and still claim a refund, file partnership tax returns, final deadline to file amended partnership tax returns for year 2010 and still claim a refund, and for the 2014 1st quarter estimated tax payment.
May 15, 2014 is the deadline to file non-profit organization tax returns.
June 16, 2014 is the deadline for the 2014 2nd quarter estimated tax payment.
September 15, 2014 is the deadline for corporate, trust, and partnership tax returns if an extension was requested and the 2014 3rd quarter estimated tax payment.
October 15, 2014 is the deadline to file individual tax returns if an extension was requested.
Posted in Tax Law & IRS Defense
The penalty for failing to file your tax return is typically 5% of the unpaid taxes for each month (or part of a month) that your return is late (not to exceed 25% of the unpaid taxes). If you file your tax return more than 60 days after the date it was due, the minimum penalty is $135.00 or 100% of the unpaid tax, whichever is smaller. Generally, the failure to file penalties are greater than the failure to pay penalties. As a result, you should typically file your tax return, even if you cannot afford to pay the tax owed, in an attempt to reduce your potential tax penalties. If your failure to file your tax return was not due to willful neglect and you can show “reasonable cause” for not filing, you may be able to avoid the failure to file penalties. As always, it is best to consult with a Florida attorney who may be better able to evaluate the tax penalty assessments.
For more information regarding the failure to file penalties, please visit www.irs.gov.
Posted in Tax Law & IRS Defense
Ordinarily and generally speaking, if a bank relieves a taxpayer of mortgage debt (through a short sale or deficiency waiver for example), the Internal Revenue Code (“IRC”) requires the taxpayer to report the cancelled or forgiven debt amount as taxable income (subject to any applicable exceptions or exclusions). This is commonly referred to as “cancellation of debt” or “discharge of indebtedness” income. Therefore, even though the taxpayer never actually realizes the forgiven debt as disposable income that year, the IRC holds the taxpayer liable for the appropriate tax amount based on the forgiven or cancelled debt. See Section 108 of the IRC.
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Posted in Asset Protection,Business & Corporate Law,Probate & Trust Administration,Real Estate Law,Tax Law & IRS Defense,Wills, Trusts & Estate Planning
The attorney-client privilege is one of the most important legal protections that an individual or entity has when seeking legal advice from a Florida attorney. Section 90.502(c) of the Florida Statutes states that communication between an attorney and a client is confidential if it is not intended to be disclosed to a third-party other than when the communication to a third-party is made in the furtherance of legal service to the client or when the use of a third-party is reasonably necessary for communication between the attorney and client. It is important to note that there are exceptions that may apply, such as when the attorney’s services are sought to enable what the client knows to be a crime or fraud. The purpose of the statute is to protect almost all information disclosed by the client. However, this protection can be waived and subject to disclosure if third-parties are involved in the communication. Moreover, Section 90.507 of the Florida Statutes provides that the attorney-client privilege is waived when a confidential matter is voluntarily discussed in a manner where a reasonable expectation of privacy does not exist. Examples may include copying a third party to an email to your attorney, forwarding an email from your attorney, including a friend in a meeting with your lawyer, or encountering your lawyer at a public venue with other people listening to the conversation and discussing your case.
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Posted in Tax Law & IRS Defense
Your local Florida property appraiser mails out the Notice of Proposed Property Taxes (Truth in Millage or “TRIM” form) in August of each year. Property owners or taxpayers who wish to contest or appeal their property value to the Value Adjustment Board must file a petition (one of the DR-486 forms) with the clerk of court within 25 days of the Notice of Proposed Property Taxes. For St. Johns County as an example, the petition for adjustment must be filed no later than September 13, 2013.
Typically as with most legal matters, it’s best to try and resolve the matter prior to filing a petition. If time permits, it’s advisable to contact your local property appraiser’s office to resolve issues such as market value, classification, or an exemption. Keep in mind that there are many other issues concerning property taxes in Florida that can be applicable, such as portability, the Save Our Homes cap (currently 1.7% for 2013 per the CPI index, which is lower than the 3%), joint ownership or adding someone to your deed, inheriting family-owned property, or the transference of property. More information can be found at the below two Florida Department of Revenue websites. As always, promptly and timely consult with a qualified tax attorney should the need arise.
http://dor.myflorida.com/dor/property/taxpayers/howdoi.html
http://dor.myflorida.com/dor/property/taxpayers/
Posted in Asset Protection,Tax Law & IRS Defense
The Home Affordable Modification Program is an important tool for homeowners who are experiencing financial difficulties in making their mortgage payments yet desire to keep their homes. Most would probably agree that the ideal home loan modification would include a lower monthly payment, lower interest rate, and probably most importantly, a principal reduction. However, that principal reduction could affect the homeowner when he or she later decides to sell the property. Although a principal reduction loan modification will not typically result in cancellation of debt income, it will likely reduce the homeowner’s basis in the subject property. The basis reduction will equal the amount of the principal reduction. The end result could increase the homeowner’s tax liability when the property is later sold. See IRS Publication 4681 (2012).
Posted in Asset Protection,Tax Law & IRS Defense
Interest follows the tax liability. See In re Burns, 887 F.2d 1541 (11th Cir. 1989). If the tax debt is non-dischargeable, then the interest accruing on the tax debt will be non-dischargeable. “[A] tax penalty is discharged if the tax to which it relates is discharged […] or if the transaction or event giving rise to the penalty occurred more than three years prior to the filing of the bankruptcy petition.” In re Burns, at 1544. If the tax liability is non-dischargeable, but the penalty portion of the liability is, then the interest which follows the tax is non-dischargeable but the interest which follows the penalty is likely dischargeable.
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