White Plains New York Tax Blog

Reality star indictment illustrates important lessons

On behalf of Lee David Auerbach, Esq. of Auerbach Law Group, P.C. posted in criminal/civil tax litigation on Thursday, September 12, 2019.

Two reality starts that might be familiar names to residents of the Chicago area are now facing federal allegations of tax evasion and other federal charges. The couple has said that they are innocent of the criminal charges and have publicly blamed a former employee of theirs for the charges.

They say that the former employee made up information about them and presented falsified documents to the federal authorities. The couple's accountant also faces the same charges and has also been accused of lying to federal investigators.

IRS wage levies can drain a person's paycheck fast

On behalf of Lee David Auerbach, Esq. of Auerbach Law Group, P.C. posted in federal and state tax collections on Friday, September 6, 2019.

Like other debt collectors, the Internal Revenue Service has a process by which it can garnish an Illinois taxpayer's wages and divert those wages to offset delinquent taxes. Unless the taxpayer makes other arrangements, the wage levy will continue until the taxes get paid.

With its wage levy process, however, the IRS enjoys special rights that other debt collectors do not. For instance, the IRS does not actually have to go to court to get a court order allowing a garnishment of wages. All they need do is send a taxpayer's employer the appropriate paperwork, and the employer will have to comply.

Capital gains tax breaks on homes can cause issues

On behalf of Lee David Auerbach, Esq. of Auerbach Law Group, P.C. posted in tax controversies on Thursday, August 29, 2019.

Many New Yorkers may already know that there are a lot of generous tax benefits associated with home ownership. In addition to being able to deduct interest from mortgages, for instance, the sale of a home can also be exempt from capital gains tax, at least up to a certain amount.

To review, the capital gains tax is a federal income tax that people ordinarily must pay when selling their property at a higher price than for what they purchased it.

Employment and offshore tax issues remain high IRS priorities

On behalf of Lee David Auerbach, Esq. of Auerbach Law Group, P.C. posted in criminal/civil tax litigation on Thursday, August 22, 2019.

As is the case across the federal government, funding cuts have meant fewer agents in charge of pursuing criminal tax litigation in cooperation with federal prosecutors.

Officials recently confirmed there are 2,100 IRS special agents, down from 2,800 in the late 1990s.The agency has hired some new agents recently, but getting them incorporated into the agency and having them begin new investigations takes time.

The four types of IRS audits

On behalf of Lee David Auerbach, Esq. of Auerbach Law Group, P.C. on Monday, August 19, 2019.

Nobody likes an audit. It’s a painful, mind-numbing and thorough examination of your taxes and financial information. The Internal Revenue Service performs audits to ensure you are reporting your taxes correctly and adhering to tax laws.

To determine whether an audit is necessary, the IRS compares your tax return to average figures associated with similar accounts. All returns that show elevated figures or other discrepancies are set aside and randomly selected for an in-depth review by a licensed auditor. If the reviewer accepts your return, it will be filed away. If not, your return will have to be examined further.

Be cautious when paying independent contractors in cash

On behalf of Lee David Auerbach, Esq. of Auerbach Law Group, P.C. posted in tax controversies on Friday, August 16, 2019.

Particularly for some smaller to mid-sized businesses in the greater New York area, it may be easier to pay certain bills under the table, that is, in cash or otherwise outside the business's normal accounting system.

There is nothing illegal about doing this per se. In some cases, it may even be convenient to do so. For instance, it might be simpler to pay someone who shovels the walk occasionally on the spot and in cash. In other situations, the person performing a service for the business may simply prefer a cash payment for perfectly legitimate reasons.

Penalties for tax evasion are wide-ranging

On behalf of Lee David Auerbach, Esq. of Auerbach Law Group, P.C. posted in criminal/civil tax litigation on Friday, August 9, 2019.

As this post has discussed before, a New Yorker can wind up in federal prison for tax evasion. Specifically, after a conviction for tax evasion, a court can order the guilty party to spend up to five years behind bars.

However, these are not the only criminal penalties possible in a case involving criminal tax litigation. For instance, both the routine filing of taxes as well as special audits and investigations often involve taxpayers having to give statements under penalties for perjury. If the government later concludes that such statements were not truthful, additional charges can be filed.

Back taxes force famous Brooklyn bagel shop to close

On behalf of Lee David Auerbach, Esq. of Auerbach Law Group, P.C. posted in federal and state tax collections on Friday, August 2, 2019.

A bagel shop in Brooklyn that garnered widespread fame for its multicolored bagels has been forced to close after New York's taxing authorities seized the property.

According to the New York Department of Taxation and Finance, the owner of Rainbow Bagels owes almost $1 million in back taxes dating from 2011. The owner for his part acknowledged that he had been in discussions with the state about taxes but indicated he was planning to re-locate his shop anyway.

The next big tax battleground could be art, real estate

On behalf of Lee David Auerbach, Esq. of Auerbach Law Group, P.C. posted in criminal/civil tax litigation on Thursday, July 25, 2019.

According to a report from the Stanford Graduate School of Business, many people may be moving to foreign real estate investments and even investments in artwork and other collectibles as a way of avoiding their tax obligations.

In 2010, the United States passed a law that helped taxing authorities keep closer tabs on offshore accounts and monetary investments. Before the new law, certain individuals could take advantage of foreign privacy laws and thus keep funds out of the view of the Internal Revenue Service, even as they funneled the money back in to the United States.

How does an offer in compromise work?

On behalf of Lee David Auerbach, Esq. of Auerbach Law Group, P.C. posted in tax controversies on Friday, July 19, 2019.

As previous posts here have discussed, many people in White Plains and the other New York suburbs may find themselves the target of an IRS audit or other collection action. Following an audit, even a well-meaning person may find himself faced with a large tax bill that would be hard to afford. After all, New Yorkers can and do make honest mistakes on their taxes. Moreover, tax laws and regulations, and even the legal positions of the IRS about the same laws and regulations, change over time. Sometimes, the IRS or even an individual examiner takes an aggressive position on which there is plenty of room for disagreement.

A New Yorker facing a tax deficiency under these circumstances may consider making an offer in compromise to the IRS. As the name implies, an offer in compromise involves a taxpayer agreeing to pay less than what is actually owed in lieu of the IRS having to go to court or use collection efforts. The benefit to the taxpayer is that she can pay considerably less and avoid legal action. The IRS, on the other hand, is able to collect revenue relatively quickly and easily.

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