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White Plains New York Tax Blog

Seeking tax penalty relief through reasonable cause

For some individuals in New York and elsewhere, tax time is just another day. For others, it is a dreaded times, as they are finding it difficult to pay the taxes they owe. When it becomes problematic and taxes are not paid, an individual could face penalties. Additionally, the collection process could initiate.

Because there are many reasons for why a person s unable to pay in full, on time or at all, the IRS will consider some of these reasons. If a valid reason does exist, it may be possible to resolve the issue. In fact, it may be possible to avoid the penalties associated with this situation.

Helping you strategize a solution for tax debt

Although some individuals in New York are concerned about tax day approaching, others are still focused on tax issues they are dealing with from previous years. When tax debt exists, individuals and businesses will face collection. These can be trying times, causing them to be unsure about what can be done and how they can move forward.

Being informed via a phone call or a visit that tax debt is being collected against can be an overwhelming and confusing time. One may not fully understand what to do in these matters. It is vital to be proactive, which means not delaying action. And by addressing this matter right away, one could prevent delinquency.

What are the penalties for tax fraud?

Facing any type of criminal allegations is a serious matter; however, some do not realize how criminal charges could stem from a wide variety of situations. Take for example taxes. Residents in New York and elsewhere are expected to pay taxes if they are owed. Nonetheless, the IRS could determine that one did not pay what they owe or at all. Such a situation could result in tax fraud charges, which can carry with them harsh consequences.

When tax fraud is committed, it means that a person did not pay the taxes that they owe. When this occurs, the IRS is able to stick an individual with civil and criminal penalties. This could result in penalties such as fine and incarceration. On the other hand, tax evasion, which is similar to tax fraud, occurs when a person fails to pay any taxes or deliberately underpaid taxes through illegal measures.

How a civil audit can turn into a criminal tax case

It is without question that the U.S. tax system is complicated. This is why most Americans seek out the assistance of an accountant to complete their taxes. Despite the initiative to obtain professional help, if an individual is not forthcoming or takes steps to reduce their tax liabilities, this could result in significant penalties. While some may think he or she will face civil consequences, if it is determined that one took steps to obstruct or evade tax responsibilities, this could result in criminal penalties.

Whether one faces civil or criminal tax consequences depends on how a person acts during the audit. It should be noted that most criminal tax cases stem from matters that were plain civil audits. It is when the auditor notices something suspicious during a civil audit that they will then notify the Criminal Investigation Division. It should be further noted that the IRS does not need to inform the person being audited that they referred the matter to the criminal division.

What is good about tax season?

Most Americans do not look forward to filing taxes. However, if you know what your options are, you may be able to use the law to your advantage to reduce your tax liability.

As a business owner, you might appreciate new legislation regarding tax breaks beginning with the 2018 tax season. In layman’s terms, you might be interested in new Section 199A tax legislation which includes:

Changes to the STAR program to address tax fraud

New York residents are likely knowledgeable of the various tax benefits offered by the state. These programs are designed to help certain residents, and if they prove eligibility, these individuals can enjoy the benefits of these programs. This may address assistance for those with children, purchasing a home or obtaining food. However, if a person cheats the system and get approved of these programs when he or she is not actually eligible, this could result in tax penalties.

Take for example the STAR program. In New York, this program provides $3 billion a year to provide a break on homeowners when it comes to school taxes. This program benefits more than 2.6 million residents. However, according to recent reports, the Governor seeks to cut out fraud in this program.

Estimated taxes in federal and state tax collections

As tax time rapidly approaches, many New Yorkers are still unaware of the details of certain issues that will inevitably affect them and their finances. While many people simply get their tax information from their workplace and follow the instructions when filling out their tax forms, some do not have it so simple. This can lead to mistakes that will cause legal problems that can spiral out of control. For those who are concerned about errors they might have made in paying their taxes, have not paid enough or did not pay at all, it is wise to have legal assistance in understanding federal and state tax collections.

Estimated taxes can be a confusing topic. Knowing who is obligated and not obligated to pay estimated taxes is imperative. Since taxes are required to be paid as a person receives or earns income during the year, some must pay an estimated amount. People might receive salary or income from work or other sources. If this is through self-employment, capital gains, dividends and more, estimated tax is a part of the process. Those who have their own business will generally need to pay estimated taxes.

What penalties and interest apply for filing taxes late?

The tax preparation process can be overwhelming. It is not only time consuming but can be nerve wrecking for some, as owing taxes is not good news to hear. While many are able to continually pay year after year, some may hit a roadblock. He or she is finding him or herself in financial ruin and knows that they cannot make these upcoming payments. Failing to make payments can trigger the tax collection process, which means addressing the penalties and interests that will likely ensue.

When a taxpayer owes and fails to pay, this is when penalties and interest will apply. When interests are charged, they are charged quarterly, and the rate can range from 9 to 4 percent. With regards to penalties, this depends on the circumstances surrounding the matter. For filing late, this penalty is roughly 5 percent per month; however, it could be as much as 25 percent of the tax shown on the return. Additionally, the penalty for paying late is one half of one percent of the unpaid amount due per month.

Guiding you through tax collection issues

If they have not already, most individuals in New York and elsewhere are preparing their taxes for this year. While this is a normal and routine task, some years can be more surprising than others. Owing taxes can be detrimental for some, as not paying these owed taxes could result in penalties. Additionally, this could prompt federal and state tax collection processes.

Dealing with IRS debt is an overwhelming situation. Individuals often do not know what to do, sometimes causing the situation to worsen. However, one does not need to go at this alone. The attorneys at Auerbach Law Group, P.C., are dedicated to helping those dealing with tax debt collection matters.

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White Plains Office
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Suite 307
White Plains, New York 10601

Phone: 914-686-7171
Fax: 914-686-0168
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17 Beverly Road
Post Office Box 2888
East Hampton, New York 11937

Phone: 631-329-7171
Fax: 631-604-6140
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726 King Street
Post Office Box 488
Chappaqua, New York 10514

Phone: 914-238-7171
Fax: 914-238-4353
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