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White Plains New York Tax Blog

Man moves forward with civil tax litigation over tax withholding

Tax matters are not always easy to handle. Some people may believe that a mistake has occurred with their return or the withholding of their taxes, and though they may think that making the Internal Revenue Service aware of the issue would be enough, that is not always the case. In some instances, civil tax litigation is necessary.

New York readers may be interested in a lawsuit recently filed in another state against the IRS. According to reports, one man claims that the IRS is withholding more taxes from his paycheck than it should and has been doing so for the last three years. Apparently, the man is paying double the amount of Medicare and Social Security taxes than required. He indicated that his employer is making the deductions.

Do not ignore a collections letter from the IRS

Dealing with the Internal Revenue Service is often nerve-wracking. Even if taxpayers do their best to file their taxes correctly, they may still worry about making mistakes and facing the wrath of the IRS. In some cases, New York residents may end up facing collections from the IRS for unpaid taxes.

When the IRS believes that a taxpayer has an outstanding balance, the agency will notify that person by mail. The letter will detail the balance, penalties and fees, and demand that it be paid in its entirety. Of course, not everyone has the ability to pay outstanding tax balances in full, which could cause them to panic. However, there are options that struggling parties may be able to take advantage of, such as installment agreements or an offer in compromise.

Tax controversies can stem from filing mistakes

Doing one's taxes is not always an easy process. Even if New York residents use online resources or tax professionals to file their documents, they may still end up with questions from the IRS. In some cases, tax controversies can result, and individuals may need to handle discrepancies.

Typically, when employers and other parties send financial information relating to taxes to employees, they also send copies to the IRS. As a result, the agency should have the same information as the individual, which it uses to check the returns filed to ensure they are correct. It is not only work-related income that is reported to the IRS, so if a person forgets to include certain information or if the IRS makes a mistake, a person could receive notice to explain the differences or even to pay additional taxes.

CNC status may help with tax collection efforts

Financial issues can have far-reaching effects, and any New York resident could feel those effects in various areas of his or her life. Money problems can cause mental and physical health concerns, and when individuals are facing tax collection on top of their other debt issues, they may feel even more overwhelmed. Fortunately, some people may be able to take advantage of assistance with collection efforts.

If parties are facing financial issues in which they cannot pay their outstanding tax debt and handle basic living expenses, they may qualify for Currently Not Collectible status with the IRS. This CNC status can delay collection efforts and can prevent income from being levied. Of course, individuals interested in obtaining this status would need to request it from the IRS, which would conduct an assessment to determine whether it could apply.

Accusations of tax evasion can lead to criminal tax litigation

With tax season well underway, many New York residents may be feeling the stress of handling their financial matters correctly. Of course, some people may be feeling more concern than others, especially if they have come under suspicion of tax evasion. If the government suspects that a person has attempted to evade filing or paying taxes, criminal tax litigation could result.

Many people may think that they have done nothing to warrant these allegations, which is why it is important that they have the opportunity to defend themselves. Still, some actions that the IRS may consider evasive include making false invoices, overstating deductions, filing a false return, destroying records and more. Fortunately, if a person is accused of any of these activities, he or she can create a defense presentation to combat those accusations.

Some tax controversies may warrant going to court

Dealing with taxes is annoying at best and immensely complicated at worst. For some New York residents, their yearly tax journey may not end with simply filing their returns and receiving a refund or having a bit more taxes to pay. In some cases, the Internal Revenue Service could suspect an issue, and some taxpayers may have to handle tax controversies.

Though it is not a common occurrence for most people, some individuals may end up having to go to tax court over certain issues. If a person believes that the IRS has made a mistake with the results of an audit or with how much tax debt a person has, going to tax court may be necessary in order to clear up the problem. In such cases, the taxpayer, or petitioner in the case, has to provide evidence of his or her stance on the matter. The IRS may accept the information or present evidence to dispute the taxpayer's records.

Improperly reporting cryptocurrency could lead to tax litigation

New York residents who are financially savvy may have jumped into the cryptocurrency game at its inception. Whether individuals have participated in crypto trades, mining, sales or other related activities, those actions may have become lucrative endeavors. Still, it is important to remember that if individuals do not report that income on their taxes, they could end up facing tax litigation.

Though some seasoned cryptocurrency experts may already know the proper way to report the income on their taxes, some individuals newer to this type of currency may not be so up to date. One of the biggest facts to remember is that the income must be reported. Not reporting this income is a violation of tax law, and it could lead to financial penalties or even criminal charges if not properly addressed.

Collections for tax debt do not have to go on forever

Paying taxes seems like a burden to most New York residents and those around the country. Though people may grumble at the amount withheld from their paychecks, they may feel relieved when they receive a refund. Unfortunately, everyone is not lucky enough to obtain a refund, and some may owe significant amounts. This type of ordeal can be difficult for some people, and they may face collections for tax debt.

Having tax debt is a stressful predicament to be in. Many people may think that they can handle their debt easily, but over time, it may become more of an issue than they anticipated. After filing the year's tax returns, individuals can gain a better idea of what they actually owe. This information can help them find the right debt relief options. In this type of situation, it may be better to file one's taxes ahead of the deadline to have more time to explore available options.

Avoid these common income tax mistakes in 2020

Paying taxes to the IRS every year is an unpleasant task for everyone, but you want to avoid making the process even more difficult, and expensive, by making mistakes on your income tax returns.

While many errors won’t automatically trigger an audit, major or minor mistakes can cause headaches by delaying refunds until they are corrected. But other more serious missteps can create costly consequences.

What issues can lead to tax controversies, audits?

Tax season is typically not one that individuals look forward to. Though possibly receiving a refund can make having to go through the often tedious filing process worth it, it can still be a stressful time, especially if the IRS decides to conduct an audit. Tax controversies can cause anyone to panic, but there are ways New York residents could help themselves lessen the likelihood of an audit.

One area that could be of concern is itemized deductions. Most people want to claim as many deductions as possible to lower their tax obligation, but large itemized deductions could raise a red flag. In particular, if someone makes a substantial charitable donation, it could increase the chances of an audit.

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